In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 01-2495

DERSCH ENERGIES, INC.,

Plaintiff-Appellant,

v.

SHELL OIL COMPANY AND EQUILON ENTERPRISES, INC.,

Defendants-Appellees.

____________

Appeal from the United States District Court 

for the Southern District of Illinois.

No. 99 C 4217—J. Phil Gilbert, Judge.

____________

ARGUED NOVEMBER 30, 2001—DECIDED DECEMBER 26, 2002

____________

Before FLAUM, Chief Judge, and CUDAHY and MANION,

Circuit Judges.

MANION, Circuit Judge. Dersch Energies, Inc. purchases

Shell Oil Company products and resells them to retail

distributors. In December 1997, Dersch began negotiating

with Shell the renewal of their franchise relationship,

which was set to expire in the fall of 1998. Throughout the

negotiation process, Dersch expressed concerns to Shell

about several contract provisions that it deemed objectionable. After ten months of negotiations, Shell (now operating as Equilon Enterprises, L.L.C. due to a merger) informed Dersch that unless it signed the proposed franchise
2 No. 01-2495

agreement within the next few days, Shell/Equilon would

issue a formal notice of nonrenewal of the parties’ franchise

relationship. Dersch signed the new franchise agreement

“under protest,” and, approximately one year later, filed an

action for declaratory relief against Shell and Equilon,

seeking a declaration of the corporation’s rights under the

agreement pursuant to the Petroleum Marketing Practices

Act, 15 U.S.C. §§ 2801-2806. After some procedural wrangling, the parties filed cross-motions for summary judgment. The district court granted the defendants’ motion,

and Dersch filed a timely motion to alter or amend the

judgment, which the court denied. Dersch appeals the district court’s decisions granting the defendants’ motion for

summary judgment and denying its motions for summary

judgment and to alter or amend the judgment. We affirm. 

I.

Dersch Energies, Inc. (“Dersch”) is a family-owned motor

fuel reselling business that has purchased and sold Shellbranded motor fuels for over fifty years. In its role as

middleman, Dersch sells Shell-branded motor fuels in portions of southeastern Illinois and southwestern Indiana. On

average, Dersch purchases over ten million gallons of

Shell-branded motor fuels annually, which it then sells to

service stations and other agricultural, commercial, and

industrial businesses. Since 1951, Dersch has purchased

motor fuels from Shell Oil Co. (“Shell”) pursuant to a series

of supply or “jobber” contracts (drafted by Shell), the last

of which became effective on January 1, 1982, and was to

remain in effect until December 31, 1984 (“1982 Contract”).

The 1982 Contract provided for year-to-year renewals at

the expiration of the initial three-year term, unless terminated by either party within ninety days of the annual renewal date. The parties operated under these annual re-
No. 01-2495 3

1 According to the defendants, “uniform contracts are important

to put all jobbers in a similar position so as to prevent jobbers

from gaining an unfair advantage over other jobbers which could

result if the terms and conditions of each individual contract were

separately negotiated.” The defendants also believe that “the

presence of different terms between various jobbers/wholesalers

might subject [them] to claims of selective application and

discriminatory practices.”

newals until September 1998, when a new franchise agreement was entered into by the parties. 

In 1997, to ensure national uniformity, Shell decided to

revise its existing franchise agreements with jobbers and

wholesalers.1

 In December 1997, Shell sent a new franchise

agreement (“Renewal Agreement”) for Dersch to sign. In the

accompanying correspondence, Shell highlighted the

differences between the Renewal Agreement and the 1982

Contract, and informed Dersch that the 1982 Contract was

set to expire on March 31, 1998. Shell also advised Dersch

that it had until December 22, 1997, to execute the Renewal

Agreement.

On February 25, 1998, Ken Zumdome, Shell’s area manager for Dersch’s territory, sent a facsimile message to John

Dersch, Dersch’s president, and Thomas Dersch, John

Dersch’s son and Dersch’s vice president, advising them

that a “[n]ew jobber contract was sent to you before Christmas. You are the only jobber who has not returned [the

contract]. Every jobber in the country has this new contract

in effect. Please return ASAP.” On March 4, 1998, John

Dersch responded by advising Shell, in writing, that the

1982 Contract was not set to expire until December 1998.

On May 29, 1998, Shell notified Dersch that “Shell wants all

jobbers on their new contract. You are the only jobber not

signed. Our legal [department] says you have the right to
4 No. 01-2495

2 As part of a joint venture agreement between Shell and Texaco,

certain assets of the companies were transferred to Equilon, effective July 1, 1998, including Dersch’s franchise agreement with

Shell. Equilon operates as a major oil company refiner and marketer of both Shell- and Texaco-branded motor fuels.

hold off signing until . . . December 31, 1998. If you do not

return the contract prior to that, your contract with Shell

will terminate.” 

On July 15, 1998, representatives from both parties met to

discuss the terms and conditions of the proposed Renewal

Agreement. During the course of the meeting, Thomas

Dersch voiced concerns over the Renewal Agreement’s: (1)

indemnification provisions; (2) release of claims provisions;

(3) assignment provisions; (4) pricing provision; and (5)

description of Dersch’s new defined territory. He also told

the Shell representatives that he considered the corresponding security and personal guaranty agreements—that

Shell was seeking to require Dersch to execute in conjunction with the Renewal Agreement—to be “onerous.” Two

days after the meeting, Dersch received a facsimile from

Zumdome advising that Shell would not require Dersch to

execute the new security or personal guaranty agreements,

but noting that the Renewal Agreement would now require

an addendum reflecting the fact that Shell had joined with

Texaco, Inc. (“Texaco”) to form Equilon Enterprises, L.L.C.

(“Equilon”) and acknowledging that Equilon would be

Dersch’s new supplier-franchisor under the Renewal

Agreement.2

In mid-August 1998, Dersch received a slightly revised

version of the Renewal Agreement from Shell, along with

a letter that, after mistakenly asserting that the 1982 Contract had expired on August 3, 1998, advised Dersch that

“the appropriate documents must be executed and re-
No. 01-2495 5

3 This was presumably to comport with the ninety-day notice requirement under the 1982 Contract and 15 U.S.C. § 2804’s general

rule that ninety days notice be given before a franchisor terminates a franchise or nonrenews a franchise relationship. See, e.g.,

Brach v. Amoco Oil Co., 677 F.2d 1213, 1217 (7th Cir. 1982).

turned to Shell not later than August 3, 1998.” According to

Dersch, it did not respond to this letter because it believed, based on Shell’s prior correspondence, that it had

until December 31, 1998, to execute the Renewal Agreement. 

On or about September 29, 1998, John Dersch received a

telephone call from Zumdome, informing him that if

Dersch did not sign and forward the Renewal Agreement

to Shell/Equilon in the next two to three days, he was

under instructions to issue an official notice of nonrenewal

of Dersch’s franchise relationship on October 1, 1998, to be

effective January 1, 1999.3

 Zumdome advised Dersch that

the nonrenewal would not be rescinded, and read excerpts

from the notice that had already been prepared by the

companies’ attorneys. Thomas Dersch then requested that

Zumdome send him a copy of the proposed notice of nonrenewal via facsimile. Zumdome complied with this request, faxing Dersch a copy of the proposed notice that

same day. After reviewing the proposed notice of nonrenewal, Dersch executed the Renewal Agreement “under

protest,” and typed the following underneath each of his

signatures or initials: “[d]espite my objections to this agreement, I have been threatened with the loss of my franchise

if I do not sign it at this time. Accordingly, I am signing it

under protest and reserve all rights to challenge it.”

Equilon signed the Renewal Agreement the next day on

September 30, 1998. 
6 No. 01-2495

4 735 ILCS § 5/2-1117(a) provides that “a defendant is severally

liable only and is liable only for that proportion of recoverable

economic and non-economic damages, if any, that the amount of

that defendant’s fault, if any, bears to the aggregate amount of

fault of all other tortfeasors . . . .”

5 Ind. Code § 23-2-2.7-1(3) provides that “[i]t is unlawful for any

franchise agreement entered into between any franchisor and a

franchisee who is either a resident of Indiana or a nonresident

(continued...)

On September 21, 1999, after operating under the Renewal Agreement for almost one year, Dersch filed an

action for declaratory relief, pursuant to 15 U.S.C. § 2805(e)

and 28 U.S.C. § 2201, requesting a declaration of its rights

under the Renewal Agreement pursuant to the Petroleum

Marketing Practices Act (“PMPA”). Specifically, Dersch

sought a declaration that Shell and Equilon (collectively

“Equilon” or the defendants) violated 15 U.S.C. § 2805(f)(1)

by conditioning the renewal of the parties’ franchise relationship on Dersch releasing claims and waiving rights that

it had under both federal and state law. 

In its complaint, Dersch alleged that the defendants, by

threatening to discontinue the parties’ franchise relationship, forced it to release or waive six state law rights, three

of which are at issue on appeal. First, Dersch claimed that

the indemnity provision of the Renewal Agreement, i.e.,

Article 11.1, required it to waive its right to contribution from joint tortfeasors in violation of 735 ILCS § 5/2-

1117(a).4

 Second, Dersch averred that the change of delivery provisions, i.e., Articles 5.1 and 5.4, violated Ind. Code

§ 23-2-2.7-1(3) because they allowed the defendants to

“change the delivery point for product sold to Dersch from

the point of origin (i.e., the fuel terminal) to the destination,

and back, at its option.”5

 Third, Dersch maintained that the
No. 01-2495 7

5 (...continued)

who will be operating a franchise in Indiana to contain [a provision] . . . [a]llowing substantial modification of the franchise

agreement by the franchisor without the consent in writing of the

franchisee.”

joint and several liability provision and the personal

obligations and provisions clause, i.e., Articles 21.2 and

21.3 respectively, subverted the limitations on personal liability for corporate officers and directors under both the

laws of Illinois and Indiana. See, e.g., Davis v. Hass & Hass,

Inc., 694 N.E.2d 588, 590 (Ill. App. Ct. 1998) (holding that

“[a] corporation is a legal entity which exists separate and

distinct from its shareholders, directors and officers.

Accordingly, shareholders, directors and officers are generally not liable for a corporation’s obligations.”) (internal

citations omitted); State of Indiana, Civil Rights Comm’n v.

County Line Park, Inc., 718 N.E.2d 768, 772 (Ind. Ct. App.

1999) (same). These contract provisions will hereinafter be

referred to collectively as the “Disputed Provisions.”

On December 9, 1999, the defendants moved to dismiss

Dersch’s complaint, arguing that there was no actual, justiciable controversy that would permit the district court to

exercise subject matter jurisdiction, and claiming that the

litigation was not ripe because Dersch’s complaint only

raised potential, not actual, violations of § 2805(f)(1). As

such, the defendants asserted that the district court was

being asked to improperly render an advisory opinion. The

district court denied the defendants’ motion to dismiss,

concluding that Dersch’s complaint alleged an actual controversy because “a fair reading of the complaint reveals

that the controversy involves the question of whether

Shell/Equilon’s conduct of conditioning the franchise

renewal on Dersch’s assent to the waiver of rights provi-
8 No. 01-2495

sion violated [the PMPA].” In ruling on the defendants’

motion to dismiss, the district court also noted that

Dersch’s complaint was “not proceeding on diversity

grounds” and that:

To the extent that Dersch is relying on § 2805(f)(1) as an

independent source of jurisdiction, Dersch’s reliance is

misplaced. Section 2805(f)(1) does not provide an independent basis for relief. Instead, § 2805(a) is the PMPA

section that grants a district court jurisdiction . . . [and

it] extends only to situations where there has been a

termination or nonrenewal, actual or constructive . . . .

