United States District Court, D. New Jersey
MEMORANDUM AND ORDER
G. SHERIDAN, U.S.D.J.
matter comes before the Court on a motion by Defendant for
summary judgment. This Court has federal question
jurisdiction, 28 U.S.C. § 1331, under the Petroleum
Marketing Practices Act (PMPA), 15 U.S.C. § 2802, which
regulates a franchisor's termination of a franchise
relationship. Plaintiff - having been denied injunctive
relief - seeks compensatory damages, consequential damages,
and attorney fees and expenses.  Because Defendant bears the
burden of proof in actions under the PMPA; the bulk of
defendant's evidence is testimonial and thus subject to
credibility determinations; and there remain disputes as to
material facts, the Court finds summary judgment
inappropriate with respect to Plaintiff's PMPA claim.
However, Plaintiffs state law claims are preempted and
therefore are dismissed.
Four S Shell, LLC, is a New Jersey limited liability company,
that formerly operated a motor fuel service station (the
"station") located on Route 1 South in North
Brunswick, New Jersey (the "Property").
(Defendant's Statement of Undisputed Material Facts
("DSUMF"), ECF No. 48-1 at ¶¶ 1, 2).
Shilpa Sathu is its owner and principal. (Declaration of
Bruce Rosen ("Rosen Decl."), Ex. 6, Deposition of
Shilpa Sathu ("Sathu Dep.") at 13:3 to 11).
Defendant PMG is a Virginia limited liability company with
its principal offices in Woodbridge, Virginia. (DSUMF at
¶ 3). Defendant PMG is in the business of, inter alia,
distributing branded motor fuels (including Shell branded
fuels) to fuel service stations for retail sale. (DSUMF at
¶ 4). Some of the stations to which PMG
distributes branded fuels are operated as franchises, with
PMG serving as the franchisor and a station operator serving
as the franchisee. (Id.; see Rosen Decl., Ex. 13,
Deposition of James Deakin at 7:22 to 8:10).
owns or leases approximately 60 to 80 fuel stations in New
Jersey. (DSUMF at ¶ 5; Rosen Decl., Ex. 1, October 24,
2016 Transcript ("October 24 Transcript") at 10:14
to 19). There are also more than a hundred other stations in
New Jersey to which PMG supplies fuel but does not own or
lease. (Id.). Overall, PMG conducts business at
sites from Delaware to Maine. (DSUMF at ¶ 5; Deakin Dep.
at 7:11 to 12). The majority of the stations owned or leased
by PMG in New Jersey are operated by franchisees. (DSUMF at
¶ 6; Plaintiff's Counter Statement of Undisputed
Material Facts ("PCSUMF") at ¶ 6).
Approximately only 20 to 25 stations in New Jersey are
operated by a commission agent. (October 24 Transcript at
11:11-11:13). Here, PMG is the owner of the property. (DSUMF
at ¶ 7). Plaintiff leases the property from PMG and
operates the station as PMG's franchisee pursuant to the
franchise agreement between them. (Id.).
filed its Verified Complaint on September 19, 2016, (ECF No.
1), and an accompanying Ex Parte Order to Show Cause, (ECF
No. 4). The same day the Verified Complaint was filed, the
Court entered an order scheduling a preliminary injunction
hearing. (ECF No. 7).
parties appeared before this Court on September 29, 2016. In
addition to argument, the Court heard testimony from Sathu
and Kamalpreet Singh (Plaintiff's employee). (ECF No.
16). After the hearing, the Court entered an Order: (1)
granting temporary restraints maintaining the status quo; (2)
enjoining termination of the franchise agreement between
Plaintiff and PMG at least until October 24, 2016; and (3)
scheduling a second hearing for October 24, 2016. (ECF Doc.
parties returned to Court for a second hearing before Judge
Sheridan on October 24, 2016. The Court heard testimony from
Deakin and McGee. At the conclusion of the hearing, the Court
concluded there was "really no dispute, but that PMG has
acted in good faith and has complied with the requirements of
the statute." (Id. at 152:13-15 (emphasis
added)). It is Plaintiff's position that the observations
as set forth in this Transcript were made without the benefit
of full discovery and are no longer supported. (See
PSOF at ¶ 19).
alleges that the rent amounts included in the renewal terms
were excessively high and that PMG proposed the changed rent
amounts in bad faith as part of an effort to retake
possession of the station. (Id. at ¶ 99). PMG
maintains that: (1) the rent amounts included in the proposed
renewal terms were not excessively high and instead simply
reflect actual market value; (2) the rent amounts were
determined according to the same rent calculation process
that PMG employs while setting renewal terms for all of its
properties; (3) the rent amounts provided in the expiring
franchise agreement were set artificially low in response to
severe mismanagement of the station and damage to its value
by a previous franchisee; and (4) that PMG specifically
advised Plaintiff before it assumed the franchise agreement
that the rent at that time was artificially low and would be
increased substantially at the expiration of the franchise
judgment is appropriate under Federal Rule of Civil Procedure
56(c) when the moving party demonstrates that there is no
genuine issue of material fact and the evidence establishes
the moving party's entitlement to judgment as a matter of
law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986). A factual dispute is genuine if a reasonable jury
could return a verdict for the non-movant, and it is material
if, under the substantive law, it would affect the outcome of
the suit. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). In considering a motion for summary
judgment, a district court may not make credibility
determinations or engage in any weighing of the evidence;
instead, the non-moving party's evidence "is to be
believed and all justifiable inferences are to be drawn in
[her] favor." Marino v. Indus. Crating Co., 358
F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477
U.S. at 255).
the moving party has satisfied its initial burden, the party
opposing the motion must establish that a genuine issue as to
a material fact exists. Jersey Cent. Power & Light
Co. v. Lacey Twp., 772 F.2d 1103, 1109 (3d Cir. 1985).
The party opposing the motion for summary judgment cannot
rest on mere allegations and instead must present actual
evidence that creates a genuine issue as to a material fact
for trial. Anderson, 477 U.S. at 248; Siegel
Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125,
1130-31 (3d Cir. 1995). "[Unsupported allegations ...
and pleadings are insufficient to repel summary
judgment." Schoch v. First Fidelity Bancorp.,
912 F.2d 654, 657 (3d Cir. 1990); see also Fed. R.
Civ. P. 56(e) (requiring nonmoving party to "set forth
specific facts showing that there is a genuine issue for
trial"). Moreover, only disputes over facts that might
affect the outcome of the lawsuit under governing law will
preclude the entry of summary judgment. Anderson,
477 U.S. at 247-48. If a court determines, "after
drawing all inferences in favor of [the non-moving party],
and making all credibility determinations in [her]
favor" that no reasonable jury could find for [her],
summary judgment is appropriate. Alevras v.
Tacopina, 226 Fed.Appx. 222, 227 (3d Cir. 2007).
[PMPA] limits the circumstances in which franchisors may
'terminate' a service-station franchise or 'fail
to renew' a franchise relationship." Mac's
Shell Service v. Shell Oil Products Co.,559 U.S. 175,
177 (2010). "[A] franchisee may bring suit in federal
court against any franchisor that fails to comply with the
[PMPA's] restrictions on terminations and nonrenewals.
Successful franchisees can benefit from a wide range of
remedies, including compensatory damages, reasonable