Additionally, on balance, the hardships imposed on Al's are far greater than the hardships
imposed on BP. Issuance of a preliminary injunction will have almost no effect on BP. In that
case, Al’s and BP would continue their agreement and BP would continue to make moncy from
Mr. Finnegan’s operation of Al’s. However, not issuing this preliminary injunction could
eliminate Al’s business.

Thus, only the second element for preliminary injunction is at issuc here. Specifically, do
“there exist sufficiently serious questions going to the merits to make such questions a fair
ground for litigation?” 15 U.S.C. § 2805. In light of the fact that this is a far more lenient
standard for preliminary injunction than is typically available outside of the PMPA, this court
grants the motion for preliminary injunction because it finds that there are questions which are
fair grounds for litigation.

11. Section 2802(c) Is Grounds for a Preliminary Injunction

This case rests primarily on onc issue of statutory interpretation which itself has created a
split among the Federal Circuit Courts. Section 2802 of the PMPA provides a general prohibition
against termination and nonrenewal of a franchise except when the notification provisions of the
Act are met, and termination of the franchise is based on a ground prescribed in the Act. 15
U.S.C. § 2802. The issue in this case is whether one of these grounds has been met.

The PMPA allows a lranchise to be terminated or nonrenewed upon “[t]he occurrence of
an event which is relevant to the franchise relationship and as a result of which termination of
the franchise or nonrenewal of the franchise relationship is reasonable.” 15 U.S.C. §
2802(b)(2)(c). Section 2802(c) of the PMPA then defines the phrase “an event which is relevant
to the franchise relationship and as a result of which termination of the franchise or nonrcnewal
of the franchise relationship is reasonable” by enumerating twelve scparate events which are

5


has oceurred.” The Marathon Petroleum court rejected the oil company’s argument that the
“court is not required to look beyond the per se grounds for termination sct forth under the Act
to delermine whether termination was reasonable.” /d. Moreover, the court in Chevron U.S.A.,
tne, v. Mebtahi, 148 F. Supp.2d 1019, 1026 (C.D. Cal. 2000), held that “even upon the
occurrence of an event enumerated in § 2802(c)(1)-(11), the Court must still inquire into the
reasonableness of a termination of an agreement covered by the PMPA.” Likewise, in Patel v.
Sun Company, Inc., 141 F.3d 447 (3d Cir. 1998), the court rejected a franchisor’s argument that
there was no statutory basis for inquiry into the objective reasonableness of nonrenewal of the
franchise agreement.

For these reasons, we find that a court may inquire into the reasonableness of a franchise
termination, regardless of whether the basis for the termination is an event enumerated in 15
U.S.C. § 2802(c).

B, Was the Taking Part of the Marketing Promises and Was it Reasonable?

Next, we must consider: (1) whether the taking was a part of “the marketing premises”
and (2) whether the taking may — or may not — be reasonable. While the [DOT construction
project requires closing onc of the five driveways to the gas station, the closure of one entrance
does not in a material way affect “the marketing premises.” The corner of land being taken is
tiny relative to the grounds on which the business actually operates, and it is inconsequential in
terms of the gasoline and automotive service business operated by Al’s. ‘hus, we conclude that
the (aking may not be “a part of the marketing premises.”

in addition, it may not be “reasonable” within the meaning of section 2802(b)(2) of the
PMPA to terminate and nonrenew Al’s franchise on the basis of the condemnation of this corner
of the property, This is one of the “rare cases [in which] the literal application of a statute will

8



i

The PMPA crcates the presumption that any termination or nonrenewpl ofa franchise is
unlawful by allowing franchisors to terminate a franchise only for certain grounds and by
requiring franchisors to give adequate notice of their intent to terminate the franchise. 15 U.S.C.
§ 2802; see Sun Refining and Marketing Co. v. Rago, 741 F.2d 670, 672 (3d Cir. 1984). The
PMPA creates a private right of action for franchisees whose franchise is terminated unlawfully,
and it additionally provides a preliminary injunction remedy that is casier to obtain than is
generally required. 15 U.S.C. § 2805, In all actions challenging the lawfulness of a termination
or nonrenewal, the franchisee need only show that the franchise has becn terminated or
nonrenewed; the burden is on the franchisor to show that it complied with the statutory
requirements of the PMPA, 15 U.S.C. § 2805(c) .
1, Standard for Preliminary Injunction

The PMPA allows courts to grant a preliminary injunction for cases brought under the
Act. The court may grant a preliminary injunction ift

(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 relicf will be less than
the hardship which would be imposed upon such franchisee if such preliminary
injunctive relief were not granted.