So to secure relief for a violation of § 2805(f)(1), the

franchisee must couch [its] relief in terms of a violation

of §§ 2802-03.

Dersch subsequently amended its complaint to address

the jurisdictional concerns raised in the district court’s

order, alleging that the defendants’ coerced renewal violated both § 2802 and § 2805(f)(1). Thereafter, the parties

filed cross-motions for summary judgment. Dersch offered

two separate and distinct legal theories in support of its

PMPA claim. Dersch’s primary argument was that the state

law waivers resulted in a constructive nonrenewal of the

parties’ franchise relationship. In the alternative, Dersch

contended that even if the waivers did not constitute a

constructive nonrenewal of its franchise relationship, it was

still authorized to sue the defendants under the PMPA

because § 2805(f)(1) provides franchisees with an implied

private right of action to enforce the statute’s provisions.

The defendants responded by asserting that even if Dersch

could meet the PMPA’s threshold burden of demonstrating

a nonrenewal of its franchise relationship, see 15 U.S.C.

§ 2805(c), it could not prevail on its claim because the Disputed Provisions were offered in good faith and in the

normal course of business pursuant to 15 U.S.C. § 2802(b)
No. 01-2495 9

(3)(A). The defendants also argued that the Disputed Provisions did not, in any event, require Dersch to waive any

rights that it had under federal or state law. Finally, the

defendants noted their agreement with the district

court’s conclusion—in its motion to dismiss order—that

§ 2805(f)(1) was “not an independent source of jurisdiction

for relief under the PMPA.” 

On March 8, 2001, the district court granted the defendants’ motion for summary judgment, and rendered its

judgment that same day. In analyzing Dersch’s claim under

a constructive nonrenewal theory, the court noted that:

Because this case deals entirely with specific provisions

of the [Renewal] Contract, to successfully show a constructive nonrenewal, it appears that Dersch would

have to show (1) that the Defendants failed to reinstate,

continue, or extend the respective motor and [sic] fuel

marketing or distribution obligations and responsibilities of itself and its franchisee under the prior franchise

contract adversely affecting the franchisee and (2) that,

if the complained-of contract provision is substantially

new and not previously agreed-upon, it must adversely

affect Dersch’s obligations and responsibilities under

the franchise . . . . If the franchisee can make its showing, there is one additional step. Under certain circumstances, a franchisor may be justified in nonrenewing

a franchise relationship. A franchisor may nonrenew

the franchise if the franchisor and franchisee fail to

agree to additions to the existing franchise agreement,

provided the franchisor proposes those additions in

good faith, in the normal course of business, and not to

prevent the renewal of the relationship.

The district court then evaluated each of the Disputed

Provisions using this analytical framework. With respect to

the Renewal Agreement’s indemnity and change of de-
10 No. 01-2495

6 A franchisor may nonrenew a franchise relationship if a franchisee refuses “to agree to changes in the franchise arrangement

that result from ‘determinations made by the franchisor in good

faith and in the normal course of business.’ ” Duff v. Marathon

Petroleum Co., 51 F.3d 741, 744 (7th Cir. 1995) (quoting § 2802(b)

(3)(A)).

livery provisions, the district court found that: (1) the

provisions were substantively the same as the provisions on

the same subject matter contained in the 1982 Contract;

and (2) even if these provisions were considered new

terms, they did not run afoul of the PMPA because “[p]roposing an already-agreed-upon provision of the existing

franchise agreement would fulfill Defendants’ showing of

good faith [under § 2802(b)(3)(A)],6

 and there is no contrary

evidence.” For these reasons, the district court held that

Dersch could not demonstrate the constructive nonrenewal

of its franchise relationship vis-a-vis these contract provisions.

The district court also concluded that the defendants’

insistence on Dersch agreeing to the Renewal Agreement’s

joint and several liability provision and personal obligations and provisions clause did not constitute a constructive nonrenewal of the parties’ franchise relationship.

These contract provisions are contained in Article 21 of the

Renewal Agreement and provide as follows:

21. BUSINESS ENTITY OR JOINT BUYER

21.1 General. This article shall apply if Buyer is a

business entity or composed of more than one

person (i.e., any combination of individuals and

business entities).

21.2 Joint and Several Liability. If Buyer is composed

of more than one person, the obligations imposed
No. 01-2495 11

hereunder shall be joint and several as to each

such person, and all such obligations shall be

deemed to apply to each person with the same

effect as though that person were the sole Buyer.

21.3 Personal Obligations and Provisions. If Buyer is a

business entity, all obligations and provisions

hereof of a personal nature shall apply as if such

business entity were an individual, and shall also

apply insofar as is legally possible and reasonably practicable to those individual persons who

have or exercise management responsibility for

such business entity, including without limitation, officers, directors or agents of corporations

and partners of partnerships. The business entity

shall manage its affairs with respect to the personal obligations and provisions in a manner so

as to give full force and effect to same. 

R61, 19.

Dersch argued that Articles 21.2 and 21.3 violated

§ 2805(f)(1), thus constituting a constructive nonrenewal of

its franchise relationship, because the provisions could be

used by the defendants to impose personal liability on John

Dersch and other managers, officers, and directors of the

corporation. The district court rejected this argument, however, concluding that neither provision could serve as a

basis for Dersch’s constructive nonrenewal theory because:

(1) Article 21.2 only applied if the “Buyer” was comprised

of more than “one person,” and the only “Buyer” to the

Renewal Agreement was Dersch, a corporation; and (2) by

its very terms (i.e., “insofar as is legally possible”), Article

21.3 was rendered inapplicable if any purported waiver

contained in that provision violated § 2805(f)(1).
12 No. 01-2495

The district court also rejected Dersch’s argument that

§ 2805(f)(1) provided it with an implied private right of

action to enforce the statute’s provisions, noting “[t]his

Court previously concluded that § 2805(f)(1) only creates

duties under the PMPA and is not an independent source of

jurisdiction . . . . There [is] no indication that Congress

intended to create an implied federal cause of action in

enacting § 2805(f).” The court then held that “if § 2805(f)(1)

does not create an implied cause of action . . . Dersch [can]

only maintain a cause of action under the general PMPA

provision conferring federal question jurisdiction onto federal courts.” 

Dersch filed a timely motion to alter or amend the district

court’s judgment, pursuant to Fed. R. Civ. P. 59(e), which

the court denied. Dersch appeals the district court’s decisions granting the defendants’ motion for summary judgment, and denying its motions for summary judgment and

to alter or amend the judgment.

II.

This court reviews the district court’s grant of summary

judgment de novo, construing all facts in favor of Dersch, the

nonmoving party. Commercial Underwriters Ins. Co. v.

Aires Envtl. Services, Ltd., 259 F.3d 792, 795 (7th Cir. 2001).

Summary judgment is proper when the “pleadings, depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law.” Fed. R.

Civ. P. 56(c). Thus, “[s]ummary judgment is appropriate if,

on the record as a whole, a rational trier of fact could not

find for the non-moving party.” Commercial Underwriters,

259 F.3d at 795. We will reverse the denial of a Rule 59(e)
No. 01-2495 13

7 Congress enacted § 2805(f)(1) as part of the “Petroleum Marketing Practices Act Amendments of 1994,” Pub. L. No. 103-371,

108 Stat. 3484.

motion to alter or amend a judgment only for an abuse of

discretion. Britton v. Swift Transp. Co., Inc., 127 F.3d 616, 618

(7th Cir. 1997).

On appeal, Dersch argues that the district court erred in

granting the defendants’ motion for summary judgment

because the analysis used by the court failed to give any

consideration whatsoever to the substantive requirements

of 15 U.S.C. § 2805(f)(1),7

 which provides that:

No franchisor shall require, as a condition of entering

into or renewing the franchise relationship, a franchisee to release or waive—(A) any right that the franchisee has under this subchapter or other Federal law; or

(B) any right that the franchisee may have under any

valid and applicable State law.

Id.

According to Dersch, the district court’s analysis of

§ 2805(f)(1) was premised on “a misunderstanding of the

basic procedural preconditions” for interpreting the Petroleum Marketing Practices Act (“PMPA” or “Act”), 15

U.S.C. § 2801-2806. Dersch contends that the district court

erred in ruling that § 2805(f)(1) does not provide an implied private right of action to enforce the statute’s provisions. Furthermore, Dersch asserts that even if § 2805(f)(1)

does not contain an implied private right of action, it is still

entitled to maintain a claim under the PMPA because the

Disputed Provisions of the Renewal Agreement, imposed

upon Dersch by the defendants, amount to a constructive

nonrenewal of the parties’ franchise relationship. Thus, at

the very heart of this case is the role § 2805(f)(1) plays
14 No. 01-2495

8 We pause to note “that the absence of a valid (as opposed to

arguable) cause of action does not implicate subject-matter jurisdiction, i.e., the courts’ statutory or constitutional power to

adjudicate the case.” Steel Co. v. Citizens for a Better Env’t, 523 U.S.

83, 89 (1998).

within the rubric of the PMPA. The issues before us—i.e.,

whether § 2805(f)(1) contains an implied private right of

action or may serve as the basis of a constructive nonrenewal claim under the PMPA—are issues of first impression for our circuit. We review questions of statutory construction de novo. Miller Aviation v. Milwaukee County Bd.

of Supervisors, 273 F.3d 722, 728 (7th Cir. 2001).8

A. The Petroleum Marketing Practices Act - 15 U.S.C.

§§ 2801-2806

Before addressing the merits of Dersch’s arguments, it is

necessary to give a brief overview of the scope and structure of the PMPA. The PMPA governs franchise arrangements for the sale, consignment, or distribution of motor

fuel “in commerce,” and protects franchisees from arbitrary

or discriminatory termination or nonrenewal of their motor

fuel franchises. Beachler v. Amoco Oil Co., 112 F.3d 902, 904

(7th Cir. 1997); Beck Oil Co., Inc. v. Texaco Ref. & Mktg., Inc.,

25 F.3d 559, 561 (7th Cir. 1994). Both the text and structure

of the Act indicate that Congress enacted the PMPA to

address the disparity in bargaining power then existing

between franchisors (typically major oil companies) and

franchisees in the petroleum industry, Beck Oil, 25 F.3d at

561, and “to level the playing field on which these parties

interact.” Beachler, 112 F.3d at 904. The PMPA was designed

to accomplish this purpose by providing a single, uniform

set of rules governing the termination of petroleum fran-
No. 01-2495 15

9 The PMPA gives franchisees the right to seek a preliminary

injunction prior to the expiration of the franchise agreement. See

15 U.S.C. § 2805(b)(2)(A)-(B).

chises and nonrenewal of petroleum franchise relationships. See generally 15 U.S.C. §§ 2801-2806. The PMPA prohibits franchisors from terminating a franchise or discontinuing a franchise relationship, 15 U.S.C. § 2802(a), unless

the franchisor does so pursuant to one of the grounds

enumerated in the Act, 15 U.S.C. §§ 2802(b)(2)-(3) or

2803(c), and meets the notification requirements contained

in 15 U.S.C. § 2804. Thus, the PMPA strikes a balance between the rights of franchisors and the rights of franchisees, by affording franchisees important but limited procedural rights, while at the same time providing franchisors

with significant latitude to respond to changing market

conditions. Beachler, 112 F.3d at 904-05; Brach v. Amoco Oil

Co., 677 F.2d 1213, 1220 (7th Cir. 1982).

