C-Store Owner Injunctive Relief under the Petroleum Marketing Practices Act
By: Christopher P. Parrington, Esq.
In the world of sports, one can often hear the following cliché: “it is important to score early and set the pace of the game.” The same holds true for petroleum lawsuits. Under the Petroleum Marketing Practices Act (“PMPA”), federal legislation provides a tool for the C-Store owners to assist them in setting the pace of litigation with franchisors.
Injunctions under Minnesota law
Minnesota law allows the Courts to restrain a party to a lawsuit (through an injunction) from acting in a certain manner while a suit is pending. Specifically, a Court may grant relief if five factors are shown, the two most important being: (1) the party seeking the injunction is likely to succeed in the case; and (2) the party seeking the injunction will suffer irreparable harm (i.e there is more than money to be lost) if the injunction is denied. These standards make it very difficult to obtain an injunction and often deter parties from seeking relief. In enacting these requirements, Minnesota has intentionally made it very expensive and difficult to obtain an injunction.
Injunctions under the PMPA
Unlike Minnesota law, the PMPA was designed to benefit the small retailer. The PMPA requires that the party seeking an injunction be a franchisee, which the PMPA defines to include most convenience stores. If the franchise is terminated, the PMPA requires courts to grant injunctions if only two factors exist: (1) there exist fair grounds for initiating suit under the PMPA; and (2) the hardship imposed upon the franchisor with an injunction is less than the hardship imposed upon the franchisee without an injunction.
Comparison of injunctions under Minnesota law and the PMPA
The difference between injunctions under Minnesota law and the PMPA is best illustrated by the following example. Gas Station is a retailer of ABC brand gasoline, distributed by ABC Corporation, at a location leased from ABC. Without any notice, ABC unilaterally decides to stop distributing to Gas Station and kicks ABC off the property. Gas Station sues ABC for the recovery of revenue the Gas Station would have received had ABC not terminated the franchise.
After initiating the lawsuit, Gas Station asks the court for an injunction allowing Gas Station back on the property and ordering ABC to continue distributing gasoline to Gas Station while the lawsuit is pending. Under Minnesota law, Gas Station’s request for an injunction would likely be denied for at least one reason - the damages of which Gas Station complains are monetary damages and do not constitute “irreparable harm.” Rather, the Gas Station would be left to incur legal fees to enforce its rights without having any business or other means of generating revenue to pay its legal fees. Essentially, Gas Station would be forced to give up on its lawsuit or accept an unfavorable settlement to avoid the financial burden of the lawsuit.
Under the PMPA, however, Gas Station’s request for an injunction would likely be granted. Under the PMPA, Gas Station would have fair grounds for arguing that its franchise was improperly terminated by ABC. Furthermore, Gas Station would be able to argue that its inability to continue operating its store and generate revenue would impose a greater hardship on Gas Station than the hardship of forcing ABC to continue its relationship as landlord and distributor to Gas Station while the lawsuit is pending. Without having to demonstrate irreparable harm, Gas Station would likely receive an injunction allowing it to operate its business while the lawsuit was pending, thereby forcing ABC to make accommodations if it wants to terminate its relationship with Gas Station. Furthermore, Gas Station would be able to recover its attorneys’ fees incurred during the