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IN THE SUPERIOR COURT OF THE DISTRICT OF COLUMBIA THE DISTRICT OF COLUMBIA, Plaintiff v. EXXONMOBIL OIL CORP., et al. Defendants.

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Civil Action No. 13cv005874 B Judge Craig ISCOE Calendar No. 14

ORDER This Court, having considered the motion of defendants Capitol Petroleum Group, LLC, Anacostia Realty, LLC, and Springfield Petroleum Realty, LLC (the CPG Defendants) to dismiss this action under Rules 12(b)(1) and 12(b)(6) of the District of Columbia Superior Court Rules of Civil Procedure (SCR) as to the claims asserted against the CPG Defendants, the plaintiffs response thereto, argument by counsel, and the record herein, and the Court having found that plaintiff lacks the requisite standing to maintain this action and that plaintiff has failed to state a claim upon which relief can be granted, it is this ____ day of ______________, 2013 hereby ORDERED, that the defendants motion to dismiss is GRANTED; and it is further ORDERED, that the complaint to this action be and hereby is DISMISSED, with prejudice, as to the claims asserted against the CPG Defendants.

_______________________________________ CRAIG ISCOE JUDGE

ATTORNEYS TO BE eSERVED: Alphonse M. Alfano (Bar No. 163444) Bassman, Mitchell & Alfano, Chartered 1707 L Street, N.W., Suite 560 Washington, D.C. 20036 Tel: (202) 466-6502 Attorney for Defendants Capitol Petroleum Group, LLC, Anacostia Realty, LLC, and Springfield Petroleum Realty, LLC David F. Smutny Christina G. Sarchio Ross C. Paolino Orrick, Herrington & Sutcliffe, LLC Columbia Center 1152 15th Street, N.W. Washington, D.C. 20005-1706 Attorneys for Defendant ExxonMobil Oil Corp. and Irvin B. Nathan, Attorney General Ellen A. Efros, Deputy Attorney General Nicholas A. Bush, Assistant Attorney General Office of the Attorney General for the District of Columbia 441 Fourth Street, N.W., Suite 600-S Washington, D.C. 20001 Attorneys for the Plaintiff

IN THE SUPERIOR COURT OF THE DISTRICT OF COLUMBIA DISTRICT OF COLUMBIA, Plaintiff v. EXXONMOBIL OIL CORP., et al. Defendants. ) ) ) ) ) ) ) ) )

Civil Action No. 13CA005874 B Judge Craig ISCOE Calendar 14

MEMORANDUM IN SUPPORT OF MOTION TO DISMISS OF DEFENDANTS CAPITOL PETROLEUM GROUP, ANACOSTIA PETROLEUM REALTY, LLC AND SPRINGFIELD PETROLEUM REALTY, LLC I. INTRODUCTION

This action was instituted by the District of Columbia against defendants Anacostia Petroleum Realty, LLC (Anacostia) and Springfield Petroleum Realty, LLC (Springfield), two companies that distribute Exxon branded motor fuels to service stations in the District. Also included as a defendant is ExxonMobil Corporation (ExxonMobil), a refiner and supplier of the Exxon branded motor fuels sold by Anacostia and Springfield to independent service station dealers. A fourth defendant, Capitol Petroleum Group, is a service company that does not own or control any service stations and is not engaged in the sale of motor fuels in the District or elsewhere. The complaint alleges that defendants violated certain provisions of the Retail Service Station Act, D.C. Code 36-301.01, et seq. (the RSSA or the Act), at 27 service stations owned by defendants Anacostia and Springfield (hereafter referred to collectively as Anacostia) and located in the District of Columbia.
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The statutory provision at issue prohibits

distributors from requiring that service station operators (usually referred to as dealers) Complaint at 29. Springfield owns and supplies only one station in the District. The other 26 stations are owned and supplied by Anacostia.
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purchase exclusively from the distributor, provided that the motor fuels purchased from thirdparties are of reasonably similar quality to those of the distributor, and provided further that the products purchased from third-parties are not sold under the distributors trademark. Id. at 36-303.01(a)(6). The instant action is the latest in a series of efforts by the Attorney General to intervene in the business affairs of defendants Anacostia and ExxonMobil. In 2011, with the active encouragement of the Attorney General (and with the active support of certain service station dealers), the Council of the District of Columbia considered a bill (Bill No. 19-299) that would have prevented Anacostia and Springfield from operating any service stations in the District. In encouraging its passage, the Attorney General called the Bill a major assist to our efforts to protect consumers from anti-competitive practices by sellers of gasoline. The Bill, however, did not garner sufficient votes for passage. Undaunted, the Attorney General commenced a lengthy and exhaustive antitrust investigation of Anacostia and ExxonMobil on the basis of a massive production of data and other documentary evidence. The investigation was ultimately dropped by the Attorney General after it failed to identify any injury to competition or any viable antitrust claim. At the conclusion of the investigation, the Attorney General stated that: In some quarters of the city, there was an increase in prices, but in many other parts of the city, there was no increase in the gasoline prices, and in the parts of the city where there was an increase, those residents had other alternatives . . . to 3 go and get cheaper gasoline.
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A copy of the Attorney Generals letter to the sponsor of the Bill is included herewith as Attachment A. Let them pump. The Washington Post. 3 September 2013, at A12, is included herewith as Attachment B. 2

In the meantime, a group of D.C. and Virginia service station operators (who had been allied with the Attorney General) instituted an antitrust action against Anacostia in the United States District Court for the Eastern District of Virginia. After lengthy discovery, the Court granted summary judgment in favor of Anacostia, stating that [p]laintiffs have no evidence of . . . any harm to competition in the relevant geographic markets [which included D.C.] between all competitors, or that any consumer was injured. SSS Enterprises, Inc., et al. v. NOVA Petroleum Suppliers, LLC and Anacostia Petroleum Suppliers, LLC, et al., Civil Action No. 1:11-cv-1134, 2012 WL 3866490 at *3 (E.D. Va. Aug. 30, 2012). On July 19, 2013, the United States Court of Appeals for the Fourth Circuit affirmed the district courts decision, concluding that there was no evidence of the defendants monopoly power or probability of their obtaining it, and the defendants conduct in excluding competition. SSS Enterprises, Inc. v. NOVA Petroleum Suppliers, LLC, et al., No. 12-2085, 2013 WL 3770710 at *2 (4th Cir. July 19, 2013).
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Now, having previously found no evidence of harm to competition, the Attorney General has instituted the instant action, claiming (in a vague and undefined way) that defendants violations have deprived service station dealers and consumers in the District of the benefits of competition. Complaint at 33. The complaint is silent, however, as to what the benefits of competition are, how consumers have been deprived of them, or how any of the defendants actions led to this result. There are no allegations of injury to competition in the traditional sense, or any claim that consumers have no lower priced options to purchase gasoline. Indeed, the words injure, injured, injury, and harm appear nowhere in the complaint. The dealers were also unsuccessful in their efforts to sue Anacostia and ExxonMobil under the RSSA and the Petroleum Marketing Practices Act, 15 U.S.C. 2801, et seq. See, Metroil v. ExxonMobil Corporation and Anacostia Petroleum Realty, LLC, 724 F.Supp.2d 70 (D.D.C. 2010), affd, 672 F.3d 1108, 400 U.S. App. D.C. 43 (D.C. Cir. 2012). 3
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As will be demonstrated below, the complaint should be dismissed on several grounds. First, the RSSA entrusts enforcement of the statutory provision at issue solely to the service station dealers whose interests the Act is designed to protect. The RSSA contains a carefully crafted enforcement scheme in which the Mayor of the District of Columbia is authorized to enforce Subchapters II and IV of the Act, and retail service station dealers are authorized to enforce Subchapter III (which contains the provision at issue here). Where the legislature so clearly and explicitly assigned separate roles for public and private enforcement, it is presumed that no public enforcement of Subchapter III was intended. In fact, the Committee Report accompanying Bill No. 1-333 (which became the RSSA) assigned a budgetary impact to Subchapters II and IV, for which resources would be expended by the Mayor due to his enforcement workload.
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With respect to Subchapter III, however, the

Committee Report states that Title II of the Bill (which became Subchapter III of the RSSA) deals exclusively with private rights, and therefore, should have negligible budgetary impacts on the District of Columbia. (emphasis added). The D.C. Council clearly intended no role for the District in enforcing Subchapter III. Second, the Attorney General seeks to side-step his lack of enforcement authority by labeling the instant action a parens patriae action on behalf of the citizens of the District. Complaint at 7. The Attorney General apparently believes that the parens patriae doctrine provides him with authority to enforce any statute, provided the complaint invokes the public interest.
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See, Council of the District of Columbias Committee on Transportation and Environmental Affairs Report No. 1 on Bill No. 1-333, the Retail Service Station Act of 1976 (September 10, 1976) (the Report) at 63-64. Pages of the Report cited herein are attached hereto as Attachment C, along with Bill No. 1-333, the subject of the Report. Report at 64. 4

As shown below, however, the parens patriae doctrine provides no such authority. It is merely a species of prudential standing, and it does not provide a cause of action where none otherwise exists. Moreover, where the purported cause of action is based on a statute, the statute must provide the District with a right of action. The parens patriae doctrine is not a substitute for a cause of action or a right of action under a statute. Third, to invoke the parens patriae doctrine, the District must meet the normal requirements for Article III standing (injury-in-fact, causation, and redressability) and, in addition, the District must assert a quasi-sovereign interest. To assert a quasi-sovereign interest, the District must assert a harm that is sufficiently severe and generalized as to threaten the economy of the District as a whole. The complaint in the instant case asserts no injury at all, much less a severe economic injury to a substantial majority of D.C. citizens. It states only that the defendants purported violations deny the benefits of competition to dealers and consumers alike. This conclusory, non-factual statement is insufficient to allege a concrete and particularized injury or to assert a quasi-sovereign interest. Fourth, it will be demonstrated that Anacostia did not violate Section 36-303.01(a)(6) of the D.C. Code. The complaint alleges that Anacostia violated the provision by prohibiting dealers from buying motor fuels from third-parties to be sold under the Exxon trademark. Complaint at 26. These allegations fail to state a claim under the relevant provision as a matter of law. Under this statutory provision, dealers may purchase motor fuels from any supplier of their choice, subject to certain conditions. One of the conditions is that the motor fuels sold by the third-party supplier not be sold under the distributors trademark. In short, dealers may

purchase non-Exxon branded motor fuel from any third-party supplier and sell it at their stations if sufficient precautions are taken to avoid trademark infringement. However, the RSSA does not provide a dealer with the right to purchase products from third-parties to be sold under the Exxon trademark. For these and other reasons set forth below, defendants motion to dismiss should be granted. The District lacks the requisite standing to maintain this action, and the complaint fails to state a claim on which relief can be granted. II. STATUTORY BACKGROUND

Subchapter III of the RSSA, D.C. Code 36-303.01-303.07, contains statutory provisions designed to benefit and protect the interests of service station operators (usually referred to as dealers). The statute was enacted in 1977, a time when service station operators leased their stations from major oil companies and purchased all their motor fuels from the same companies. As recognized in the legislative history of the RSSA, the major oil companies used their superior bargaining power in negotiating the terms of the marketing agreements that governed their business relationships with the dealers. As the D.C. Council stated: Because of this disparity in bargaining power, distributors are able to dictate the terms of a marketing agreement to their own best advantage while taking unfair advantage of the prospective retail dealer.
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Report at 26.

Thus, the RSSA was enacted to level the playing field by protecting the dealers interests.
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A.

Summary of the RSSAs Main Four Subchapters

The RSSA consists of four main subchapters. Subchapter I (section 36-301.01) consists solely of definitions. Subchapter II provides for the registration of all refiners, distributors, retailers, and others that sell motor fuels in the District of Columbia at wholesale and at retail. D.C. Code 36-302.01, et seq. It also contains provisions that prohibit the operation of service stations by refiners (e.g., Exxon, Shell, BP), and provisions that prohibit price discrimination by distributors. Id. at 36-302.02, 36-302.03. Subchapter III prohibits the inclusion of various provisions in motor fuel supply contracts between distributors and service station dealers (referred to as marketing agreements). D.C. Code 36-303.01, et seq. For example, distributors a specifically defined group under the statute are prohibited from including so-called exclusivity provisions in their marketing agreements. Id. at 36-303.01(a)(6). Distributors are also prohibited from requiring the dealer to keep his retail station open for business for a specified number of hours or days, or from setting the retail price for motor fuels at the dealers station, or from forcing the dealer to purchase other non-motor fuel products from the distributor. Id. at 36-303.01(a)(1), (2), (3). Subchapter III also includes protections against the arbitrary termination or nonrenewal of dealer

The Committee Report identified five purposes in enacting Title II of Bill No. 1-333, which became Subchapter III of the RSSA. Each of these purposes is aimed exclusively at protecting the interests of service station dealers. The five purposes of Title II were to (1) grant increased legal protection to retail dealers; (2) afford express notice of the rights and responsibilities of retail dealers; (3) ensure that retail dealers are treated equitably; (4) end arbitrary, unreasonable and discriminatory terminations, cancellations, and non-renewals of retail dealers; and (5) enhance the independence of retail dealers. Report at 28. 7

marketing agreements, as well as protections for dealers who desire to sell their service station businesses by assigning the marketing agreement to a buyer. Id. at 36-303, 36-305. Subchapter IV prohibits certain conversions of full service retail service stations to ones that would no longer permit automotive services to be performed by the operator. D.C. Code 36-304.01, et seq. The provisions of Subchapter IV protect dealers who earn a

substantial portion of their livelihoods from automotive repairs. Id. B. Enforcement of the RSSA

In enacting the provisions of the RSSA, the City Council explicitly provided the means by which each subchapter is to be enforced. It identified the entities authorized to enforce each subchapter, and it set forth the remedies available to each such entity, with respect to each subchapter. The authority to enforce Subchapters II and IV is vested in the Mayor. D.C. Code 36302.05. Whenever the Mayor has reason to believe that any person has violated or is violating any provision of Subchapter II or IV, the Mayor is authorized to take certain actions, including the issuance of cease and desist orders, the institution of civil actions for injunctive relief, and the imposition of fines and civil penalties. Id. at 36-302.05(a). In the case of such violations, the Mayor is required to first issue an order directing [the violator] to cease and desist from continuing such violation. Id. If the violator fails to comply with the order, the Mayor is authorized to seek preliminary and permanent injunctive relief in any court of competent jurisdiction to enforce the law. Id. Criminal actions are also authorized and, upon conviction, the violator may be subject to a fine not to exceed $1,000 or imprisonment for not more than 90 days, or both. Id. at 36-302.05(b).

In contrast, the authority to enforce Subchapter III is vested exclusively in service station dealers, in two separate subsections. First, Subsection 36-303.04 authorizes certain non-judicial remedies for service station dealers where the provisions of Subchapter III are violated. Second, Subsection 36-303.06, entitled Civil Actions, authorizes dealers to institute private civil actions for damages, declaratory and injunctive relief, specific performance, and attorneys fees. No other person or entity is authorized to bring a civil action under Subchapter III. In short, the RSSA provides an elaborate and carefully crafted enforcement scheme that provides different means of enforcement, and different civil and criminal remedies, for violations of the RSSAs different subchapters. The RSSA, however, does not provide a role for the Attorney General in enforcing any provision of Subchapter III, leaving such enforcement exclusively to the service station dealers whose marketing agreements the statute is designed to protect. III. ARGUMENT

In the instant case, the Attorney General seeks to enforce a provision of Subchapter III of the RSSA. The provision at issue, Section 36-303.03(a)(6), prohibits distributors from including certain exclusivity provisions in the marketing agreements they enter with service station dealers. The Attorney General seeks to enforce this section, notwithstanding (i) the absence of any explicit statutory authority for enforcement by the District; (ii) the fact that service station dealers are authorized to sue distributors in the event of any violation of their Subchapter III rights; and (iii) the absence of any service station dealer who claims that his rights have been violated. The Attorney General apparently believes his parens patriae authority entitles him to

enforce any statutory provision, including section 36-303 of the RSSA, as long as his purported objective is to vindicate the public interest. The parens patriae doctrine, however, provides no such authority. [T]he doctrine of parens patriae is merely a species of prudential standing . . . and does not create a boundless opportunity for governments to seek recovery for alleged wrongs against them or their residents. Serv. Emps. Intl Union Health and Welfare Fund v. Phillip Morris, Inc., 249 F.3d 1068, 1073, 346 U.S. App. D.C. 74, 79 (D.C. Cir. 2001); Arias v. Dyncorp., 738 F.Supp.2d 46, 54 (D.D.C. 2010); State of Sao Paulo of the Federative Republic of Brazil v. American Tobacco Co., 919 A.2d 1116, 1121 (Del. Sup. Ct. 2007). It is not an all-encompassing writ enabling the Attorney General to institute actions under any statute whenever he believes the public interest would be served. As will be demonstrated more fully below, the parens patriae doctrine does not provide the District with Article III standing where none otherwise exists. Table Bluff Reservation v. Phillip Morris, 256 F.3d 879, 886 (9th Cir. 2001); Qupaw Tribe of Oklahoma v. Blue Tee Corp., 653 F.Supp.2d 1166, 1180 (N.D. Okla. 2009). Each State or other jurisdiction invoking the doctrine must meet the requirements for Article III standing, as well as establish the type of quasi-sovereign interest described more fully below. Nor is the doctrine of parens patriae a cause of action in and of itself. New Mexico v. General Electric Company, 467 F.3d 1223, 1243, n.30 (10th Cir. 2006) ("the [parens patriae] doctrine does not create a cause of action."); State of New Hampshire v. Hess Corporation, 20 A.3d 212, 216 (N.H. 2011) ("Parens patriae does not provide a cause of action, but may provide

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a state with standing . . ."). A state or other jurisdiction invoking the doctrine must assert a legally sufficient common law or statutory cause of action.
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Moreover, if the cause of action is based on a statute, the statute must authorize an action by the State. See, Connecticut v. Physicians Health Services of Connecticut, Inc., 287 F.3d 110, 120 (2d Cir. 2002) (whether or not a State has parens patriae standing under Article III, State may not bring suit if the statute does not permit it); Illinois v. Life of Mid-Am. Ins. Co., 805 F.2d 763, 766 (7th Cir. 1986) (RICO statute not intended to permit a parens patriae proceeding); Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251, 260-66, 92 S.Ct. 885, 890-894, 31 L.Ed.2d 184 (1972) (states cannot bring parens patriae actions under 4 of the Clayton Act because Congress did not intend to allow such suits). For the reasons that follow, the instant complaint should be dismissed on two grounds. First, the complaint falls far short of alleging the requirements for parens patriae standing, which include the normal Article III requirements and, in addition, the assertion of a quasi-sovereign interest. Second, the complaint fails to state a claim upon which relief can be granted. The only cause of action asserted by the complaint is a claim under Section 36-303.01 of the D.C. Code.

For examples of types of causes of action asserted in parens patriae cases, see, Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 594-95, 102 S.Ct. 3260, 73 L.Ed.2d 995 (1982) (discrimination in violation of Wagner-Peyser Act, 29 U.S.C. 49, et seq. and Immigration and Nationality Act, 8 U.S.C. 1101, et seq.); Arias v. Dyncorp, 738 F.Supp.2d 46, 49 (D.C. 2010) (Alien Tort Claims Act.); New York v. Microsoft Corp., 209 F.Supp.2d 132, 136 (D.D.C. 2002) (Antitrust.); In re Tobacco/Governmental Health Care Costs Litigation, 83 F.Supp.2d 125, 127 (D.D.C 1999) ((1) common law fraud and misrepresentation; (2) conspiracy; (3) violations of RICO; (4) violations of federal and DC antitrust laws; (5) negligent misrepresentation, negligence, gross negligence; (6) negligent performance of voluntary undertaking); Connecticut v. Physicians Health Services of Connecticut, Inc., 287 F.3d 110, 112-13 (2nd Cir. 2002) (ERISA); Oregon v. Legal Services Corp., 552 F.3d 965, 967-968 (9th Cir. 2009) (Tenth Amendment Clause challenge to program integrity regulation governing the Legal Services Corporation.); Table Bluff Reservation v. Philip Morris, 256 F.3d 879, 881 (9th Cir. 2001) (Tribe alleged violation of tribal sovereignty, 42 U.S.C. 1983, equal protection, 42 U.S.C. 1981, the Privileges and Immunities Clause, the Thirteenth Amendment, and 42 U.S.C. 1985.). 11

Neither the District nor the Attorney General is authorized to enforce this section. Moreover, even if the Attorney General were authorized to enforce this section, the complaint fails to assert a legally sufficient claim under Section 36-303.01(a)(6). A. The Complaint Does Not Meet the Requirements for Parens Patriae Standing 1. The District must satisfy the Article III requirements for standing as well as assert a quasi-sovereign interest.

No action may proceed in the courts of the District of Columbia unless the plaintiff meets the requirements for Article III standing. Grayson v. AT&T Corp., 15 A.3d 219, 229 (D.C. 2011); Bd. of Directors of Washington City Orphan Asylum v. Bd. of Trustees of Washington City Orphan Asylum, 798 A.2d 1068, 1073 (D.C. 2002). The requirements for Article III standing are well-established and well-known. Each plaintiff must establish an injury in fact, which is: (i) a concrete and particularized injury that is actual or imminent and non-speculative; (ii) that was caused by the defendants conduct; and (iii) that is capable of being remedied by the damages or injunctive relief requested by the complaint. Padou v. District of Columbia Alcoholic Beverage Control Board, 70 A.3d 208, 211 (D.C. 2013); Grayson v. AT&T Corporation, 15 A.3d 219, 246 (D.C. 2011). In addition to the Article III requirements, there are certain prudential aspects of standing that preclude claims even when an injury in fact is shown to exist. These prudential considerations prohibit claims for which the harm, although real, is shared by the general public in an undifferentiated manner. Padou v. District of Columbia Alcoholic Beverage Control Board at 211. See also, York Apartments Tenants Assn v. District of Columbia Zoning Commn, 856 A.2d 1079, 1084 (D.C. 2004). It is this prudential aspect of standing that the parens patriae doctrine is designed to address.

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The doctrine of parens patriae is a narrowly construed, judicially created exception to the normal rules of standing applied to private citizens . . . Arias v. Dyncorp, 738 F.Supp.2d 46, 53-54 (D.D.C. 2010) quoting Estados Unidos Mexicanos v. DeCoster, 229 F.3d 332, 335 (1st Cir. 2000), quoting Alfred L. Snapp v. Puerto Rico, 458 U.S. at 602. It relaxes the requirements for prudential standing by permitting a State to assert claims based on generalized physical or economic harm to the public at large. Service Employees International Union Health and Welfare Fund v. Philip Morris Inc., 249 F.3d at 1073, 346 U.S.App.D.C. at 79. This relaxation of the prudential standing requirements, however, is circumscribed and permitted only when certain clear-cut requirements are met. In Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 102 S.Ct. 3260 (1982), the Supreme Court described the requirements for invoking the doctrine, stating that the State may not bring a parens patriae action on behalf of particular citizens or groups of citizens: That concept does not involve the States stepping in to represent the interests of particular citizens who, for whatever reason, cannot represent themselves. In fact, if nothing more than this is involved-i.e., if the State is only a nominal party without a real interest of its own-then it will not have standing under the parens patriae doctrine. 458 U.S. at 600.
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To assert a real interest of its own, the State must assert a quasi-sovereign interest. Id. at 601. This interest was described in Snapp as an interest in the health and well-being- both physical and economic-of its residents in general. Id. 458 U.S. at 607 (emphasis added).

An exception to this rule is the common law authority of the State (dating from pre-modern times) to act as parens patriae for persons who are legally unable, on account of mental incapacity [or otherwise] to take proper care of themselves or their property. Snapp, 458 U.S. at 600.