If a franchisor terminates a franchise or fails to renew a

franchise relationship in accordance with the PMPA, the

franchisee may maintain a civil action under 15 U.S.C.

§ 2805(a) and/or (b). Lippo v. Mobil Oil Corp., 776 F.2d 706,

720 (7th Cir. 1985). In order to prevail, the franchisee must

prove, as a threshold matter, a termination of its franchise

or the nonrenewal of its franchise relationship within the

meaning of the Act. 15 U.S.C. § 2805(c) (“the franchisee

shall have the burden of proving the termination of the

franchise or the nonrenewal of the franchise relationship.”);

Beachler, 112 F.3d at 905 (“It of course is the franchisee’s

initial burden under the PMPA to establish that its franchise has been terminated or not renewed . . . and if it fails

to satisfy that burden, our inquiry is at an end.”).9

 It is only

then that the franchisor has “the burden of going forward

[and] establishing that it is entitled to one of the affirmative
16 No. 01-2495

defenses set forth in the Act [i.e., 15 U.S.C. §§ 2802(b),

2803(c)].” Duff v. Marathon Petroleum Co., 51 F.3d 741, 744

(7th Cir. 1995) (citing § 2805(c)). With the foregoing principles in mind, we now turn to the merits of Dersch’s

lawsuit.

B. Dersch’s 15 U.S.C. § 2805(f)(1) claim

Dersch’s first argument on appeal is that § 2805(f)(1)

provides franchisees with an implied private right of action

to enforce the statute’s provisions. Dersch claims that this

is so because “there is no suggestion in the language or

legislative history of Section 2805(f)(1)” that a franchisee

must demonstrate the nonrenewal of its franchise relationship, pursuant to § 2805(c), before maintaining a suit under

the PMPA for a franchisor’s violation of the statute. While

the plain meaning of § 2805(f)(1)’s text is clearly important,

this statutory subsection must still be construed in its proper

context. Smith v. Zachary, 255 F.3d 446, 448 (7th Cir.

2001), cert. denied, 122 S.Ct. 1207 (2002) (holding that “[t]he

plain meaning rule is applicable when the statutory language is clear, unambiguous, and not controlled by other

parts of the act or other acts on the same subject.”). “A statute is passed as a whole and not in parts or sections and is

animated by one general purpose and intent. Consequently,

each part or section should be construed in connection

with every other part or section so as to produce a harmonious whole. Thus, it is not proper to confine interpretation to

the one section to be construed.” 2A Norman J. Singer,

Sutherland Statutory Construction § 46:05 (6th ed. 2000).

Section 2805(f)(1) is contained in the PMPA’s “enforcement provisions” along with 15 U.S.C. § 2805(a), which is

entitled “maintenance of civil action by franchisee against

franchisor; jurisdiction and venue; time for commencement
No. 01-2495 17

10 Section 2803 applies to trial and interim franchises, and therefore is not at issue in this case.

of action,” id., and delineates all of the statutory requirements for maintaining a cause of action under the PMPA.

See also 15 U.S.C. § 2805(b) (outlining statutory requirements for obtaining equitable relief under the Act). Section

2805(a) provides that “[i]f a franchisor fails to comply with

the requirements of section 2802 or 280310 of this title, the

franchisee may maintain a civil action against such

franchisor . . . .” Id. (emphasis added). See also § 2805(b)(1)

(district courts may grant equitable relief to franchisees,

maintaining an action under § 2805(a), “to remedy the

effects of any failure to comply with the requirements of

section 2802 or 2803 of this title . . . .”) (emphasis added);

accord §§ 2805(c), 2805(d), 2805(e). 

Like the district court, we believe that the existence of an

explicit cause of action in § 2805(a) and (b)—i.e., one based

on a franchisor’s violation of §§ 2802 or 2803—makes it

highly unlikely that Congress absentmindedly forgot to

provide a cause of action for § 2805(f)(1). See Dersch Energies, Inc. v. Shell Oil Co., 2001 WL 1803652, *3 (S.D. Ill. May

15, 2001). It is an elemental canon of statutory construction

that “where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others

into it.” Transamerica Mortgage Advisors, Inc. (TAMA) v.

Lewis, 444 U.S. 11, 19-20 (1979). Thus, “ ‘[w]hen a statute

limits a thing to be done in a particular mode, it includes

the negative of any other mode.’ ” Id. (citation omitted).

Therefore, while the text of § 2805(f)(1) clearly displays an

intent to prohibit certain conduct, the PMPA does not provide franchisees with a distinct and independent remedy

for a franchisor’s violation of this statutory subsection. See

Gonzaga Univ. v. Doe, 122 S.Ct 2268, 2275-76 (2002) (holding
18 No. 01-2495

11 For identical reasons, we reject Dersch’s argument that 28

U.S.C. § 1331 provides it with an independent jurisdictional basis

to maintain an action against the defendants under the PMPA.

that “even where a statute is phrased in such explicit

rights-creating terms, a plaintiff suing under an implied

right of action still must show that the statute manifests an

intent ‘to create not just a private right but also a private

remedy.’ ”). As we recently emphasized in Miller Aviation v.

Milwaukee County Bd. of Supervisors, 273 F.3d 722 (7th Cir.

2001),

A private right of action to enforce federal law must be

created by Congress . . . [I]n evaluating whether a

statute contains a private right of action . . . [t]he judicial task is to interpret the statute Congress has

passed to determine whether it displays an intent to

create not just a private right but also a private remedy.

Statutory intent on this latter point is determinative.

Without it, a cause of action does not exist and courts

may not create one, no matter how desirable that might

be as a policy matter, or how compatible with the statute. “Raising up causes of action where a statute has

not created them may be a proper function for commonlaw courts but not for federal tribunals.” 

Id. at 729-30 (quoting Alexander v. Sandoval, 532 U.S. 275,

286-87 (2001)) (emphasis added).

Because “statutory intent” is “determinative” on the

question of whether Congress intended to create a private

remedy, Miller, 273 F.3d at 730, we conclude that a franchisee may only maintain a civil action under the PMPA for

violations of § 2805(f)(1) if those violations constitute a

nonrenewal of its franchise relationship under § 2802 or

2803.11
No. 01-2495 19

12 The district court also held, with respect to Articles 21.2 and

21.3, that these contract provisions did not require Dersch to

waive any rights that it had under state law. Because we conclude

infra that Dersch cannot succeed on its constructive nonrenewal

claim, even if these contract provisions required it to waive

certain state law rights, we need not address this aspect of the

district court’s holding. For this same reason, we decline to

address the parties’ detailed arguments on whether each of the

Disputed Provisions required Dersch to release or waive state law

rights in violation of § 2805(f)(1)(B).

C. Dersch’s “Constructive” Nonrenewal Claim

This leads us to Dersch’s next claim, that the defendants’

violation of § 2805(f)(1) constitutes a “constructive” nonrenewal of its franchise relationship under § 2802. Dersch

appears to argue that if a franchisor conditions the renewal

of a franchise relationship on the franchisee releasing or

waiving rights that it has under federal or state law, there

has been no renewal of that relationship within the meaning of the PMPA. 

The district court rejected this argument, holding that the

parties’ franchise relationship had been renewed because

the Renewal Agreement was, in substance, identical to the

parties’ prior franchise agreement. The court also held that

even if the Disputed Provisions could be characterized as

changes or additions to the parties’ franchise, i.e., new

contract terms, Dersch would still not be able to prevail on

its claim because “[p]roposing an already-agreed-upon

provision of the existing franchise agreement would fulfill

Defendants’ showing of good faith [under § 2802(b)(3)(A)],

and there is no contrary evidence.”12

On appeal, Dersch takes issue with both of these conclusions. First, Dersch argues that while “it might seem logical

to infer that an offer to renew existing contract terms
20 No. 01-2495

would not amount to a constructive nonrenewal, such an

inference cannot be made when Section 2805(f)(1) is involved.” According to Dersch, a franchisor can violate

§ 2805(f)(1) even if it offers a franchisee an agreement

identical to the one set to expire because § 2805(f)(1)’s

release and waiver prohibition specifically applies when

the parties are “renewing the franchise relationship.”

§ 2805(f)(1) (emphasis added). As such, Dersch contends

that it would render § 2805(f)(1) meaningless if a franchisor

could avoid the statute’s release and waiver prohibition by

simply offering to renew a franchise relationship on terms

and conditions identical to those contained in the parties’

prior franchise agreement. Second, Dersch contends that to

the extent the district court assumed a nonrenewal of the

parties’ franchise relationship and treated the Disputed

Provisions as “new” terms, it erred in holding that the defendants were entitled to use § 2802(b)(3)(A)—which permits franchisors to nonrenew a franchise relationship if the

franchisee refuses to agree to changes or additions made in

good faith and in the normal course of business—to circumvent § 2805(f)(1)’s release and waiver prohibition. In

short, Dersch asserts that the district court’s test for analyzing its constructive nonrenewal claim: (1) “kept it from giving any consideration whatsoever to the substantive

requirements of Section 2805(f)(1),” and (2) permits “franchisors to continue to insist upon the waiver or release of

rights, if they have historically done so.” This approach,

Dersch argues, ends up grandfathering a problem that

Congress sought resolve when it amended the PMPA to

include § 2805(f)(1). 

We agree with Dersch’s argument in some respects. There

is no question that § 2805(f)(1) was enacted to provide

franchisees with a certain amount of protection during the

negotiation process of “entering into or renewing the
No. 01-2495 21

franchise relationship.” Furthermore, like Dersch, we think

that the meaning of § 2805(f)(1)’s text is clear; a franchisor

may not condition the renewal of a franchise relationship

on a franchisee releasing or waiving rights under federal

or state law. As such, a franchisor cannot circumvent

§ 2805(f)(1)’s release and waiver prohibition by offering to

renew the parties’ franchise relationship on terms and

conditions identical to those contained in a prior franchise

agreement, whether the prior agreement was entered into

before or after the enactment of the statute. Nor is a

franchisor permitted to use § 2802(b)(3)(A) to do an end run

around § 2805(f)(1)’s release and waiver prohibition.

However, while we agree with Dersch’s interpretation of

§ 2805(f)(1)’s meaning, this only calls into question the

reasoning of the district court’s decision, not its ultimate

conclusion—that the defendants’ alleged violation of

§ 2805(f)(1) did not result in a constructive nonrenewal of

the parties’ franchise relationship. For the reasons that

follow, we conclude that the district court’s decision must

stand because Dersch’s franchise relationship with the

defendants was renewed within the meaning of the PMPA.

See, e.g., Peele v. Country Mut. Ins. Co., 288 F.3d 319, 332 (7th

Cir. 2002) (holding that “ ‘[a]n appellate court may affirm

the district court’s [decision] on any ground supported by

the Record, even if different from the grounds relied upon

by the district court.’ ”) (citation omitted).