15 USC. § 2805,

In this case, the first and third requirements for granting a preliminary injunction are not

at issue. Al’s has demonstrated that the franchise has been terminated and nonrencwed.



included within this phrase. 15 U.S.C. § 2802(c). This case concems only section 2802(c)(5)
which defines one of the events as “condemnation or other taking, in whole or in part, of the
marketing premises pursuant to the power of eminent domain.” 15 U.S.C. § 2802(c)(5). The
phrase “marketing premises” is further defined in the statute as “premises which . . . are to be
employed by the franchisee in connection with sale, consignment, or distribution of motor fuel.”
15 U.S.C. § 2801(8).

in light of the foregoing, two questions arc presented to this court: (1) are the twelve
events enumerated in section 2802(c) per se grounds for termination — in other words, if the
event is one of the twelve listed, is the court still required to inquire into whether the termination
is reasonable, or are all twelve listed cvents automatically reasonable grounds for termination;
and (2) did the taking in this case involve the “marketing premises,” i.e., did the taking affect
premises which were employed “in connection with salc, consignment, or distribution of motor
fuel.” We will address each of these issues in tum.

A. Is the Court Allowed To Inquire into the Reasonableness of the Termination?

BP argucs that the twelve events enumerated in section 2802(c) are per se grounds for
termination of a franchise relationship, while Al’s argucs that this court must examine the
reasonableness of terminations whcthcr or not the basis for termination is an event enumerated in
section 2802(c).

The Seventh Circuit has not yet addressed the issue of interpretation of this section of the
PMPA. Some Circuits follow BP’s interpretation, i.c., any of the events enumerated in section
2802(c) are per se grounds for termination of a franchise agreement. See Russo v. Texaco, Inc.,
808 F.2d 221, 225 (2d Cir, 1986) (“Once having ascertained that an event is encompassed by one
of the twelve enumerated events [in § 2802(c)], a court nced make no further inquity as to the

6



produce a result demonstrably at odds with the intentions of its drafters.”” U.S. v. Ron Pair

Enters., Inc., 489 U.S. 235, 242 (1989) (quoting Griffin v. Oceanic Contractors, Inc., 458 US.
364, 571 (1982)).

We believe that such a strict interpretation is in direct conflict with the legislative history
of the PMPA, which clearly shows that it was enacted to offer “franchisees meaningful
protections from arbitrary or discriminatory terminations and non-renewals.” Senate Report at
18. Thus, we conclude that the PMPA’s legislative history does not support making minimal
condemnations, such as the one in the instant case, grounds for termination.

For these reasons, a preliminary injunction is granted because there are sufficient
questions going to the merits of whether the taking is of “a part of the marketing premises” and,
if so, whether the taking is “reasonable.”

CONCLUSION

For the reasons addressed above, we grant the motion of Al’s Service Center, Inc. and
Kevin Finnegan for a temporary restraining order and preliminary injunction. BP Products
North America is hereby prohibited from terminating or nonrenewing its frarichise relationship
with Al’s Service Center. This case is set for status on July20, 2006 at 9:00 a.m.

It is so ordered.

LD C4.

Wayne R. Andersen——
Dated: Qua fave

United States District Judge



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS :
EASTERN DIVISION

a Maryland corporation,

Al’s Service Center, Inc., au Llinois )
corporation and Kevin Finnegan, individually —)
and d/b/a Al’s Service Center, Inc., )
)
Plaintiffs, y
)

ve ) No. 03 C 4508

) Wayne R. Andersen

BP Products North America, ) District Judge
)
)
)

Defendant.

MEMORANDUM, OPINION & ORDER

This case is before the court on plaintiffs motion for temporary restraining order
(“TRO”) and preliminary injunction pursuant to Fed. R. Civ, P. 65 and 15 U.S.C. § 2805
prohibiting the defendant from terminating its franchise relationship with the plaintiff. For the
reasons set forth below, we grant plaintiff's motion for temporary restraining order and
preliminary injunction.

BACKGROUND

The following facts are taken from plaintifl’s third amended complaint and emergency
motion for TRO and preliminary injunction, as well as from testimony presented at the June 2,
2006 hearing, The plaintiff, Al’s Service Center, Inc. and its principal shareholder and president,
Kevin Finnegan, (“Al’s”) bring this case against the defendant, BP Products North America
(“BP”), Al’s, the franchisee, contends that BP, the franchisor, has unlawfully terminated and

nonrenewed its franchise agreement.


reasonableness of the termination.”), Desfosses v. Wallace Energy, Inc., 836 F.2d 22, 26 (1st Cir.
1987) (“If an even falls within the list [in § 2802(c)], termination is conclusively presumed to be
reasonable as a matter of law.”); Clinkscales v. Chevron U.S.A,, Ine,, 831 F.2d 1565, 1573 (11th
Cir. 1987) (holding that courts may only examine the reasonableness upon which termination or
nonrenewal ofa franchise is granted when the event is not enumerated in § 2802(c)), Hinkleman
v. Shell Oil Co., 962 F.2d 372, 378 (4th Cir. 1992) (“Section 102(c) of the PMPA, 15 U.S.C. §
2802(c), provides twelve situations in which Congress has decided that termination of a
franchise agreement is reasonable.”).