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Where, as here, the complaint purports to address economic concerns, the District must allege widespread economic harm. To rise to the level of a quasi-sovereign interest, the injury must be to a substantial segment of [the] population, thus threatening the economy as a whole. Id. at 607. In Commonwealth of Pennsylvania v. Kleppe,
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the D.C. Circuit noted that the

Supreme Court upheld state standing to challenge actions whose clear and direct effects would be the substantial disruption of the states internal economy and impairment of the well-being of the citizenry. Commonwealth of Pennsylvania v. Kleppe, 533 F.2d at 673, 174 U.S.App.D.C. at 446, citing Pennsylvania v. West Virginia, 262 U.S. 553, 591, 43 S.Ct. 658, 663, 67 L.Ed.7d 1117, 1119 (1923). In the same case, the D.C. Circuit set forth the guidelines for determining whether a quasi-sovereign interest exists. First, there can be no standing where the primary thrust of the injury is to a narrowly limited class of individuals, and where the harm to the economy as a whole is insignificant by comparison. Kleppe, 533 F.2d at 675, 174 U.S.App.D.C. at 448. To establish such an interest, the direct impact of the alleged wrong [must] be felt by a substantial majority, . . . , of the states citizens, so that the suit can be said to be for the benefit of the public.
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Id.

The key elements of a quasi-sovereign interest are the substantiality of the injury and its impact on the general population. It thus appears that injury to the states economy . . .; if sufficiently severe and generalized, can give rise to a quasi-sovereign interest in relief as will

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Commonwealth of Pennsylvania v. Kleppe, 533 F.2d 668, 174 U.S.App.D.C. 441 (D.C. Cir. 1976).

Alternatively, the doctrine can be invoked if the direct effect of the injury is felt by less than a majority as long as the harm results in substantial generalized economic effects. Id.

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justify a representative action by the state. Kleppe, 533 F.2d at 675, 174 U.S.App.D.C. at 448. (emphasis added).
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A second important factor in determining whether parens patriae standing is appropriate is the presence or absence of a more appropriate party or parties capable of bringing the suit. Kleppe, 533 F.2d at 675, 174 U.S.App.D.C. at 448. See also, Tobacco Litigation, 83 F.Supp.2d at 134 (Parens patriae standing is rarely appropriate in the presence of a more appropriate party or parties capable of bringing suit.). Where a more appropriate party exists, parens patriae standing should be denied. In order to establish the requisite standing, therefore, the District must first demonstrate Article III standing, and then it must augment the Article III requirements with a quasisovereign interest.
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If the allegations of injury to D.C. residents do not meet the injury in fact

test of Article III, the inquiry ends there. See, New York v. U.S. Army Corps of Engineers, 896 See, also, e.g., New York v. Microsoft Corp., 209 F.Supp.2d 132, 150 (D.D.C. 2002) (injury in a suit brought by a state in its parens patriae capacity rests upon sufficiently severe and generalized harm to the welfare of that state's citizens, rather than harm to the proprietary interest of the state); In re Tobacco/Governmental Health Care Costs Litigation, 83 F.Supp.2d 125, 133 (D.D.C 1999) (harm must be felt by a substantial majority); Quapaw Tribe of Oklahoma v. Blue Tee Corp., 653 F.Supp.2d 1166, 1179-80 (N.D. Okla. 2009) (when filing a parens patriae action, a tribe must show that all or a substantial portion of its members have suffered an injury.); Navajo Nation v. Superior Court of the State of Washington for Yakima County, 47 F.Supp.2d 1233, 1240 (E.D. Wash. 1999) (The governmental entity must raise claims which affect all its members, not just a select few.); Pennsylvania v. NCAA, No. 1:13-cv00006, 2013 WL 2450291 at *12 (M.D. Pa. June 6, 2013) (2013) (Injury to the state's economy or the health and welfare of its citizens, if sufficiently severe and generalized, can give rise to a quasi-sovereign interest in relief justifying an action brought in parens patriae.). Oregon v. Legal Services Corp., 552 F.3d 965, 970-71 (9th Cir. 2009). See also, e.g., Table Bluff Reservation v. Philip Morris, 256 F.3d 879, 886 (9th Cir. 2001) (before plaintiffs can satisfy parens patriae requirements, they must first allege injury in fact to the citizens they purport to represent). See also, New York v. Microsoft Corp, 209 F.Supp.2d 132, 149 (D.D.C. 2002) (parens patriae plaintiff must establish that its interest satisfies the constitutional minimum of Article III standing); Pennsylvania v. NCAA at *12-13. This inquiry is to determine whether the alleged injury is concrete and particularized and actual or imminent and fairly traceable to the defendants conduct. Arias v. Dyncorp., 738 F.Supp.2d 46, 49 (D.D.C. 2010). 15
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F.Supp.2d 180, 195 (E.D.N.Y. 2012) (because the court holds that there is no injury-in-fact, it does not reach the issue of whether New York has asserted a quasi-sovereign interest). If the minimum requirements of Article III standing are met, the court turns to the second part of the test, which is to determine whether the injury is sufficiently severe and generalized to create a quasi-sovereign interest. Kleppe, 533 F.2d at 675, 174 U.S.App.D.C. at 448. The court must also determine whether there is a more appropriate party or parties capable of bringing suit. By proceeding in this manner, the Court can determine whether [a] quasisovereign interest [is] sufficiently concrete to create an actual controversy between the State and the defendant. Snapp, 458 U.S. at 601. 2. The District has not asserted an injury in fact or a quasi-sovereign interest.

The plaintiff bears the burden of establishing Article III standing. Dominguez v. UAL Corp., 666 F.3d 1359, 1362, 399 U.S.App.D.C. 92, 95 (D.C. Cir. 2012); Saucier v. Countrywide Home Loans, 64 A.3d 428, 447 (D.C. 2013). Moreover, the facts necessary to establish standing must be clearly apparent on the face of the complaint. Baker v. U.S., 722 F.2d 517, 518 (9th Cir. 1983) (citations omitted). The complaint in the instant case makes its only reference to the effect of the alleged violations at paragraph 33, stating: These violations deny independent retail dealers selling Exxon-branded gasoline in D.C., and the many thousands of consumers in D.C. who purchase such gasoline, the benefits of competition in the supply of Exxon-branded gasoline. This allegation is insufficient to confer standing on the District for the following reasons: (a) The Retail Dealers

First, it should be clear that the Attorney General does not have parens patriae standing to represent the interests of 27 individuals who operate the Exxon service stations at issue in this

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case. The concept [of parens patriae] standing does not involve the States stepping in to represent the interests of particular citizens who, for whatever reason, cannot represent themselves. Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. at 600. Indeed, it is not even alleged that the 27 dealers are residents of the District. To assert a quasi-sovereign interest, the complaint must allege facts sufficient to show injury to a substantial majority of the Districts residents. The injury must be sufficiently severe and generalized to threaten the economy as a whole. No such injury is alleged in the complaint. Second, the complaint must allege factual allegations to establish injury-in-fact. It cannot rely on non-factual conclusory assertions. Grayson v. AT&T Corp., 15 A.3d 219, 247 (D.C. 2011) (Court required to determine whether plaintiff alleged facts sufficient to demonstrate standing in the context of a motion to dismiss.); Rempfer v. Sharfstein, 583 F.3d 860, 868-69, 388 U.S.App.D.C. 226, 234-35 (D.C. Cir. 2009) (plaintiffs must allege facts essential to show standing); Danvers Motor Co. v. Ford Motor Co., 186 F.Supp.2d 530, 538 (D.N.J. 2002) (motion to dismiss granted where plaintiffs failed to allege on the face of the complaint facts required to establish the injury-in-fact element of standing). The language alleging a denial of the benefits of competition is a non-factual, conclusory assertion set forth in a vague and nondescript manner. Such nondescript and

conclusory allegations are insufficient to meet the plaintiffs burden to allege a concrete and particularized injury. Brown v. F.B.I., 793 F.Supp.2d 368, 374 (D.D.C. 2011). To the extent that the allegations of the complaint directed to standing are conclusory, the court may simply disregard them. Chavez v. Illinois State Police, No. 94-C-5307, 1999 WL 592187 at *3 (N.D. Ill. Aug. 2, 1999).

17

Third, the complaint does not allege that any dealer has a desire to purchase Exxon branded motor fuels from a supplier other than defendants Anacostia and Springfield. Nor is there any allegation that another supplier of Exxon branded motor fuels has offered to supply a dealer at a price below (much less appreciably below) the prices charged by defendants. Thus, the legal issue concerning the proper interpretation of Section 36-303.01(a)(6) is presented in the abstract, and the complaint seeks the type of advisory opinion that the courts are without authority to issue. Smith v. Smith, 310 A.2d 229, 231 (D.C. 1973). Fourth, the words injure, injured, injury, and harm appear nowhere in the complaint. Instead, the District invites the Court to infer some unidentified harm by reading into the complaint something that appears nowhere therein. Any harm implied from the benefits of competition language, however, is entirely speculative. The courts require more than

unadorned speculation and conclusory allegations to establish standing. Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 44, 96 S.Ct. 1917, 1927, 48 L.Ed.2d 450 (1976). Fifth, the RSSA affords the dealers an express right of action for any violation of D.C. Code section 36-303.01(a)(6) and express remedies to deal with specific injuries. A dealer that has suffered a real and concrete injury is a far more appropriate party to bring an action under section 36-303.01(a)(6) than the District of Columbia, especially where, as here, the Districts action is presented in the abstract without any particularized allegations of injury. (b) Consumers

The complaint also alleges that consumers have been denied the benefits of competition. To the extent it is meant as an allegation of injury, it is conclusory and vague. There are no factual allegations describing how consumers have been injured, how the injury

18

supposedly stems from any of the defendants actions, or how the injunction requested by the complaint would redress the injury. Nor is there any description of what the supposed benefits of competition are or how consumers have been deprived of them. After such a lengthy antitrust investigation of

Anacostia, one would expect the Attorney General to have alleged a well-defined injury to competition, if one existed. The vagueness of the complaint, therefore, appears deliberate and contrived. It is a somewhat less than artful attempt to avoid any discussion of injury, leaving the Court and the defendants in the dark as to how consumers have been injured, how many consumers have been injured, and how their injuries translate into some discernible harm to the economy of the District. Clearly, citizens of the District who do not drive, or who rely exclusively on the Metro, would not be harmed. Nor would there be any harm to District citizens who purchase gasoline in Northern Virginia, in Montgomery or Prince Georges County, or elsewhere in Maryland. The same can be said of citizens who purchase gasoline in the District at the City's 80 or so other service stations. And, even those who regularly purchase at the 27 stations at issue in this case can purchase gasoline elsewhere if they believe that prices, quality, or service is better at other locations. As the Attorney General stated in dropping his antitrust investigation of defendants, [D.C.] residents had other alternatives . . . to go and get cheaper gasoline. There is no allegation that anything has changed since this statement was made. In short, the benefits of competition language is purposely vague and conclusory. It is insufficient to establish an injury-in-fact, much less an injury so severe and generalized that it threatens the economy of the District. To establish standing, the [f]actual allegations must be

19

enough to raise a right to relief above the speculative level . . . and dismissal under Rule 12(b)(6) is appropriate where the complaint fails to allege the elements of a legally viable claim. (citations omitted). Onewest Bank, FSB v. Marshall, 18 A.3d 715, 721 (D.C.2011). For all of these reasons, the complaint fails to allege sufficient facts to demonstrate Article III standing or the existence of a quasi-sovereign interest, and this Court lacks jurisdiction over the subject matter of the claims set forth in the complaint. B. The Complaint Fails to State a Claim Upon Which Relief Can Be Granted 1. The District of Columbia has no right to enforce Subchapter III of the RSSA.

As stated above, the parens patriae doctrine is not a cause of action. Any State or other jurisdiction relying on the doctrine must assert a legally sufficient cause of action under the common law or under a statute. If the purported cause of action is statutory, the statute must authorize an action by the State.
15

No statutory authority exists for the Mayor, the District, or the Attorney General to enforce any provision of Subchapter III of the RSSA. Nor may such a right of action (and a corresponding remedy) be implied absent [a] clear indication that doing so would frustrate [the legislatures] clear intention or yield a patent absurdity. Columbia v. Baretta, U.S.A., 872 A.2d 633, 651 (D.C. 2005). To determine the intent of the legislature, the primary source is the text of the enactment itself. Id. In Baretta, the District of Columbia Court of Appeals reviewed the text of a statute holding gun manufacturers liable in tort for damages traceable to assault weapons, and it refused to imply a right of action for the District when no such right was included in the statute.
15

(emphasis added).

District of

Physicians Health Services, 287 F.3d at 120; Life of Mid-Am. Ins. Co., 85 F.2d at 766; Hawaii v. Standard Oil, 405 U.S. at 260-66, 92 S.Ct. at 890-94. 20

See, id. at 652 (Applying these standards, we hold that the SLA confers a right of action on individuals who are injured, but not the District of Columbia). The same is true here. The RSSA provides a right of action to retail dealers who are injured by a violation of Section 36-303.01(a)(6), but not the District of Columbia. This conclusion applies with all the more force where, as here, the RSSA explicitly grants the Mayor the authority to enforce Subchapters II and IV of the Act, and omits any mention of the Mayor or the District in enforcing Subchapter III. Under the doctrine of expressio unius, the legislatures expression of one remedy implies the intent to exclude others. Howard University Hospital v. District of Columbia Department of Employment Services, 952 A.2d 168, 174 (D.C. 2008), quoting Mack v. United States, 637 A.2d 430, 433 n.6 (D.C. 1994). Where the District was provided a cause of action to enforce Subchapters II and IV, it is highly improbable that [the legislature] absentmindedly forgot to mention the District in enforcing Subchapter III. Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 20, 100 S.Ct. 242, 247, 62 L.Ed.2d 146 (1979). Indeed, where the legislature has expressly provided a remedy to redress the violation of a statute, the courts must be chary of reading others into it. Brantley v. D.C., 640 A.2d 181, 184 (D.C. 1994). Thus, in Connecticut v. Physicians Health Services of Connecticut, Inc., the Second Circuit refused to imply a right of action for the State of Connecticut in enforcing a section of ERISA where no right of action was conferred on the State. The Second Circuit recognized that States are empowered to sue under certain sections of ERISA but not under the one at issue in the case. The Courts conclusion that Congress intentionally omitted any right for states to sue under the section at issue found strong support in the fact that states are expressly empowered to bring actions under other sections of the same statute. Id. 287 F.3d at 121.

21

Here, as well, the RSSA expressly provides the District with a right of action and remedies under Subchapters II and IV, which evinces a legislative intent to exclude the District as a party entitled to enforce Subchapter III. The failure to mention the District or the Mayor in Subchapter III was deliberate, as is indicated clearly in legislative history of the Act. In discussing the additional duties and responsibilities that enforcement of the RSSA would impose on the District of Columbia budget, the Committee on Transportation and Environmental Affairs noted the additional duties of the Mayor in enforcing Titles I and III of the Bill (which became Subchapters II and IV of the RSSA). The Committee was, however, unable to predict the number of potential violations and, hence, whether there would be a substantial increase in enforcement workloads. Report at 63. However, with respect to Title II of the Bill (which became Subchapter III of the RSSA), the Committee predicted a negligible budgetary impact because Title II deals exclusively with private rights. Report at 64. (emphasis added). Where, as here, the statute provides only for private enforcement of Subchapter III, the District lacks authority to enforce its provisions. 2. The complaint fails to state a legally sufficient claim for violations of D.C. Code Section 36-303.01(a)(6).

The complaint alleges a violation by defendants of section 36-303.01(a)(6). The sole basis for this claim is that defendants marketing agreements prohibit dealers from purchasing Exxon branded motor fuels from third-party suppliers. Complaint at 26. As will be demonstrated below, this allegation is insufficient to state a claim under the relevant section as a matter of law. Section 33-303.01(a)(6) of the RSSA affords dealers the right to purchase motor fuels from a supplier of their choice, but only under certain conditions. One such condition is that the

22

motor fuels purchased from third-parties not be sold under the distributors trademark, which, here, is the Exxon trademark.
16

Thus, the RSSA provides that retail dealers can purchase any

brand of motor fuels from third-parties, or purchase generic, unbranded motor fuels, but not Exxon-branded motor fuels. The so-called exclusivity provision of the RSSA is set forth at Section 36303.01(a)(6). It provides that no marketing agreement shall: (6) Prohibit a retail dealer from purchasing or accepting delivery of, on consignment or otherwise, any motor fuels, petroleum products, automotive products, or other products from any person who is not a party to the marketing agreement or prohibit a retail dealer from selling such motor fuels or products, provided that if the marketing agreement permits the retail dealer to use the distributors trademark, the marketing agreement may require such motor fuels, petroleum products, and automotive products to be of a reasonably similar quality to those of the distributor, and provided further that the retail dealer shall neither represent such motor fuels or products as having been procured from the distributor nor sell such motor fuels or products under the distributors trademark. (emphasis added). The term such motor fuels as used in the above-quoted statutory subsection means the motor fuels purchased by the dealer from a supplier who is not a party to the marketing agreement. When a term is used repeatedly in the same statutory provision, it is intended to have the same meaning throughout.

The distributors trademark is referred to in the definition of marketing agreement as any trademark owned, leased, or otherwise controlled by the distributor for the purpose of engaging in the retail sale of motor fuel at a retail service station. D.C. Code section 36-301.01(7). Exxons Distributor PMPA Franchise Agreement with Anacostia and Springfield (which was filed concurrently with ExxonMobils motion to dismiss) grants Anacostia the right to use the Exxon trademark and to grant the use of those Proprietary Marks to Distributors franchised lessee or franchised independent dealers. Id. at 1(a)(1) and (2). Because the Exxon Distributor PMPA Franchise Agreement is referred to in the Complaint at 2, 5, 16, 18, and 19, it is thereby incorporated therein. See, Pisciotta v. Shearson Lehman Bros., 629 A.2d 520, 525 n.10 (D.C. 1993). None of the dealers at the 27 stations at issue in this case currently are authorized to use the Exxon trademark except through a marketing agreement with Anacostia and their right to use the mark will terminate if they do not comply with the requirements of the marketing agreement. 23

16

As the District of Columbia Court of Appeals stated in Ruffin v. United States, No. 12CF-596, 2013 WL 4746792 (D.C. Sept. 5, 2013), there is a presumption that identical words used in different parts of the same act are intended to have the same meaning. Id. at *7. Indeed, this rule of statutory construction is surely at its most vigorous when a term is repeated within a given sentence. Id., citing Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581, 595, 124 S.Ct. 1236, 157 L.Ed.2d 1094 (2004) (quoting Atl. Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 433 (1932)). Here, the term such motor fuels is used four times in the same sentence, and it is surely intended to have to the same meaning each time it is used. It refers to the motor fuels purchased from a person who is not a party to the marketing agreement. It states that a retail dealer may not sell such motor fuels or products under the distributors trademark. (emphasis added). This language is clear and unambiguous, and it should be interpreted strictly in accordance with its plain meaning. See, 1137 19th Street Associates, Limited Partnership v. District of Columbia, 769 A.2d 155, 161 (D.C. 2001). In short, Section 36-303.01(a)(6) was designed to provide dealers with various alternative sources of motor fuels for resale at their stations. This flexibility, however, is not unlimited. While dealers can purchase any other brand of motor fuels from third-party suppliers, or purchase unbranded, generic motor fuels, they cannot purchase products that can only be sold under the distributors trademark. Thus, in the only case decided under this provision, the Court limited its consideration to whether the plaintiff-dealers could purchase motor fuels from third-party suppliers that were not

24

intended to be sold under the distributors trademark. Kazem Kazemzadeh v. Eastern Petroleum Corporation, Case No. 2006-CA-9077B, slip op. at 14-15 (Super. Ct. D.C. Aug. 19, 2010).
17

In Kazemzadeh, the marketing agreement between each dealer and the distributor, Eastern Petroleum, required that the dealers purchase all of their motor fuels (BP as well as other motor fuels) from Eastern. Unlike the circumstances presented here, the plaintiffs in Kazemzadeh did not claim an entitlement to purchase BP branded motor fuels from another supplier. They claimed a right to purchase non-BP motor fuels from a distributor of their choice. Indeed, the Court characterized the plaintiffs allegations as follows: Plaintiffs argue that their marketing agreements with BP and Eastern violate Section 36-303.01(a)(6) because the marketing agreements, the deed restrictions and the Eastern DSAs contain absolute prohibitions on purchasing and reselling any non-BP motor fuel not purchased from Eastern. Id. at 14 (emphasis added). In granting summary judgment in favor of the plaintiffs, the Court rejected the defendants claim of absolute exclusivity, holding that: In the context of this case, Plaintiffs would be permitted to sell other brands of motor fuel so long as the quality of fuel is similar and there is no representation that the other brands were obtained from BP or other brands under BPs trademark. Id. at 15 (emphasis added). Because motor fuels purchased from third-parties could not be sold under the BP trademark, there was no consideration given to whether the Kazemzadeh plaintiffs could purchase BP branded motor fuels from a supplier other than Eastern Petroleum. In the instant case, the Districts claims are the exact opposite of the claims asserted in Kazemzadeh. Here, the District is not concerned with a dealers ability to purchase other (i.e., non-Exxon) motor fuels from a supplier of their choice. The complaint filed by the District asserts a dealers right to purchase Exxon-branded motor fuels from third-party suppliers.

17

A copy of the Courts decision in Kazemzadeh is included herewith as Attachment D. 25

Indeed, the District hopes to expand the reach of Section 36-303.01(a)(6) beyond its plain meaning to include requirements that were never intended by the legislature. The Court, however, should not read into an unambiguous statute language that is clearly not there. Carter v. State Farm Mut. Auto. Ins. Co., 808 A2d 466, 472 (D.C. 2002). Although Section 36-303.01(a)(6) of the RSSA provides the dealers with wide latitude in purchasing motor fuels from other suppliers, it does not provide a right to purchase motor fuels that may only be sold under the Exxon trademark. For these reasons, the complaint fails to state a claim under Section 36-303.01(a)(6) upon which relief can be granted. IV. CONCLUSION

Based on the foregoing, defendants motion to dismiss should be granted.

