Opinion ID: 1197889
Heading Depth: 1
Heading Rank: 4

Heading: Petroleum Marketing Practice Act Preemption

Text: Amoco next contends that the holding of the court of appeals decision relating to the breach of good faith and fair dealing directly conflicts with the preemptive provisions of the Petroleum Marketing Practices Act, 15 U.S.C. § 2806 (1988) (PMPA). We disagree.
Under the Supremacy Clause of the United States Constitution, federal law may preempt state legislation [7] governing the same subject matter. See U.S. Const. art. VI, cl. 2; Louisiana Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 368, 106 S.Ct. 1890, 1898, 90 L.Ed.2d 369 (1986); Mobil Oil Corp. v. Virginia Gasoline Marketers & Automotive Repair Ass'n, Inc., 34 F.3d 220, 224 (4th Cir.1994), cert. denied, ___ U.S. ___, 115 S.Ct. 1097, 130 L.Ed.2d 1065 (1995); Banner Advertising, Inc. v. People ex rel. State, 868 P.2d 1077, 1080 (1994). Preemption occurs if Congress expressly states its intent to preclude state regulation of a subject. Louisiana Pub. Serv. Comm'n, 476 U.S. at 368, 106 S.Ct. at 1898; Mobil Oil Corp., 34 F.3d at 224; Banner Advertising, Inc., 868 P.2d at 1080. In the absence of express congressional intent, state law is pre-empted if that law actually conflicts with federal law ... or if federal law ... thoroughly occupies a legislative field.... Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 2617, 120 L.Ed.2d 407 (1992) (citations omitted); see also Banner Advertising, Inc., 868 P.2d at 1080. Also, federal provisions must be construed in light of the presumption against the preemption of state police power regulations. Cipollone, 505 U.S. at 518, 112 S.Ct. at 2618; see also Banner Advertising, Inc., 868 P.2d at 1080-81.
The PMPA's primary purpose is to provide a uniform body of law and to protect petroleum franchisees from arbitrary or discriminatory terminations and nonrenewals. Mobil Oil Corp., 34 F.3d at 223 (citing S.Rep. No. 731, 95th Cong., 2d Sess. 15 (1978), reprinted in 1978 U.S.C.C.A.N. 873, 874.) The PMPA provides: 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) (1988). By its express language, the statute preempts only those state laws that apply to franchise terminations or nonrenewals. Bellmore v. Mobil Oil Corp., 783 F.2d 300, 305 (2d Cir.1986); see also Simmons v. Mobil Oil Corp., 29 F.3d 505, 512 (9th Cir.1994) (Those ... state law claims that do not implicate ... [a] termination or nonrenewal of the franchise ... are not preempted by 15 U.S.C. § 2806(a).). Congress did not intend to preempt all state regulation through passage of the PMPA. Esso Standard Oil Co. v. Department of Consumer Affairs, 793 F.2d 431, 435 (1st Cir.1986); see also Bellmore, 783 F.2d at 304 (The PMPA neither expressly nor impliedly preempts all state law relating to any aspect of the termination or non-renewal of petroleum franchises.); Ted's Tire Service, Inc. v. Chevron U.S.A., Inc., 470 F.Supp. 163, 165 (D.Conn.1979) (The ... [PMPA] does not preempt all state laws regulating petroleum franchises....). The framers of the PMPA intended to create a uniform system of franchise termination, not a uniform system of contract law. O'Shea v. Amoco Oil Co., 886 F.2d 584, 593 (3d Cir.1989). The dealers' claims are not preempted in the present case because they do not implicate Amoco's termination or nonrenewal of the franchises. See Simmons, 29 F.3d at 512. The dealers challenge substantive provisions of the contracts and Amoco's pricing conduct, which occurred during the term of the contracts. Patterson v. McLean Credit Union, 491 U.S. 164, 176-80, 109 S.Ct. 2363, 2372-74, 105 L.Ed.2d 132 (1989) (distinguishing postformation conduct from behavior during initial formation of contract). Allowing the dealers to pursue their state law claims does not create substantive rights that would not exist under the PMPA. See Mobil Oil Corp., 34 F.3d at 224-25. The statutory language and the presumption against preemption prevent us from finding a state-federal conflict because of a fortuitous and attenuated application of the PMPA. See Exxon Corp. v. Georgia Ass'n of Petroleum Retailers, 484 F.Supp. 1008, 1018 (N.D.Ga.1979), aff'd sub nom. Exxon v. Busbee, 644 F.2d 1030 (5th Cir.), cert. denied, 454 U.S. 932, 102 S.Ct. 430, 70 L.Ed.2d 239 (1981); see also Mobil Oil Corp., 34 F.3d at 228 (Ervin, C.J., dissenting) (Unlike the majority, I expressly do not think that the statute intended to void any state law provision that indirectly affects the termination or nonrenewal of the [franchise] relationship....); Bellmore, 783 F.2d at 305 (It would be contrary to the Congressional purpose for this court to read the statute expansively, beyond the intended limits of the PMPA, and to find a conflict between state and federal law resulting in the preemption of a state statute in areas that Congress left to the control of the states.). Although Amoco's practices had an attenuated affect on the dealers' ability to remain viable business entities, they did not directly impact the termination or nonrenewal of the franchises. Because the dealers' state law claims address substantive provisions and behavior that did not involve termination or nonrenewal, they are not preempted by the PMPA.