Blackwell v. Power Test Corp.

• Decision Date: 19 August 1981
• Docket Number: Civ. A. No. 80-2227.
• Citation: 540 F. Supp. 802
• Parties: Robert C. BLACKWELL, d/b/a Bob's Power Test of Elizabeth, individually, and for all other persons similarly situated, Plaintiffs, v. POWER TEST CORP., a Delaware corporation, Power Test Petroleum Distributors, Inc., a New York corporation, Staten Island Gasolines, Inc., a New York corporation, Power Test of New Jersey, Inc., a New Jersey corporation, John Doe and Richard Roe, Inc., Defendants.
• Court: U.S. District Court — District of New Jersey

540 F. Supp. 802

Robert C. BLACKWELL, d/b/a Bob's Power Test of Elizabeth, individually, and for all other persons similarly situated, Plaintiffs, v.POWER TEST CORP., a Delaware corporation, Power Test Petroleum Distributors, Inc., a New York corporation, Staten Island Gasolines, Inc., a New York corporation, Power Test of New Jersey, Inc., a New Jersey corporation, John Doe and Richard Roe, Inc., Defendants.

Civ. A. No. 80-2227.

United States District Court, D. New Jersey.

August 19, 1981.

COPYRIGHT MATERIAL OMITTED

Robert H. Jaffe, Springfield, N. J., for plaintiffs.

Sue C. Nussbaum, Wayne, N. J., for defendants.

OPINION

MEANOR, District Judge.

This litigation was initiated by Robert C. Blackwell(Blackwell), d/b/a Bob's Power Test of Elizabeth, a franchisee and lessee of defendantState Island Gasolines, Inc.(SI Gasolines), in response to the attempted termination of plaintiff's franchise agreement and lease by defendantPower Test Petroleum Distributors, Inc.The matter is presently before the court on plaintiff's motion for class action certification and defendants' motion for dismissal pursuant to Fed.R.Civ.P. 12(b)(6) or, in the alternative, for summary judgment.¹For the reasons set forth below, the court will grant the defendants' motion for summary judgment.

Since November 1978, Blackwell has leased and operated a gasoline retail sales outlet, d/b/a "Bob's Power Test", located in Elizabeth, New Jersey, pursuant to a lease agreement, Blackwell Afft., Exhibit B, with SI Gasolines.Plaintiff and SI Gasolines were also parties to a Retail Dealer Franchise Agreement, id., Exhibit A.Both agreements were effective as of November 17, 1978.Plaintiff also executed a Guaranty Agreement, id., Exhibit C, at this time, as well as a Dealer Disclosure Form, id., Exhibit D.Certain provisions in these various agreements are at the heart of this controversy and will be detailed shortly.

Until sometime in the latter part of May 1980, plaintiff adhered to the conditions and terms of his franchise and lease agreement.At that time, however, the price of gasoline plaintiff was required to purchase from the defendants or their designee, pursuant to the terms of the franchise and lease agreement, "began to cost as much as ten cents (10¢) per gallon in excess of the cost of similar quality gasoline from the distributors of major oil producers."Complaint¶ 13, at 6.After two purchases from the defendants at this price, plaintiff began to purchase gasoline from other sources at prices ranging from $1.07 per gallon to $1.09 per gallon.

Shortly thereafter, on June 22, 1980, the defendants, Power Test of New Jersey, Inc.(PTNJ), and SI Gasolines sent a notice to all Power Test dealers enclosing a composite of the standard Power Test franchise agreement and related lease agreement, emphasizing those portions of these agreements which required the dealers to purchase gasoline from them as a condition of the lease and franchise.Id., Exhibit A. Paragraph 11 of the lease agreement, as highlighted by the defendants, indicates that a default of the lease occurs if and when "the lessee ... mixes any other brand or grade gasoline with Power Test gasoline in a storage tank connected to a dispensing pump on the premises or if lessee sells or holds out for a sale as a Power Test brand gasoline which is not a Power test brand gasoline."Id., Exhibit A, ¶ 11, at 2.The highlighted portions of the franchise agreement also dealt with the dealers' obligation to purchase gasoline from the defendants.In paragraph 1, dealers warrant to sell "only Seller's SI Gasolines gasoline."Id., Exhibit A, ¶ 1, at 2.More importantly, paragraph 15 of the franchise agreement, as reiterated in the Notice, reads:

15.Gasoline clause: Dealer does hereby covenant and agree that for and during the entire term, the Dealer shall not, nor permit any other, to store, handle, sell, offer for sale, advertise for sale, use or permit to be used upon the premises or any part thereof or adjacent thereto, any gasoline, oil or other petroleum products, other than supplied by the Seller or such company as the Seller shall designate.