Respectfully submitted, /s/ Alphonse M. Alfano ALPHONSE M. ALFANO (Bar #163444) Bassman, Mitchell & Alfano, Chartered 1707 L Street, N.W., Suite 560 Washington, D.C. 20036 Ph: (202) 466-6502; Fax: (202) 331-7510 Email: bma@bmalaw.net Attorney for Defendants Capitol Petroleum Group, Anacostia Realty, LLC, and Springfield Petroleum Realty, LLC

26

ATTACHMENT A

;;

GOVERNMENT OF THE DISTRICT OF COLUMBIA


O}<'FICE OF THE ATTORNEY GENERAL

***
June 17,2011 BY HAND

Councilmember Mary M. Cheh, Chairperson Committee on Government Operations and the Environment Council of the District of Columbia 1350 Pennsylvania Avenue, N.W. Washington, DC 20004 Re: Bill 19-299, the "Retail Service Station Amendment Act of2011"

Dear Chairperson Cheh: I am pleased to provide the Committee on Government Operations and the Environment with the views of the executive branch of the District of Columbia Government ("District") in support of Bill 19-299, the "Retail Service Station Amendment Act of2011." In recent years, the Attorney General's office has sought to apply consumer protection and antitrust laws to protect D.C. consumers from anti-competitive practices by sellers of gasoline that result in higher prices to consumers. Bill 19-299 would provide a major assist to our efforts. It would amend the provision of the Retail Service Station Act of 1976 that has prohibited gasoline producers, refiners, and manufacturers from opening or operating gasoline service stations in D.C. D.C. Official Code 36-302.02. The proposed amendment would extend this prohibition to "jobbers, " which are defined by statute as "Wholesale supplier[ s] or distributor] s1 of motor fueL" D.C. Official Code 36-301.0l(6A). Jobbers that currently operate gasoline service stations in D.C. would have two years to come into compliance with the new restriction. The primary benefit of prohibiting jobbers from operating gasoline service stations in D.C. is to make it more difficult for jobbers to use any market power they may have as the owners of multiple D.C.-area service stations in a way that increases the retail gasoline prices charged by D.C. stations. The recent trend towards concentration ofD.C. service station ownership in the hands of a few major jobbers leads the Administration to conclude that additional statutory protection is needed. For this reason, we support Bill 19-299. We point out, however, an inconsistency between the caption of the bill and the statute it is amending. The long title says the intent of the bill is to prohibit gasoline distributors from

441 Fourth Street, NW, Suite 1100S, Washington, D.C. 20001, (202) 724-1301, Fax (202) 741-0580

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Councilmember
;

Mary M. Cheh, Chairperson

June 17,2011
Page 2

"owning and operating retail service stations in the District of Columbia." The statute, however, as it presently exists, simply prevents producers, refiners, and manufacturers from "opening" and "operating" retail gas stations. The premise of the existing law is that those covered - i.e, the producers, manufacturers, and refmers - can continue to own the stations but cannot operate them; the stations need to have independent operators. Thus, if jobbers and wholesalers were simply added to the list of those covered by the law, they could continue to own the stations but could not operate them. If the intent of the legislation is to prevent jobbers from "owning" the stations and the real estate on which they are located, as the long title seems to suggest, then the text of the bill would need to be amended to reflect that intent. Back in May 2007, at a Council Committee hearing on Bill No. 17-142, the "Retail Service Station Clarification Amendment Act of2007," the Office of the Attorney General presented testimony that offered some support for allowing jobbers to own and operate gas stations in D.C. The focus at that time was to keep producers, manufacturers and refiners from controlling the price at the pumps. It was believed that jobbers would be a pro-competitive force. According to the written testimony, "[bJy allowing jobbers to operate their own retail stations in D.C., Bill 17142 ha[ d] the potential to encourage retail competition by increasing the number of stations that [were] not controlled and supplied by the maj or oil companies." Testimony of Bennett Rushkoff (May 24,2007). The Committee also received a letter from the Federal Trade Commission staff in support of allowing jobbers to operate gasoline service stations. The FTC staff stated that vertical integration of suppliers and service stations is often "based on efficiency concerns," and that "[ljimiting the ability of suppliers to operate service stations when it is efficient to do so is likely to lead to higher retail prices." Letter from FTC Office of Policy Planning, Bureau of Economics, and Bureau of Competition (June 7, 2007). Since 2007, the landscape has changed dramatically in D.C. 's retail gasoline market. In 2009, Exxon sold all of its D.C. gasoline stations, resulting in just two major gasoline wholesalers owning a substantial majority ofD.C.'s gasoline stations. In contrast to 2007, when the Office of the Attorney General suggested in its written testimony that the Council might "consider additional statutory changes in order to allow D.C.'s independent [gasoline station] operators to operate more independently of particular oil companies" (emphasis added), now the primary concern at the retail level is the high proportion of D.C. gasoline stations owned by particular wholesalers. Last month, I indicated publicly that, as part of the District's efforts to try to reduce the exorbitant prices that D.C. consumers pay for gasoline, this Office is actively investigating whether there have been antitrust law violations in the D.C. gasoline market that have resulted in unnecessarily high prices. That investigation is continuing. In D.C., as in most other large cities, a major constraint on retail gasoline competition is the relatively small number of retail stations. In addition, in many parts of D.C., it is not easy to find suitable sites for new stations. Given the significant barriers to entry into D.C. 's retail gasoline

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Councilmember Mary M. Cheh, Chairperson

June 17, 2011


Page 3

market, the recent concentration of gasoline station ownership in the hands of a small number of wholesalers has the potential to enable those wholesalers to exercise market power, resulting in higher retail prices for consumers. The District's current law on gasoline marketing agreements makes it harder than it would otherwise be for a wholesaler to exercise market power through direct manipulation of gasoline prices. The law does so by prohibiting a distributor from requiring a station operator - including the operator of a station owned by the wholesaler itself - to buy gasoline from that distributor. D.C. Official Code 36-303.01(a)(6). Under this law, a distributor may seek to secure a station operator's loyalty through better prices or better service, but not through contractual restraints on the station operator's ability to buy gasoline from other suppliers. Put another way, while District law does not permit a gasoline station operating under the Brand "X" trademark to purchase Brand "Y" gasoline and dispense it from a Brand X pump, the law does give the Brand X gasoline station the right to purchase Brand X gasoline from any available supplier. The threat to consumer welfare posed by these market conditions calls for vigorous enforcement of federal and District antitrust laws, careful antitrust review of transactions that could further increase market concentration, and serious efforts to reduce unnecessary barriers (including regulatory barriers) to the opening of new gasoline stations. Bil119-299 is an important step in the right direction. By forbidding wholesalers from directly operating their D.C. gas stations, Bill 19-299, together with the District's existing restrictions on gasoline marketing agreements, would help to prevent wholesalers from exercising market power. If not restricted in this way, wholesalers could maintain their positions as the exclusive suppliers of particular gasoline stations simply by becoming the operators of those stations and choosing themselves as their suppliers. Accordingly, the Administration supports Bill 19-299. We fully support the bill as written. We further suggest that, either as part of this bill or as part of a future bill, the Council may wish to consider additional statutory measures that could offer consumers more effective long-term protection from the combination of (1) high concentration in the ownership of D.C. gasoline stations and (2) significant barriers to the entry of new retail gasoline stations in D.C. First, we respectfully request the Council to consider providing the Attorney General with express authority to seek injunctions and civil penalties, on behalf of the public, against distributors that violate the District's gasoline marketing agreement law or engage in any other presumptively anti-competitive practices that could have the effect of increasing prices at the pump. Second, if the current bill is intended to allow wholesalers to own gasoline stations, but not operate them, then a new bill should provide that wholesalers with a high concentration of gasoline station ownership may not use their market power, over time, in other ways besides increasing wholesale gasoline prices. For example, a wholesaler with a high enough concentration of gasoline stations could choose to raise rents and/or provide little or no facility maintenance. The station operators would probably have little choice but to pass on their higher rental and maintenance costs in the form of higher retail prices to consumers .

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Councilmember

Mary M. Cheh, Chairperson

June 17,2011
Page 4

In conclusion, passage ofBi1l19-299 should increase the effectiveness of the District's gasoline marketing agreement law as a means of preventing gasoline wholesalers, at least in the short term, from exercising market power to the detriment of consumers. We support Bill 19-299, commend the Members of the Council for its introduction, and urge its favorable consideration by the Committee, and, ultimately, by the full Council. Sincerely,
\.

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"'-""- /

~v "'-{ ~U rr{,in B. Nathan Attorney General for the District of Columbia

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ATTACHMENT B

Editorials The Washington Post September 3, 2013 A12


I ~

,Let them pump


A lawsuit over I}~C.fuel pricesis'unnecessory andnoasteful. '
require the latter to purchas, e fuel eXclu,sivelY from ,siinilar t,o operating agreements and dealer arhim. Supposedly these contracts violate D.C?s rarigements in jurisdictions across the country." Retail Service Stations Act; the city's lawsuit, Mr. This happens to be true: Mr. Mamo's business . Nathan said, will "lncreasewholesale ccmpetition, model is consistent with other forms of "vertical and bring down retail prices at the pump?' control" tliat have long been a; feature of the This is hard to square with Mr. Nathan's decisjon 'gasoline market - and that have, a generally nottofileanantitrustsuitagainstMr.Mamqayear benign. impact on efficiency and 'prices at the :ago. Mer exhaustive investigation, Mt. Nathan pump, according to a 2005 study by the University concludedthat, "In SOmequarters of the city, there of California Energy Institute. t, I, was an increase in prices,' but in many other parts We don't doubt that Mr. Marne drives. 'a hard of the city, there was' no increase in the gasoline, bargain with station operators or that they would prices, and in the parts ofthe Citywhere there was benefit from shopping among wholesalers, Nor do an increase, those residents had other alternawe doubt that both Mr. Mamo and his opponents tives ..:to go and get cheaper' gasoline?' have plenty of political clout and the will to It's also not clear that Mr. Mamo's contracts exercise it. violate the relevant section of the Retail Service What we do doubt - because neither the recent Stations. Act, which bars exclusive deals - ex~pt . history of local gas prices nor the economic when a distributor of branded gasoline, which is literature supports it - is that less leverage for Mr. what Mr. Mamo is, wants to, ensure that the Mamo would mean more for consumers. As likely, retailers using his brand provide fuel of "reasonthe station operators, not motorists, would pocket ably siinilar quality?' . ' the benefits. Surely Mr. Nathan can find better uses Responding to the lawsuit, MT. Mamo defended, for his limited resources than a lawsuit that won't' what he said are "legitimate operating agreements ?: 'materially .affect gas prices even in the unlikely that have been in place for years and that are event that it succeeds ..

'
'

HEN, DISTRI,' " CT GAS prices spiked to . over $4 per gallon in 2011, politicians ~ found a scapegoat in Eyob "Joe" Mamo, . ' the wholesaler Who supplies fuel to most, but not all, D.C. gas stations, Soaring prices reflected Mr. Marne's undue market power, not. objective conditions .such as the world price of , crude oil, officials cried, Thus began an attempted' rackdown on Mr. Marne that included' proposed legislation in the D.C:Council, an antitrust investi. gation by. the Gray administration and federal lawsuit bygas station operators. Mr. Mamo won each battle, basically because no one could prove that his business methods cause high gas prices - much less that they are illegal. For all of his alleged market manipulation, a gallon of regular unleaded in D.C. is almost 25 cents cheaper now than a year ago, 'according to the American Automobile Association. Some mogul." , Nevertheless', D.C. officials areresuming their" crusade against him. Last week,' Attorney General . IrviIr B. 'Nathan flied a lawsuit in D.C. Superior. Court seeking to overturn contracts between Mr. , Mamo and a.couple of dozen station operators that

an

ATTACHMENT C

T/EA Commi~tee

Report No.~on

Bill Nos. 1-333 and 1-39

Council of the District of Columbia

Report
City

Hall,

14th and E Streets,

N. W.

Fifth Floor

638-2223 or Government Code 137-3806

To From

council Memhers Jerry A. Moore, Jr., Chairman September


10, 1976

(J1l~~~'
~~i;th~~
;~n:. TransPortation and Environmental Affairs

Date

Subject Bill No. 1-333, the "Retail Service Station Act of 1976", and Bill No. 1-39, the "Retail Service Stations Act"

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rv

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The Committee on Transportation and Environmental Affairs, to which was referred Bill No. 1-333: To provide for the registration of persons selling, supplying, or distributing motor fuels, for a prohibition on the operation of retail service stations by producers, refiners, and manufacturers, for non-discriminatory use of voluntary allowances, equipment rental charges, and motor fuel apportionments, for certain non-waiverable conditions in marketing agreements, for certain riqhts, r~p~0nsi~ilities, and remedies relative to the termination, cancellation, and non-renewal of marketing agreements, for a moratorium on conversions to limited service retail service stations, and for other purposes, having considered the same, reports favorably thereon with amendments and recommends that the bill, as amended, do pass. The Committee on Transportation and Environmental Affairs, to which was referred Bill No. 1-39, having considered the same, reports unfavorably thereon and recommends that the bill do not pass. TABLE OF CONTENTS A. B. C. D. E. F. G. H. I. J. K. Legislative History .................. pp. Purpose and Effect ......................... pp. Committee Hearings and Public Comment .......... pp. Commi ttee Amendments ........................... pp. Section by Section Analysis of Bill No. 1-333, As Amende d. ............................. pp . Executive Comments ........................... pp. Fiscal Impact ................................... pp. Appendices A - G pp. Bill No. 1-38, As Introduced (APPENDIX H) pp. Bill No. 1-39, As Introduced (APPENDIX I) ........ pp. T/EA Committee Print (9/10/76) of Bill No. 1-333 2-3 3-35 35-39 40- 47 48-6 0
61-62 62-64

AI-G2 Hl-H3
11-'15

J .31~U-75

:~*~f.l:~~i:{t((t({{t({~;:;:;~~f~JJE~!HH[f::ff:f:;{[ITHtifft[{!{!{!!iI~f~~~~f-!:;:{~7!)~~~(\mL~~'1&~?j!2:jjj:~t;.~"i2Ef:f!.:;;:;;:{lI~:~~~f~f:tt~,~~~~~~~:.~~~~~~~~

- 26 -

:'~::JtM:

with some legal protection.,the Committee .believes. that these laws with their inherently difficult enforceability afford inadequate protection to retail dealers, particularly in light of the current pressures to convert independently operated retail service stations to directly operated retail service stations an e the total number of retail service ' ns. A marketing agreement under District of Columbia law is a nC'ontractn. Thus, the distributor/retail dealer relationship is governed by the general laws of contract, incluOing the provisions of the District of Columbia Uniform Commercial Code, Pub. L. No. 88-243, ~ 1 (December 30, 1973), D.C. Code, sees. 28:1-101 through 28:10-104 (1973 ed.), except where these laws are restrained by the principles of equity or are preempted by Federal or District of Columbia statutes. Unlike many other states, the District of Columb' has not enacted any specific preemptory statutes, such as a general franchising law. in economic strength, marketing position, business acurne~, ~~a available alternative courses of action between diatributors dnd retail dealers. These differences result in a significant disparity in bargaining power in the initial negotiation, subsequent modification, and enforcement of marketing agreements. A marketing agreement is essentially a "Contract of Adhesion". It is generally a standard form contract drafted by the distributor with very little or no input from the retail ~ealer or negotiation of marketing agreement terms .. Because of this disparity in bargaining power, distributors are able to dictate the terms of a marketing agreement to their own best advantage while taking unfair advantage of the prospective retail dealer. It is not uncommon for a distributor to impose unreasonable terms upon a retail dealer, to eschew the normal remedies provided by general contract laws, and to reserve a unilateral contract right to terminate, cancell, not renew, or modify a marketing agreement on short notice. As a result, retail dealers are generally denied the traditional perogatives and protections afforded to independent businessmen. In the event of an arbitrary, unreasonable, or discriminatory termination, 'cancellation, or.non-renewal of a marketing agreement or other abuse of the retail dealer by his distributor, the retail dealer is generally

~ !"'"",

0
e-~

~-..!

.0 0

----ThereTsge-n:eral-l-y---a-'-fremendous di fference

o
o

r"''''''~''''''''''''''''''-~:':!

-.. -_.. - .. __ ._.---

.--o- ..... -.-~=~_-,_

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- ..~"

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2B -

t .

::.:.-.: (1) to grant increased legal protection to retail dealers which they are unable to obtain for themselves without severely impeding or eliminating basic freedom of contract; (2) to clarify the contractual relationship between distributors and retail dealers by providing the parties with. express notice of their rights and responsibilities;
LO:.:".":.::

(3) to insure that distributors will treat retail dealers in an equitable manner;
t-

o
~.
~.!

(4) to end, to the extent possible, the arbitrary, unreasonable, and discriminatory terminations, cancellations, and non-renewals of marketing agreements and other abuses of retail dealers and unsavory practices by distributors; and (S) to enhance the independenc~ of reta': ~eal~rs in the operation of their retail service stations by reducing the control that distributors may exert on the retail prices and marketing practices on independently operated stations through both the marketing agreement and unjustified threats of termination, cancellation, and non-renewal and, thereby, enhance fair and honest competition and the ability of retail dealers to tailor their operations to the needs, preferences, and conveniences of their local customers. Title II of Bill No. 1-333 achieves these purposes by:

i"') -

c
0

t.::::::

..........

~-

(1) requiring distributors to disclose certain information, including any present plans for the future disposition of the retail service station, to the prospective retail dealer prior to entering into a marketing agreement (Section 4-202) ; (2) prohibiting the termination, cancellation, or nonrenewal of a marketing agreement unless such termination, cancellation, or non-renewal is based on one or more of the grounds specified in the legislation and is executed in accordance with specific notice requirements (Sections 4-203(b), (d), and (e; (3) granting the retail dealer a right to assign or ~ransfer his marketing agreement SUbject to approval by the distributor (Section 4-205);
;':::.""'-~

'.'h..._

~:~::::~

..:::\::.:::.: ~ :::m~~:~~~~~~~~~~::~':: ~:;::~.:.:::}!j;:'::: ::.~:.'=I:'l:X~.:~T:'::.~J.~JJjj:;~;~;~i:::;;::::~:;:~~: :~:::::>.:.:::~:::.:~~::.::.:::::;:,~,,:-:.oo~~-;-;~;;;~:;;:;;:::;::::;~;~:;~:;~;f:i~~;;:: =:;;;;;;;;~;~~~;~jjj.:jJH;:::;:j}#;j;;;jj:-';2.:;.::::':':'::::::~jj:;j~::::::j?7S?7Sl i=?:PjE:t :-.~';-;'

- 63 -

t~~:~
r..;::::::

E;;;;;; .-.._-.
1-333, including the impact of this bill on the personnel, facilities, and budgetary requirements of the DECO, on several occasions, this fiscal analysis was never submitted to the committee. Titles I and III of Bill No. 1-333 will impose the following additional duties and responsibilities on the District of Columbia Government: (1) processing of two informational statements, i.e., declarations of desire or intent to sell, supply, or distribute motor fuels (Section 3-101(a and notifications of discontinuance (Section 3-101(b; enforcement of violations of Sections 3-101(a), 3-102(a), 3-102(b), 3-103, 5-301(b), and 5-301(c); promulgation of rules and regulations with respect to the temporary operation of retail service stations by refiners, pr..iC'JC:2rs, and manufacturers (Section 3-l04(ai processing of requests for permission to temporarily operate a retail service station or for exemptions from the specified divorcement date (Sections 3-104(a) and (b; and conducting a study of the adequacy of existing motor fuel sale facilities and repair and maintenance service facilities (Section 5-301(d.

~,_._ ....
.
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1'

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,"

(2)

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(3)

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0 0

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(4)

-:::':':'~':~'

I:::::::::

t::.::::::~

(5)

~~::~f.~
"

l::'.:::",-:': :::::::::!:

The Committee does not believe that items (1), (3), or (4) will result in any serious adverse financial impacts on the District of Columbia, either short-term or long-term. For the most part, these duties can be absorbed into existing departmental structures with minimal additional personnel, facilities, supplies, or other resources. The Committee is unable to predict the number of potential violations of Titles I and III of this bill and, therefore, can not determine whether or .not there would be a substantial increase in

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~~~

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:;::.or.::;.

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.-

._._

_-.-_._-

....... _

:.~ <,:'.;:.::.:.:::.:.:.:.::.::.:.:.:.:.: ..:.:.. :.:.,.:.:::.:.:.".::.:::::::::::::::::::::::::::::::::::::::. :;:::::::::.:.:.:.:.:.::.: :.:.::.:.:.:.:.:.:.:~.~~~.

:.:::;;;;;:j~5~2J'iiii::i:::::~~i{j;;;~:;~~VH:YHfLEiH3ffEii::eE?iEi~25E::L~:L/E:EK:\\

..-

64

L::~

L:::

....

.~~
enforcement workloads. With respoect to the study mandated by Section 5-301(d), the Committee notes that this study would not continue beyond June 1, 1978 and, therefore, it should not have any long-term adverse . financial impacts. Title II of Bill No. 1-333 deals exclusively with private rights and, therefore, should have negligible budgetary impacts on the District of Columbia. ~/ H.
~L~

Committee

Action

:.0
.. .:t
C',~
:~

On September 10, 1976, he Committee on Transportation and Environmental Affairs me in regular session to take action on this legislative plJoposal through a mark-up of and vote on a draft Committee Print and a draft Committee Report. Present at this meet1ing were Jerry A. Moore, Jr. I Chairman of the Committee, and Julius Hobson, Committee Member. Committee Member Nadine Winter had notified Chairman Moore that she would not be able to attend this meeting because of other Council matters. Mr. Anthony Rachal, Staff Director of the Committee, noted that several representatives of the petroleum industry had requested that a public hearing be conducted by the Committee on Bill No. 1-333. Mr. Rachal stated that an additional public hearing was not required and that, in the Committee staff's opinion, such a hearing was unnecessary, particularly in light of the joint public hearings conducted on October 8, 1975 with respect to Bill Nos. 1-38 and 1-39 .sA/ The Committee members agreed that a public
e'

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.:: ..

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53/ See H.R. REP. NO. Session, 28-29 (1976) and S. 1st Session 12 (1975), which legislation similar to Title similar conclusions.

94-1615, 93rd Congress, 2nd REP. NO. 94-120, 93rd Congress, concern proposed Federal II of Bill No. 1-333, for

54/ See the "Committee Hearings :and Public Comments" section of this report for a further discussion of the Committee staff's recommendation.

.:~~:::

..

