Court Opinion

ID: 3165601
Source: CourtListenerOpinion
Date Created: 2015-12-24 21:00:56.123456+00
Date Added: 2024-06-11T11:56:55.012732
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                           DEC 24 2015
                     UNITED STATES COURT OF APPEALS                     MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

LIGHT PETROLEUM, INC.,                           No. 13-56909

              Plaintiff,                         D.C. No. 2:12-cv-04689-PA-VBK

  and
                                                 MEMORANDUM*
EFRAM DORI, an Individual; et al.,

              Plaintiffs - Appellants,

 v.

EXXONMOBIL CORPORATION, a New
Jersey corporation, Erroneously Sued As
Exxon Mobil Corporation and CIRCLE K
STORES INC., a Texas corporation,

              Defendants - Appellees.

                    Appeal from the United States District Court
                       for the Central District of California
                     Percy Anderson, District Judge, Presiding

                     Argued and Submitted December 11, 2015
                               Pasadena, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: GOULD and BERZON, Circuit Judges and ZOUHARY,** District Judge.

      1. Plaintiffs are franchisees of ExxonMobil (“Exxon”) who operate retail

service stations leased from Exxon. When a franchisor such as Exxon seeks to sell

a service station in which it owns a fee interest, California Business & Professions

Code § 20999.25(a) requires the franchisor to make a bona fide offer to sell to the

franchisee before selling to another party. Plaintiffs, to whom Exxon made offers

of sale, brought this diversity suit, contending that Exxon’s offers were not bona

fide within the meaning of Section 20999.25(a). The district court granted

summary judgment to Defendants, concluding that Exxon’s offers were objectively

reasonable and therefore bona fide. We affirm.

      2. Exxon’s offers of sale contained covenants and deed restrictions that,

among other things, limited the properties’ commercial uses and required Plaintiffs

to enter into a fifteen-year supply agreement with convenience store chain Circle

K. Plaintiffs contend that Exxon’s offers did not convey its entire “interest” in the

service station properties, in violation of Section 20999.25(a). But a California

appellate case interpreting Section 20999.25(a) has held that the statute establishes

only “minimal standards” to limit governmental intrusion into a franchisor’s

       **
             The Honorable Jack Zouhary, District Judge for the U.S. District
Court for the Northern District of Ohio, sitting by designation.

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property rights. Forty-Niner Truck Plaza, Inc. v. Union Oil Co., 58 Cal. App. 4th

1261, 1274 (1997). A franchisor’s offer must convey its interest in the “marketing

premises,” meaning premises that are “employed by the franchisee in connection

with the sale, consignment, or distribution of fuel.” Id. at 1282 (quoting Cal. Bus.

& Prof. Code § 20999(h)). As such, “a bona fide offer includes the sale of pumps,

dispensers, storage tanks, piping and other equipment necessary for the continued

operation of a service station.” Id. This view of the “interest” that a franchisor’s

offer must convey is consistent with courts’ broader reading of the purpose of

Section 20999.25(a) as “allow[ing] franchisees a reasonable opportunity to

continue operating their facilities if they exercise their right to buy.” Id.; see also

Ellis v. Mobil Oil, 969 F.2d 784, 787 (9th Cir. 1992) (stating the purpose of an

analogous federal statute, the Petroleum Marketing Practices Act). Exxon’s offers

convey sufficient interest in the premises to satisfy Section 20999.25(a).

      3. Plaintiffs claim that Exxon’s offers were not bona fide, as Section

20999.25(a) requires, because some of their terms were objectively unreasonable.

For our review of whether Section 20999.25(a) has been satisfied, it is not

necessary to conduct a term-by-term analysis to determine whether an offer is

reasonable. We hold that the non-price terms in Exxon’s offers, taken as a whole,

were commercially reasonable, especially considering that thirty-six franchisees

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have already accepted Exxon’s offers of sale. Exxon’s offers satisfied Section

20999.25(a), which establishes only “minimal standards,” so as to limit

governmental intrusion into a franchisor’s property rights. Forty-Niner, 58 Cal.

App. 4th at 1274.

      AFFIRMED.

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