As previously discussed, the PMPA was enacted to

address one narrow, yet crucial, aspect of petroleum franchise relationships—the termination of franchises and the

nonrenewal of franchise relationships. Most of the time, it

is obvious when a termination or nonrenewal has taken

place. There are, however, situations where a franchisor’s

actions will indirectly result in the termination of a franchise or the nonrenewal of a franchise relationship—i.e., an
22 No. 01-2495

13 In fact, Dersch has continued to sell Shell-branded motor fuel

throughout the course of this litigation pursuant to the terms of

the Renewal Agreement.

informal termination or nonrenewal. We recognized this

possibility in Beachler, 112 F.3d at 906, when we held that

the assignment of a franchise will result in a termination or

nonrenewal, within the meaning of the PMPA, if a franchisee demonstrates that the assignment terminated or discontinued any of the “ ‘three statutory components of the franchise agreement,’ which include ‘the contract to use the refiner’s

trademark, the contract for the supply of motor fuel, [and] the

lease of the premises,’ ” id. (citation omitted) (emphasis

added), or that the assignment of the franchise was made in

violation of state law. Id. (“If an assignment is found to be

invalid under state law, it will necessarily result in a

termination of the franchise that is prohibited by the Act.”).

See also Shukla v. B.P. Exploration & Oil, Inc., 115 F.3d 849,

852-54 (11th Cir. 1997); Chestnut Hill Gulf, Inc. v. Cumberland

Farms, Inc., 940 F.2d 744, 750-52 (1st Cir. 1991); Ackley v. Gulf

Oil Corp., 726 F. Supp. 353, 360 (D. Conn.), aff’d mem., 889

F.2d 1280 (2d Cir. 1989); May-Som Gulf, Inc. v. Chevron

U.S.A., Inc., 869 F.2d 917, 922-25 (6th Cir. 1989). 

Dersch, however, makes no attempt to argue that the

“coerced” release or waiver of the aforementioned state law

“rights” compromised or diminished, in any manner

whatsoever, its ability to lease retail premises or sell

branded motor fuel.13 Instead, Dersch argues that the offer

of a franchise renewal on a “take-it-or-leave-it basis,” in

violation of § 2805(f)(1), constitutes a “failure to renew”

under the PMPA, even when a franchisee’s statutory “franchise” has, in fact, been renewed. The interdependence between certain provisions of the PMPA, however, make this

argument untenable.
No. 01-2495 23

The composition of a petroleum franchise is delineated

with precision in the Act’s definitions for “franchise” and

“franchise relationship.” The PMPA defines the term “franchise relationship” as “the respective motor fuel marketing

or distribution obligations and responsibilities of a franchisor and a franchisee which result from the marketing of

motor fuel under a franchise.” 15 U.S.C. § 2801(2) (emphasis

added). The term “franchise” means any contract between

a franchisor, as defined by 15 U.S.C. § 2801(3), and a franchisee, as defined by 15 U.S.C. § 2801(4), under which the

franchisor authorizes or permits the franchisee “to use, in

connection with the sale, consignment, or distribution of

motor fuel, a trademark which is owned or controlled by

such [franchisor] . . . which authorizes or permits such

use.” 15 U.S.C. § 2801(1)(A). A “franchise” covers the

essential contracts between a franchisor and a franchisee—

i.e., contract to use the supplier’s trademark in connection

with retail sales, contract for supply of fuel to be sold

under the trademark, and a lease of premises for the sale of

fuel. 15 U.S.C. § 2801(1). A “franchise relationship” then is

“an entity separate from, but defined by, the ‘franchise,’ or

contractual arrangement existing between the parties.”

Unocal Corp. v. Kaabipour, 177 F.3d 755, 764 n.6 (9th Cir.

1999) (emphasis added). See also Han v. Mobil Oil Corp., 73

F.3d 872, 876 (9th Cir. 1995). Therefore, when a franchisee

alleges that a franchisor has “failed to renew” the parties’

franchise relationship, i.e., “reinstate, continue, or extend

the franchise relationship,” 15 U.S.C. § 2801(14) (emphasis

added), as required by § 2802(a)(2), it must demonstrate

that at least one of the three essential components of a

petroleum franchise has been discontinued. This principle—which is nothing more than a restatement of our holding in Beachler—applies whether a franchisee’s constructive

nonrenewal claim is based on the assignment of its franchise or of a franchisor’s alleged violation of § 2805(f)(1).
24 No. 01-2495

14 See also 15 U.S.C. § 2805(f)(2), which provides that the “interpretation or enforcement” of the “franchise” shall be governed by the

law of the State “in which the franchisee has [its] principal place

of business . . . .” (emphasis added).

Because Dersch does not argue that the defendants’ alleged

violation of § 2805(f)(1) resulted in the nonrenewal of a

lease of retail premises, motor fuel supply contract, or the

contract to use the Shell trademark in connection with

retail sales, it cannot demonstrate the nonrenewal of its

franchise relationship within the meaning of the PMPA.

The central problem with Dersch’s argument, and indeed

with the district court’s reasoning below, is that it presumes

a franchisee can only enforce § 2805(f)(1)’s release and

waiver prohibition in the context of a PMPA claim. While it

is certainly possible for a § 2805(f)(1) violation to result in

the nonrenewal of a franchise relationship, that will not

always be the case. When a franchisor’s violation of

§ 2805(f)(1) does not result in a nonrenewal of the parties’

franchise relationship, a franchisee must resort to remedies

outside of the PMPA to vindicate its rights under the statute. We reach this conclusion for several reasons. To begin

with, as we have repeatedly emphasized, the PMPA is only

designed to regulate a narrow aspect of petroleum franchise

relationships—the termination of franchises and the

nonrenewal of franchise relationships. See generally §§ 2801-

2806. While it is true that § 2805(f)(1) was enacted to address

the disparity of bargaining power existing between

franchisors and franchise outside the termination/ nonrenewal context, i.e., during the negotiation process for

entering into or renewing a franchise relationship,14 there

is nothing in the PMPA suggesting that Congress intended

for franchisees to sue franchisors under the Act’s remedial

provisions for violations of § 2805(f)(1) when a termination
No. 01-2495 25

or nonrenewal is not at issue. As previously explained,

“even where a statute is phrased in such explicit rightscreating terms, a plaintiff suing under an implied right of

action still must show that the statute manifests an intent ‘to

create not just a private right but also a private remedy.’ ” Gonzaga Univ., 122 S.Ct at 2275-76 (citation omitted).

By not amending the PMPA’s remedial provisions to

include a private right of action to enforce § 2805(f)’s provisions, Congress made clear its intent for franchisees to

resort to remedies outside the PMPA context for redress of

violations of the statute when a nonrenewal is not at issue.

This conclusion is further supported by the Act’s preemption clause, which provides that:

To the extent that any provision of this subchapter

applies to the termination (or the furnishing of notification with respect thereto) of any franchise, or to the

nonrenewal (or the furnishing of notification with respect thereto) of any franchise relationship, no State or

any political subdivision thereof may adopt, enforce, or

continue in effect any provision of any law or regulation (including any remedy or penalty applicable to

any violation thereof) with respect to termination (or the

furnishing of notification with respect thereto) of any

such franchise or to the nonrenewal (or the furnishing of

notification with respect thereto) of any such franchise

relationship unless such provision of such law or regulation is the same as the applicable provision of this

subchapter.

15 U.S.C. § 2806(a)(1) (emphasis added).

By specifying with such precision when the States must

stand aside in favor of federal regulation, Congress implicitly marked the outer bounds of the power it intended to
26 No. 01-2495

15 This is an application of the familiar canon of statutory construction expressio unius est exclusio alterius, which provides that

“to express or include the one thing implies the exclusion of the

other . . . .” Black’s Law Dictionary 602 (7th ed. 1999). See also

Freightliner Corp. v. Myrick, 514 U.S. 280, 288 (1995).

exercise.15 Geib v. Amoco Oil Co., 29 F.3d 1050, 1058 (6th Cir.

1994); Continental Enterprises, Inc. v. Am. Oil Co., 808 F.2d 24,

27 (8th Cir. 1986); Esso Standard Oil Co. v. Dept. of

Consumer Affairs, 793 F.2d 431, 434 (1st Cir. 1986). Beyond

those limits, “state regulation may claim full federal approbation.” Continental Enterprises, 808 F.2d at 27. See also Esso,

793 F.2d at 434 (holding that Congress, by enacting § 2806,

did not intend “ ‘to preempt all state provisions involving the substantive aspects of petroleum-products franchises.’ ”) (citation omitted). 

It is also important to keep in mind that the regulation of

petroleum franchise relationships has traditionally been a

matter of local concern in which the parties frame their

relationships with reference to State law. Hanes v. MidAmerica Petroleum, Inc., 577 F. Supp. 637, 644 (W.D. Mo.

1983). Cf. § 2805(f)(2); Lippo, 776 F.2d at 712 (holding that

petroleum franchise agreements are interpreted according

to state contract law); Brach, 677 F.2d 1217-18 (same). Congress enacted the PMPA to federalize the standards by

which petroleum franchises are terminated and petroleum

franchise relationships are nonrenewed, not to create a

federal common law for governing petroleum franchise

agreements. O’Shea v. Amoco Oil Co., 886 F.2d 584, 593 (3d

Cir. 1989). In other words, the PMPA was not designed to

provide franchisees with a federal forum for the resolution

of run-of-the-mill contract disputes like those at issue in this

case. Without termination or nonrenewal, Dersch has

no claim under the PMPA. Dersch is, however, entitled
No. 01-2495 27

to bring a state law claim to enforce its rights under

§ 2805(f)(1), such as economic duress. See, e.g., Hurd v.

Wildman, Harrold, Allen & Dixon, 707 N.E.2d 609, 614 (Ill.

App. Ct. 1999) (holding that “[e]conomic duress is a condition where one is induced by a wrongful act or threat of

another to make a contract under circumstances that

deprive one of the exercise of one’s own free will.”). In any

event, whether the Disputed Provisions are voidable under

state law is not a question that can be resolved under the

remedial provisions of the PMPA.

We, therefore, conclude that if a franchisor impermissibly

conditions the renewal of a petroleum franchise relationship

on the relinquishment of any right that a franchisee has

under federal or state law, and the coerced relinquishment of that right does not result in a nonrenewal of the

parties’ franchise relationship, the franchisee must resort

to remedies outside of the PMPA context to enforce

§ 2805(f)(1)’s release and waiver prohibition—primarily, if

not exclusively, through state law remedies. Section

2805(f)(1)’s release and waiver prohibition then, in this

case, provides Dersch with a claim under state law to challenge the validity of the Disputed Provisions. This is certainly not unusual given the structure of our federalist

system of government. As we noted in Spearman v. Exxon

Coal USA, Inc., 16 F.3d 722 (7th Cir. 1994), “[m]any federal

rules serve as the jumping-off point for state claims without

converting these into claims under federal law.” Id. at

725. See also Seinfeld v. Austen, 39 F.3d 761, 764 (7th Cir.

1994) (noting that state law actions are ofttimes premised

on a violation of federal law).