..,
~~~

A BILL

In the Council

of the District

of Columbia

,....

o
("\1

"
o o o
o

To provide for the registration of persons selling, supplying or distributing motor fueJs, for a prohibition on the operation of retail service stations by producers, refiners, and manufacturers, for non-discriminatory use of voluntary allowances, equipment rental charges, and motor fuel apportionments, for certain non-waiverable conditions in marketing a~reements, for certain rights, responsibilities, and remedies relative to the termination, cancellation, and. non-renewal of marketing agreements, for a moratorium on conversions to limited service retail service stations, and for other purposes.

r")
BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA,
That this Act may be cited as the "Retail Service Station Act

of 1976".

DEFnUTIONS
Sec. 2. Definitions. of this Act, the following have words, terms, respectively

For the pruposes phrases, ascribed indicates and their to them

derivations

shall

the meanings

in this section

unless

the context

clearly

otherwise:

.
2

,
-:(;'"

--2-

--(a) -Automotive I>roductmeans any product or item of


~ ~

44 46 47 48 49 49
50
S]

-~rchandise,includin9'
~

any tire, battery, or similar ~tor

_ vehicle accessory or part, other than motor fuels or petroleum products, which is intended to be or is capable of being ust:dwith, in, or on a metor vehicle, whether or Eot such produ~t ~s essential for the proper operation and

~.-\.
<:>
........

~intenance

of a motor vehicle and whether or not such

~roduct is also suitable or is actually sold or used for

'.

non-motor ...

Vehicle purposes:

52
54

"'" ---~

(b) -Distributor" means any person who is engaged in the business of selli~q, ~niEiiE:::4r Qtherwis~ supplying,

55
56

or distributing, on consignment or otherW:':3e, rr..~tor fuels or

o
c

petroleum products to or through retail service stations which

57

it owns, leases, or otherwise controls andwho also,maintains a 58 marketing agreement with a retail dealer for the sale or distribution of motor fuels or petroleum products to a retail service station, whether or not such distributor owns, leases, or otherwise controls such retail service station: (c) !hat
FOSS

o
.I

59 60

!o

61 62 64 65 66 67 68 69

-Engaging in the Retail Sale of Motor Fuel- means

at least t.'1irty (30) per

centum of 111e rei:3.il dealer's

revenue, excluding such revenue as is derived from t.'le

!,etail sale of petroleum products and automotive products and from the repair, maintenance, and servicing of motor vehicles, is derived from the retail .sale of motor fuelJ ...

-3-

(d) ...

-Equipment- means any movable tangible

personal a retail

7] 72

roperty which is used in the business of operating

.'a
t;'-.'
....

service

station,

other than property which is either except through depreciation or

73 74 75 76 17 78 79
80 8]

consumedin the ~usiness,

amortizaticn, customers.

or !;.eld for immediate or ultimate The term ...

sale to

-equipmentalso includes any motor . storaqe tank, machble, appliance

fuel dispensing aUlIlp,lift,

";::-or ot.'ler similar

aroperty which was movable tangible

-.

personal property at the j:ime such property was purchased, leased, or otherwise .!.cquired by t.."leopera~or of a retail whether 2,r not such property was to .!.nyreal property; of a richt

service .station,
0

subsequ~~tly attached Or affixed

82

o
.0

E.,ower created by the marketing agreel:1ent or by law to terminate, 5:.ance1,or otherwise put an end to a marketing

(e)

-Failure

to Renew-means any exercise

or

84 85

86
87 S8 89 90 9] 93 94 95 95

agreement at the !?cpiration of its exercise of a right

tenn, including the

or acwer to put an end to a marketing

agreement whic:."l would other,..,ise be extended or renewed


.

automatically

for a definite

fai1ure to extend or renew a marketing agreement which does


DOt provide for automatic ~xtension or renewal.

or -

indefinite

term and any

~e

term

-failure

to renew- shall

also include any termination ~r

cancellation an expiration

of a marketing a~aement which does not ~ecify date or term;

.' . "
~.~ .",: 0 ::. ". ~ ;.

,._-- .. - -- .- .- ... ---~.-----.----------.


"t."'.
'~I~", .... :. ,. "
I :"'" ',t .' :.'. ":""'"

--..----.--;--.
:'.'! .... -" " .... " .'
: .... !

I
!

,....

i'

.;.,

.,.
:.::.-

-4-

If)-Goodwill.~ return

means.the tendency or habit of customers service station with which

97 98 99
]00

for trade to the retail

. ~ey ~

have been previous~y dealinq and includes, dealer's

with respect

the value of a retail

qoodwill, whatever value,

. r"

advilntage, or bene'fit is adde4 to the value of a retail business as a result of the efforts of the

] 0] ] 02
]04

service station

retail ...

dealer and his employees durinq the term or terms of and of any

o
...

a marketing agreement with the distributor,

104,
]05

.,-. .. ~
C"'1

e.reCedin'c; marketing aqreementS between the same parties,

~~

including,

but not limited


.

to, whatever value, advant.aqe, or


'.

107 ) 07 ]08

benefit

is added by the reputation


.
&

of ~~e retail

dealer and

his employees for competence, skill, punctuality, dealing,

q".lali ty, ability, honesty,

o c o tJ

":rea1iability iDteqrit.y, attributes

personal attention, reasonable prices,

] 09
]]0

!air

and ~ther and

in 2roviding motor fuels,

pet:roleum products,

III
) )2 ]]3

automotive 2roduets and in providing motor vehicle repair, . maint:enanc:e,and ,2,ther servi~es, over and above the value of and other tangible or otherwise or other by the

my invent:ory, ~uipcent,
property, controlled

~f a trademark owned, leased, l;)y the gistributor,

real

estate,

]]4
]]5 ])6 ]] 7 ]]8 ])9

or of advertising

promotions furnished or financed, in whole or part,

c!istributor,

which value, !.dvantaqe, or benefit

can service d~aler.

reasonably be expected to remain at !he retail station location after

the departure of !he retail

] 20

':: ., :::;:'."~: '~ ; -';:, ::.'~,',:~ ,.~i ,:'i,,: ;"~"""

. '. ~", .: .~. , : ..;,: ~':: ....:' '. ', '::,'

'~;.."~ '. -, 't:: "'~' .... '~":';'; .' .... : "'~' :'.; . a.'}. '\

'. "\ "~" ::'~ ~;., :. ':

.,.

,
.;~ :,-

.
-5-

.'
, 2

!ndetermininq the value of a retail

dealer's

goodwill, any

] 2] ] 22 ]23 124 ]25

!ncrease in the volumeof motor fuel, petroleum product, and ~utomotiveproduct sales, repair, any increase in the volume' of provided, any
.

increase 'in .the n1lI'\ber g.f customers, any financial or other contributions to advertising or promotionsby the retail ,~
(:)

maintenance, and other services -

dealer, the numberof I,ears the retail the retail service ~tation,

]2G
]27 ]28. ] 29 ] 29 l3l ]32 ]33 ] 34 ] 3G ] 37 ]38
] 39 ] 4]

d""

~J;.'

has

cperated

and o~~er s~lar

factors should

~
C'~~

be taken into account in light of all other factors and circumstances~


19)

,...,.... , ~

'I
I
I
I

-MarketingAgreement-meanSany written ag=eement, lease,


.

c o
c '
'0

or c:olrbinat.1on of agreements, including 'any cont:act,

franchise, or other agreement, which is entered into between


'

I
I

~ distributor
11)

and a retail

dealer and pursuant to which: agrees to sell, supply, or

the distributor

!istribute

motot" 'fuel to the retail

deaier. for t..'lepu..."'"Pose .

I
I

'of engaging in the retail

retail. ,!ervice station;


12)

sale of such motor fuel at a and dealer is granted t..'leright, in addition to whatever else maybe

the retail

privilege,

provided, to l
11)

or authority,

]42 J42

use any trademark owned,leased, or for ~'le pu:pose of

] 44 ]45

~erwise

controlled by t.~e distributor

::,/!::';~,:~ '~':~-'h:-: ,;'}' ,"'"'

'!~',;:'

::":~',>"::,::>"

" :'':/;::
-6-

'!

.,.--

'~ :,
'0-

.. ':..::"'-:':' ...
.

.'"11 ~

:".::.:

0 ',: '. '.:::

~..

;-. ', . .. ,. ... ':'

:~..

;. .~ ~ _'0

engaging in the retail --service ~tation~ or 1ii) leased,

sale of motor fuel at a retail

]46

]47
service station owned, for t.'1e

occupy a retail

149
)50

or otherwise controlled

by the distributor

E,urpose of engaging in the retail (h) ...

sale of motor fuel ~ ' -

) 51 ',' 153
]54
]55

-Merchantable Product means any proc.uct which is it is reasonably resalable


'~.

a
~"
...

in such a condi.tion that

in t.'1e

normal course of the operation of a retail service station -~usiness at a nrice normally charged for a new or unused

C":

- .

) 56 ]56

prodnct~

:"')
o

(1) ...
special product, Uquified
I

-Motor Fuelw means any gasoline, fuel, peuoleum distillate, eet=oleum liquid
' --

diesel

fuel,

]58 ]59
)60 ] 6]

refined petroleum product, natural gas

natural

product, crude oil

product,

or ot..'1ersubsta..'"lce or

o o

combination of substances !,hich is intended to be or is capable of beinq' used for the 2,urpose of pr~pellinq %UDDing any intera~ or

] 62 ] 63 and ,}64 ]65 ]66 ,168 ] 69


]70

combustion engine ~ a motor vehicle

which is sold or used, alone or blended or compounded with other substances, J.j) by any person for such ~urpose: person, firI:l, estate, partnership,

Personw means any natural E.usiness trust, trust,

association, corporation, interest,

bro ~r more persons- having a common or joint

or other leqal or commercial enti~y the also

of an entiey,

term wperson shall

~n t.'1e case include !.fly ot.lter

] 72 ] 73

:..i!";'", .,:. ~t ... :.. :;.:. .f' . ' w::: ;;'1': .' ;.,,:,,~: .~.' ~.:.~...,~:~:....~.~ : . r.. !... \':.~ . ~.j.~~~ '~:::' 'I,:::"

~. ~':'~. ;', ~ _1:'~ \=: ~':.'.:.; -. ~:'-,;.~::~~ .;',: iJ. ""~:"'.

~ ..:."~'

. '''':'.;,. :... +f '

"

::

'

-7-

,entity which is a parent companyof the enti tYi !:,as, directly or indirectly, thirty (30) per centum or more

114 ]14 ]75


]76

votinq control over the enti.tY1 manaqes or effectively controls She entity, nla1;ionshipi' other than through a contractual control with the entity. the -te:m person-

~r is under co~n

]11
]18

!n addition, -shall

in the case of an entity,


.

-"-t-:
-c, "".

...

also include an.yother entity of the entity; thirty

which is a subsidiary or has, directly

.-

] 80 ]80 ] 8]

affiliate

over which the entity

~~

or iBtirectly, control: entity, .!k)

(30) per centum or more voting

o c
a
a

or which is managedor effectively control by the other than ~~rough a contractual ~~lati~nshipi Petroleum Product- means any oil, fuel oil, grease, lubricant, crude oil,

]83
] 84 ]86 )87

residual

petroleum distillate,

!,e~ined pet:olewu product, natural. petroleum product, Datural ~as product, c:ude oil product, or similar other than. motor-'fuels; ~ich prodnct,

]88
]89 ]90 ] 9] }92

is intended to be or is vehicle,

capable of being used with, in, or on a ~tor whether 0:: not such proCuct is essential

for ~~e proper

operation ana maintenance of a motor vehicle and !,hether or DQtsuch product is also sui table or is actually !.old or

]93 ]94 ]94


]96

used for non-motor vehicle purposes: J.1) ~rson -Refiner, Producer, or Manufacturer- means any

who is engaged in the business of manufacturing, distilling, blending, or compounding

]91
]98

2.roducinq, refining,

";l".~i'~~' . I.~;!; ~ j..:..':'. ': ~..!' ~:r.~:. ~~~:.;;~'';;: ;:'~;:"" .":-=,,:.; ';;.:"'~ ;.:.,:. ,~; .:. ~." ~. 4:'''''.-: ,'~.;'=" f::~.~?':';'
.;~

t.

t. I: ; .. :.' .:~\

.=.~.': 1-'-;;':":

.4";~ . ;.: ;::;

:~;.f:. .. :'i',

_ \:,,'" ., .

1 .

:.:~

'-8-

'~tor, fuel's,petrolewn products, or precursors of motor


.uels or petroleum products, whic.1-t are ultimately sold, !.upplied, or distributed . District
.

]99
200 20] 202 203

to retail

service stations in the

~etheror 2,!stilling,
.,r

of Columbia by such person or any ot.lter person, ~ot such manufacturing, producing, refining, blending, or compounding is performedby such of Columbia,or whois engaged!n

204 206 207-' 209 2JO 2)]. 2]2


2]3

E,ersonwithin the District

o
~... C'~

the business of importing metor fuels or petroleum E,roducts J

.. ,.. ~~

~loyee ~ther~se

'(m)' -Retail Dealer- meansany person, other than an of a distributor, controls a retail whoowns, leases, operates, or
.

service station

for ~~e pu.-pose

o
c
'0

of engaging in the retail

sale of motor fuel and whoalso

~intains

a marketing agreement"witha distributor:

.!.n) -Retail Sale- meansthe sale of, any tangible 2,ersonal property to the public: for any purpose other than !or,the resale of the property in the fOrI:! in which it is sola or for the use or incorp'oration of t.1-te property sold as '

2)5 2)6 2J7 2]9 220 22] 22]


223 224

a material or part of other tangible personal property ~ be

prodnced for sale by manufac~uring,assembling, ~roc:essing, or refining: .!.o) -Retail Service Station- meansany fixed geographic

location, including the real es~ate and permanent

improvements thereon, which is opera~ed for t..'l.e purpose of

'.

225 226

storing and selling motor fuel at retail

and whichhas a

i .. .,'
_... ".~ .',6': . ,..
-.4 .:. ';",. -. 'oe;,-, ~, . ; ... ~
'..,

.... ~;.: .

.;

.,'. :.:

.':'

..... ~.,!': .

-, ~ :'':'".,.....

0.";. \,..

-9-

.~

.dispensing system for delivery service location

of motor fuel into the !,hether or not such


.

227 228 229 230 23] 23]

tanks of motor vehic~es,

is also operated for the purposes of se~~ing or other ~roducts or servicing ~tor

petrole:un products, .automotive products, at retail vehicles 7


.r-.

or of repairing,

maintaining,

o
~
(-."

. . J?)
for ~ale, for !.ale, ~fer,

Selling,

Sell,

or Salew means selling, expcsing for sale, peddaling,

offering advertising or any other

233 234 235 236 237 239 240 24] 242

keeping for sale, trafficking in,

bartering,

exchanqe, or delivery

in any manner or by any

Deans ~ther than purely qratuitouslY7

a
o

mark, brandname, or other identifying

o o

~ith

- -

(q)

-Trademark- means any uQ.denuu:k:aade.:~ame, service

mark, symbol, or name,

including

any identifying and

mark, symbol, or name associated

.!.r)

any motor fuel: Whol~aler-

means any person,

including

any

244 245 246 247

distributor, supplying, U) retail

who is engaged in t.'1e business of selline,

or ~istribut:.ing moter fuels or petroleum products service

stations

in the. District

of Columbia.

~- TO It:-,.I-)

J.C.

u---vA
~-.(.,--

It .r, .":.JYJ ..

-10TITLE OPERATION OF ~Al:L I SERVICESTATIO~lS

!fU1~

17+I~1-ss
5

7
.
)]

!ec.3-101 Registration .La)

2! Intent
refiners,

~.Sell

Notwithstanding anything contained in I).C. Code, all producers, distributors, , ..r~tailde.ale~s


I.

]3 ]4 . ]5 or ]~ ]7
}8

!.ec:. 47-2314 (1973 ed..), manufacturers r ~keters, suppliers, sel.lers


~ ~ ~..

wholesalers, ..,;.e~ilers

jobbers ,r~sel.lers.,

of motor fuels, station, shall,

including !.ny operator of a retail before sel!ing, ~upplying, or be used


.

service

-~
'-."
{'.~

distributing

any motor fuels w~ch may ultimately

]9

for the purpose of propelling ~d annually thereafter, that file

or running any motor vehicle with _ the Mayor a written or intend to sell, supply, or

]9
20
2]

t-?

seclaration

they desire

a a a

distribute declaration ~er

metor fuels in the District shall be filed

of Coltmbia.

on such form or forms. and in such i..~clude,

~e

23 23 24 25 26 27 28

as maybe prescrlJ:)ed by the Mayor and shall

in

addition

to such o~er

information as t.'le z.-.avor shall

require,

!. Ustiitq of the types and grades of t.~e motor

fUels and petroleum rcducts that such person wishes or


intends to sell,
.

supply, or distribute:

any trademark or of the names and of the names and

trademarks associated therewi~: addresses of the suppliers

a listing

thereof~ a listing

addresses of the persons to whom such motor fuels or oetroleurn products are or will be sold, supplied, or distributed: description, including the location, and a 29 29 30
3]

of any proposed or existing utilize in his

facilities

and equipment such person will

business.

person to sell,

It shall

be a violation

of this

'1'itle for any

supply, ~r distribute

any moter fuel to any

32

. :. . .. ~,....
....

"

.::i .:: ..... :. .

> .. ~.~: ..:.'''.

~ ";'.

:'.

::.:

.
-

.>,: ~

'.

.1

.'

.....

..........

-11-

"

person in the District of ,oltmlbia,by himself' or- by his 'employee,servant, or agent, or as the employee,servant, or
,

33
34

agent of any other person, or to have !Py motor fuel in his "", 35 custody or possession with intent to sell, distribute ~upplYIor 36

such motor fuel.,.,tdthout having.,first ,filed .a..... '''.

,,3.7,.,
.

current: valid declaration with the Mayor,provided that any E,ersonwhois enqaqedin the business of selling,
. r:"

37 39 39
40

supplying,

o
.,;..~
"<

or ~stributinq

motor fuel in ~,e District

of Colu::lbia. on

the ~ffective date of this Act maycontinue such business for not ~re of this ~t Ib) than thirty~ without filing
(30)

...... ........

days after the effective date

4] 42 44 45
46

~" ~,.

a declaration.

Whenever a person intends to discontinue the supplying, or distributing moter fuel

o o o
a

busJ.ness~f selling,

in the District 2f COlumbia, whether through a sale or bans fer of the business or otherwise, such person' shall DOtity the Mayor'in writing of .!.uchdiscontinuance at least ten (10) days prior to the date ~~at such ~iscontinuance will take effect. !uch notice shall give ~~e date of the

47 48
49

50 5]
,52

cU.scontinuance, the !'.easonfor such discontinuance, and, in the event of a sale 2,r transfer of the business, the effective date thereof and the name, and address of the purchaser or transferee !ec. 3-102.

thereof.

53 53 55

Restrictions ~ Oper~ti~~.

f , ..".

'.

..

. : '0.

.r . ,........
J :

5,' I.,."" , ',.'.:.'

....

.t' I, ....

.'

;..... :: ....-..'. , ...4~: ..:.; . :; .... : .....~...,f-", :......

'."

..

....',

......~

-122

refiner,

(a)

After the effective date of this Act, no producer, .r manufacturer of motor fuels as the terms are and (1) of this Act shall of Columbia, .
,

57
58

defined in sections !-lOl(j) open a retail

59 60 6] 62 62
63 64 65

service station !n the District

1%:espective of whether or not such etail

service station

.will be o~erated under a trademark owned,leased, or otherwise controlled by such produc~r, refiner,
,~

or

o
~

sanufacturer, unless such retai: service station is to be operated


.'

EY

a person or entity other than either an

,,! ~.~

employee,servant, sommissioned agent or subsidiary of such producer, refiner, or manufacturer or a person c!:' entity who

66
01 "68

operates or managessuch ~etail service station under a


. C)

contract with such producer, ~efiner, or manufacturer which provides for a fee arrangement.
.1b)

o o o

68

After JanuarY1,".l~~~ f.~' no producer, refiner,

or

70

!.8Dufacturerof. m,otorfuels as the terms are defined in sections l-l0l(j) and (1) of this Act shall operate a retail

7] 72 73
74

service ~tation in the District of Columbia, irrespective of whether or not such retail service station ~.4'ill be operated' under a trademark~wned,leased, or other..,ise controlled by such producer, refiner,

75 76 77
78

or manufacturer, with employees, servants, commissioned agents, or subsidiaries of such producer, refiner, or manufacturer or .!. person or
wi~

entity whooperates or managessuch retail

service ~tation

79

;;, .... ?:..:..~ .. :.. ~... ,: ,,::~" .. .,: ..~~""~".;'-""':"'#-'~:'--";"';' .,','

..

...

.; .;...;~

;1 ..~ ........

' "

."'!.. :,. " '.: ~:"""

.. -:' .....

oJ>

,.

':-

.:';','~

'oi

."

.~.

..
,
;-::~

'~

-13-'

under a' contract with such producer, refiner, ~ufacturer Sec. .. Non-Discrimination. -

or

79 80 82 84

which provides for a fee arrangement.

3-103.

allOwances, including, but not limited to, any temporaryor permanentprice !.eduction, price allowance, price adjustment, special . sale, deal, discount, inducement, incen1:.ive,ren1:. reba1:.e,rent abatement, !,en1:. relief,
c:i
-::::-

(a)

Every wholesaler shall extend all voluntary

.-

85 86 87 88 89
90
9]

...

premium

or other allowance, unifomily,

on an !,CiUitable basis, to !n the event that an

every re1:.ail service stations served.


C"!
1''')

exceptional ~r unduehardship has been imposed~na specific %etail service s1:.ationby the occurence or existence ~f

92 92
93

o o o

special or unusualcircumstances, inc~uding, but not limited to, loss by fire or a temporaryroad closing, a non,

UD1formily extended~luntary such retail (b) ... servi~e sta1:.ion.

allowance maybe extended to

94 94
96

Every wholesaler shall apply all equipmentrental

charges !or equipmentof a comparableage, condition, grade, or quality ~iform11y, en an equitable basis, retail service station !.erved. to every during periods of shortage

97

98
99 ]0] 102 ] 03
]04

.!.c) Every wholesaler shall,

affec1:.ing !ouch wholesaler, apportion uniformi1y all motor fuels, including ~l grades of motor fuel, and all petroleum

products affected by!.uch shortage, on aa equitable basis,

'~~~N:~:;;'l : :~.:i4I': .... :"..-.~.;.~:;:, ..

""':~

.r: . ,: . ,r ..'.,~ ~::.~ ..... :.

:.. :;::."

~'.",'" ~ ........

- .

. t . '.'

-14- .
2
.~

to every retail

service

~tation

served.

No wholesaler shall

]06 ]07
.108 .

unreasonably discriminate . their allotments.

between retail

ts

the :purpose of thissubsection, is unable or

service

stations ..a ,

in

shortage shall unwilling basis,

exist

when !.ny wholesaler on either!.

)09
]]0

for any reason,

permanent or temporary :-.otor

to ~e1l, distribute,

or supplY.!FY specific retail

lll-

fuels or petroleum products to all


... r

previously

served in a quantity ''l!quivalent to that distributed, or supplied to such retail

3ervice stations

1] 2
]]2 ]]3

a
~
C".!
~'"

e,reviously sold, service

.;.-,.

...
this ..

Sec. 3-104.
(a)

stations. Rules and ReCiUla tions:

Exemotion~. -:...- ....... 3-102 of

--

]]4
]] 6
]]8 ]]9

Upon finding that

enforcement of section

o
c

~itle

would !cposed an exceptional . producer,

or undue ha:dshi~

upon !Fy refiner,

or manufacturer as a resu1 t of t..~eMayor

]20
]2] ]22

the existence ~f special

or unusual circumstances, such producer, refiner, or

o o

may grant per.mi~~ion~

manufacturer to temporarily operate a retail

...

service

station

]23 ]25 ]25 ]26 ]27

for a period of not longer than ninety 190) days.


"

!,!it.~in

sixty ~e

(60) days following ~~e effective

date of this Act, specifying

Mayorshall

promulgate rurea and regulations

She special

or unusual circumstances during which a operate a to, ~~e

producer, .=.efiner, or manufacturer may temporarily retail .!.ervice station, including, service but :not limited by a retail

] 28 ]29 ] 30

abandonmentof a retail

station

dealer,

-'ii,

., .~.... ..; ..;;.. ~i'1!:~!":-:~:-:"-;~:. ~~ ~:~j:.-:~ . <:.:,:..:r'!-.!;,,".i. ~~.~

..

~s

..~.:~~ ";

'~:'7~':~" ~I"..~;'.:,,~ ~:.;~.'~:.,~~.~......

. ~"' ....;.:.., -,..:.;, ~'f".'I~~ .::~

' .

h" .:.~t:,J '. -.: ... ':,.. t.

-152

the termination of, =.ancellation of, or failure

to renew a

] 3] ) 32 ,_
'}33

marketing agreementother j:,hana wrongful or illegal termina.tion, cancellation,..or :failure j:,orenew , and other emergencies. ~y producer, refiner, or manufacturer who

.]34
]35 ]36
j37 ]38)39 ]40 ] 4] ]43 }43

desires the permission erovided for in this subsection shall submit


Q

wri~ten request .... for such permission to the Mayor, to operating ~y retail

-,
o

on such form or forms and in !ouchmanneras maybe prescribed by the l~yor; prior service station.

~-

..uch request shall include a state!:!ent of

t:'~
!'.-:'

the special or unusual circumstances that exist and of the .' exceptional: or undue hardship !!hich would result
,

_.

fro1:1 the

enforcementof section 3-102 of this !itle. a

!!othing

o a
,0

CDDtained in this subsection shall be construed as authori~any ... producer, refiner, or manufacturer to operate

]44 ]4S
]46

any E.etail service station in violation of 1:.."1is Title during the E,endenc:y. of.a. request for permission to temporarily operate !.u~~retail
.1,b)

service station.

]47
] 49

'rhe Mayormaygrant an j7~~i:;,r;,-,9f not lonc;er than

one .1,1) year to the @ivestitw:ij7date s?ecified in section 3- . l02(b) ~f tliis Title to any producer, refinerr manufacturer whois ~able, either sell, transfer, or to

]50 )<.

1S]
] S2 ]53 ]S4 ]55

after reasonable effort,

or otherwise dispose of any retail