Other Circuits follow Al's interpretation, i.¢., a court must examine the reasonableness of
a termination regardless of whether the basis for the termination is an event enumerated in
section 2802(c). See Sun Refining and Marketing Co. v. Rago, 741 F.2d 670, 673 (3d Cir. 1984)
(“Although the legislative history is not unambiguous, in light of the Act’s specific intent to
bencfit franchisees, we decline to construe § 2802(c) as a per se termination rule favoring
franchisors.”); Patel v. Sun Co. Ine., 141 F.3d 447, 457 (6th Cir. 1998) (“There is no question
that at least some of the §2802(c) relevant cvent exceptions mandate some form of judicial
scrutiny”); PDC Midwest Refining v. Armada Oil and Gas Co., 305 F.3d 498, 508 (6th Cir.
2002) (“Courts must carefully scrutinize the reasonableness of terminations whether or not the
terminating even is specifically enumerated in § 2802(c)").

We believe that the inquiry into whether a termination is “reasonable” within section
2802(b)(2)(c) of the statute is not foreclosed by virtue of the fact that a terminating franchisor
can point to onc of the enumerated grounds for termination set forth in section 2802(c), As the
court slated in Marathon Petroleum Co. v. Pendleton, 889 F.2d 1509, 1512 (6th Cir. 1989), “we
must scrutinize the reasonableness of terminations even when an event enumerated in § 2802(c)

7



The most recent lease agreement (“Lease”) between Al’s and BP began on August, 1

2002 and was scheduled to end on July 31, 2005. The Lease sets certain grounds that allow for
termination of the franchise agreement for the facility located at 17 West 615 Butterfield Road,
Oak Brook Terrace, Illinois, which is defined as the “Facility” in the Lease. Specifically, the
Lease states that:
Lessor has the right at any time to terminate or nonrenew this Agreement, all
associated agreements and any applicable franchise relationship for any reason or
ground permitted by the PMPA or applicable federal, state or local law. Without
limiting the generality of the foregoing, Lessor has such right of termination or

nonrenewal upon the occurrence of any of the following...

(t) Condemnation or other taking, in whole or in part, of the Facility pursuant to
the power of eminent domain or conveyance in lieu thereof... .

Lease, | 19,

The Lease and the franchise relationship between Al’s and BP is governed by the
Petroleum Marketing Practices Act, 15 U.S.C. § 2801 et sey. (*PMPA”). The PMPA governs the
circumstances when franchise agreements may be terminated or nonrenewed.

Al’s is a full-service gasoline and automotive service center located al 17 West 615
Butterfield Road, which is at the comer of Butterfield Road and Midwest Road in the city of Oak
Brook Terrace, Tllinois. Kevin Finnegan has owned and operated the station for more than thirly
years. On October 15, 2002, the Illinois Department of Transportation (“IDOT”) informed BP
that, as part of a widening and resurfacing project, it would need to acquire 0,030 acres in fee
simple and 0,027 acres of temporary casement of BP’s properly. The letter stated that it was
IDOT’s intent to enter into a negotiated agrecment, but if there was no agreement, it would
initiate an eminent domain proceeding. On March 26, 2003, BP notified Al’s that IDOT intended

to initiate the process of condemnation of part of the service station premises and that BP would


terminale and nonrenew the franchise relationship cffective ten (10) days prior to the date of
condemnation, Al’s offered to pay BP 10% more than any final offer BP reccived from TIDOT so
as to avoid the eminent domain proceeding.

According to Al’s, the gas station property covers 60,897 square feet, and it has five full
access driveways. Through eminent domain, IDOT is taking about 800 square fect less than
2% of the total area of the gas station. The road improvements will additionally require the
climination of one of the driveways and convert another one of the driveways to a limited access
driveway. Al’s argues, and this court agrees, that this minimal taking will have a negligible
effect on both the operation and safety of the business.

DISCUSSION

The PMPA was enacted because of “the disparity of bargaining power which exists
betwecn the franchisor and the [ranchisce” in the gasoline industry. S.Rep No, 95-731, 95th
Cong,, 2d Sess. 15 (“Senate Report”) 1, 17. As the Seventh Circuit noted, Congress “enacted the
PMPA in an effort to protect ‘franchisees from arbitrary or discriminatory termination or non-
renewal of their franchises.’”” Brach v. Amoco Oil Co., 677 F.2d 1213 (7th Cir. 1982) (quoting,
Senate Report at 15). “Most important, ‘the one thing the Act is clearly intended to prevent is the
appropriation of hard-earned goodwill which occurs when a franchisor arbitrarily takes over a
successful going concern.’” Thompson v. Amoco Oil Co., 903 F.2d 1118, 1119 (7th Cir. 1990)
(quoting Brach vy. Amoco Oil Co., 677 F.2d 1213 at 1220). Thus, consistent with ils general
goals, the PMPA makes it difficult, but not impossible, for a franchisor lo terminate or nonrenew
a franchise by generally prohibiting these actions, Thompson v. Amoco Oil Co., 903 F.2d 1118 at

1119-1120.