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Scottsdale Gas Co. LLC v. Tesoro Refining & Marketing Co. LLC

United States District Court, D. Arizona

October 11, 2019

Scottsdale Gas Company LLC, Plaintiff,
v.
Tesoro Refining & Marketing Company LLC, et al., Defendants.

          ORDER

          HONORABLE STEVEN P. LOGAN UNITED STATES DISTRICT JUDGE

         Before the Court is Scottsdale Gas Company LLC's (the “Plaintiff”) Application for Temporary Restraining Order Without Notice and Preliminary Injunction. (the “Motion”). (Doc. 10) The Court granted the Plaintiff's request for a temporary restraining order and ordered defending parties Tesoro Refining & Marketing Company LLC and Treasure Franchise Company LLC (together, the “Defendants”) to respond to the Motion. (Docs. 11, 15) On October 10, 2019, the Court held a hearing (the “PI Hearing”) to address the Plaintiff's request for a preliminary injunction. At the PI Hearing, oral argument was provided by both parties. The Court's ruling is as follows.

         I. Background

         The Plaintiff operates a retail convenience store and gas station at 10809 North Frank Lloyd Wright Boulevard in Scottsdale, Arizona (the “Premises”). (Doc. 10 at 2) The Plaintiff entered into a franchise agreement and a gasoline agreement (the “Gasoline Agreement”) with the Defendants. (Doc. 10 at 2-3) Under the franchise agreement, the Defendants have a reversionary leasehold interest in the Premises. (Doc. 10 at 2) Under the Gasoline Agreement, the Defendants are responsible for supplying the Plaintiff with gasoline. (Doc. 10 at 2) It is unclear what role the Defendants play in helping the Plaintiff process customer credit card payments.

         On June 13, 2019, the Defendants sent a notice of termination (the “Notice”) to the Plaintiff seeking to terminate the Gasoline Agreement. (Doc. 10 at 3) The Plaintiff initiated this lawsuit under the Petroleum Marketing Practices Act (the “PMPA”) seeking to prevent the Defendants from terminating the Gasoline Agreement. (Doc. 1) On October 3, 2019, the Plaintiff filed the Motion, alleging that the Defendants had engaged in illegal, extrajudicial means of seeking to terminate the Gasoline Agreement. (Doc. 10) The Court issued a temporary restraining order (Doc. 11) and held the PI hearing on October 10, 2019, to address whether a preliminary injunction should issue.

         II. Legal Standard

         “A preliminary injunction is ‘an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion.'” Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012) (quoting Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam) (emphasis omitted); see also Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008) (citation omitted) (“A preliminary injunction is an extraordinary remedy never awarded as of right”).

         “A plaintiff seeking a preliminary injunction must show that (1) he is likely to succeed on the merits, (2) he is likely to suffer irreparable harm without an injunction, (3) the balance of equities tips in his favor, and (4) an injunction is in the public interest.” Winter, 555 U.S. at 20. “But if a plaintiff can only show that there are ‘serious questions going to the merits'- a lesser showing than likelihood of success on the merits- then a preliminary injunction may still issue if the ‘balance of hardships tips sharply in the plaintiff's favor,' and the other two Winter factors are satisfied.” Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1291 (9th Cir. 2013) (quoting Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011)). Under this serious questions variant of the Winter test, “[t]he elements . . . must be balanced, so that a stronger showing of one element may offset a weaker showing of another.” Lopez, 680 F.3d at 1072.

         III. Analysis

         The Plaintiff seeks a preliminary injunction preventing the Defendants from (i) terminating the Gasoline Agreement between the parties; (ii) acting on any reversionary leasehold interest in the Premises; (iii) taking any extrajudicial actions affecting the Plaintiff or its ability to operate a retail store and gas station at the Premises; and (iv) causing any agents, employees or contractors of the Defendants from entering onto the Premises, except for performing acts in the ordinary course of business. (Doc. 10 at 13) The Plaintiff also seeks an injunction requiring the Defendants to continue (i) their relationship with the Plaintiff as a supplier of gasoline, and (ii) processing credit cards in the same manner as before the Defendants sought to terminate the Gasoline Agreement. (Doc. 10 at 13) In response, the Defendants argue that the Plaintiff is not entitled to a preliminary injunction in this case because the Plaintiff cannot demonstrate (i) that it is entitled to a preliminary injunction under the PMPA or (ii) that the Plaintiff has a high likelihood of success on the merits of its claims under the Federal Rule of Civil Procedure 65 standard. (Doc. 15 at 2, 10)

         A. Injunctive Relief Under the Petroleum Marketing Practices Act

         The PMPA prohibits the termination or nonrenewal of a franchise (i) outside of specifically enumerated reasons and (ii) upon the franchisor's compliance with PMPA's notice requirements. Khorenian v. Union Oil Co. of California, 761 F.2d 533, 535 (9th Cir. 1985). A franchisee may bring an action to prevent termination or non-renewal under the PMPA if the franchisor has failed to comply with the statutory requirements. Id.; 15 U.S.C. § 2805. In particular, franchisees may obtain preliminary injunctive relief if (1) they establish that the franchise has been terminated and that “there exists sufficiently serious questions going to the merits to make such questions a fair ground for litigation, ” and (2) a court determines that, on balance, the hardships imposed upon the franchisor by issuance of preliminary injunctive relief are less than the hardships that would be imposed upon the franchisee in the absence of such relief. Id.; 15 U.S.C. § 2805(b)(2)(A) and (B).

         The Defendants argue that the Court cannot issue an injunction under the PMPA because the Plaintiff has failed to submit a timely application for an injunction. (Doc. 15 at 2) The Defendants argue that the deadline for filing a request for an injunction under the PMPA is 90 days. 15 U.S.C.A. § 2805(b)(4) (stating “the court need not exercise its equity powers to compel continuation or renewal of the franchise relationship if such action was commenced . . . more than 90 days after the date on which notification pursuant to section 2804(a) of this title was posted or personally delivered to the franchisee . . . .”). The Defendants argue that the Notice was provided to the Plaintiff on June 13, 2019, which is more than 90 days before the Plaintiff filed the Motion on October 3, 2019. (Doc. 15 at 2) At the PI Hearing, the Plaintiff did not dispute that the Motion was filed after the 90-day deadline imposed by the PMPA. However, the Plaintiff argues that an untimely filing does not preclude the Court from issuing a preliminary injunction. At this time, the Court declines to exercise its discretion to issue a preliminary injunction under the terms of the PMPA because the Motion was untimely.

         B. Injunctive Relief Under Federal Rule of ...


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