service sta.tion which he owns, leases, ~r otherwise controls or enter into a satisfactory marketing ~greementor lease

-{,::;.: ... !,~ol'.";.; . ::::.:~: ~.!.~ .

:~~7'~' ';.';,.~ )', ~/',~,'; ~~' ,.~!", ... ;.:\;:.,~ ;.,~.,::.A;.~:. ,.:;:,; ....~ ... ~.~#i.":'~

r; ~.:.'~; ~~ _-.~:'.~ .. :.:

:J' :... ro.:., .....

,...

. ~

T.'~;:."

-162

with a qua~ified authorized

retail dealer or other ~erson who is

]56

to operate such retail service station ~der '" .' '..".'.all o~~er
..c_.., .
,._.

] 57 ]57 ] 5~

.sectl.on 3-102 of' this Title.

.rules !:ld regulations implementation


4."

(c)

The Mayor is authorized

to promulgate

necess~'7 .for ,the. ,prQp.far,

-' J EiQ. .. ,.
] 6] ] 6)

and enforcementof

Tit.les I .and.. III of this

-Act.

o
=:
C'~

.!.4)

The Mayor may require any person subj ect to the of section 3-101 of this Title to maintain such

] 63'

2rovisions

164 ]65

r... .,

o
C'l

written records and to file with the Mayor written ra~orts

containing' such information

as the Mayo~ sha '.1 dee=1 and enforcer-ent of

]66
']67

necessary!or

the proper implementation

o o

Titles I and !Il of this Act !ec. 3-105. Violations - Notice, Order, Injunction, and

]68 ]70
)7]

. Penal ties.

person h,as violated or is violating- any provision of Titles or III of ~~is Act or the rul.es and requlations promulgat.ed

(a) Whenever the Mayor has reason to believe that any I

]73

]74
]75
]76 ]78 ]78

pursuant thereto, hoe shall cause written notice to be served upon such person in the manner provided for by law. DOtice shall specify the provision or provisions ~yor

that the

Such -

has reason to believe that the person has violated or facts or actions \mon which

]79
] 80

is violating' and the ultimate the Mayor eases his belief.

~e

Mayor shall also cause a

] 82

'r- Y,r,.. ,,;,.-. ....'ui;

. ..
-:..~~ :-f.. 2..:~:.
;- :.~ 4 i:

r~,.~ ... ',";; .... ~..:.T. '.:..

. :~ :.: :i ... :.; . .: '.. -:;,~ . ~.~'. .:.~.,...:~ .~.... ~ ... ~;..~.- j::... ~ .::."

"t

:~,,!: :... r .i.~i ',

~#~.

.
.:.;.,.

."

-172

written

, order to be served upon such e,erson directing

such

]83
]84

person to immediately cease and desist viola tion. !f

from ontinuing such

the person se ordered refuses. or:-fails .to~.:.' .';";;: .:]85 .!he Mayor shall be aut.~orized to for a temporary or per::tanent ] 86 187 ] S8
]89

comply with such order,

apply tC'. any court of competent ,iurisdiction restraining I' I ,,:,


i

order,

preliminary

!.njunction,

injunction violation.

restraining

such person from ontinuing such have jurisdiction preliminary to grant such

o.
~
(,'.,J
?""~

temporary restraining peJ::nallentinjw:etion,

The court shall

]90
] 9]

order,

injunction,

or other .::,elief as may be appropriate

]92

"

under the circumstances

'J 92
of'TTtles I or III ]94 ]95 ]96

o c
CJ 'Q

of this

(b)

Any violation

of any provision and regulations constitute

pursuant thereto, upon conviction

Act or the rules

promulgated

thereof,

shall

a misdemeanor and shall,

than $300 or by 'imprisonment !or not more than ninety . days or both. provision !n the event of any violation I or XXI~f ~~s of any

be punishable by a fine of not more (90)

]97
]98 )99

of Titles

Act or the rules

and

200 20] 202 203 203

zegulati~ns

promulgated pursuant ~~ereto, shall constitute

each and every day

of such violation the penalties

a separa~e offense and provided for herein shall be ~plieable to offense.

each such separate

'.

.'.~;~ ::.. ..;,.;.:.:;.~; ..;::::.. -. :... :'::: (~:::,: ...'.'../.:, ..::,. ':: :-".!" .:.: <.:.~~
-1.9-

:',.::.:

to

'. ,LI':;", ... ~.: .: ~,..~ ..,~:.'~~' ':',.: ... ;.t:, 'r r-: ......... ,:-

':t

:.

':.'0 ..

TITLE II

MARKETING AG~~TS
!ec. 4-201. Conditions Affecting Marketing Aqre~~nts.

7
1]
]3

All marketinq aqreements s?a1.l be in writi.,ns and __ s~~ll be !.ubject this to the non-waiverable conditions whether or not such conditions set for-..h in

]4

section, section,

are ex-oresslv

.] 5 ]7]8
]8
...

set: forth !.n .auch marketing -aqreements


.r

For thepu..---pos~sof

this

the term ~marketing agreement- !,hall also cl..llateral or ancilla:y

o -.::-'
~

include

any oral or written

aqreeme.~t. -

No marketing agreement shall:

]9
service 2] 22 23 24 25

C':
!"'='station

la)

require

a retail

dealer

to keep his retail

; E,er day, or days per-week, or for any speeified

open for business

for any specified

nlJr.lberof hours hours of the

day, 2.r. days of t.'le week, e."Ccept as ot.'lerwise provided 1,1.1.. section !-203(c) (5)1 require a retail dealer to purchase or accept Qny products from

c
c

jp)
c!elivery

27 28 29 30 3] 32

2f, on,

c:onsiqnment or otherwise,

the distributor

2,ther than, such motor fuel~

!!!!! petroleum

produc-c~~t;omot:ive~oaiiei!i'as

are SP~,cified in t.'le

-~
..

----.

marketing agreement~:. such :quipmen.:t . ...asis -necess1!ry-f-o~

-i;b@' open~un

of a ~eta-il maintain, ric;ht,

ae1Wi-cEt-!,.t:atic~,r- -_. .or qrant to t.'le to fix,

distributor maintain,

(c)

fix,

or establish, privilec;e, lhe prices

.34 35
36

~e

or aut.'lority

or establish,

at which the retail

, -19-

-,w~
e,etroleum pzoductis , or 37 37 to meet any sales quotas or automotive 39

dealer

shall

sell

any motor fuels,

automotive products1 Cd) .. require the retail dealer

for ~y.motor

fuels,

petroleum ~roducts,

40 4] 1--

products~STe:Qd Qy S~R

or'~th~rwise interest
",,t"'.

...

. (el

market;~q agreeme~ dealer from selling,


~. -.:

prohibit

a retail

assigning,
~;

43

transferin9

hi$ }!1al::~e.ting aqreentent or .".any ~ ..: - ~ ..

-44-.."
.'

.!herein: to another person; prohibit a retail dealer from' purchasing or any or

45
47

'0

~ ~~
!"ry

acceptinq ,elivery of, on consignment or otherwise, motor fuels


I

Cf)

.
48 49

E.eb:ole~ products , automotive products,

other products from any person who is not a party to the

50
5] 52 S3

marketinq aqreecent or rohibit

a retail

dealer

froo selling

o
o

such l!1Otor fuels or ,roc.ucts, provided that agreement permits the ~etail dealer

if t..i.emar}:etir:g

to use the distributor's such motor

o o

uademark,
fuels,

t.lte marketing !.sreement may require


'

S4
55

petroleum produci:S, and automotive products to be of

a reasonably similar provided further

..

quality

to t.ltose 2,f the distribut0:L-1J, and 56 cealer shall neither represent

that the retail

such motor fuels or products as having been procured from.the distributor _ tributor' nor sell such motor fueis or products under the dis-

s trademark i require a retail dealer to take part in any require the 58

promotional or advertising retal.l

(g)

dealer to ~se,

campaign which will

59
60
E]

utilize,

or accept any premiums, qifts, bonuses, rebates,

coupons, pes'ters,

stamps, tickets,

or other promotional i terns;

6]

! .

...

.:~ :::,:." -: :' ....:: ..,.>. .. .... :: ..... ':,'::-':<.'/:.:.' .'


-20-

.. .

. . .. .. . :. ".:'... . .. : :~"'~'; .
.

t,

.t

.,'

right ~f any party to such marketing agreement t9 a trial by jury -or to the interposition of. counter-claimS "'-'-"

(h)

contain any provision which in any way limits the

63 64
6S 6S

...

or cross-

claims: (i) ~
"I"'"

contain any provision which requires the retail novation,

67
68

dealer ~o assent to any release, assi~entl

o
....-. ..
'-;"'.J:

waiver, or !.stoppelwhich would relieve any person from any Uabil:ity granted
.,ij)

69
70

imposed

EY

this Title o~ would negate any rights

C:~'
!'~

to a retail ~ealer by this Title; be for a term of less than one (1) year: or contain any te:rm or condition which, directly or

7] 73
7S

lk)

o
Co

inairectlv, violates this Title.

o
o

construed as prohibiting a distributor froe suggestina or ~ advising the ~tail dealer of appropriate or reasonable hours of ope~~tion, ~ays of operation, or prices, provided that the distributor shall in no way or manner attem~t to threaten or coerce the retail dealer !nto follOWing his suggestions or advice. !o~~ing contained within this a retail dealer

16 78
79 80

Nothing contained within this subsection shall be

8] 82 83
84

subsection sh~ll ~e construed as ~rohibitinq

85
86

frcm.agreeing to purchase or accept ~eli verI of other products or equipment from the distributor or from 2,articipatinq financially or otherwise in any promotional or !.avertising campaign sponsored by the. distributor, provided

86 87

aa

..;;.' ."~i} Y:'.::f;:~~~;~;:::;:!~::{::.'=::: .:::~~.~; <';':'::~':: :(' ... r,i; .:.~.i-:;-.'~, .. ~; .. ~ ~".~>.r .. ;;:~.:; i) '.: ~~ :'.:.':;' .. >..:.;,.: .. ~:'::~7-,I~;..;:.:.~'F:;~~.;". t::'.~{-::,~-; ":"::" - ..
....
>
;.

.~

-212

..:..:

..

<that

the -' threaten

distributor

shall

in no way or manner attempt to

89 90 90

or coerce such actions on the part of the retail


.::,~~ ~.:. -:#O~-:.~~

dealer.

Sec. 4-202.

Disclosures ~.Pros~eetive

Retail

Dealers.

92 94

!,rior to entering . ~rospecti~

into any marketing agreer.o.ent wit.~ any a distributor

r~1:ail dealer,

.sha.ll. disclose: tJle'. _:95..


96

.
o
~:l~'

information set forth ~tail.

in this

subsection to such prospective any

dealer in writinc;.

!"rior to transfer!.ing

98 99

marketing agreement or interest transferee, set a retail dealer

therein So any pros?ective disclose ~e information

~r
~

shall

]00
] 0]

forth in this

subsection

to' such prospective ~ansferee

in writing.

]0] .
knownad!h"ess of the previous three
]03

.!.a)
retail

'!he name and last ~ealer or dealers

for the immediately prior

] 04
] 05

o a

year period or !or the entire distributor

period during which the

has either sold or distributed motor fuels or ".. petroleum prcaucts to or t..ltroughsuch retail service station !ocation location, . or owned, leased, whichever period . or otherwise cont=olled such is shorter, and the grounds or of, or failure .

106 ] 06

J 07 J 08
J09

reasons for ~e

termination of, cancellation


.

to renew eac.to:. marketing agreement with such previous retail dealer or dealers.

llO
]]0

;~ l ."., ., ~eJ'.~.: '.':--,!'''.;-i .,t.i;.,:!.r:.~~ .... ~."".4) .j'-'" .i~~. (/-, ,' ~ ',-, .~.... ::.,;.- '.~-.a~" ,.t,..; .:.:;.r..:,:.: ..r:.(.~,;,:,.",:::,,, ",~:;;t'.""""~ _.-:i'~''''~~~' ":' ~;t~~';\ : .., .:............. _.. " " . !..... ... .' ' ..~:~!~"''..'-'.;:"''-'~:'';,. ,.....
'.. '. .' ' . I .I' ; ....:....;..... _ ' '. . . _. '.

.0,

.',

.'.

'.'

j.

-22"2

I; .

(b)

'!'heexistence of any present conunit:nents,


.

112

negotiations, ~r plans for the future sale, d~lition, other disposition

. ~f such location.
.... '" !

or

]]3
]14
]] 6

-- ;..

'.'t:

. _c,

.1.-.

Renew.
_

Sec. 4-203.' Termination, .C.ancellatj.on,and Failure to

]]6
]]8

(a)

A retail

dealer shall -4.. have the right to te=ina"t:e ._.,. .~.", .

,'"

-or ,E,epudiate any marketing. ,.agreement to. which he is a party

]]9
] 20 ] 2]

o
~
C-.'

penalties and without any recou-~e by.the


.

Or any reason, without the imposition of any damages or

such termination or repudiation, within seven c.ays, not including Saturdays, Sundays, or holidays, after t."'e day :?n

dist:ibutor

for

]22 ]23 ]23 ]24 ]25 ]26 the

.hich performanceof such marketing aqree-~nt commences.

o o
a

For purposes of this subsection, t."leterm ~I:a:keting agreement-!;"'all not include any renewal, extension,

modification, amendment, or novation of an ~~sting ma:keting agreement. !or purposes of this s~section, term performance- shall ~an the granting right, privilege,

]27
]28 ]29
...

0:

a present t.~e

or authority to se a. tradel2rk, privilege,

granting of a present right, occupy A :eta!l

or !.uthority to '

]30
] 3]
.

service station,

or the actua~ delivery of

any motor fuels, petroleum products, or autotxltive 'Croducts

. or repudiate terminate ...

to the retail

dealer. In order to exe:cise his right to a marketing ag~eement pu:suant to dealer shall:

]32 . ]32 ]33 ]34

this subsection, the retail

:':i..~"'f#;,.''I'
:0" ."
o.

.,...':

..,0,'

.;4.1,.~..~..::~:!' u:.:~~." ':'.,,,,-::-:~ -,:r.'::; .. .~.:.'I. I': :.~~.~.': . .' .~: ,';'. ;'; . .~I~.:~ .. ;.:_.:.;f.", -~ .:~.~..~ ,.~~ .:" ::.~.. "._.~, .,,/':.,.~... ~,..::.. \ .,...::!.~: _.".#~ 0, 0.. .: .'" ' . '. ~ '.' . - . . ; .0' ,~ . . " . . .. .'.' .. '.' .... .' .' '.:.'
to " _,' :'., "_ ' .:' '.' ,:."
4 , ." '. ."

oJ

_.. .. . ."

.. '

....

-232

. (1) mail written notice, by registered or


.

] 36 ]37
38

certified

mail,

10

the distributor

of his intention to

exercise his ricjht under-.~j.s .su,bsec:tion .-wjd:.hin .... the~"peri.od" '. .J specified in this subsect.i.on; (2) being used .by ac;reementi discontinue use ot a.Yly ..tra.4~a,;~_2..resently -...

] 38

.1

]40 ] 4] ] 4]

. 1

such retail

dealer pursuant to the marketing ..."

o
~""'" "';j

13) deliVer
the distributor

or tender, so far as is practical,

to

]43

all IDC?ney, !.quipment,and merc.hantable motor fuels, E"etroleum products, and deale~ has not

]44
145

C'-~

~.,
o
c:

products, incl.ud~ng~l

automotiveproducts which the retail

]46

presently sold, which have been loaned, sold, or aelivered to the retail within ten dealer pursuant to the marketing .!qreement days after mailing t..'1e notice specified in

J 47 .
]48 ]49 ]49

-' o
o

(10)

this subsection; and (4). ... distributor deliver or tender to the distributor
"

full

] 5] ]52 ]53

poss~ssion ~f any retail

service statio~ provided by the

ursuant to the marketing aqreementwi~~in ten

(10) days after mailing the notice specified in this subsection. !he retail dealer shall receive full credit, or the cash

]54
]54 ]56 ] 57 ] 58
] GO

.p;oducts 2,elivered to the distributor

equivalent, for all money,equipment, and merchantable pursuant to paragraph

(3) of t.'lis !.ubsection. !lothing contained within this

~:';-~,:;~~;: ..~.~-;::.!:,:.,:~:~~~ .~ '.~:~.~ ~~~.,: .. ~!J.~.;:~~. !.~.~ 1':;':'~~~; ".-: .'~.,.':;'.,:;,;: r .' ;:~. ~
-24-

~~y

'f;

'~''f?'<;:': :~.:::~ ../~?,~~:i,;.~' .. :;!."' .. -~ .;:~ . ::~ :... :'1':'~I:~.';~

subsection shall

be construed as ~anting

a s~lar

right

to

] 6]

terminate or repudiate tot.~e agreement o.r as prohibiting cancelling in this


.
~,~

!!ist::'ilJutor under a m.c!.J':ke1;ing. '" J62 dealer from


] 63 ] 64

the !.etail

a marketing agreement during the ~eriod specified

subsection. No retail

.]64 dealer or distributor,


.

..

Cb)

except as shall

]66-

o
~,.

otherwise ~rovided in subsection

(a) of t.~is section,

]67

terminate, ancel, or faU to renew a ma=keting aqreement unless he .urnishes prior WJ:'ittennotice to t!:e other party. !,uch notice shall be sent to the ot..~e: pa:ty by registere<! g"r certified mail not less thal1 ninety
(90)

J 68
]69

" '"

'

""+,....

."
o
(:)

]70
]7]

c.ays prior

to

~e

date on which the marketinq agree!:lent is to be

]72 ]73

or not renewed, unless a shorter . period is provi.ded for in t:!l.is subsection. ~uch notice shall contain. a statelIlent of t!1e partyl s inte:tion

te%minated, ~ancelled,

]75
]76

...

.so
and a No

t:erminate, cancel, or .fail to renew the marketing. aqreement,

]76 ]77
]79

!.he date on Whichsuch action shall becomeeffective,


!.tatement of the specific distributor shall grounds for such action. cancel, or fail

terminate,

to renew a

]79
]80 . ] 8] ]82 ] 83

marketing agreement, or notify a retail in~ention to take such action,

dealer of his

good faith ~elieves that: the facts and .::i,~~..ll:Stances existing specified do, in fact, 1ustify his reli.ance on the grounds

unless he reasonably and in

in his notice of i"'ltention to take suc..'laction.

]84

"-1

,-25~~

Notic~ furnishe4 pursuan~ to this, subsection shall be effective ~n the date of the'mailing . !n the event that a termination or cancellation ~on is based
(1)

]85
]86

]88 ]89 ]90


19]

one or more of the grounds specified in paragraphs


(4)

Shr0ugh

and (10) through

(17)

of subsection

(e),

t..lte

'!!.inety(90) day advance notice shall not be required. !owever, in such an event, the distributor shall furnish

]92 ] 94 ]94
]95

!!%,ittenuotice to the retail dealer as far in advance of the effective date of such ter'mination or cancellation ,,-., ~asonably practical under t...'le ci:cumstances. as is

o
",,"
'C" M

The distributor's failure to furnish prior written notice, ,as required


by

this subsection, of his intention not to renew a or not such marketing agreement

marketing agreement,whe~~er

provides for automatical extension or renewal, shall constitute

o
a

a renewal of the marketing agreement for a term of one yea~ from its stated expiration date. !c) No distributor shall terminate or cancel any
]97 ]98

o
or-,

marketing ~greement with a retail dealer, either directly or indirectly, unless such termination or cancellation
-e'.

'-...-!

is based

]99
200 20]

,upon one or core of the grounds specified in this subsection. lio distributor shall terminate or cancel any marketing agreement ~ith a retail dealer unless the grounds fOr such termination ~r cancellation in the marketing aqree1'!1ent. (1) T.he retail dealer has failed to pay financial

202
203

are expressly set forth

204 206
207
208

2,bl.igationsdue to t.'1e distributor

under the marketing

agreement, including, but not limited to, rents for any equipment or retail service station provided by t..~e distributor

and I?ayments for any %:IOtor fuels, petroleum

209
2] 0 2]]

products, or automotive roducts delivered, on consignment

-26- ,

iu~~
2]2 2] 3 214 .2]6 2]7 2]8 2]9 22] 222".:_:~ ..223,

or otherWise, to the .retail ~ealer by ,t.~e distributor pursuant to the marketing ~greement, !!,ithin :the time and in the manner prescribed by ~~e marketing ~qreement.

12) ~e

retail dealer has filed for or has been

declared banknlpt, has petitioned for or has been declared insolvent, or has petitiC?.Ilfap-,.for a reorganization or creditor !,rrangement under1:heapplicable laws.

J,,3) ,A termination or dissolution of the partnership, orporation.;:,,~r-_o-ther entity <:)p.~ratinq .the' retail service station or,the.death of the,rj!tail dealer,
,-.r:-'

provided that a termination or dissolution of a partnership or other entity shall not constitute a ground for the termination or cancellation of a marketing agreement where the remaining partners : or individual members of the other entity have notified the distributor of their intention to operate the retail service station

o
'7
""

""
"

~..~

o
a

and to acquire the interests of the departing partners or members pursuant to Section 4-205 Ca) - Cd).

14)
o

~he retail dealer has voluntarily abandoned,

225 226 227 228


230 23]

C) or has given notice of his L~tention to voluntarily abandon,

.. his .. retail
,

service station, other than pursuant to sections

4~20~

(!.) or 4-205 of this Title. (5) ... ~e retail dealer has unjustifiably left his .

retail service station vacant or unattended for an unreasonable '-~eriodof time or

open his retail ~ervice statiQn for business for an .unreasonable~,~~d of ~ number of days during any calendar

has

unjustifiably failed to

232
233

year. The period of time and number of days which shall be deemed unreasonable shall be expressly set forth in the marketing agreement, but in no event may such period of time be less than

-'

-yW~c.~~
-27-

~.~4
.'whom~e (6)
.

"nine

'(9)

co~secut~ve days or such numberof days be

less than eighteen

(18) days dur~ng any calendar year. dealer.


~&

Tone retail

some other person over and was grossly negligent


.,-7'

239 240 '24]


. 242

retail

dealer has control

__ .

in .!lot exercising

such control,

has wilfull1~ or ma-lic~ously or personal property, .'

~estroyed or damagedthe real including any ~quirment tpat retail


...

is. uaed in tl'le",opera1;~9p. ..,o..J._t;.P,e 243


....

service .

station,

o.f the distributor

:&urnished
'~"'..

-~-

244

-'

pursu~t

to the marketing agreement and the. retail

dealer

244

o.
~

has refused to reolace or repair

such real or personal orooertv . ... or some other person over and was grossly negligent
.

17)
whom t~e retail
.

~e

retail

dealer,

246 247, 248249 250 25] 252 253 254 254

~., ~"
..

-.

dealer has control such control,

in uot exercising

comingled, !;1sbranded, mislabeled,

has deliberately

a~ulte~ed, to his

or misrepresented

customers any gltor prodhcts delivered

fuels, ~

petroleum products,

or autocoti ve

o
c

the retail

dealer by the distributor

'pursuant to the marketing agreement in a manner prohibited

o by the marketing-'agreement or by !:,ederal or District


'Columbia law or contrary retail service station The retail

of

to customary'E,rac,!:;ices in the

industry. dealer has made materially false,

-18)
-~eceptive,

256 257 258 259

or misleading representations

to the distributor service

which are related station E,usiness. 19) any !ederal regulations station,

to the operation of his,retail

':he retail or District

dealer has fai~ed to complywith of Colunlbia laws, rules, or service or

26] 262 263


264 265

E,elating to the operation of a retail !:outnot limited to,

including,

laws, rules,

regul.ations relatinq

to the paycent of ta."Ces and the

-28-

~~

maintenance

of any necessary

licenses, e,ermits, or agreement made ~e retail'

266 267 268 269


" c'"

registrations,

which the marketing

dealer responsible

for complying with, and such failure to has .2.r will


y a.: ~ "'~'

comply with such laws, rules, or regulations adversely

affect the business ,relationship . bei:"~een "the

269' " ~".

'".

"~

!.etail dealer and the distributor

or the business of -:the:

270 27]

I'"

distribu ter.

110) The

retail dealer has been convicted of the a felony, cricinal

273 274 275 . 276 277 278 279

:ommission

or attecpt to co~t

'0

misconduct or violations of law involving moral turpitude, fraud, or commereial dishonesty,

...

~.

...

which is related to t."te which

r-:
"":"")

operation of his retail !,ervice station business and would affect the ability of the~etail

dealer to operate his

retail service station business ~r would tend to deface or

o
. 0

seriously damage the reputation ~f the distributor

or his

280 280

trademark, provided that this subsection shall not apply to

o
-0

convictions that have been disclosed to the distributor by the retail dealer prior to entering into the marketing agreement.
(11) ...

The condemnation,

appropriation,

or ot."'l.er .

282 283

public takinq of the retail serviee station loeation covered by the !,U'kinq agreement, power of ~nent retail. in whole or p'art, pursuant to the

...

284 285
286 287

domain or the loss of or damage to the

service !,tation facility by .aa act of God, to the

extent that such ~aking or damage makes the continued operation of the retail !,ervice station cCmplet2ly unfeasible.

288 288

:/t~:; ~~~;}~.:::;.::.:.:.~.~:~t/~::~:~;t;~/:.~ ':':~~:-;l~.~:, .~;~.:<~~ ..... ",~~: ... ;... ~~;.: :':':.:';~:':. o.:,,~~:,;, .;;... ::;~ ... ::::.:.;~ ... :'~~.:~~ .....~ .;.:
, -292

'; .. :.:.:.;:.:::. :.

(12) ~

The marketing

aqreement grants the retail .. . or authority to occupy a retail

290 29] 292 293 294 295


297

dealer ~~e right, privilege,

service !otation leased by the distributor :f-rom anot.~er person and !ouch lease is terminated, cancelled, or'not

xenewed by such ~t:,h.er person for a_cause b~yond the reasonable


, ..,-"

::ontl:olof ~~e distributor.

113): The distributor has lost his legal rig~t, for


&:&use beyond his reasonable control, to qrant the retail

a.
~
('-!

298 299 300 302 303 304 J05 J06 306 308 J09
3]0 3] ]

dealer ~~e right, pri vileqe , or aut..~ori ty to use any trademark ~rovided' for in t..~e marketing (14) .. severe ... agreement.

"....
~ .:l

The retail dealer has been afflicted with so ne is rendered

a physical or mental disability'that

c)

o
o
'0

.!,ne~pa.bleof operating his retail service station for an

for the another

unreasonable

period of time and has been unable to :)!:ovide

continued person.

operation of his retail service station by .'.

.i1S) The retail dealer has failed to substantially


~omply with any other essential and reasonable ~ondition, or provision expreSSly set fo~~ requirement,

in the ~ketinq

.
'

~qreement
(16) ..

~e

existence or occurence of any cause or or cancellation of

3]3 3]4 3)5


3]6

circumstance ... the marketing

which would make termination

agreement reasonable, just, and equitable in -_. light of ~~e facts and circumstances t..~en ~~istinq.

