WASHINGTON, DC - The U.S. Supreme Court ruled unanimously earlier this week that oil companies can change their leases with independent service station owners and that station owners cannot therefore press claims pursuant to the U.S. Petroleum Marketing Practices Act (PMPA), the Jurist reports.
In Mac's Shell Service, Inc. v. Shell Oil Products Co., the plaintiff said that Shell and Motiva used rent increases to try to terminate their franchise deals so that the companies could take over. The justices disagreed.
"We hold that a franchisee cannot recover for constructive termination under the PMPA if the franchisor's allegedly wrongful conduct did not compel the franchisee to abandon its franchise," wrote Justice Samuel Alito. "Additionally, we conclude that a franchisee who signs and operates under a renewal agreement with a franchisor may not maintain a claim for constructive nonrenewal."
The court remanded the case for further proceedings.
The PMPA regulates the relationship between oil companies and gasoline marketers. When Shell Oil assigned its rights under franchise agreements to a third party, the gas station owners signed the new agreements but brought suit pursuant to the PMPA alleging constructive non-renewal and constructive termination.