In reaching this determination, we are by no means suggesting that § 2805(f)(1) only operates at the state level. On

the contrary, if a franchisor impermissibly conditions the

renewal of a franchise relationship on the franchisee releas-
28 No. 01-2495

16 Section 2805(b)(2) provides that a district is required to issue a

preliminary injunction if:

(A) the franchisee shows—

(i) the franchise of which he is a party has been terminated

or the franchise relationship of which he is a party has not

been renewed, and

(ii) there exist sufficiently serious questions going to the

merits to make such questions a fair ground for litigation;

and

(B) the court determines that, on balance, the hardships imposed upon the franchisor by the issuance of such preliminary injunctive relief will be less than the hardship which

would be imposed upon such franchisee if such preliminary

injunctive relief were not granted.

(continued...)

ing or waiving federal or state law rights, and the franchisee’s refusal to agree to this conditional renewal results in

the nonrenewal of that relationship, the franchisor’s violation of § 2805(f)(1) may be examined in conjunction with

the franchisee’s claim for the nonrenewal of its franchise

relationship. See, e.g., Carter v. Exxon Co. U.S.A., a Div. of

Exxon Corp., 177 F.3d 197, 200-03 (3d Cir. 1999); Riverdale

Enterprises, Inc. v. Shell Oil Co., 41 F. Supp. 2d 56, 64-67 (D.

Mass. 1999). See also Korangy v. Mobil Oil Corp., 84 F. Supp.

2d 660, 666-67 (D. Md. 2000).

Moreover, the PMPA requires franchisors to provide

franchisees with a formal notice of termination or nonrenewal, which, in most cases, must be given 90 days in

advance. 15 U.S.C. § 2804. During this 90-day period, a

franchisee may, and often does, seek injunctive relief to

prevent the franchisor from terminating its franchise or

nonrenewing its franchise relationship under the lenient

standard provided by the Act in 15 U.S.C. § 2805(b)(2).16
No. 01-2495 29

16 (...continued)

Thus, once the franchisee establishes a termination or nonrenewal, it need only prove “a reasonable chance of success on the

merits” of its claim of a PMPA violation and that the balance of

hardships tips in its favor. Beachler, 112 F.3d at 905. Additionally,

the franchisee need not establish that it would be irreparably

harmed in the absence of an injunction. Id.

Beachler, 112 F.3d at 905 (noting that a “franchisee is entitled

to a preliminary injunction under the Act based upon a

lesser showing than would be required in the ordinary case

under Fed. R. Civ. P. 65.”). Because “[d]istrict courts . . .

enjoy broad discretion in fashioning temporary equitable

remedies, especially under the PMPA’s lenient standard,”

Koylum v. Peksen Realty Corp., 272 F.3d 138, 147 (2d Cir.

2001), a district court has the power to preserve the status

quo between the parties during the pendency of the litigation (i.e., the existing terms of the franchise relationship). Id.

In this respect, the PMPA protects franchisees not only from

arbitrary and discriminatory termination or nonrenewal, but

also from the harmful effects of threatened termination or

nonrenewal. See, e.g., Shell v. Shell Oil Co., 216 F. Supp. 2d

634, 639-40 (S.D. Tex. 2002).

Thus, Dersch’s assertion that it was forced to execute the

Renewal Agreement rings hollow. As one court recently

noted, “[b]ecause a franchisor cannot terminate without

providing the requisite notice, threats of termination unaccompanied by explicit notice pursuant to § 2804 have no

teeth.” Shell Oil Co., 216 F. Supp. 2d at 640. Once the § 2804

notice is issued, the franchisee may immediately avail itself

of the protections afforded by § 2805, id., and therefore

Dersch was not in the “Catch-22” envisioned by the dissent—i.e., either waiving its legal rights under § 2805(f)(1)

or committing “economic suicide” by allowing its gasoline
30 No. 01-2495

supply to be terminated. A district court within our circuit

recently made this same observation, noting:

[A] franchisee [need not] go out of business in order to

obtain relief from improper nonrenewal. A franchisee

presented with a renewal agreement so coercive that it

suggests that the franchisor’s ulterior motive is to prevent renewal can refuse the agreement. If the franchisor is unwilling to renew, it must notify the franchisee of nonrenewal ninety days before the nonrenewal

is to take effect. 15 U.S.C. § 2804(a). During this ninetyday interim, the franchisee may seek a preliminary injunction to prevent enforcement of the nonrenewal.

Under the protection of an injunction, the franchisee

can continue operating its business on the terms of the

previous agreement while the merits of its action

against the franchisor are resolved. The availability of

injunctive relief ensures that a franchisee need not go

out of business before seeking relief from improper

nonrenewal. 

Jet, Inc. v. Shell Oil Co., 2002 WL 31641627, *4 (N.D. Ill. November 22, 2002). See also Beachler, 112 F.3d at 905 (holding

that “Congress’ remedial purpose in enacting the PMPA is

reflected in the provision providing for preliminary injunctive relief.”).

The dissent claims that in making this point we have

contradicted the crux of our holding—i.e., that a franchisee

cannot maintain a claim for a § 2805(f)(1) violation unless

it results in the nonrenewal of the franchise relationship—

because:

In effect, the majority is saying that, in a § 2805(f)(1)

case like the one before us, the statutory notice of

nonrenewal is the precise equivalent of nonrenewal itself and may be treated as nonrenewal for purposes of
No. 01-2495 31

maintaining suit. This position, of course, recognizes

the validity of constructive nonrenewal, a concept that

the majority opinion has otherwise attempted thoroughly to demolish.

Dissent at 42.

In one respect, the dissent is correct: a franchisor’s issuance of a notice of nonrenewal is the precise equivalent of a

nonrenewal. Lippo, 776 F.2d at 720 (noting that “[i]n an

action brought under section 2805(a) the franchisee has the

burden of proving termination [or nonrenewal] of the franchise. (This must really mean attempted termination [or nonrenewal] if the injunctive relief is to be of any use.)”) (emphasis

added); Jet, Inc., 2002 WL 31641627 at *5 (holding that “[b]y

lowering the required showing [under § 2805(b)(2)], the

Act’s remedial scheme prevents nonrenewal from taking

place until a franchisee’s case can be heard on the merits.”).

The dissent is also correct when it asserts that a franchisee

is not precluded from seeking relief under the PMPA merely

because the franchisor failed to issue a formal notice of

nonrenewal. Dissent at 45. Neither of these observations,

however, supports the dissent’s overall argument, which is

premised on an overly expansive definition of “constructive

nonrenewal.”

According to the dissent, “[c]onstructive nonrenewal

merely means treating something which is literally or in fact

not nonrenewal as actual nonrenewal for purposes of

litigation.” Dissent at 42. This definition of constructive

nonrenewal, however, cannot be reconciled with this

court’s holding in Beachler or § 2805(c)’s requirement that

franchisee must, as a threshold matter, demonstrate the

nonrenewal of its franchise relationship. Furthermore,

contrary to the dissent’s repeated assertions, we do not

reject the constructive nonrenewal approach accepted by the

vast majority of our sister circuits. Our opinion specifically
32 No. 01-2495

17 The “constructive” label, however, can be confusing. This characterization does not mean that a franchisee can maintain a

PMPA claim based on franchise policy disagreements. In the

context of the PMPA, constructive means “not directly expressed,

but inferred,” The Compact Oxford English Dictionary 322 (2d ed.

1989), i.e., an indirect or informal termination or nonrenewal. See

Beachler, 112 F.3d at 906.

recognizes that a franchisee may bring a cause of action

under the PMPA when a franchisor’s actions result in the

loss of one of the three statutory components comprising a

“franchise” under the Act—i.e., lease of retail premises,

motor fuel supply contract, or the contract to use the

franchisor’s trademark. In such cases, this circuit and

several of our sister circuits have held that a franchisee may

maintain an action under § 2802 for the nonrenewal of its

franchise relationship; an action which is commonly

referred to as a claim for “constructive nonrenewal.”17

Beachler, 112 F.3d at 906; Shukla v. B.P. Exploration & Oil, Inc.,

115 F.3d 849, 852-54 (11th Cir. 1997); Chestnut Hill Gulf, Inc.

v. Cumberland Farms, Inc., 940 F.2d 744, 750-52 (1st Cir. 1991);

Ackley v. Gulf Oil Corp., 726 F. Supp. 353, 360 (D. Conn.), aff’d

mem., 889 F.2d 1280 (2d Cir. 1989); May-Som Gulf, Inc. v.

Chevron U.S.A., Inc., 869 F.2d 917, 922-25 (6th Cir. 1989).

What we do reject is the constructive nonrenewal theory

advanced by the dissent, which, to our knowledge, has only

been endorsed by the Ninth Circuit. See Pro Sales, Inc. v.

Texaco, U.S.A., 792 F.2d 1394, 1399 (9th Cir. 1986). In Pro

Sales, the court held that “a franchisee who signs a successor contract under protest and promptly seeks to invoke its

rights under the PMPA . . . has not ‘renewed’ the franchise

relationship so as to bar relief under the PMPA.” Id. at

1399. There are several problems, however, with the dis-
No. 01-2495 33

18 Indeed, one of the arguments made by the franchisee in Pro

Sales was that “its continuation of the franchise relationship only

under the terms of the TRO, and not under the terms of either

successor contract . . . bears on whether its actions constitute[d]

[a] nonrenewal.” Pro Sales, 792 F.2d at 1399 n.6.

sent’s reliance on Pro Sales. To begin with, Dersch did not

“promptly seek to invoke its rights under the PMPA.” In

Pro Sales, the franchisee signed the contested franchise

agreement and, at the same time, filed suit under the

PMPA. 792 F.2d at 1396. The franchisee also moved for,

and was granted, a temporary restraining order continuing

the terms of the old franchise agreement. Id. Here, in

contrast, Dersch signed the Renewal Agreement and

operated under the terms of that agreement for just under

a year before filing suit.18 Thus, even were we inclined to

consider applying the reasoning of Pro Sales in this case,

Dersch has met only the first prong of the test articulated

in that opinion—i.e., signing the agreement “under protest.” See Shell Oil Co., 216 F. Supp. 2d at 642 (noting “that

there is no allegation in this case that any Plaintiff accepted

the renewal agreements under protest while simultaneously bringing suit, as was the case in Pro Sales.”).

Even more problematic, however, is the fact that the Pro

Sales court completely disregards the statutory protection

afforded to franchisees who receive a formal notice of

termination or nonrenewal under the PMPA. As previously

noted, once a franchisor issues a formal notice of nonrenewal, a franchisee may immediately seek injunctive relief

under § 2805(b)(2). The Pro Sales court, however, ignored

a franchisee’s ability to obtain an injunction under the

PMPA, and relied exclusively on the legislative history of

the Act in support of its holding. 792 F.2d at 1399 (noting
34 No. 01-2495

that “[t]he legislative history of the Act reflects a number

of specific concerns . . . [one of those being] that franchisee

independence may be undermined by the use of actual or

threatened termination or nonrenewal . . . .”). We have

held, however, that “[l]egislative history is problematic

under the best circumstances, and even so reliable a source

as the Conference Committee Report may be used only

when there is a genuine ambiguity in the statute.” Board of

Trade of City of Chicago v. S.E.C., 187 F.3d 713, 720 (7th Cir.

1999). By enacting § 2805(b)(2), Congress clearly indicated

the means by which it would protect franchisees from being

coerced into signing a new franchise agreement against their

will. NSY, Inc. v. Sunoco, Inc., 218 F. Supp. 2d 708, 712

(E.D. Pa. 2002) (noting that “[t]he PMPA gives the franchisee a cause of action against the franchisor for violations of

the Act’s provisions, including the right to seek a preliminary injunction prior to the expiration of the franchise

agreement.”). 