'

.. \

;':.~.~:-~~ '::': :~~t ';',.;,::c.:~;" :;.~~~:~ .~:~:;~~ ~.:'~'~.~':.~;,::~.~:-:.: :~:~';',<': .; ',::".~':~, :'~::::,;.,~.:.~ ..;.:..,:.:-::.
. '
.; .
~,

I ;~}

I. ;: :;.~,:.;:

:> ..... , ;'.,.~ -:":" .... . '. : ~.' '0:r:>. "


"

.~J : '.

~.

,
;<i:;

"-30~ '2

117) , The retail dealer and the distributor

have

3]8
3]9 320 322 323 324 326 326 327 328 330 .33} 332 334 335 336 337

executed a mutual agreement ~qreement in writing.

to terminate the 'marketing

>

Cd) ...

No distributor shall fail to renew a marketing


-

agreement with a retail dealer, either directly c'r

indirectly, spless such failure, to renew is'based- upon one or mOre of ~~e qrolmds specified in this subsection. distributor shall fail to renew a marketinqagree=ent the grounds for such failure to renew forth !n the marketing agreement. No unless

,rC)'
lI?"'-"

.....

are expressly set

C" !',"

-.~

11) The

existence of any of the grounds which

o would 1ustify the termination or cancellation of a marketing o agreement pursuant to subsection (c) of this section.
12)

~e

distributor

intends to and does in fact

Cj ~i~~raw
.0

entirely, within one (1) year of the effective date {b} of this

of ...

the notice furnished pursuant to subsection

~ection, from the sale in the District of Columbia of motor ,!nels, petroleum products, and automotive products.

338,
340

dealer ~e

(3)

The marketing agreement grants the retail

right, privilege, ,or authority to occupy a retail

34)
342 343 344 345

service ~tation owned, leased, or o~~erwise controlled by the distributor and the distributor intends to and does in

fact withdraw

entirely, within one (1~ year of ~~e effective (b) of

date 2f the notice furnished pursuant to subsection

"

.j

:.; .4

;'';.".

",,"

~.:.:.

~~

'.

:'."

.",:

. .:

.:.;."

-312

this ~ection, controllinq, District

from the.business
,!Ild operating

of. owning, leasinq, statiQll~ in. the..

.34.6 347 347 ,349

r,et{lil service

of Columbia.
14).

The marketing agreement grants the 'retail" privilege" 'or aa:t . ~orityto

dealer She right, service ~tation

.. ":ocC'.lpy"a :eta.~l '.',.>L.:,350 .',,' ~


.by:;~_

owned, lE?asee., ,orot."'er..,ise,cq,ntrolled ~d the distributor location intends to sell

,.:,351,~ : 352 353 354 355 356

the- distributor

or lease

o'
('!

the retail subsidiary,


-

serTice !.tation parent,

to a person other than a controlled or

affiliate,

or ot."'er entity

manaqedby~"'e ~istributor distributo7 ~tor

or controllinq

or managing t."'e s~le of interest in

".~
i '"

for a ~urpose other ~"'an the retail a leasehold

0--

fuels or L~tends to relinauish . service location, E!.'"Ceeuting a new lease


-

357 358 359 359

,.-.. the retail


j

-'

station

without any intention for, or otherwise

of purchasinq, regaining

o o

control

of the location. on the part of the distributor and

!n
~d

the retail trying

(5)

A failure

36] 362 363


364

dealer,

bo~'" parties

having acted in good faith

to ef!ect

a renewal, to agree to any reasonable to the marketing and

essential

changes in or additions

~qreement considering circumstances.

t.~e t.~en E!.'"eisting facts

365 365

,
The retail dealer has failed to make and maintenance to the real or personal furnished pursuant to the

reasonable epairs

(6)

367
368

property of ~"'e distributor

369

:. " ~ ";'" ,.t.

... : .......

:"
. '''.~ .f '.

.... ':<'.:':':'.:' ..~."' .'....;. '::':'." ~~..::: .. ,':..' ':. .' .. :.: ..' ~:-, ~ .,""
.~

.' ': ...... : ...

..,

.' :'.:.

',:.. '.

e,

.;'4

-32... 2

."

. .,.

marketing agreement ~rovided that the marketing agreement requires the retai~ dea~er to ,!ssume such responsibi~i ty for repair and maintenance . ";', :,,=.7." 17) comply ~
-'.' ;.... ;~c-:.;
----::

370 37] 37]. 373 374 375 376 377 378 379 . 380 38J
382 383

The retail dealer has failed to substantialy

with any reasonab~e minimum standar~s for the .... ...

operation of !. 'retai~ service station whi~~ a,reexpressly set ._,..


cr

fort!1in the .. marketing agreement,' including, but not

limited to, standards s,0ncerning the cleanliness and

~. appearance of t.lote retail service !.tation and the safeness of


1'.:',1

facilities and se..~ices,wit.'lin a easonable ~e

after

.~ receiving written notice of non-compliance and such failure to comply will damage the integrity of the ~':str;i1jutor' s

..

o
C

tradecark or the reputat-.ion .of eit.~er t..'1e distributor or


-

other retail service stations operating under the

o distributor'st:ademark.
a
18)

3g3 385 386 387 388 389 390 39] 392

1'hedistributor has received substantiated

repeated ~ustomer complaints concerning t.'1e conduct or practices of ~'1e retail dealer, including, but not limited to, repair or maintenance work of a substandard quality~ obnoxious or ~isrespectful behavior ~owards customers, or dishonest, ~ethic~, or fraudulent practices, and the

..

continuance of !.uch conduct or practices will damage ~'le ~tesrity of the ~istributor's trademark or ~~e reputation

-3'j":

.
;

~;,.

"

of either the distributor or other retail service stations opex:ating under the distributor's trademark. (e) No distributor shall terminate, cancel, or fail to
..:.::

393 394 396


:.397

renew any marketing agreement, -either directly;cor,-':';-:::" i~directly, for any of the following reasons:
-,

398 400 401 401

,,(1), refusal of the retail dealer to accept a

. ,renel-Tal of 'a marketing agreement for a term of less than one year;

o
...."';

(2) refusal of the retail dealer to take part in any promotional or advertising campaign, to meet sales quotas suggest~d by the distribu~or, to purchase or accept delivery of any [products or equipment] motor fuels or petroleumproducts not speci~ied in the marketing agreement, or any

403 404 405 406 407 407 408 409 410 411 411 413 414
415

-'.
r.-.'

~"
o c o
6

other produc,ts or equipment, to sell motor fuels, petroleum products, or automotive products at a price suggested by the distributor, or to comply with any standard of performance ~ impsoed upon such retail dealer by the distributor which exceeds the standards of performance imposed by the marketing agreement; (3) refusal of the retail dealer to keep his re-

tail service station open and operating during those hours or days which, in the reasonable opinion of the ret~il dealer, are unprofitable or to follow the suggestions or advice of the distributor concerning days or hours of operation;

416 417
417

.... .::.; .:.;: /:. ::. ~,.;

.,
,

:',~.;,~' " '~"~'


.~

..' ~.' ~ .:'


."

.: ,~,::

fl,

t'.

.~ ! " ,

.::

'

.....~.
,

..

'"

'I

.. f.,.' '

.,'

,"

,,,

,."',

~'342

14)' the retail


right ~ sell, (5) of assign,

dealer's or othe~ise

attamptto transfer

exercise his his mar~eting

419 420

agreement 2r 'any interest<th.er-ein- to.,another::.p.~SQnt,:'h.~;;.ri ::,::1 .:.:::".~~.:l~.:",:;;;;;." the distributor's service desi.ret;;o ob't;ainpossessiO:{l.
. .

423 . .,. 424 425 426 427 428 428 43] 432 433

retal.l

static:>!lU]:;:~tl:r. leased to ther.;tail ~etail sale. o~ .motor ~uel.

dealer
.r

in order to en~age i;1.~e ownbehalf.lio

on its

marketing agreement s~~ll specify any

o of the reasons S?ntained in ~~is subsection as grounes for


........ ~ .~
*"f "a'

the termination of, ancellation

of, or failure

to renew

such marketing agreement by ~~e distributor. Sec. 4-204. Retail Dealer's Remedies Subseauent to or Failure

!"'~

~ermination,

Cancellation,

c
!a)

to

Renew. section are in

The remedies provided for in this

436 437 438 439

!.ddition to any and ~ll other re . nedies available

to the

<::) retail

l:)ther !.tatute !b)

dealer under this or act,

Title,

the marketing agreement, any

or law or equity. of, cancellation

In the event of any termination

44] 443 444 445 446 447 448

g.f,

or failure

to' renew a marketing agreement, whether action of either the retail

E.Y

the unUateral distributor, dealer,

dealer or ~~e

by mutual a9'reement, by the death of the retail shall make or ause to

or other..rise, the distributor in good faith

be made an offer

to repurch~s~ !rom the retail within ~irty (30) days

dealer or his legal

representative

,. . '--"'00 ' ,~..:. .

~. .

'.

. .: :-. :,.,'. ,.;'

~.
r :

"~

...

.:

..
,'

..'-

.......

-!.... : . :..~.

-v .~ .

. .
<I. ..,.

',',

""

..

.' .... :!. .


,
:.

f'

'.

'

":'

. ....~
.'

.'

."
'-

...

-35-

~~

..

'rW

~
2

after the effective date of such !ermination, or non-renewal, ~.including, any and all ~rchantable

cancellation,

449
450

products,

but. not limitedd:.o.j):an~t .!!!O-~or: fuels;:~':pe~Q.l:eum:-: r: .. ;;.:-.::::45t;.;:.:.:;.;.; ;': ..:;:;-: 452 __.
453

products, and automotive products, !,t. the full price originally paid or at the then current wholesale whichever price shall ~e lower,
. r.

price, and any ,!?d all equipr.ent,

454
455

including any equipment which has been !,ffL~ed or appenced, <:) ",,'
('}

after the effective date of this!ct the distributor,

with t..'1e permission of

456
457
4Sa

to a etail service station leasec from t.'1e


,

distributor, at the current fair market va Lue

which ha,ie been

... ~ ; ,,'

purchased by the retail dealer from the distributor and which

459

have been tendered, to the extent that such tender may be practi- 460 a
o

cal, by the retail dealer or his legal representative to the dis- 462tributor. If the distributor does not make or cause _to be made a 462
463 464

o
o

g60d faith offer to repurchase the retail dealer's products and ~ipment ~is Within .. i;he thirty (30) day period provided for in the retail dealer or his legal

subsection,

465
466

representative

zeasonable a price ~s may be obtained, may apply the balance owed by the distributor against any ~xisting indebtedness

may sell the products and equipment for as

467 468 469 470


47] 472

owed by the retail dealer to ~'1edistributor, a cause of action aqainst the ~st:ibutor difference.

...

and shall have

for t..~e repurchases

In the

event that the distributor

the retail ~ealer's products and equipment the distributor

:-,:':'~"': .. ~";'.':::':,..::~: 7:;:' , .:':.\":.:/.,': :::',~.:..::>:.;~"'~>"~:~ ;';;",',~ ' .:.~,: ":',;~':',.;: ,,.'""~:~.~::~; :."::':,::'; ...,~".:
-362,

:.':':.:;.'. ';~'~ "'~ .:~:"'"

shall have ~e

right to first apply the value of the

473 ,474 475 476 477


r:

products and equipment being repurchased against any existing indebtedness ~ed the retail dealer. directly .to the distributor by obligation to

~he distributor's

repurchase shall be enforceable 2,nly to the extent that there are no other valid claims or liens' ac;ai-nst"suc:h '.'
''''"':

;,478"

.,

products or equipment by or on behalf of other eredtors"of ,.. ~ . 479'


. .

o
:"=:T
~.~

. '. the retail dealer.


~.~

479
..

1c)

Equipment pUrchased or othenlise acquired by the

48]
482 483

retail ~ealer and affixed or appended, after ~~e effective date of this !ct with the permission of the lessor, toa retail service ,!tation leased by the retail dealer shall

..... .,

484 485 486 487


4S8

o remain the property of the retail dealer, notwithstanding .0, ~~e fact ~~at it is ermanently affixed or ~~e existence of-

o
o

any contrary provisions in a marketing agreement, o~~er


j -

agreement, or law.

of, or failure to'renew a !ease or other agreement or ~~e termination of, cancellation of, or failure to renew a

Upon the termination of, cancellation

489
490 49)

marketinq aqreement, the retail dealer or !lis legal %epresentative shall have a reasonable time in which ~

492
492

remove such equipment. In removing such equipmeni:, the retail sealer or h!s legal representative shall leave ~~e i:he same

493 494

retail service station premises in substantially

.~ .,t, ''':. ~. :,,:


.f

J' ,....'~~'f,..
4 '..

',,:.f : .:; t.:~;:~:' .: ,:.. ; ; .. ~; ...... t.::_: ..;.. .


'0.. ~
. '

, '.
'

'1 ~ ' '.

II..

':1.' ..''\. ' ... , t"


~ . "

I ,.
_.

'0:. -..~-.. ,,~:."("",'t. r.. " . ".~ . -:'"' ...... , ., . ~,;. :.-'. ~, ;.,'#.1 " ....,.:.;.'..1".,. .:..'t..... . ~tr", 'It ' .. , ~. .,.f).,. t.,.
.!',

h( ~., "!'
" '

_"I

et>
.'

'......

.:

.~.

.,

.".~' ! . '.i.:', , i,.,. "


'.,

- " -:4e.

.. ...

";'

-37:t

condition ~s they were at .the time the equipment was affixec

495
495

or appended.
!d) If the distributor t~nates, cance~s, or fails to

497
498

~enew a marketing agreement for any of the grounds specified !n sections 4-203(c)(2),(3),(11), 203 (c3,). (2) , (3),
,._

or (14) and 4-

499
500 501

2"r (4") or for'any cause or circumstance -".

allowed under section 4-30-3'(c:) (16) which invo'lves t:'1e-retail

o dealer's failure to ,omp1y with t.i.e marketing agree'l'Ont or . -::,which was not beyond ~e
C'"

5')2
503

reasonable control of the

distributor to prevent, the ~i.stributor shall pay to the

504

~~ retail dealer, wi~i.in ~i.irty (30) days of the effective date

...
-

505 506 507


508

of the termination, cancellation, or failure to renew, the full value of any business goodwill enjoyed by t.i.e dealer on ~e effective date of the notice !urnished pursuant to

..-.. ,-,

c section 4-203 (b) o

508 Sale .Assicpunent, 2 O~'ler T:-ansfer 2! !. Marketinq Aareement. 5]0


5]]

!.ec.

4-205.

!pproval of any sale, assignment, or o~,er transfer,


~,

(a) No distributor shall unreasonably withhold his

5] 3

5]4 5]5

including !Py transfer of the retail dealer's right, privilege, or authority to occupy a retail service station pursuant to a marketing agreement, of a marketing' agreement or any interest therein to another person by a retail dealer.

...

5]6

5]7 5]8 5]8

,-

:.!'~.'''A"J(,~_'~':';':~.;. ~~'J..~~.~.~~:.:!"~,: .. ~ .. "!.!.~.' ."J ~

.. ~ "ot!,;.', .. ", {~ " '!. ~,~~ ;. :.~~~'''#:~::.;.'' . ;::. ...' ~'! .... :;.!..;.~':"" f:,: ~.;,.:~! .~. ;;"'~'J~". : ;r.:I;' '!IV.'~ I.~.': .~ . ::.; ..' .~:\!,.-. ' ..:.':: "'jvJ~: . ~~":'.j( :.~t~~':':.~.,,~~ .. -v ,,-, . '... .. . ..' . '.' .. . (/-1'
.~ : ,.. :', .f ""; ", " ".
'O :

'I;

,~

'.

":.':.i"';;~':''!'"''

,'..... _.:

'!... ;. ;;.,.

: . ~~".' . "'

-38-

'11J'

fYl 2

Ib) ~ansfei

No retail dealer shall sell, assign, or otherwise a marketing agreemertt-or any interest therein

520 52] 522

unless he furnishes prior written notice to the distributor of his !ntention transfer. to make such sale, assignment, or other

523
524 525 526 527 528 529 530 530 532 533 534 536 537 538 538 .

Such notice shall be 'sent to the distributor by

registered ",r ertified mail- and shall include the p,:-ospective.1:ransferee's!lame and address, a statement of
r-

~e

prospective

transferee's !in~ncial qualifications, business

o
......,

..
r'.' '

statement of the prospective ~ansfereets

experience during the previous five (5) ~ears, and a s~a~emen~ of the prospective transferee's~bilitY~

it;!

charaeterL and credit history. Ie) Tone distributor shall ei~~er approve or disapprove

o
0-

such sale, assignment, or other transfer in writinq within sixty (60) days after receipt of the notice specified in
. I

subsection

(b) of .... t..'tis section. - distributorts A

failure to

o IJOtify. the retail dealer of his !'pproval or disapproval


shall be construed as an approval of ~e assiqnment, or other transfer.
14)

proposed sale,

Xn order for a sale, assignment, or o~er

transfer

540 54] 542 543 544

of ...

a marketinq agreement to be valid, the prospective

transferee shall aqree in writing to comply with-all valid .Onditions, and provisions of the existing

requirements,

marketing ~qreement which may be applicable.

.. ;;: . ". :~ .. :.,.::' .... ; " ,,-:'.~ :J..~ -;I:! ,;,;., ....... ." .. .,J,:::..~ .... .'!/~

~.I!.

!" .

~ ~.:~

..'

0'::' . #,;:".~~ . ~ .: .. :. \:. -.: . '}. ~ ;,.' .,: .>" ". .:.:.~.f.~ .1-. "",J, 't~t'.: .;.~ .!~ ... ,...... ;: -", -:-', ;...~i,;, ..,,!';' ::':'

' .

:'.

",:",

",
~~:,'.;

. ",
.,':

.'
',

~ :.~;,

,/

. ,,.,,.

I :,

.:! '.'' :.!."


'

i:"

"""

... , ".'; .~ ., ,.~ ;" ,- ~~

. -. " .....

-392

Ie)

A prospective

transferee any sale,

shall

have ~~e right

to

546

!erminate or repudiate transfer

assignment, or other tllerein

547
548

~f a marketing ag:reer-..ent or" any interest

for any reason, without the imposition of any damaqesor. penalties -- transferor for !pd wi~~Qut any recourse by the

such action

549 550 55] . -.552 553 554 555


.. -. -" ...

or distributor_.fo.r. !.uch action,_ ~ith.in .sevan :

days, not including Saturdays#. !undays, or -holidays,- a.ter t.~e day on which the sal!i!, !.ssic;nment, or other transfer is

"'......
" ',-

consummated. In order to exercise his right subsecti~n, the ~ansferee mail written shall: notice,

under this
.

!":'

11)
certified

by registered

or of his .

557 558 559 560 562 563 563

!,B-il, to the transferor

and the d.i.stributor under this

o
a

intention

lO

exercise

his right in this

subsection within

the period !'pecified

subsection;

o
.0

agreement:

(2)

discontinue

use of any trademark presently pursuant to the marketing

being ~ed by su~~transferee

13) . deliver or tender,


the transferoror distributor,

so far as is practical, all

to

.565 566 -568 569 569 570


570

~s appropriate,

money,

equipment, and merchantable roducts which have been loaned, . sold, or delivered to the transferee by"either ~e transferor or the distributor and which the t:ansferee has

not already sold, within ten (10) days after notice specified in this subsection: and

mailing the

f.~r:.":,:'~.~~f;'.~: :~:;/t".~;;~:(::.~.:.}:~~.: ~:.:jJJ::t.:~~~:;~i?:~~~.~.~~?~~.~. ':.~::~~~~~:'~ :


.~

{r3~:: h/;:~,'~:::j:; ;.:~~:~/ ~~",,:/:;: ~t/~~ ::~~ .. ;~: 'if .r?~;.,;~'::':';./'~~'/:::':'


2

.,
;.;:r

'-40-

. (4)

...

deliver

or tender to the transferor service station

full

572 573 574 575

..possession of any retail transferee specified

!.ithin ten (10;)... days af-ter mailing the notice . . in this ~ubsecti~n. credit, or the cash

trans fered- to the

The transfe~ee shall receive full


equivalent,

577
-5'8
~ ~ '#-

.or all moneYoi'1.equipment,: and'merchan:tabl~~' transf;e:ror or-: ~,~

products delivered or ten~ered to ~e ,,..:


0-

579' 580 58] . 582 583 585 586

distributor, this shall

as appropriate,

pursuant to aragraph (3) of-

subsection.

!!othing contained within t."tis subsection

be construed as ~anting

a 'similar right to terminate


or the distributor. Aqainst

r:"-'
~

or

repudiate ,to either

t."te transferor Dealer's

!ec.
o
~ la)

4-206.

Retail

Cause 2!Action

Distr1buto'r. In addition to any and all dealer under this


"

ot."ter remedies available the marketing or law or equity, a

588 589 590 59] 59]

to the retail

...

Title,

aqreement, any 2,ther statute


,
,

or act,

o retail

dealer maymaintain a civil

action against a

distribu tor for: (1) ... failure to make such disclosures as are

593 594 596 597

required by ~ection 4-202;

12)
(3) ...

failure

to repurchase as required by section

!-204(b);
failure to pay the full va~ue of any business
4-204(d):

599

~oodwill as required by section

6no

.--,j

~~'~)/{~~Y.:J~::~,~;;~,:/~,:~.;(::;~;~~~::~:: i::;;~~":'~::;~,~~~,,: .~:::: ~~'~;,~.:'::'.::/~',:'::.'t, .;','~::,"'i::~~":''''';'. :tt::' ~'~~::;;)~t:;;:~);~;":;:,. ~7~,:~); . -.:~.:; J: 'S'~:':;\:F~':~i;.\ ~;~;" i

-412

i4)

wrongful or illegal cancellation

of,

602 603
"
. ,'_.' -.~

termination 2,f, or failure to renew a marketing

agreement with the'~.r.etal ~d'ealer~" ': :.:::: 604


604

...

under section 4-203;

is}

unreasonably

withholding

approval of a '-oth~r'transfer

606
607

proposed !.ale, assiqnment,or of the ~;rketing


,('":

agreement. including for in section 4-

608 6]0 .

b ~ (;'.:
~-t)

~e.court ascertainable
~

cay award actual damages,

loss of goodwill as provided

6]]
6]2

204(d), sustained

EY

the retail deale: as a result of ~~e

distributor1s

violation ~f this Title and may also grant

613
6]4

such other ~egal or equitable ~elief as may be a@propriate,


o

includinq, but not limited to, declaratory specific The ... performance, and injunctive

judgment,

614
6]4

relief.

o
o

court may, unless the action was frivolous, direct attorney and

616 6]7
6]9

that ?sts of the, flction, including reasonable expert witness

fees, be paid by the distributor.


I

court finds that the distributor te~nation ... ~rketing ~so of, cancellation

s wrongful

or illegal

If the

'6]9
620 62] 622 623

of, or failure to renewthe the court may

agreement was wilful or intentional,

award the retail dealer ascertainable

loss of goodwill

.
and ~unitive (b) ... damages. transferee shall have a cause of No prospective

625
626

action against a distributor

-.

as a result of the

.~tz.;."/:,<..~ .. i: ::{:::/~~~::':.~;.::;:.:i~"~~:';:::'~\~:7 :.' .::: -:~..::'7:...'.;: :~'::,~'.~;,'. ':~;.~.:::':.~~'~:~".~.::~-:.~: ~:~;.: h. '::.:.,:


-42-

::::;"~''" ::. , ...

~.<;;:; .....!.<....:~:::~. :;I'~.

distributor's

disapproval

~f a proposed

sale, assignment,

or

627 628
630 .
63]

other transfer of a 'marketin9' !.sreement. (c) .A

civil action brougtlt. ..bya retail:, dealer against,;a-


.

~istributor

pursuant

to this s'ection shal.l.be commenced"

~ithin two (2) years after such cause of action arose. ~ec. 4-207.
.J'"

632
634""" ."

APplicationr"2! Marketing

Title ~

~"'Exstina

Agreements.

635
6'37

la)

This Title shall only apply to that portion of a agreement which concerns ~~e operation of a retail

o
~ ~ ..~
""'~ ~: .f

~rketinq service ..

638
639

station which is located wi~~n

~~e District of conduc~ed by

Columbia !pd only to ~~e extent of the business a 'retail dealer wit..'tin-'the District of Columbia.
.

640 64] 643


644

--_.

c c c
o

lb), This Title shall apply to any and all marketing-

agreements entered into ,act. !,he term -entered

after ~~e effective

date of this

into shall include any renewal, or novation of a pre-

645 646 647

.extension, !pdi;l:cation, amendment, existing ~rketinq Ie) ~is agreement.

I
. I
i

Title shall also apply to any failure to renew marketing agreement.

649
650

a -

pre-existing

'.
TITLEIII 653

MORA"rORItiM os

CONVERSIONS SERVICE

TO L!n.ITEI)

655 656

SERVICE: RETAIL

STATIOUS

--

i
ii'\" .,;;

':~r~~;;~~;~.ir~~~ .\~1~.):.~:.:" ::~~:~:i,.~:..-~ ',i~!;;: :;.~ ~.?;:.;;,'i~,2~~,~\:::.: ..;;;..~:?',.::;.:~Z;'~::~:;}.~: <'~.,:'::.~')" .:,'.~/,:~:: ..~~\ ..., :;";;.;', 'f:::'.:~' .~,,!': 1"0 . . -4~
.

."

...

;.

,.

,
~.( :,

.
Prohibition

'.'Sec. 5-301.

.ta)

For the purposes of this retail,; service location

-- ----~~~--~
on Conversions. section, any-reta'il

659
'
66] :,:662~~ r:

the term -full servi'ce'

service station area,


.
.

station-'means

~hich provides a garage, ~closed

service bay; work maintaining,

663

or, similar

area for repairing,

664
666"'" 666

servi'cd.~"l9', ~r ot.l-].ero'lise working on motor vehicles.;"" Sueh "

..
C';
0::::.-

repair,

maintenance, and service to, .!ires, the installation .fan belts,

work may include, -but is or replacement of brakes, water pumps,

E?t limited batteries,

6Ei7
668

lic;hts,

C"r

mufflers and ~the= parts


:

and accessories -and the performance wheel alignments, t-me-

669 670 67] 672

~ :: . ..

.-

of motor oil =.hanSes, lubrications, ups, tire repairs,

~rake adjust.~ents,

and ,;~nera!. repai-r-and

p
C

maintenance work and !,ervices.

Ib)
-full

No retail retail

service

station

which is operated as a on or after the

674 6'75
676 677

service

service

station-

o o
effective Qate ~.this

Act may be structurally

altered, of the type or conversion,


"

modified, or otherwise =.onverted, irrespective or magnitude of the alteration, including, but not l~ted ~dification,

678
679
680

to, !Py alteration,

modification,

or conversion wh~chhas the effect access to an existinq similar

~f merely obstructinq bay,' !,.ork area, or

qarage, service

68]

enclosed area by any motor vehicle which was accommodated,into a non-full service facility

68]
682

2reviously until

!!.anuary1, 1979.

683

.j..

~
:.:.r-

-44-

-r.>
" A,

~':.r'

(c) No person who is an operator. of any :full service retail service station" on or after the effective date of this ~, including any.person :.whois':a :.Stibsequent~-'Oper.ata~ 0.: any -:.'
I

such retail service statio~, .oz.who, in any mannex:,controls the oper~ticn of any' such retail service station', shall s!JbstCl~tially .reduce -the number, types, qu'antity, or quality of the repair,
