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MARINI v. ATLANTIC RICHFIELD CO.

August 27, 1979

Edward MARINI t/a Marini's Arco, Plaintiff,
v.
ATLANTIC RICHFIELD CO., a Pennsylvania Corporation, Defendant.



The opinion of the court was delivered by: FISHER

Plaintiff operates a retail gasoline dealership pursuant to a franchise relationship with defendant-distributor as defined in the Petroleum Marketing Practices Act, (PMPA), 15 U.S.C. § 2801, Et seq. This business has been conducted at Route 72 and Jennings Road, Manahawkin, Ocean County, New Jersey, since 1970 in accordance with three leases each of three year duration, the latest expiring May 31, 1979. By various certified letters commencing December 29, 1978, defendant notified plaintiff of its refusal to renew the business arrangement beyond its stipulated termination date by reason of (1) arrearages in payments due; (2) failure to operate for seven consecutive days; (3) trademark violations. Plaintiff seeks a preliminary injunction continuing prior restraints prohibiting defendant from terminating the franchise and leasehold agreements. Defendant moves for a mandatory injunction directing plaintiff to quit the premises.

Part 1 of PMPA, which became effective June 19, 1978, governs terminations and renewals of franchise agreements, and was intended by Congress to protect independent gasoline marketers who lacked the bargaining position to override distributor decisions not to renew franchises. In moving the legislation, Congressman Staggers underscored this purpose:

 
We need the continued presence of the independent gasoline marketers who care about the motoring needs of their customers and who will continue to provide important consumer services and price competition.
 
This legislation will do just that. It will place the protection of the federal government between the franchisor and the franchisee. The inequity of power which exists between the franchisor and his franchisee is balanced by this bill. That balance is provided by prohibiting termination or nonrenewal of any franchise without good cause. As a result, gasoline retainers will no longer be threatened by arbitrary, unfair, discriminatory or punitive termination or nonrenewal of their livelihood. The entire motoring public will ultimately benefit from this result.

 123 Cong.Rec. 3027 (1977).

 The grounds asserted for nonrenewal of plaintiff's franchise are defined in several subsections of PMPA, allowing such action upon

 
(C) The occurrence of an event which is relevant to the franchise relationship and as a result of which termination of the franchise or nonrenewal of the franchise relationship is reasonable, if such event occurs during the period the franchise is in effect and the franchisor first acquired actual or constructive knowledge of such occurrence
 
(i) not more than 120 days prior to the date on which notification of termination or nonrenewal is given, if notification is given pursuant to section 2804(a) of this title . . .

 15 U.S.C. § 2802(b)(2).

 Events "relevant to the franchise relationship and as a result of which termination of the franchise or nonrenewal of the franchise relationship is reasonable", set forth in § 2802(c), include:

 
(8) failure by the franchisee to pay to the franchisor in a timely manner when due all sums to which the franchisor is legally entitled;
 
(9) failure by the franchisee to operate the marketing premises for
 
(A) 7 consecutive days . . .
 
(10) willful adulteration, mislabeling or misbranding of motor fuels or other trademark ...

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