Moreover, given the lenient standard for obtaining injunctive relief under the PMPA, we do not accept the Ninth

Circuit’s assertion in Pro Sales—echoed by the dissent in

this case—that franchisees would be forced to go out of

business before invoking the protections of the Act unless

they are permitted to sign renewal agreements under

protest. 792 F.2d at 1399. If a franchisee is able to demonstrate that the franchisor’s attempted termination or nonrenewal violates the PMPA, the district court is required to

issue an injunction to protect the franchisee’s economic

interests during the pendency of the case. If, on the other

hand, a franchisee (like Dersch) cannot make such a showing because its statutory “franchise” has been renewed,

that franchisee must seek redress at the state level to enforce its contract rights under the franchise agreement—

i.e., violations of § 2805(f)(1) that do not constitute a non-
No. 01-2495 35

19 In Pro Sales, the court seems to endorse the concept that a

franchisee may forego the requirements of § 2805(b)(2) and

simply issue itself a de facto injunction by signing an agreement

under protest because the franchisee’s ability to continue in business under the terms of an “illegal” contract is within its control,

792 F.2d at 1399 n.7, whereas the issuance of an injunction is

“uniquely within the power of the district court to grant . . . .” Id.

To follow such an approach, however, would result in this court

substituting its judgment for that of Congress. That, of course, is

not a proper function of the judiciary, United States v. McKinney,

98 F.3d 974, 979 (7th Cir. 1996), and we therefore find this aspect

of the Pro Sales court’s reasoning unpersuasive.

20 As previously noted, a formal notice of nonrenewal is not

necessarily a prerequisite to filing suit under the PMPA. The

significance of the notice is that it formally expresses the franchisor’s intent to discontinue the parties’ franchise relationship

(within 90 days), and therefore constitutes a “nonrenewal” for

purposes of § 2805(c). Thus, if the actions of a franchisor indirectly result in a termination or nonrenewal (e.g., an assignment

of the franchise), and no notice is issued in conjunction with that

action, the franchisee is clearly not precluded from filing suit

(continued...)

renewal under the PMPA but are instead ordinary contract

disputes.19

Here, Dersch’s actions dictated its fate. Had Dersch allowed the defendants to issue a formal notice of nonrenewal, its dispute with the defendants would have been

transformed from a mere contract dispute into a nonrenewal (within 90 days) of its franchise relationship—thus

allowing it to meet its burden under § 2805(c) and maintain

suit against the defendants via § 2805(a)-(b). However, by

signing the renewal agreement, and thus renewing its

statutory “franchise,” Dersch divested itself of the right to

bring an action under the PMPA.20 Although federal courts
36 No. 01-2495

20 (...continued)

under the PMPA, even in the absence of such notice. Beachler, 112

F.3d at 903-04. The central inquiry in both instances is whether

the franchisor has terminated the franchisee’s statutory franchise

or failed to renew the parties’ franchise relationship, or formally

expressed its intent to do so.

are required to grant the PMPA “a liberal construction

consistent with is overriding purpose to protect franchisees,” Brach, 677 F.2d at 1221, we are not empowered “to

take liberties with the PMPA’s carefully stated provisions

and reengineer the statute in the name of rough justice.”

C.K. Smith & Co., Inc. v. Motiva Enterprises LLC., 269 F.3d 70,

76 (1st Cir. 2001). See also Shell Oil Co., 216 F. Supp. 2d at 641

(holding “[t]his Court does not have license to read a

remedy into a statute that Congress did not enact. Section

2804 and 2805 provide adequate remedies for aggrieved

dealers consistent with the balancing of interests the PMPA

drafters intended to achieve.”) (internal citation omitted).

After all, the PMPA “constituted a diminution of the

property rights of franchisors and thus should not be

interpreted to reach beyond its original language and

purpose.” May-Som Gulf, 869 F.2d at 921.

In this case, Dersch chose to renew its franchise relationship with the defendants—thus reaping the benefits of

renewal (i.e., the continued supply of branded gasoline)—

but objected to contract provisions that it deemed to be

violative of § 2805(f)(1). While the Disputed Provisions

may indeed violate § 2805(f)(1), they clearly have no impact

on Dersch’s statutory “franchise.” As such, Dersch is precluded from using the remedial provisions of the PMPA to

sue the defendants for a “constructive nonrenewal” of its

franchise relationship when all of the essential statutory

components of its PMPA franchise remain intact. Beachler,

112 F.3d at 906. Therefore, to the extent that Dersch con-
No. 01-2495 37

tends that the defendants have failed to renew the parties’

franchise relationship because they violated § 2805(f)(1), it

has failed to state a claim upon which relief can be granted

under the Act.

III.

Section 2805(f)(1) does not provide franchisees with an

implied private right of action for a franchisor’s violation of

its provisions. Furthermore, the defendants’ alleged violation of § 2805(f)(1) does not constitute a nonrenewal of

the parties’ franchise relationship within the meaning

of the PMPA. We, therefore, AFFIRM the district court’s

judgment granting the defendants summary judgment of

Dersch’s PMPA claim and denying Dersch’s motion for

summary judgment, as well as the court’s order denying

Dersch’s motion to alter or amend its judgment, for the

reasons stated in this opinion. 

CUDAHY, Circuit Judge, dissenting.

I.

The question that remains after studying the opinion of

the district court and that of the majority (which affirms

the district court by applying a different analysis) is obvious: what possible purpose could Congress have had in

amending the PMPA in 1994 to add § 2805(f)(1)? Although
38 No. 01-2495

the district court set out to provide some sort of substance

for this admittedly remedial piece of federal legislation, its

efforts were, in the end, about as fruitless as those of the

majority, which virtually writes § 2805(f)(1) out of the

United States Code. The majority can only speculate that

the section was intended to give some unspecified heft to

some unspecified state remedy—thereby completely departing from the broader aim of remedying gross disparities in franchisor-franchisee bargaining power and providing regulatory uniformity on a national basis. See Beachler

v. Amoco Oil Co., 112 F.3d 902, 904 (7th Cir. 1997). The

only state law claim mentioned is economic duress—a

notably slippery cause of action even if marginally fortified

by § 2805(f)(1). Maj. Op. at 27. The majority is quite frank in

conceding that in its view a federal claim under § 2805(f)(1)

can be recognized only if the franchisee is willing to commit

economic suicide by allowing its gasoline supply to be

terminated. 

A.

The district court attempted to avoid such a harsh result

by tentatively allowing recovery on a theory of constructive

nonrenewal. Such a theory has been clearly recognized

in some circuits, see, e.g., Pro Sales, Inc. v. Texaco, USA, 792

F.2d 1394, 1399 (9th Cir. 1986) (“[A] franchisee who signs

a successor contract under protest and promptly seeks to

invoke its rights under the PMPA . . . has not ‘renewed’ the

franchise relationship so as to bar relief under the

PMPA.”), and finds support in dicta in the Seventh Circuit,

see Boyers v. Texaco Refining & Marketing, Inc., 848 F.2d 809,

813 n.4 (7th Cir. 1988) (“Our decision that Boyers has

waived his right to raise the ‘constructive nonrenewal’

argument on appeal should not affect his ability to pursue

this theory on his main claim if the facts supporting

this theory are laid out sufficiently in Boyers’s Second
No. 01-2495 39

Amended Complaint.”). This theory treats a renewal

achieved by threats of termination in the same way as a

literal nonrenewal. However, in exploring this promising

approach, the district court was led astray into treating

§ 2805(f)(1) as applicable only to prospective contract

provisions and not to those provisions contained in earlier

franchise agreements. Thus, the district court’s constructive

nonrenewal analysis, although initially encouraging, is

almost as thorough in erasing § 2805(f)(1) from the federal

code as is the route taken by the majority. 

The majority opinion, even though it rejects the constructive nonrenewal approach, disapproves of the analysis

applied by the district court in draining § 2805(f)(l) of substance after that court has applied a constructive nonrenewal theory. The majority “agree[s] with Dersch’s arguments in some respects” that the district court’s application

of the constructive nonrenewal theory “ ‘kept it from giving

any consideration whatsoever to the substantive requirements of Section 2805(f)(l)’ ” and “permits ‘franchisors to

continue to insist upon the waiver or release of rights, if

they have historically done so.’ ” Maj. Op. at 20-21 (quoting

Appellant’s Br. at 14, 20, 21). In other words, the district court erred in holding that only new provisions of a

franchise agreement could invoke the prohibition of

§ 2805(f)(l). The majority goes on to say:

[W]e think that the meaning of § 2805(f)(l)’s text is

clear; a franchisor may not condition the renewal of a

franchise relationship on a franchisee releasing or

waiving rights under federal or state law. As such, a

franchisor cannot circumvent § 2805(f)(l)’s release and

waiver prohibition by offering to renew the parties’

franchise relationship on terms and conditions identical

to those contained in a prior franchise agreement,

whether the prior agreement was entered into before or
40 No. 01-2495

after enactment of the statute. Nor is a franchisor

permitted to use § 2802(b)(3)(A) [the good faith proviso] to do an end run around § 2805(f)(l)’s release and

waiver prohibition.

Maj. Op. at 21. 

I could not agree more fully with these observations of

the majority that reject the district court’s application of

§ 2805(f)(1)’s prohibition only to new contract terms and

that court’s invocation of the good faith justification of

§ 2802(b)(3)(A) to validate the Disputed Provisions that

have been contained in past agreements. As a matter of

law, terms that violate § 2805(f)(1) cannot qualify as good

faith proposals. How can one in good faith insist on the

inclusion in the agreement of terms forbidden by statute?

See, e.g., Coast Village, Inc. v. Equilon Enterprises, LLC, 163 F.

Supp. 2d 1136, 1178 (C.D. Cal. 2001) (“Notwithstanding

Plaintiffs’ failure to rebut the evidence presented by Defendant of its good faith development of the provisions in

the new agreement(s) . . . several provisions of the new

agreement(s) require waiver of rights protected by state or

federal law, and therefore agreement thereto cannot be

required to effect renewal of Plaintiffs’ franchises.”); Riverdale Enterprises, Inc. v. Shell Oil Co., 41 F. Supp. 2d 56, 67 (D.

Mass. 1999).

To confine the prohibition of § 2805(f)(1) to new terms, or

only to changes in terms, is a construction that simply finds

no support in the text of § 2805(f)(1). See Maj. Op. at 21.

And to rely on § 2802(b)(3)(A), which permits franchisors

to nonrenew a franchise agreement relationship if the franchisee refuses to agree to changes and additions made in

good faith in the normal course of business, is to indulge

the contradiction that unlawful terms can somehow be offered in good faith and in the normal course of business.
No. 01-2495 41

1 The reader, seeing the majority opinion and dissent simultaneously as parts of a single text, may find the interplay of the various arguments and counter-arguments both muddled and

contradictory, since they have been composed progressively, one

after another, and are found in layers like the sedimentary strata

of the fossil record. I have tried to provide some sense of where

in the temporal evolution of this dissent particular comments

belong, but I recognize the extreme difficulty of keeping things in

coherent order.

See Coast Village, Inc., 163 F. Supp. 2d at 1178; Riverdale

Enterprises, Inc., 41 F. Supp. 2d at 67.