.r{

maintenance, and other services, including the retail sale of motor fuels, petroleum products, and automotive products, previously offer~d until January 1, 1979. Such operators shall

a
0;;;,;-

r-:!

.....
~r

maintain the retail service station's existing garages, service bays, work areas, and similar areas in'a fully operational condition

and reasonably equipped to perfo~~pair,

maintenanr.e, and service

o
CJ

work on motor vehi~les, including the provision of a qualified individual or individuals who is or are capable of performing repair, maintenance, and service work on motor vehicles during a reasonable number of ho~~s per day and of days per week. not be construed as prohibiting anypersQn This subsection shall

,-... ,:,-~.I

who 'operates or controls

a "full service retail service stationn from discontinuing the retail sale of motor fuels at such retail service station, provided that less than twenty (20) per centum of such retail service station's qross revenue derived from the retail sale of motor fuels, petroleum products, and automotive products and from the repair, maintenance, and servicing of motor vehicles is derived from the retail sale of motor fuels, and provided further that such discontinuance of the

-45-

.."w

>: v-::-----.. -.I ... _ ...

retail

sale of . motor
. _ ... __

fuels_ shall not. authorize


I,

any-other .. sub".
~...cw-._. ..., .... _ .. _~ __

stanti.al reduction previously o"ffered.

in repair, maintenance

ol;.other services

This subsection- shidi~rtot Be: construed' as -_._,-

prohibi ting a full service "retail service -. statd.on~I-.from' selling mo.tor fuels on a s~lf-service __ basis.~.provided_.that.such-retail c, service ,"b
~
~_r

-.....

station

continues

to. sell mQtor

fuels on.anon-self-service

basis. Cd) The Mayor 'is authorized repair, maintenance, and directed and other to study the being offered

motor vehicle by existing service ments,

services

"full service

re"aail service

stations"

and "non-full establishof

!'-.,

retail service commuters,

stations"to

residents, persens

commercial

and other affected

in the District

o o
,0.

'columbia, both in terms of adequacy This study shall include existing "full service an analysis

and in terms

Of

convenience.

of the impact of convertinq stations" to nnon-fullservice of Columbia. of

retail service in various

retail service

stations"

areas of the District

The Mayor is also authorized existing retail service commercial

and directed

to study the adequacy

stations

to serve the needs and convenience commuters, and other fuels,

of residents, affected petroleum

establishments,

persons

with respect

to the retail products

sale of motor in various

products,

and automotive

areas of

the 'District of Columbia. of the petroleum products

Such study shall include and automotive products

an examination

being offered

-46-

'fW

()A~t-:f"~

to the Council a preliminary

by commercial

establishments

other than retail service stations. present

The Mayor shall, if necessary, reJ?ortwithin .Act detailing presently thirty


(30)

9.,~Y.!?-. ~,~::ep~:tlJ,e,:~t.f_eCj;~Y~L cl.'~.tJ!: o.t,,-t-pis'.'

:,~;:.:.'.'.', .-

,~:,A

the need for any additional-funds

aooveandbeyond for

budgeted

funds which the Mayor deems' necessary

performance

of such study.This

Act does"no,t authorize- the expenditure the findings

of. any such additional

funds., A final report detailing the Mayor's recommendations

..>-.
0'

of such studv, including

or proposals or other

.,....
'~

with respect to any necessary actions, shall be submitted

or desirable

legislation

". .. '.
'

to the Council no later than June 1, 1978.

~'"

'.rITLE IV

o o
c:~

GENEBAL

PROVISIONS

!his Act. shall constit:ute a statement of the public policy 2,f the District
Act shall be liberally
\

Sec. 6-401. Statecent of Public Polic:v.

699 70]

of Columbia. !he provisions of 1:h,is const--ued in order ~ effectively

,I
i

703 704 705

carry out the pw:poses of t.~is Act in the interests public health, safety, and welfare.

2,f the

~OS
707 7"9
7]0

!ec.

6-402. Severability.

!f any provision or part t.~ereo! of t.'tis Act or t.~e application ~'tereof to any person or circ~tance declared unconstitutional is

2,r invalid, su~~ invalidity,

711

~:~~i.::'~;'1{::;:~.;.~:f ~;;.t::~:~j+::;:) ..;)~;~ { ;;~i~(;'~"> :;.,~:.'/.~:.:~::;:: ~:.;~i: ~~;-'.;,~; .. ~:i':',,~? ;,:~r:": ~~. ~.; .. :~:.~ :~~;~:~:~i~:~~.: :~ .. ,::;':::'~;~Y" ;.:~~:-:/~ ~~::"::~~;;':~.~':- -,
I

to: ~.

-47- .
2

unconstitutionality, or inapplicability.~hall

not affect any

7]2 7]3 '.- .


:,

other provisions or applications of this.Act wlJieh. can be

given effect without the l.n.y.a..l;i.d.. -p~qv:ision_or!!Ppl'i~at~on":':--'" 7]4' and to this end, all provisions of.this Act. are her.eby. _. declared .. see, ..
.r-.

7]4 _ 7]5

to be severable.
6-:~03.Effective Date; . " .
.

7]7
,o~

~s ...

Act shall take effect at ~~eend

.the. pe=io~

719, ..
\

o
~."

provided review of acts of the Council of .... for congressional .


the District of Col~bia

720

in subsection

(c) of section 602 of


..

72] 722
722

C"

the District of olumbia Self-Government and Gove~r.ental Reorganization Act.

1'0

o c

o
a

...

ATTACHMENT D

SUPERIOR COURT OF THE DISTRICT OF COLUMBIA CIVIL DIVISION KAZEM KAZEMZADEH et al., Plaintiffs, v. EASTERN PETROLEUM CORPORATION et al., Defendants. : : : : : : : : : : OMNIBUS ORDER This matter comes before the Court upon Defendant BP Products North America Inc.s Motion for Summary Judgment, filed on April 15, 2009, Plaintiffs Motion for Partial Summary Judgment, filed on April 21, 2009, Defendant Eastern Petroleum Corporations Memorandum of Points and Authorities in Opposition to Plaintiffs Motion for Partial Summary Judgment, filed on May 15, 2009, Defendant BP Product North America Inc.s Memorandum in Opposition to Plaintiffs Motion for Summary Judgment, filed on May 18, 2009, Defendant Eastern Petroleum Corporations Reply in Further Support of its Motion for Summary Judgment, filed on May 29, 2009, Plaintiffs Combined Reply to Defendants Oppositions to Plaintiffs Motion for Partial Summary Judgment, filed on May 29, 2009, Defendant Eastern Petroleum Corporations Motion for Summary Judgment Pursuant to Sup. Ct. R. Civ. P. 56, filed on June 18, 2009, Plaintiffs Opposition to Defendant BP Products North America, Inc.s Motion for Summary Judgment, filed on June 18, 2009, Plaintiffs Opposition to Defendant Eastern Petroleum Corporations Motion for Summary Judgment, filed on June 18, 2009, Defendant BP Products North America Inc.s Praecipe Regarding Legislative History of the RSSA, filed on August 14, 2009, and Plaintiffs Response to

Case No. 2006 CA 9077 B Calendar 6 Judge Brian F. Holeman

BP Products North America Inc.s Praecipe Regarding Legislative History of the RSSA, filed on August 19, 2009. I. BACKGROUND Plaintiffs, operators of retail service stations in the District of Columbia, purchased fifteen retail gasoline stations from BP Products North America, Inc. (BP). (Second Am. Compl. 1-2, 15-21H, 25, Apr. 9, 2009.) The gasoline stations, with the exception of one, are supplied BP branded motor fuel through Defendant Eastern Petroleum Corporation (Eastern). (Id. at 2.) In November 2002, Plaintiff Wahla, LLC (Wahla) purchased the 1244 South Capitol property from BP. (Id. at 25.) As a condition of selling the real estate to Wahla, BP required Wahla to execute a BP branded motor fuel supply agreement in which Wahla would only purchase fuel directly or indirectly from BP. (Id..) In late 2005, BP assigned its rights and obligations under the 1244 South Capitol Supply Agreement to Defendant Eastern. (Id. at 29.) After this assignment, Eastern increased the wholesale prices charged for their BP branded motor fuel to Wahla, which frequently included higher prices than it charged other District of Columbia BP dealers. (Id. at 30.) Between 2004 and 2005, BP raised the rents at the other fourteen (14) stations involved in this lawsuit. (Id. at 31.) This forced Plaintiffs to either pay the higher rent or lose their operated businesses. (Id. at 34.) In August 2005, BP contracted with Eastern to sell BPs interests in its District of Columbia metropolitan area gasoline stations to Eastern. (Id. at 35.) Pursuant to separate Purchase and Sale Agreements (PSA), Plaintiff Kazemzadeh purchased six station properties located in the District of Colombia from BP (Id. at 42), while other Plaintiffs purchased the seven remaining station properties from BP (Id. at 43).

Each PSA required each Plaintiff to agree to a fifteen-year deed restriction prohibiting any non-BP brand fuel from being sold at the station properties. (Id. at 42.) Each PSA further required that Plaintiffs cancel their previous supply agreements with BP and enter into exclusive fifteen-year Dealer Supply Agreements (DSA) with Eastern. (Id.) Consistent with the provisions of the PSA, Plaintiffs executed fifteen-year motor fuel DSAs with Eastern. (Id. at 44.) Plaintiffs contend that Defendant Eastern has sold motor fuel to Plaintiffs at wholesale prices materially higher than the prices at which Eastern has sold to other District of Columbia area BP dealers (Id. at 53.) Plaintiffs further contend that Defendants BP and Eastern have violated District of Columbia law by imposing illegal and unreasonable contract terms and restraints (Id. at 3.) II. APPLICABLE STANDARD To prevail on a motion for summary judgment, the moving party must demonstrate, based on the pleadings, discovery, and any affidavits submitted, that there is no genuine issue as to any material fact and that it is thus entitled to judgment as a matter of law. Grant v. May Dept Stores Co., 786 A.2d 580, 583 (D.C. 2001) (emphasis added); Super. Ct. Civ. R. 56(c). A trial court considering a motion for summary judgment must view the pleadings, discovery materials, and affidavits in the light most favorable to the non-moving party and may grant the motion only if a reasonable finder of fact, having drawn all reasonable inferences in favor of the non-moving party, could not find for the non-moving party based on the evidence in the record. Grant, 786 A.2d at 583 (internal citations omitted). The moving party has the initial burden of proving that there is no genuine issue of material fact in dispute. If the moving party carries its initial burden, then the non-moving party assumes the

burden of establishing that there is a genuine issue of material fact in dispute. Id. at 593 (internal citations omitted). The non-moving party may not simply rest on conclusory allegations to establish that a genuine issue of material fact is in dispute. Boulton v. Inst. of Int'l Educ., 808 A.2d 499, 502 (D.C. 2002). Instead, the non-moving party must set forth specific facts showing there is a genuine issue for trial. Super. Ct. Civ. R. 56(e). III. ANALYSIS Plaintiffs assert sixteen counts against Defendants.1 Counts 16, 18, 20, 22, 24, 26, 28, 30 allege violations of the Retail Service Station Act (RSSA), D.C. Code 36-301 et seq., for each of the service stations. Counts 17, 19, 21, 23, 25, 27, 29, 31 allege breach of contract for each of the service stations. Plaintiffs contend that the marketing agreement precluding Plaintiffs from purchasing motor fuel from sources other than BP violates the RSSA. Plaintiffs further allege that Defendants breached the DSAs, which contain open price terms for fuel, by charging Plaintiffs commercially unreasonable prices. In Count 15, Plaintiffs By Inc., 2402, Inc., C and W Services, Inc., Wahla BrothersSargohda, Inc., Barka, Inc., Fort Dupont, Inc., and Sohone, Inc. seek a declaratory judgment resolving the interpretation of the supply agreement.2 (Second Am. Compl. 147, 149-150.) Specifically, Plaintiffs allege that the parties disagree as to the meaning of a 3.5 cent provision, and whether the provision provides a maximum amount Plaintiffs can be charged for

Counts 1-14 of the Second Amended Complaint were dismissed with prejudice. (Order of Judge Holeman, Oct. 26, 2009.)
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Plaintiffs Kazem Kazemzadeh, Kazco No. 2, Inc., Kazco Properties, Inc., Kase Properties, LLC, K&T Enterprises, Inc., A&K Enterprises, Inc., Case Enterprises, Inc., KCY Enterprises, Inc., and Neelou, Inc. have dismissed with prejudice Count 15. (Order of Judge Holeman, Oct. 26, 2009.)
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breaching the agreement, or whether it merely provides Eastern with an option to terminate and the damages it is entitled to recover if it chooses to exercise that option. (Pls. Oppn Easterns Mot. Summ. J. 41.) The pending motions raise several discrete issues. First, both Defendants contend that Plaintiffs state law claims are not governed by the RSSA, rather the federal Petroleum Marketing Practices Act (PMPA). (Mem. P. & A. Supp. BPs Mot. Summ. J. 13; Easterns Mot. Summ. J. 13.) Second, both Defendants argue that the RSSA claims pertaining to the 1244 South Capitol property are barred by the RSSAs two-year statute of limitations. (Mem. P. & A. Supp. BPs Mot. Summ. J. 14; Easterns Mot. Summ. J. 16.) Third, Eastern argues that there is no private right of action under the RSSA for violations of RSSA 36-303.01(a), which prohibits exclusive dealing arrangements in marketing agreements between distributors and retailers. (Easterns Mot. Summ. J. 15.) Fourth, both Defendants contend that the prohibition on exclusive dealing arrangements under RSSA 36-303.01(a) is not applicable to them. BP argues that it does not have marketing agreements with Plaintiffs, and Eastern argues that the RSSA permits exclusivity arrangements when the distributor is operating under a refiners brand. Plaintiffs argue that they are entitled to summary judgment on this point because both Defendants are parties to marketing agreements with Plaintiffs that contain exclusive dealing provisions. Fifth, both Defendants argue that Plaintiffs cannot prove facts entitling them to relief as to Plaintiffs contract claims. (Mem. P. & A. Supp. BPs Mot. Summ. J. 18; Easterns Mot. Summ. J. 16.) Sixth, Eastern argues that it is entitled to summary judgment as to Count 29 of Plaintiffs Second Amended Complaint because the Plaintiff of Count 29 did not provide notice of dispute to Eastern as to his UCC claims. (Easterns Mot. Summ. J. 31.) Seventh, Eastern argues that it is

entitled to summary judgment as to Count 15 of Plaintiffs Second Amended Complaint because the terms of the DSA give Eastern a right to assess liquidated damages in the event that Plaintiffs breach the agreements by failing to meet requisite minimum purchase volume requirements. (Id. at 32.) A. THE PETROLEUM MARKETING PRACTICES ACTS PREEMPTION

In their respective Motions for Summary Judgment, both Defendants assert that the PMPA, 15 U.S.C. 2801 2807, preempts Plaintiffs state law claims. (BPs Mem. P. & A. Supp. Mot. Summ. J. 12-13; Easterns Mot. Summ. J. 13.) Defendant BP argues that the PMPA preempts Plaintiffs state law claims because BP terminated its franchise agreements with Plaintiffs upon signing the cancellation agreements and the PSAs. (BPs Mem. P. & A. Supp. Mot. Summ. J. 13.) As to the 1244 South Capitol station, even though BP admits that no PMPA termination occurred, BP argues that because Eastern is the only party to the marketing agreement with Plaintiff Wahla, the PMPA preempts Wahlas state law claims. (Id. at 13.) Defendant Eastern argues that because RSSA 36-303.01(a)(6) limits Easterns grounds for termination under the supply agreement, such limitation is preempted by the PMPA. (Easterns Mot. Summ. J. 13.) In their Opposition, Plaintiffs allude to the 1994 Amendments to suggest that PMPAs preemption scope is limited. (Pls. Oppn Easterns Mot. Summ. J. 20.) Plaintiffs claim that the PMPA does not preempt their claims because the instant case has nothing to do with the termination or nonrenewal of petroleum franchises. (Id. at 19.) In determining whether the PMPA preempts the RSSA, the Court considers both Congress explicit and implicit intent. Davis v. Gulf Oil Corp., 485 A.2d 160, 168 (D.C. 1984) (citation omitted). As for Congress explicit intent, the PMPA states, in relevant part, as follows:

To the extent that any provision of this title . . . 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 title. 15 U.S.C.S. 2806(a)(1) (LexisNexis 2010) (emphasis added). The PMPA makes it clear that it provides just two types of protection to franchisees: (1) the franchisor may not terminate a franchise during the course of the agreement; and (2) it prohibits the franchisor from non-renewing a franchise at the conclusion of the agreement unless the nonrenewal is based upon a ground enumerated in the statute. Davis, 485 A.2d. at 165 (citation omitted). Thus, the PMPA explicitly preempts the RSSA solely as to the two subject areas of termination and non-renewal of franchise relationships. As to whether the PMPA implicitly preempts the RSSA, if any provision of the RSSA stands as an obstacle to the accomplishment and execution of the full purposes and objectives of the PMPA, the PMPA implicitly preempts that particular RSSA provision. Id. at 169 (citation omitted). While the PMPA adds a layer of rights and obligations upon the franchise relationship, it was not intended to totally displace state law principles which do not specifically apply to the termination or non-renewal of the franchise. Hanes v. Mid-America Petroleum, Inc., 577 F. Supp. 637, 645 (W.D. Mo. 1983); see also Bellmore v. Mobil Oil Corp., 783 F.2d 300, 305 (2d Cir. 1986) (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.)

The outcome of the foregoing analysis is straightforward. Plaintiffs claims are not explicitly or implicitly preempted by the PMPA. The PMPA does not explicitly preempt Plaintiffs state law claims because they do not concern the termination or non-renewal of their agreements with Defendants. The PMPA also does not implicitly preempt Plaintiffs state law claims because the RSSA provisions do not interfere with the PMPAs intended purpose of establishing a uniform set of rules governing the grounds for termination and non-renewal of motor fuel franchises and the notice which franchisors must provide franchisees. B. RETAIL SERVICE STATION ACTS STATUTE OF LIMITATIONS

Defendants argue that the statute of limitations of the RSSA precludes Plaintiffs claims (1 and 16) as to the properties located at 2210 Bladensburg Road and 1244 South Capitol, respectfully, because Plaintiffs filed this action more than two years after their agreement to sell only fuel purchased directly or indirectly from BP. (BPs Mem. P. & A. Supp. Mot. Summ. J. 14-15; Easterns Mot. Summ. J. 16.) Plaintiffs contend that this issue was resolved once already by the Order of the Court dated July 18, 2007 and signed by Judge Geoffrey Alprin, who found that the violation was continuous. (Pls. Oppn Eastern Mot. Summ. J. 24-25; Order Denying Mot. Dismiss 14-15, July 18, 2007.) A continuing violation exists where there is a series of related acts, one or more of which falls within the limitations period . . . . Boulton, 808 A.2d at 503-04 (citing Doe v. District of Columbia Commn on Human Rights, 624 A.2d 440, 444 n.5 (D.C. 1993)). The RSSA has a two-year statute of limitations that begins to run after the cause of action accrues. D.C. Code 36-303.06(c) (2010) (A civil action brought by a retail dealer against a distributor pursuant to this section shall be commenced within two (2) years after such cause of action arose.).

Plaintiff contends that the alleged illegal impact of the agreements entered into in 2001 continued to affect Plaintiff Wahlas ability to purchase motor fuel during the two-year limitations period. Thus, Wahlas claims are not precluded by the RSSA statute of limitations. The Court has previously determined that the alleged wrongdoing was continuing in nature. Defendant has cited no authority that would support vacating the Order of July 18, 2007. C. PRIVATE RIGHT OF ACTION

Defendant Eastern argues that there is no private right of action under the RSSA for a violation of RSSA 36-303.01(a). (Easterns Mot. Summ. J. 15.) Eastern asserts that the RSSA, 36-303.06(a), sets forth various types of claims that a retail dealer may pursue against a distributor in a civil action, but violations of 36-303.01(a) are not included in this list of authorized claims. (Id. at 15.) Consequently, Eastern surmises, the only remedy available to a retail dealer under the RSSA, 36-303.03(a)(1) is the right to terminate or repudiate any marketing agreement to which he is a party for any reason . . . within 7 days . . . after the day on which performance of such marketing agreement commences. (Id. at 15.) RSSA 36-303.06(a)(1) states that the list of claims for which a civil action may be brought against a distributor is [i]n addition to any and all other remedies available to the retail dealer. D.C. Code 36-303.06(a)(1) (emphasis added). Further, in Davis, the court considered an alleged violation of RSSA 36-303.01(a)(10), which like the provision at issue here, is not included in the list of civil actions under RSSA 36-303.06(a)(1). See Davis, 485 A.2d at 170. The court was certain, nonetheless, that the legislature intended to permit franchisees to seek relief from franchisors violations of [that subsection]. Id. at 171 n.12.

D.

APPLICABILITY OF THE RSSA TO DEFENDANT BP

Defendant BP contends that it is not subject to the RSSA because: (1) BP is not a distributor within the meaning of the RSSA; and (2) BP did not enter a marking agreement with Plaintiffs. (BPs Mem. P. & A. Supp. Mot. Summ. J. 15.) 1. DEFENDANT BP AS A DISTRIBUTOR

First, Defendant BP contends that it cannot be a distributor because it does not sell, supply, or distribute fuel to Plaintiffs and it does not own, lease, or otherwise control Plaintiffs properties. (BPs Mem. P. & A. Supp. Mot. Summ. J. 16.) Defendant BP alleges that it is a refiner under the RSSA because it indirectly sells its refined oil to distributors such as Defendant Eastern. (Id. at 16-17.) BP further contends that it cannot be labeled as a distributor under the RSSA purely based on its function as a distributor in other states without owning any retail service stations in the District of Columbia because such an interpretation would violate the Constitutions Commerce Clause. (BPs Praecipe 1, Aug. 14, 2009.) BP alleges that the District of Columbias Home Rule Act provides that the Council of the District of Columbia had no authority to enact any act . . . which is not restricted in its application exclusively in or to the District. (Id. at 3) (citing D.C. Code 1-206.02(a)(3)). BP interprets Council of the District of Columbia Report on Bill 1-333 to indicate that BP can only qualify as a distributor based on its activities within the District of Columbia. (Id.) Plaintiffs allege that, for definition purposes, BPs actions outside the District of Columbia may qualify BP as a distributor under the RSSA. (Pls. Resp. BPs Praecipe 2.) Plaintiffs further rely on an expansive definition of person under the RSSA to suggest that BP is a distributor

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because it maintains a common or joint interest with . . . or manages or effectively controls Eastern. (Pls. Oppn BPs Mot. Summ. J. 16.) The definition is well-founded, as elsewhere under District of Columbia law, person is intended to include corporations. See Schiff v. Am. Assn of Retired Pers., 697 A.2d 1193, 1199 (D.C. 1997) (Wagner, J., dissenting) (citing D.C. Code 28-3901(a)(1)3). The determination whether BP is a distributor under the RSSA is a question of law for the Court. See Miller v. W.H. Bristow, 739 F. Supp. 1044, 1049 (D.S.C. 1990) (holding that whether one is entitled to PMPA protection is a question of law for the Court). The RSSA defines a distributor as: [A]ny person who is engaged in the business of selling, supplying, or distributing on consignment or otherwise, motor fuels or petroleum products to or through retail service stations which it owns, leases, or otherwise controls, and who also maintains a marketing agreement with a retail dealer for the sale or distribution of motor fuels or petroleum products to a retail service station, whether or not such distributor owns, leases, or otherwise controls such retail service station. D.C. Code 36-301.01(2) (emphasis added). The quoted language plainly provides that BP may be a distributor without owning, leasing, or otherwise controlling the retail service stations in question. Nothing in the statutory definition of refiner under the RSSA precludes an entity from being both a refiner and a distributor. See D.C. Code 36-301.01. Further, it does not violate the Constitutions Commerce Clause to conclude that BP is a distributor, for definition purposes under the RSSA because the Court is not attempting to regulate BPs activities as a distributor outside the District of Columbia. It is undisputed that BP is engaged in the business of selling, supplying or distributing . . . motor fuels or petroleum products

