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Cecil Fresher Gerald Cochran Don Sorenson Bob Jones Leland Wienke Monte Cooper Jerry Illingworth Bruce Chapman Tom Doll George Schreiner Robert Peck Denny Bird Eddie Attrash Mark Saxe Fresne's Auto Service, Inc. And Dwight Estby v. Shell Oil Company, a Delaware Corporation
Citations: 846 F.2d 45; 1988 U.S. App. LEXIS 5918Docket: 87-3781
Court: Court of Appeals for the Ninth Circuit; May 5, 1988; Federal Appellate Court
Retail dealers of motor fuels in Portland, Oregon, known as the appellants, entered into Dealer Agreements and Motor Fuel Station Leases with Shell Oil Company (the appellee), granting them the right to purchase and resell Shell-branded fuels. The dealers alleged that Shell intended to assign their lease and supply agreements to Pacific Northern Oil Corporation, which they claimed would terminate their franchises and violate the protections of the Petroleum Marketing Practices Act (PMPA). The dealers sought injunctive relief and damages, but both Pacific and Shell moved to dismiss the complaint for failing to state a claim under Federal Rule of Civil Procedure 12(b)(6). The U.S. District Court, led by a magistrate, granted the motions, concluding that the proposed assignments did not constitute a termination under the PMPA. The dealers appealed the dismissal. The Ninth Circuit reviewed the dismissal de novo, emphasizing that allegations must be taken as true and viewed in favor of the nonmoving party. The PMPA establishes federal standards for terminating and renewing franchise relationships in the motor fuel sector, aimed at protecting franchisees from arbitrary termination. A franchise is defined by three components: a contract to use the refiner's trademark, a supply contract, and a lease of the sales premises. The court found that the dealers did not allege any breach of the agreements that constitute their franchises. Any future breach by Pacific could prompt a lawsuit, making the current action premature. Consequently, the dismissal by the district court was affirmed.