Therefore, while I agree with the district court in following Pro Sales, Inc., supra, to find a basis for this lawsuit

through a constructive nonrenewal analysis, I cannot agree

that that approach can be thwarted, as it was by the district

court, by restricting it only to new terms or to changes in

terms, or by employing the good faith proviso to trump

§ 2805(f)(1). I would pursue, as a preferred option, a

constructive nonrenewal analysis, but in that context would

apply § 2805(f)(1) to the Disputed Provisions here even

though they have been included in past agreements.

Further, I would not permit § 2802(b)(3)(A) [the good faith

proviso] to override the prohibition of § 2805(f)(1). 

B.

The points which the majority attempted to make in its

first response1

 to the observations of the dissent are remarkable, but far from convincing. Citing the provisions of

the PMPA for 90 days’ formal notice of nonrenewal, together with the associated provisions for preliminary

injunctive relief, the majority has contradicted most of

what it carefully attempted to demonstrate in the earlier
42 No. 01-2495

part of its opinion. Thus, the majority has gone to great

lengths to establish that there can be no federal claim based

on § 2805(f)(l) unless there has been an actual termination

or nonrenewal of a franchise. The majority says that, “if a

franchise impermissively conditions the renewal of a

franchise relationship on the franchisee releasing or waiving federal or state law rights, and the franchisee’s refusal to

agree to this conditional renewal results in the nonrenewal of

that relationship, the franchisor’s violation of § 2805(f)(l)

may be examined in conjunction with the franchisee’s

claim for the nonrenewal of its franchise relationship.” Maj.

Op. at 27-28 (emphasis added). Nothing could be clearer

than this. And, of course, it is the basis of my observation,

to which the majority now objects, that the franchisee must

either waive its rights under § 2805(f)(l) or commit economic suicide by allowing its gasoline supply to be cut

(through nonrenewal of the franchise). 

The majority, also in its first response to my dissent,

points to provisions for a notice of nonrenewal and for

associated preliminary injunctive relief as affording an

escape from the “Catch-22” which I have outlined. 15 U.S.C.

§ 2805(b)(2). In effect, the majority is saying that, in a §

2805(f)(1) case like the one before us, the statutory notice of

nonrenewal is the precise equivalent of nonrenewal itself

and may be treated as nonrenewal for purposes of maintaining suit. This position, of course, recognizes the validity

of constructive nonrenewal, a concept that the majority

opinion has otherwise attempted thoroughly to demolish.

Constructive nonrenewal merely means treating something

which is literally or in fact not nonrenewal as actual nonrenewal for purposes of litigation. A substantial part of the

majority opinion is dedicated to showing the error of con-
No. 01-2495 43

2 Thus, the majority states, “When a franchisor’s violation of

§ 2805(f)(1) does not result in a nonrenewal of the parties’ franchise relationship, a franchisee must resort to remedies outside of

the PMPA to vindicate its rights under the statute.” Maj. Op. at

24.

3 Now, I look at what I hope (as I compose this chronologicallylast footnote) is the final version of the majority and dissenting

opinions. I see that in the course of numerous passages back and

forth of drafts of these opinions between the majority and me

(and the revisions consequent to these passages) the majority

opinion seems to have evolved from emphatic disapproval of a

theory of constructive nonrenewal to an embrace of that approach. The majority in effect now says that Dersch made only a

procedural error. Had this small gasoline distributor merely

waited for a formal notice of termination instead of signing the

franchise agreement under protest, he would have been free to

litigate his rights under § 2805(f)(l) to his heart’s content.

This is a procedural possibility not mentioned by either of the

parties or by the district court nor, as far as I am aware, by anyone else in connection with the enforcement of rights under

§ 2805(f)(l). I am not prepared to say that constructive nonrenewal as outlined by the majority does not exist, but the

majority’s route is certainly not expressly provided in the words

of the statute. There is nothing to indicate a preference by

Congress for the solution proposed by the majority to the path

outlined in Pro Sales and open to Dersch here.

However, the important thing to me is not the procedural

formalities (not) observed by Dersch, but rather the possibility of

(continued...)

structive nonrenewal,2 yet, in response to the dissent, the

majority argues that the statutory notice of nonrenewal

really amounts to actual nonrenewal for purposes of sustaining a lawsuit based on § 2805(f)(1). This is a convenient

contradiction that simply will not hold water.3

 The majority
44 No. 01-2495

3 (...continued)

maintaining suit without suffering a loss of fuel supply. My

position here is that Dersch should not be deprived of this

opportunity in the case before us, whether or not there was some

other procedure that might have provided a similar opportunity.

As I have noted, the procedure proposed by the majority is far

from clear from the text of the statute and seems to me in no way

superior to the Pro Sales approach. 

Nonetheless, I am pleased that this dissent has apparently resulted in the concession that constructive nonrenewal is alive and

well—albeit in a slightly different form than that pursued by

Dersch and Pro Sales. How these developments will be viewed by

the franchisor community remains to be seen. In the responses of

the majority to this dissent, franchisors may have won the battle

but lost the war.

4 See Maj. Op. at 15 (“In order to prevail, the franchisee must

prove, as a threshold matter, a . . . nonrenewal of its franchise.”);

Maj. Op. at 27 (“We, therefore, conclude that if a . . . coerced

relinquishment of [a federal or state] right does not result in a

nonrenewal of the parties’ franchise relationship, the franchisee

must resort to remedies outside the PMPA context to enforce

§ 2805(f)(1)’s release and waiver prohibition.”); Maj. Op. at 27-28

(“[I]f a franchisor impermissibly conditions the renewal of a

franchise relationship on the franchisee releasing or waiving

federal or state law rights, and the franchisee’s refusal to agree to

this conditional renewal results in the nonrenewal of that rela-

(continued...)

also asserts that the standards for preliminary relief under

the PMPA are lenient in their demands on the franchisee.

They can hardly be lenient enough to provide preliminary

relief when by the majority’s analysis elsewhere there can

be no permanent relief under § 2805 (f)(l)—injunctive,

declaratory or in damages—unless there has been an actual

nonrenewal of the franchise.4

 And, if suit may be main-
No. 01-2495 45

4 (...continued)

tionship, the franchisor’s violation of § 2805(f)(1) may be examined in conjunction with the franchisee’s claim for the nonrenewal of its franchise relationship.”).

tained by treating notice of nonrenewal as the functional

equivalent of nonrenewal itself, what need would there be

for something formally titled “a private right of action”? In

fact, if the majority’s view of the 90-day notice provision is

correct, the majority is recognizing a procedure which in

every relevant respect is functionally equivalent to a private

right of action for the franchisee.

Additionally, the only case from this circuit, Beachler,

cited to support the majority’s contention that Dersch

should have refused to sign the renewal agreement and

filed suit upon receiving statutory notice of nonrenewal

does not stand for the proposition that PMPA relief

requires such formal notice under § 2804. Beachler, 112 F.3d

902. If anything, Beachler supports the proposition that

Dersch’s PMPA cause of action arose the moment Shell

said “take-it-or-leave-it,” and was unaffected by whether

or not Dersch signed under protest. In Beachler we analyzed

the availability of relief for franchisees under the PMPA

without regard to whether formal notice of nonrenewal or

termination under § 2804 was ever issued. See id. at 903-04

(“Once Amoco’s plans for the assignments and sales were

finalized, affected dealers in Peoria and Springfield were

notified both orally and in writing. Six of the sixteen dealers then instituted this action under the PMPA for preliminary and permanent injunctive relief.”). The franchisees in

Beachler filed suit upon written notice of the pending assignment and were denied relief because “the franchisees” have failed to show that the assignments would give

rise to a termination or nonrenewal under the PMPA.” Id. at
46 No. 01-2495

5 The majority’s responses to my dissent appear to recognize

subliminally that it is on perilous ground with its newly conceived acknowledgment that actual nonrenewal is not a precondition to PMPA relief. Because the statute does not expressly

require statutory notice as a precondition to the preliminary relief

cited by the majority (it merely requires the still indeterminate

concept of “nonrenewal” contained in § 2805(b)(2)(A)(i)), the

natural next question is why must we adopt the majority’s

requirement of formal statutory notice? The majority answers

that question by citing to the district court of the Southern

District of Texas for its proposition that the absolute earliest

moment at which PMPA relief is available is at the time formal

statutory notice is given under § 2804(a). Shell v. Shell Oil Co., 216

F. Supp. 2d 634 (S.D. Tex. 2002). However, the majority fails to

indicate how, within this analytical framework, Beachler’s

plaintiffs could have, any more than Dersch, had a cause of action

for nonrenewal based on Amoco having “announced its

intention[s]”; a circumstance that, like the take-it-or-leave-it offer

given Dersch, evidences a total lack of formal statutory notice of

nonrenewal. Beachler, 112 F.3d at 902. Texas’ admittedly extensive

understanding of all things petroleum notwithstanding, Beachler

is good law in this circuit and is extensively relied upon by the

majority for its test of “nonrenewal,” and Beachler clearly does not

require formal statutory notice of nonrenewal as a prerequisite to

“nonrenewal.”

909 (emphasis added). What is significant is that the right

to relief under the PMPA did not depend upon either of the

grounds advanced by the majority: (1) actual nonrenewal

or termination or (2) formal notice of nonrenewal under

§ 2804(a).5

 Therefore, as I have already argued, Dersch’s

cause of action for constructive nonrenewal, as analyzed

under Beachler, arose when Shell made its take-it-or-leave-it
No. 01-2495 47

6 Subsequent revisions of the majority opinion appear to indicate

that it might, perhaps, agree with the statement in the text when

it lowers its requirement for a nonrenewal suit to simply a

“formal[ ] express[ion]” of an intent to nonrenew. Maj. Op. at 35-

36 n.20. This immediately brings to the forefront what is perhaps

the true kernel of my disagreement with the majority: how and

why is Dersch’s cause of action under the PMPA extinguished by

its agreement under protest (ostensibly to preserve its rights

under the PMPA) to the unlawful conditions that are the trigger

of those very rights? In the interest of bringing this dissent to a

final close, I leave that question for future discussion and possible

resolution.

7 The ultimate holding of Beachler, that there was no nonrenewal,

does not undermine this analysis. That holding resulted from

an examination of whether the prospective effect of the announced assignment would be nonrenewal. Similarly, Dersch’s

case should be analyzed to determine if the prospective effect of

the take-it-or-leave-it offer would be nonrenewal, which, as noted

supra, I believe it would be.

offer of renewal6 containing the contract terms that violated

§ 2805(f)(1).7

The majority’s observations about Pro Sales and its

relation to Dersch’s claim are equally wide of the mark.

First, the majority faults Dersch for failing to “promptly

seek to invoke its rights under the PMPA.” “Promptly” in

the case of Pro Sales, by the majority’s reckoning, apparently meant in a matter of days or weeks, not a year as in

Dersch’s case. However, I think this Pro Sales requirement

relates significantly to the kind of relief being sought. In

Pro Sales the franchisee apparently asked for injunctive

relief. Dersch requests only declaratory relief (which I

suppose might translate into reformation of the franchise

agreement) and there is no particular need for a speedy

resolution in that context or, for that matter, a need to
48 No. 01-2495

maintain the old contract in force pending a declaration of

its illegality (and the excision of its void provisions).