As used in this chapter [Consumer Protection Procedures], the term (1) person means an individual, firm, corporation, partnership, cooperative, association, or any other organization, legal entity, or group of individuals however organized[.] D.C. Code 28-3901(a)(1) (emphasis added).
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as set forth in the RSSA definition. As long as BP is subject to marketing agreements with any retail dealers, BP is a distributor under the RSSA. 2. DEFINITION OF MARKETING AGREEMENT

Second, BP contends that it is not subject to the RSSA per section 36.303.07 because it does not have marketing agreements with Plaintiffs. (BPs Mem. P. & A. Supp. Mot. Summ. J. 15.) BP alleges that its 2005 PSAs with Plaintiffs were cancelled by the DLSA Cancellation and Interim Cancellation. (Id. at 17.) Plaintiffs assert that the term marketing agreement may apply to any written agreement or combination of agreements, including any contract, lease, franchise, or other agreement. (Pls. Oppn BPs Mot. Summ. J. 16) (quoting 36-301.01(7)(A)). Plaintiffs argue that they have marketing agreements with BP because BP was the original party to their 2005 PSAs with BP. (Id.) Plaintiffs argue that the 2005 PSAs are preexisting marketing agreements that were modified, amended or novated when Eastern became the direct supplier to Plaintiffs stations. (Id.) Therefore, Plaintiffs aver that BP still has marketing agreements with Plaintiffs because section 36303.07(b) provides that the RSSA applies to any and all marketing agreements [including] any renewal, extension, modification, amendment or novation of a preexisting marketing agreement. (Id. at 16.) Plaintiffs further argue that even if BP assigned these supply agreements to Eastern, a franchisor cannot circumvent their agreement by the simple expedient of assignment. (Pls. Mot. Summ. J. 13) (quoting Dege v. Milford, 574 A.2d 288, 291 n.3 (D.C. 1990). [T]he RSSA seeks to effectuate broad remedial purposes[;] its provisions must be liberally construed in favor of the independent retailers. Dege, 574 A.2d at 292. RSSA 36-301.01(7) states as follows:

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(7) "Marketing agreement" means any written agreement, or combination of agreements, including any contract, lease, franchise, or other agreement, which is entered into between a distributor and a retail dealer and pursuant to which: (A) The distributor agrees to sell, supply, or distribute motor fuel to the retail dealer for the purpose of engaging in the retail sale of such motor fuel at a retail service station; and (B) The retail dealer is granted the right, privilege, or authority, in addition to whatever else may be provided, to: (i) Use any trademark owned, leased, or otherwise controlled by the distributor for the purpose of engaging in the retail sale of motor fuel at a retail service station; or (ii) Occupy a retail service station owned, leased, or otherwise controlled by the distributor for the purpose of engaging in the retail sale of motor fuel. D.C. Code 36-301.01(7) (emphasis added). Marketing agreements under section 36-303.01(a) of the RSSA also include any oral or written collateral or ancillary agreement. D.C. Code 36303.01(a). The 2005 PSAs are marketing agreements under the RSSA. The 2005 PSAs state, in relevant part, as follows: The parties acknowledge and agree that in connection with this Agreement (and as a condition to Sellers obligation to proceed to closing), Purchaser and Seller shall, at Closing, enter into . . . the fifteen (15) year Seller Dealer Supply Agreement . . . . The Seller Dealer Supply Agreement shall pertain to the terms and conditions upon which Purchaser shall purchase from Seller motor fuel and other products to supply the businesses operated at the Property. Purchaser shall be obligated to comply with Sellers brand and image requirements for retail branded fuel facilities as set forth in the Seller Dealer Supply Agreement . . . . Purchase and Sale Agreement 36 (Sept. 2, 2005) (emphasis added). The PSAs establish that: (1) BP and Plaintiffs entered into a fifteen (15) year supply agreement; and (2) BP and Plaintiffs entered

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agreements where [Plaintiffs] shall purchase from [BP] and Plaintiffs will comply with [BPs] brand and image requirements. The Court finds unconvincing BPs argument that both the DLSA cancellation agreement and the subsequent Mutual Cancellation and Release extinguished all of BPs marketing agreements with Plaintiffs. Both the DLSA cancellation agreement and the Mutual Cancellation and Release only cancelled the supply agreements, i.e. the DLSA and the Interim BP supply agreements, not the deed restrictions, as part of the 2005 PSAs with Plaintiffs. Although it is unclear on the facts presented whether the 2005 PSAs were renewed, modified, amended, novated, or even assigned when Eastern stepped into BPs shoes as the direct supplier, BP still maintains a marketing agreement under the RSSA. E. EXCLUSIVE DEALING ARRANGEMENTS

Plaintiffs argue that their marketing agreements with BP and Eastern violate section 36303.01(a)(6) of the RSSA because the marketing agreements, the deed restrictions and the Eastern DSAs contain absolute prohibitions on purchasing and reselling any non-BP motor fuel not purchased from Eastern. (BPs Mem. P. & A. Supp. Mot. Summ. J. 15-16.) Eastern argues that the RSSA permits exclusivity arrangements between suppliers and distributors when distributors operate under a refiners brand. (Mem. P. & A. Easterns Oppn Pls. Mot. Summ. J. 7.) Eastern relies on an exception provided under RSSA 36-303.01(a)(6), which states, in pertinent part, as follows: [I]f the marketing agreement permits the retail dealer to use the distributors trademark, the marketing agreement may require such motor fuels . . . to be of a reasonably similar quality to those of the distributor, and provided further that the retail dealer shall neither represent such motor fuels or products as having been procured from the distributor or sell such motor fuels or products under the distributors trademark.

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D.C. Code 36-303.01(a)(6) (emphasis added). The language of the RSSA does not at all indicate that exclusivity is permitted. Rather, the language allows for a provision in a marketing agreement stipulating that fuel must be of a reasonably similar quality if the retail dealer does not represent other fuel as being procured from the distributor under whose trademark the dealer operates. In the context of this case, Plaintiffs would be permitted to sell other brands of motor fuel so long as the quality of fuel is similar and there is no representation that the other brands were obtained from BP or other brands under BPs trademark. The legislative history for RSSA 36-303.01(a)(6) provides greater clarity. It states, in pertinent part, as follows: [This subsection] prohibits exclusive dealing arrangements. This subsection also prohibits such commingling of motor fuels and products as to constitute fraud, misrepresentation, or trademark violations. This section does not authorize a distributor to establish a functional exclusive dealing arrangement by an overly strict interpretation of the phrase reasonably similar quality. D.C. Council, Report on Bill 1-333 at 70 (emphasis added). The legislative history of this provision further states that it was not intended to authorize . . . illegal practices, but was designed to provide some minimal protection to the distributors trademark. Id. at 64 (emphasis added). The clear and unambiguous language of 36.303.01(a)(6) and the express prohibition in the legislative history are in direct and irresolvable conflict with the acknowledged exclusivity requirements of both the PSAs and the DSAs. On these facts, a reasonable finder of fact could not find in favor of Eastern. Therefore, Plaintiffs Motion for Summary Judgment is granted as it relates to this claim because the exclusive dealing arrangements created by Defendant BPs PSAs and required by Defendant Eastern in its DSAs violate section 36-303.01(a)(6) of the RSSA.

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F.

BREACH OF CONTRACT 1. BP

Plaintiffs allege that Eastern did not set its fuel prices in good faith, as required by D.C. Code 28:2-305. D.C. Code 28:2-305 defines an open price term as [a] price to be fixed by the seller or by the buyer means a price for him to fix in good faith. (Emphasis added.) In its defense, Defendant BP argues that Plaintiffs are not entitled to relief as to their contract claims because: (1) BP does not fix or set Plaintiffs fuel prices; (2) District of Columbia law does not recognize a breach of contract action for aiding and abetting; (3) BP maintains no contractual liability because BP executed releases with Plaintiffs before Plaintiffs signed supply agreements with Eastern; and (4) Plaintiffs have actionable contract claims relating to the 2210 Bladensburg and 1244 South Capitol properties because BPs assignment of rights and responsibilities concerning these stations is a novation that discharges BP of any duties under previous supply agreements. (Mem. P. & A. Supp. BPs Mot. Summ. J. 18-22.) Plaintiffs claims and Defendants arguments establish issues of material fact for trial that preclude summary judgment. Regarding Plaintiffs price-fixing claim, Plaintiffs argue that BP can be liable under UCC section 2-305 because the factual background involves transactions in goods. (Pls. Oppn BPs Mot. Summ. J. 18.) Plaintiffs further argue that BP is still a party to the three-party transactions involving both Plaintiffs and Eastern. (Id. at 19.) At minimum, the process by which prices were set, whether that process was conceived in good faith and the nature of outcomes are all issues of fact to be decided at trial. Plaintiffs also argue that Defendant BP mischaracterizes Plaintiffs claims as aiding and abetting. (Id. at 20.) Plaintiffs allege that their breach of contract claims are for direct breaches of contract by BP because the direct contract is actually a three-party global arrangement, out of

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which all the agreements flowed. (Id.) The question whether there was in fact a breach of contract, irrespective of any characterization that either side may assign to the operative events that give rise to the instant actions, are questions of fact to be determined at trial. Plaintiffs allege that the Mutual Cancellations and Releases make clear that they only release claims against BP that were made prior to December 15, 2005. (Id. at 21.) The Amended Complaint states, [f]rom at least as early as December 15, 2005, and continuing through the present, Defendants have violated and continue to violate UCC section 2-305 . . . . (Pls. Am. Compl. 93.) The intent of the parties at the time of execution of the releases is a question of fact. Whether the releases served to preclude any contractual liability as to BP and the extent to which any claims were released are legal questions to be determined by the Court. Finally, Plaintiffs assert that BPs assignment of the existing DSAs to Eastern with respect to the 2210 Bladensburg Road and 1244 South Capitol stations were not novations. (Pls. Oppn BPs Mot. Summ. J. 22.) A novation is the discharge of a valid existing contract by the replacement of one debtor for another or the substitution of a new obligation in lieu of an already existing responsibility. Bashir v. Moayedi, 627 A.2d 997, 999 (D.C. 1993) (citation omitted). Whether any assignment was a novation ultimately requires a determination of the intention of the parties as indicated by the facts and circumstances. Hemisphere Natl Bank v. District of Columbia Ins. Guar. Assn, 412 A.2d 31, 37 (D.C. 1980) (citation omitted). 2. EASTERN

Defendant Eastern argues for summary judgment as to the contract claims on the grounds that it is entitled to a presumption of good faith as explained in U.C.C. 2-305 because there is no dispute of material fact. (Easterns Mot. Summ. J. 29.) Eastern contends that if a suppliers DTW4

Dealer tank wagon prices represent the cost of the motor fuel to the gasoline retailer.

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prices are: (1) within the range of DTW prices that other suppliers charged; and (2) the pricing system was applied uniformly to similarly-situated dealers (id. at 17) (citing United Food Mart Inc. v. Motiva Enters. L.L.C., 457 F. Supp. 2d 1329, 1334-37 (S.D. Fla. 2005)), then good faith is established. In support of its contention, Eastern refers to the expert witness testimony of Professor Andrew Kleit, Defendant Easterns designated expert on petroleum marketing issues, who concluded that Easterns DTW prices have been lower than Exxons DTW prices from 2006 to 2008. (Easterns Mot. Summ. J. 17) (citing SMF 25 and SMF Ex. 6, Kleit Report at 2). Eastern also argues that Plaintiffs expert witness on petroleum marketing issues, Dr. Richard J. Olsen, has presented a flawed opinion that Easterns prices are commercially unreasonable, in that he relied on rack-over contracts,5 which are fundamentally different from DTW prices. Eastern insists that rackover contracts are not open price contracts, but fixed prices based on a third party market source. Plaintiffs assert that Defendants violated U.C.C. 2-305, as codified at D.C. Code 28:2305(2), by charging plaintiffs motor fuel prices that were/are neither commercially reasonable, nor set honestly in fact or in good faith. (Second Am. Compl. 239.) More specifically, Plaintiffs argue that Eastern is not entitled to a presumption of good faith because Easterns prices are not posted. (Pls. Oppn Easterns Mot. Summ. J. 27-28.) U.C.C. 2-305, states as follows: (1) The parties if they so intend may conclude a contract for sale even if the price is not settled. In such a case the price is a reasonable price at the time for delivery if: (a) (b) nothing is said as to price; the price is left to be agreed by the parties and they fail to agree; or

See Easterns Mem. Law Supp. Mot. Exclude Ops. Test. Richard J. Olsen 3 (A rack-over contract is a closed price contract, under which the price a marketer charges to a dealer is calculated by applying a fixed markup to the rack or market price at which product is made available to the marketer at a refiners supply terminal.).
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(c)

the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.

(2)

A price to be fixed by the seller or by the buyer means a price to be fixed in good faith.

U.C.C. 2-305 (1), (2) (2004). Comment Three (3) explains a posted price or a future sellers or buyers given price, price in effect, market price, or the like satisfies the good faith requirement. U.C.C. 2-305 cmt. 3. Commercial reasonableness is a question of fact to be determined . . . in the context of the particular industry in which the sale took place. Natl Hous. Pship v. Mun. Capital Appreciation Partners I, L.P., 935 A.2d 300, 314 (D.C. 2007) (internal citations omitted); see also Allapattah Servs., Inc. v. Exxon Corp., 61 F. Supp. 2d 1308, 1324 (S.D. Fla. 1999) (citing TCP Indus., Inc. v. Uniroyal, Inc. 661 F.2d 542, 548 (6th Cir. 1981) ([T]he reasonableness of an open price term are questions for the trier of fact.)). It is facially obvious that whether Defendant Easterns prices were commercially reasonable is a question of fact for trial. 3. PRICE DISCRIMINATION

Plaintiffs allege that Eastern engaged in price discrimination in violation of section 36302.03(a) of the RSSA by failure to uniformly extend price adjustments to every retail service station in the District of Columbia. (Pls. Mot. Summ. J. 19.) Although Defendant Eastern agrees that it employs different price zones in the District of Columbia, Eastern asserts that section 36-302.03(a) of the RSSA does not prohibit such price zones because the section only applies to adjustments and discounts, and not to the setting of prices themselves. (Easterns Oppn Pls. Mot. Summ. J. 17.) Eastern alleges that setting of prices is a common and conventional practice in the petroleum industry. (Id. at 18) (citing United Food Mart,

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457 F. Supp. 3d 1329). Eastern further asserts that Dr. Olsens criticisms of Easterns price zones are flawed because they raise serious questions about his methodology, actual conclusions, and basic math. (Easterns Mot. Summ. J. 29.) Even if Dr. Olsens conclusions are not excluded, Eastern alleges that there is no dispute of material fact because Eastern did not engage in discriminatory pricing. (Id.) Section 36-302.03(a) of the RSSA provides: Every wholesaler shall extend all voluntary allowances . . . [and] any temporary or permanent price reduction, price allowance, price adjustment, special sale, deal, discount, inducement . . . uniformly, on an equitable basis, to every retail service station served. 36-302.03(a) (emphasis added). Contrary to Easterns position that there is no dispute of material fact on the issue of discriminatory pricing, at minimum whether Easterns admitted employment of different price zones alone is evidence of discriminatory pricing under the RSSA is a question of fact for trial. 4. COUNT 29 NOTICE OF BREACH OF CONTRACT

Defendant Eastern argues that it is entitled to summary judgment as to Count 29 because Plaintiff James Jackson did not provide a notice of dispute as to his UCC claims as required by D.C. Code 28:2-607(3). (Easterns Mot. Summ. J. 31.) D.C. Code 28:2-607(3) provides that once a tender has been accepted the buyer must notify the seller of any breach within a reasonable time or be barred from any remedy. D.C. Code 28:2-607(3)(a) (2010). The determination whether the seller was notified within a reasonable time is a question of fact unless all the circumstances lead to all but one conclusion. Mariner Water Renaturalizer of Washington, Inc. v. Aqua Purification Sys., Inc., 665 F.2d 1066, 1069 (D.C. 1981) (citation omitted).

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Plaintiffs Opposition cited as supportive Plaintiff Jacksons deposition, in which he asserts that he made an Eastern representative, Gordon Hankey, aware that he was not satisfied with the pricing concerning the tax differential between the District of Columbia and Maryland. (Pls. Oppn Easterns Mot. Summ. J. Ex. P at 262.) The record further reflects that Plaintiff Jackson did not inform Eastern that its DTW prices were in breach of the supply agreement. (Id.) D.C. Code 28:1-201 provides that a person has notice of a fact when, from all the facts and circumstances known to him at the time in question, he has reason to know it exists. D.C. Code 28:1-201(25)(c). Whether Plaintiff Jacksons complaint of unsatisfactory pricing concerning the tax differential provides sufficient notice of a breach of contract under the UCC, and whether any valid notice was rendered with in a reasonable time in this context are questions of fact for trial. See Mariner Water, 665 F.2d at 1069 (D.C. 1981) (citation omitted). G. DECLARATORY JUDGMENT

In Count 15, Plaintiffs request a declaratory judgment putting a limitation on the amount for which they would be liable if they breached their agreements by failing to meet requisite minimum purchase volume requirements. Eastern argues it is entitled to a summary judgment because the terms of the DSAs do not give Plaintiffs a right to terminate the DSAs, rather the terms give Eastern a discretionary right to assess liquidated damages in the event that Plaintiffs breach the agreements by failing to meet requisite minimum purchase volume requirements. (Easterns Mot. Summ. J. 32.) The DSA provides: Dealer agrees that if the volume of products purchased fails to meet the minimum purchase requirement . . . , Eastern may, at its option and in addition to any other available remedies: (1) [C]ollect three and one-half cents for each gallon of gasoline for which Dealers actual purchases . . . fall below the

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Minimum Annual Quantity . . . (2) [E]stablish good faith purchase amounts for the forward twelve (12) month period that would cure the existing breach; and (3) [B]oth (1) and (2) above. Defendant Eastern made substantially similar arguments in its Motion to Dismiss of March 26, 2007. In addressing those arguments, the Court concluded that the contract was sufficiently ambiguous and that Plaintiffs declaratory judgment claim should not be dismissed. (Order Denying Mot. Dismiss 15, July 18, 2007.) In the absence of any new evidence, whether the provision is intended to be a limitation on the amount of damages in the event of breach by the Plaintiffs or liquidated damages should Eastern choose to cancel the agreement with Plaintiffs remains a question of fact. WHEREFORE, upon careful consideration of Defendant BP Products North America Inc.s Motion for Summary Judgment, Plaintiffs Motion for Partial Summary Judgment, Defendant Eastern Petroleum Corporations Memorandum of Points and Authorities in Opposition to Plaintiffs Motion for Partial Summary Judgment, Defendant BP Product North America Inc.s Memorandum in Opposition to Plaintiffs Motion for Summary Judgment, Defendant Eastern Petroleum Corporations Reply in Further Support of its Motion for Summary Judgment, Plaintiffs Combined Reply to Defendants Oppositions to Plaintiffs Motion for Partial Summary Judgment, Defendant Eastern Petroleum Corporations Motion for Summary Judgment Pursuant to Super. Ct. R. Civ. P. 56, Plaintiffs Opposition to Defendant BP Products North America, Inc.s Motion for Summary Judgment, Plaintiffs Opposition to Defendant Eastern Petroleum Corporations Motion for Summary Judgment, Defendant BP Products North America Inc.s Praecipe Regarding Legislative History of the RSSA, and Plaintiffs Response to BP Products North America Inc.s

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Praecipe Regarding Legislative History of the RSSA, and the entire record herein, it is this 19th day of August 2010, hereby ORDERED, that BPs Motion for Summary Judgment is DENIED; and it is further ORDERED, that Easterns Motion for Summary Judgment is DENIED; and it is further ORDERED, that Plaintiffs Motion for Partial Summary Judgment is GRANTED IN PART; and it is further ORDERED, that the Defendants exclusive dealing provisions VIOLATE RSSA 36303.01(a)(6), and it is further ORDERED, that Plaintiffs Motion for Partial Summary Judgment regarding the Contract Counts is DENIED; and it is further ORDERED, that this matter is set for a Status Hearing on November 12, 2010 at 9:30 a.m. at 515 5th Street, N.W., Building A, Courtroom 49.

_______________________________ BRIAN F. HOLEMAN JUDGE Copies e-served to: Harry C. Storm, Esquire William A. Goldberg, Esquire Lerch, Early & Brewer, Chartered 3 Bethesda Metro Center Suite 460 Bethesda, MD 20814 Steven E. Tiller, Esquire Whiteford, Taylor & Preston, LLP Seven Saint Paul Street Baltimore, MD 21201

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William L. Taylor, Esquire Russell Powell, Esquire King Street Station I 1800 Diagonal Road Suite 600 Alexandria, VA 22314 William S. Heyman, Esquire Tydings & Rosenberg LLP 100 East Pratt Street 26th Floor Baltimore, MD 21202 Vanessa K.R. Keith, Esquire 10 South Broadway Suite 2000 St. Louis, MO 63102

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