of § 2802(b)(2)(E) governed the court's analysis of the right of first refusal. The court's discussion of the "OR" clause between subsection (I) and (II) of § 2802(b)(2)(E)(iii) is however irrelevant to this action. Chevron has already admitted that § 2802(b)(2)(E) is inapplicable as to movants. Similarly, in ARCO v. Brown, No. 85 C 515, slip op. (N.D. Ill. Oct. 21, 1985), a case involving termination rather than non-renewal, the district court's dismissal of the complaint was based upon a finding that § 2802(b)(2)(E) had been complied with. Lastly, while Brown v. American Petrofina Marketing, 555 F. Supp. 1327 (M.D. Fla. 1983), did reject plaintiff's pursuit of the right of first refusal, it did so, in part, because of its finding that plaintiff had been properly non-renewed under § 2802(c) and § 2802(b)(2)(C).
In sum, this Court is clearly empowered under PMPA to grant the type of equitable relief requested by plaintiff-movants. See, e.g., Abadjian v. Superior Court, 168 Cal. App.3d 363, 367, 214 Cal. Rptr. 234 (1985) (ordering movants the right of first refusal). Furthermore, defendants have specifically contemplated the mechanism necessary to comply with an order granting such equitable relief to the plaintiffs. See the Asset Purchase Agreement attached as Exhibit A to Movants Memorandum in support of this Motion. The only remaining question is whether such should be granted in this instance and at what price?
2. Equitable Relief in This Instance
The determination as to whether to grant these three plaintiffs their request for a mandatory injunction, ordering defendants to offer them the right of first refusal as to the stations which they currently lease, is based upon an analysis of traditional equitable criteria. The fact that the statute authorizes injunctive relief does not rid the Court of its obligation to determine whether such relief is appropriate. United States v. Price, 523 F. Supp. 1055 (D.N.J. 1981), aff'd, 688 F.2d 204 (3d Cir. 1982).
In analyzing the appropriateness of plaintiffs' request for equitable relief, this Court is mindful that the remedy provided should be narrowly tailored to fit the violation. Society for Good Will to Retarded Children, Inc. v. Cuomo, 737 F.2d 1239 (2d Cir. 1984); U.S. v. Spectro Foods Corp., 544 F.2d 1175 (3d Cir. 1976). Moreover, the Court recognizes that mandatory permanent injunctions are looked upon disfavorably and are generally only granted in compelling circumstances. Price, 523 F. Supp. at 1067.
This Court thus begins its analysis of plaintiffs' motion by reviewing the violation which forced this situation.
At some time during 1985, Chevron decided to solicit bids for the purchase of certain marketing assets, including the service stations in question. Cumberland Farms submitted the successful bid and subsequently, Chevron and Cumberland Farms entered into an agreement whereby Cumberland assumed all of Chevron's obligations with its service stations in a certain geographical area. The Chevron-Cumberland Farms agreement went into effect on May 31, 1986. As a result of such transaction, Chevron was found to have failed to renew its franchise relationships with plaintiff-dealers, within the meaning of PMPA. See September 25, 1987 Opinion at pp. 7-9.
Chevron, thereafter, alleged that its non-renewal was justified because it had made a good faith determination in the normal course of business to withdraw from the market as provided by 15 U.S.C. § 2802(b)(2).
However, this defense, Chevron admitted, was unavailable as to the three plaintiffs in this motion. As a result, Judge Sarokin found summary judgment in favor of these three plaintiffs on Count I.
In granting summary judgment to these three plaintiffs on Count I, Judge Sarokin did no more than acknowledge what was apparent; Chevron had chosen not to renew its franchise relationships with these three plaintiffs and had no justification for such under PMPA. Judge Sarokin in no way indicated in either the September 25, 1987 or the November 4, 1987 Opinion that he found Chevron to have violated § 2802(b)(3)(D)(iii) or any other specific subsection of § 2802. This Court will not expand upon the earlier holdings in any way. Thus, this Court concludes that the violation which plaintiffs seek to have remedied through an Order directing Chevron to offer them the right of first refusal is no more than Chevron's unjustified non-renewal of its franchise relationships with these plaintiffs.
In balancing the equities of the situation, this Court does not believe that an Order directing Chevron to provide these three plaintiffs with the right of first refusal (a directive which this Court believes to be tantamount to a forced sale of the land), is an appropriate remedy for such a violation. Had Chevron not violated the statute as to these three plaintiffs they would, at best, have received renewals of their leases with Chevron. Since this Court is unable to compel the continuation or renewal of plaintiffs' franchise relationships with Chevron (see § 2805(e)), it adopts an alternative form of relief for these three plaintiffs pending the outcome of this litigation.
During the course of this litigation, these three plaintiffs shall have their franchise relationships with Cumberland continued, however, the terms of their most recent lease agreement with Chevron shall govern the relationship; there shall be no termination of or non-renewal of the franchise relationship, except for good cause shown to the satisfaction of this Court; and any rent increases or changes in the term of the lease agreement shall have the approval of this Court prior to effectuation.