Further, the statutory language of which the majority is so

fond defines for us what is considered “promptly” done

under the PMPA: filing suit within one year of the nonrenewal. § 2805(a). The majority cannot be claiming that

Dersch sat on its rights without notice to Shell: Dersch

signed under protest after clearly indicating its lack of

assent to the contract terms. There is no question that

Dersch has acted as “promptly” as the PMPA requires.

The majority also faults the Pro Sales court for ignoring

the PMPA provisions for receipt of the formal notice of

termination and immediate recourse to preliminary injunctive relief. I fail to see the relevance of this point. The

fundamental analysis of the basic merits of rights under the

PMPA by the Ninth Circuit is quite different from the

analysis by the majority here. Whether the Pro Sales court

thought the PMPA provisions for notice and preliminary

relief were important, let alone critical, does not seem to

me significant in the context of its basic approach. After all,

preliminary, status-quo-maintaining procedures are purely

ancillary to statutory rights. They may afford a more orderly

mode for enforcing rights, but they are hardly central to the

analysis. Nor does § 2805(b)(2) significantly alter the

balance of bargaining power as between franchisor and

franchisee.

II.

A.

As an alternative approach, I believe that an independent

basis for plaintiff’s suit might be found even without recourse to the theory of constructive nonrenewal (although

an independent basis is not necessary to the result here).

Both the majority and the district court here rejected the
No. 01-2495 49

possibility of a private right of action for franchisees injured by breaches of § 2805(f)(1). Both the district court and

the majority relied heavily on Alexander v. Sandoval, 532

U.S. 275 (2001), in reaching this conclusion. I certainly have

no quarrel with the thesis that the existence of a private

right is a matter of Congressional intent. But Sandoval,

which involved an alleged private right to sue on regulations that extended the rights conferred by the statute, is a

far cry from the present case, which deals with a new statutory right that is an awkward fit in the express enforcement provision already contained in the statute. This is not,

as the majority characterizes it, an attempt to read new

types or modes of remedies into the statute. Transamerica

Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 19-20 (1979).

Section 2805 clearly provides for damages as well as injunctive relief. Nor is this an attempt to expand an existing

cause of action to capture new, extrastatutory conduct.

Sandoval, 532 U.S. 275. An unarguable purpose of the statute

is to furnish private rights to franchisees to protect themselves from franchisors who use imbalances in bargaining

power to force compliance with franchisor policies. Beachler,

112 F.3d at 904. And this certainly is not an attempt to hijack

a funding statute whose purpose and function lie far

removed from private citizen actions. Gonzaga Univ. v. Doe,

536 U.S. 273, 122 S. Ct. 2268, 2275-76 (2002). 

The cases upon which the majority relies forbid the distortion of statutory language to create remedies where none

were intended. These cases are distinguishable from the

present case, where Congress’s clear intent was to empower private actors, the franchisees, with a cause of action. While the original statute defined those rights in

terms of literal nonrenewal or termination, the 1994 amendments expanded that right in § 2805(f)(1) to include

renewal accomplished at economic gunpoint, where the

threat of nonrenewal forced waivers of rights otherwise
50 No. 01-2495

8 The state law sections relevant to the Disputed Provisions are

set forth in the majority opinion, supra, at 6 nn.4-5.

provided by law. To see the statute in its totality and conclude that Congress’s arrangement shows an intent not to

allow a remedy for this right defies the logic of the statute.

Section 2805(f)(1) becomes a dead letter unless Dersch has

a basis for maintaining this kind of suit, and the class of

persons entitled to sue will not be enlarged by recognizing

a private right here. In summary, Dersch has a basis for suit

preferably as a matter of constructive nonrenewal or,

as an alternative, by exercising a private right of action

under § 2805(f)(1). 

B. 

Once it is determined that Dersch has the ability, as a

threshold matter, to maintain an action under the PMPA,

via one or the other statutory alternative, one must next

decide whether, on the merits, the Disputed Provisions

here violate § 2805(f)(1) and actually require the waiver of

a right existing under state law as a condition of the franchise renewal. As the majority makes clear, the franchise

renewal here was offered on a take-it-or-leave-it basis.

Therefore, if the Disputed Provisions required Dersch to

waive a state law right, § 2805(f)(1) was violated. 

The first Disputed Provision is Article 5, which allows

the defendant to make alterations in the conditions and

locations of fuel deliveries. Dersch alleges that Indiana law

gives it the right to a franchise agreement that does not

contain provisions allowing the substantial modification of

the agreement without the written consent of Dersch.8

 The

district court did not consider the merits of Dersch’s Article
No. 01-2495 51

5 claim, finding instead that Dersch had failed to show that

a constructive nonrenewal took place. While I am inclined

to believe that the effect of Article 5 is to allow a “substantial modification of the franchise agreement” without written consent of Dersch, there has been insufficient factual

development to determine whether, in fact, Dersch qualifies for the protection of Indiana’s Deceptive Franchise

Practices Act, Ind. Code §§ 23-2-2.7-1 et seq. I would remand to the district court to determine whether Article 5

violates § 2805(f)(1).

Dersch also argues that Disputed Provision Article 11, in

which Dersch agrees to indemnify Shell even for actions in

which Shell was contributorily negligent, violates Illinois

law establishing the right to several liability for defendants

whose fault is found to be less than 25% of the total fault,

and establishing Dersch’s right to contribution from joint

tortfeasors. See 735 ILCS § 5/2-1117; 740 ILCS § 100/2.

Dersch’s argument appears to have merit. Section 2-1117

would assign liability to Dersch, in admittedly limited circumstances, only to the extent of actual pro rata fault.

Additionally, the invoked right to contribution under 740

ILCS § 100/2 (that was, for unknown reasons, not expressly

listed by statutory section) gives Dersch the right under

Illinois law to escape liability for Shell’s tortious conduct.

Article 11 requires Dersch to waive this right, and appears,

therefore, to violate § 2805(f)(1). However, on remand, I

would allow Shell to show any circumstances that might

undermine Dersch’s argument on this point. The issue has

not been addressed on the merits by either the district court

or the majority.

On another of the Disputed Provisions, I agree with the

district court that Dersch’s claim under Articles 21.2 and

21.3 of the Agreement cannot succeed. Article 21.2 is inapplicable to Dersch because Dersch is not “composed of
52 No. 01-2495

more than one person.” Article 21.3, Dersch argues, is designed to require by contract that managers and directors of

Dersch assume personally the obligations of the corporation. Although I perceive how Dersch could arrive at its

interpretation of the unusual language of Article 21.3, I

cannot assign such sweeping legal consequences to this

provision taken as a whole. I do not see how the managers

and directors, who are not parties to the franchise agreement, could be assigned personal obligations under it by the

parties. Overcoming the right of a third party not to be

bound by a contract to which she is not a party would

require the third party’s consent. Even if Article 21.3 were

an attempt by Shell to impose contractual obligations on

nonparties, and this is hinted at by the unusual language,

this is simply not a legal possibility.

On a broader front, Shell asserts that the savings clause

of Article 19 eliminates any alleged violation of law supporting Dersch’s action. Article 19 of the Agreement states:

To the extent that any provision of this Contract is in

conflict with any valid and enforceable law existing on

the effective date thereof, that provision shall be

deemed amended to conform with such law as it applies to this Contract at the time either party takes any

action or exercises or claims any rights under such provision.

This provision, which presents the most difficult issue in

the case, may well have been designed by Shell to avoid the

sort of confrontation with franchisees with which we are

struggling. If so, the effort almost succeeds, but in the end

seems to deal more with appearances than with reality.

Shell can argue, in accordance with the language of Article

19, that the Disputed Provisions are only enforceable to the

extent permitted by law. Hence, none of the Disputed

Provisions can violate § 2805(f)(1) because they would at
No. 01-2495 53

9 This is an assumption, the validity of which is not clear. First,

it is not clear that a contract provision in itself actually violates

§ 2805(f)(1). The language speaks of the conduct of the franchisor

in requiring a state or federal law waiver, not of the invalidity of

the provision itself. As other courts have held, requesting a

waiver of a franchisee’s legal rights is not, per se, illegal. It is only

when that waiver is part of a take-it-or-leave-it contract, and there

are threats of nonrenewal if not accepted, that § 2805(f)(1) is

violated. See Coast Village, Inc., 163 F. Supp. 2d at 1181 n. 38, 39

(collecting cases). Therefore, unless the waiver standing alone is

per se illegal, Article 19 might not ever take effect. 

(continued...)

some point be amended by Article 19 to conform to the

PMPA’s strictures. This has a good ring to it, but there may

be serious questions of timing. While the savings clause

may operate at some future date to amend the invalid provisions, it does so after the violation of § 2805(f)(1) giving

rise to the claim has occurred.

The plain language of § 2805(f)(1) forbids the waiving of

state law rights as a condition of entering into a franchise

agreement. Therefore, the § 2805(f)(1) violation occurs with

the franchisor’s threat of nonrenewal by a take-it-or-leave-it

contract containing a term that waives a franchisee’s state

or federal legal rights. Accord Pro Sales, Inc., 792 F.2d at

1399; Coast Village, Inc., 163 F. Supp. 2d at 1176 (“Franchisees facing an immediate threat of nonrenewal may sue

under the PMPA.”). Article 19 amends contract provisions

that have been determined to violate a valid law. Therefore, even assuming Article 19 operates as Shell argues and

would eventually amend a contract term found to violate

§ 2805(f)(1) retroactively to the date the contract went into

effect,9

 Article 19 cannot operate to undo the antecedent
54 No. 01-2495

9 (...continued)

Second, the effect of Article 19 in this context may, in some

sense, be illusory. A franchisee faced with a take-it-or-leave-it

contract containing provisions objectionable under § 2805(f)(1)

cannot negotiate those terms, as the phrase “take-it-or-leave-it”

makes clear. After the contract becomes effective, Shell is not

simply going to remove those terms upon the objection of a

franchisee that § 2805(f)(1) has been violated (especially under the

majority’s view eviscerating such a franchisee’s PMPA rights).

Instead, at that point, litigation will commence. Only after a court

has ruled that § 2805(f)(1) has been violated would Article 19

possibly effect an amendment of the offending provision, thereby

merely duplicating, in part, what the court’s ruling has already

done. From this perspective, Article 19 is mere surplusage to the

PMPA remedies. Although likely well-intentioned, enforcement

of Article 19 might be as difficult and costly as enforcement of

rights under the PMPA.

This is not to say Article 19 lacks any valid purpose. If Shell

were to pursue a breach of contract action against a franchisee,

the franchisee might defend by claiming the contract is void for

illegality of certain provisions. Article 19 might operate in such

circumstances to amend the offending contract provisions and

allow the primary claim, breach of contract, to proceed on the

merits. That curative use of Article 19 is starkly different from the

nullifying use being advocated by Shell in this case.

threat. And it is the threat of nonrenewal to induce acceptance of renewal terms violating § 2805(f)(1) that forms the

basis of the claim. 

Would a lawyer advise her franchisee-client to submit to

terms abrogating the client’s state law rights in the hope

that the contract would somehow be amended to conform

to state law in the future? This seems to me to be the

practical context in which to view the problem.
No. 01-2495 55

III.

I would, therefore, reverse and remand to the district

court for further proceedings, and I respectfully DISSENT.

A true Copy:

Teste:

 _____________________________

Clerk of the United States Court of 

Appeals for the Seventh Circuit 

USCA-02-C-0072—12-26-02