In sum, plaintiffs' motion for equitable relief in the form of an Order directing Chevron to offer the right of first refusal to plaintiffs is denied without prejudice. This Court grants an alternative form of relief, however pending the outcome of this litigation, which this Court believes acknowledges the extent of plaintiffs' improper non-renewal at this time. An Order in conformity with the Opinion on this motion shall be submitted by plaintiffs.
III. Plaintiff's Motion for Reversal of Magistrate Hedge's Order Denying Protective Order
This motion is brought by plaintiffs, eighteen Chevron and Gulf dealers in New Jersey, Pennsylvania and Delaware, pursuant to Fed.R.Civ.P. 72(a). Plaintiffs object to and seek reversal of Magistrate Hedges' Discovery Order of December 7, 1987, to the extent the Order compels plaintiffs to produce invoices embodying purchases of gasoline from all sources for the period January 1, 1984 to the present while denying plaintiffs' motion for a protective order pursuant to Fed.R.Civ.P. 26(c).
The standard to be applied by a district court in reviewing a magistrate's order is set forth in Fed.R.Civ.P. 72(a). Such rule provides that a district court judge shall consider objections made by the parties and "shall modify or set aside any portion of the magistrate's order found to be clearly erroneous or contrary to law." Fed.R.Civ.P. 72(a).
On December 7, 1987 Magistrate Hedges granted defendant Cumberland Farm's motion to compel the production of plaintiff's gasoline purchase invoices, finding that there was no legitimate basis on which to withhold them and that such invoices were discoverable on the issue of plaintiff's damages. (Magistrate Hedges Opinion of Dec. 7, 1987 at 1, 2.) In addition, Magistrate Hedges denied plaintiffs application for a special protective order concluding that:
The harm which plaintiffs seek to protect against is, on this record, speculative. In any event, I am not satisfied that the intent of Rule 26 was to permit a party to erect a shield around information which demonstrates, or tends to demonstrate, a breach of contract on the party's part. That is simply a risk which a party must bear in the context of commercial litigation such as this. (Magistrate's Opinion at p. 2).
This Court finds Magistrate Hedges' conclusions and holding to be neither "clearly erroenous" or "contrary to law". First, it is clear that the discovery requested by Cumberland is relevant to the issue of plaintiff's damages. While it is true that the primary relief sought by plaintiffs is equitable relief in the form of an Order directing defendants to offer them the right to purchase their service stations, plaintiffs also seek money damages.
To that end, plaintiffs have produced massive amounts of documents allegedly showing that gasoline sales and the profitability of plaintiffs' service stations have been severely limited since Cumberland Farms acquisition of the properties from Chevron. Cumberland seeks to counter this contention by showing how much of each type of gasoline was purchased, from whom it was purchased, what the purchase price was, and by comparing these invoices with other records, what, if any, change in profitability has occurred. Such is permissible.
Second, the refusal by Magistrate Hedges to enter a special protective order pursuant to Fed.R.Civ.P. 26(c) was well justified. Rule 26(c) provides that where "justice requires [a protective order may issue] to protect a party or person from annoyance, embarrassment, oppression or undue burden or expense. . . ." In this instance, the contention that certain plaintiffs may be forced to withdraw from this lawsuit because of "misbranding" which may be found by the production of these invoices, does not meet the "annoyance, embarrassment, oppression or undue burden or expense" standard of Rule 26(c). As Magistrate Hedges held, the harm which plaintiffs seek to protect themselves against is, on the record, speculative. (Magistrate's Opinion at p. 2). Moreover, since a protective order governing discovery in this litigation is already in place, plaintiffs have court protection against defendants' use of the information in the invoices outside this litigation. In addition, should defendants seek to use such information to terminate or non-renew a franchise relationship, plaintiffs may always seek an injunction against such action as was done in Gilderhus v. Amoco, 470 F. Supp. 1302 (D. Minn. 1979) and Di Napoli v. Exxon, 549 F. Supp. 449 (D.N.J. 1981).
For the foregoing reasons, plaintiff's motion for reversal of Magistrate Hedges' Discovery Order is denied. Cumberland's request for an award of costs and attorneys' fees associated with the preparation, presentation and filing of the opposition to plaintiff's motion is also denied.
An Order in conformity with the Opinion in this Motion shall be submitted by plaintiffs.
This Opinion has dealt with three motions in this action. The first, defendant-Chevron's motion for partial reconsideration of the November 4, 1987 Opinion is denied. The second motion, made by three plaintiffs for equitable relief in the form of an order granting them the right of first refusal in connection with the assignment of their service stations, is denied without prejudice. An alternative form of equitable relief pending the outcome of this litigation has been ordered. The third motion before the Court, plaintiffs' motion for reversal and objection to the Magistrate's Order of December 4, 1987, is denied.
Dated: February 25, 1988