It is further understood and agreed that the Dealer shall purchase or acquire from the Seller or such company as the Seller shall designate, all his requirements of gasoline, oil or other petroleum products which are, or are to be, stored, handled, sold, offered for sale, advertised for sale or sued upon the demised premises or any part thereof or adjacent thereto, and he does, hereby, agree to pay at the time of delivery, unto the Seller, or such company as the Seller shall designate, for such gasoline, oil or other petroleum products is designated by the Seller, at the bulk plant from which deliveries are to be made to the demised premises.

The Dealer covenants and agrees that it will not ... mix any other brand or grade of gasoline with Power Test gasoline in a storage tank connected to a dispensing pump on the premises; and will not sell or hold out for sale as Power Test brand gasoline any gasoline which is not Power Test brand gasoline.

Should there be any breach in any of the provisions contained in this paragraph, the Seller shall have the right to terminate this contract on giving to the Dealer two (2) days notice ... and the Dealer shall vacate the premises and Seller may recover possession of the premises by summary proceedings or otherwise.

Id., Exhibit A, ¶ 15, at 3(emphasis in original).The Notice also informed the dealers that the conditions of the franchise agreement and lease would be strictly enforced.Id.,Exhibit A, at 1.

Upon the receipt of this Notice, Blackwell, through his counsel, informed the defendants by letter dated June 25, 1980, that their attempt to enforce the Gasoline Clause of the franchise agreement would constitute a violation of federal antitrust law, as well as the New Jersey Franchise Practices Act.Blackwell Afft., Exhibit F.Although plaintiff expressed his continued desire to remain a Power Test franchisee, he indicated that he would take such legal action as necessary to assure uninterrupted possession of the premises.Id. at 2.

The defendants' response to this communication was two-fold.In a letter dated July 1, 1980, legal counsel for PTNJ rebutted the numerous contentions of plaintiff that the franchise and lease agreement provisions were violative of the federal antitrust laws.PTNJ also advised plaintiff's counsel that "the utilization of his marketing facilities for the introduction and sale of gasoline other than that supplied by Power Test is in clear violation of the law."Blackwell Afft., Exhibit G, at 2.Furthermore, PTNJ informed plaintiff's counsel that these acts by a dealer "will result in a termination."Id.Then, on July 15, 1980, defendantPower Test Petroleum Distributors, Inc.(PT Distributors), served plaintiff with a notice of termination.The termination was premised upon the assertion that plaintiff

stored, handled, sold, offered for sale, advertised for sale and used or permitted to be used upon the premises a gasoline other than that supplied by Power Test Petroleum Distributors, Inc. or did mix another brand of gasoline with gasoline supplied by Power Test Petroleum Distributors, Inc. in contravention of the terms of paragraph 11 of your Lease Agreement and paragraph 15 of your Retail Dealers Contract.

Blackwell Afft., Exhibit H. PT Distributors also demanded that plaintiff vacate the premises by July 18, 1980.

On July 18, 1980, plaintiff instituted this present lawsuit, seeking injunctive relief and damages against the defendants for violations of sections 1and2 of the Sherman Antitrust Act,15 U.S.C. §§ 1and2,section 3 of the Clayton Act,15 U.S.C. § 14, andsection 102 of the Petroleum Marketing Practices Act, 15 U.S.C. § 2802.Jurisdiction was alleged under sections 4and16 of the Clayton Act,15 U.S.C. §§ 15and26, section 105 of the Petroleum Marketing Practices Act, 15 U.S.C. § 2805, and28 U.S.C. § 1337.For reasons that will become clear shortly, it is necessary to discuss in some detail the substantive allegations of the complaint.

After a description of numerous parties, plaintiff alleges that "defendant Power Test is the parent corporation of subsidiaries PT Distributors, S. I. Gasolines and PTNJ."Complaint¶ 4, at 2.Plaintiff also named as defendants certain fictitious individuals and entities.Specifically, plaintiff averred

The identities of defendantsJohn Doe and Richard Roe, Inc. are presently unknown and/or plaintiffs are presently without sufficient evidence to warrant naming such additional named defendants at this time.Plaintiffs reserve the right to amend this complaint if and when warranted by the obtaining of additional evidence which would justify the naming of additional named defendants after the commencement of discovery proceedings.

Id.,¶ 5.

A variety of wrongs are alleged to have been perpetrated by the defendants.It is alleged that the plaintiff and the putative class members have suffered losses as a result of the enforcement of provisions in the franchise and lease agreements which require the purchase of gasoline at "artificially fixed prices."Id.,¶ 6, at 3.It is also alleged that the defendants have engaged in an unlawful combination and conspiracy, "and have been parties to contracts, agreements and understandings", restraining interstate commerce and trade in the sale of gasoline.The five specific actions alleged are:

(1)defendants required that Blackwell and all other dealers "only purchase gasoline requirements from defendants", id.,¶ 9(a), at 5;

(2)"defendants ... tied to a lease agreement a provision requiring plaintiff ... to purchase all their gasoline requirements from defendants", id.,¶ 9(b), at 5;

(3)defendants required that plaintiff purchase gasoline "at prices artificially fixed by them", id.,¶ 9(c), at 5, which prices are greater than those on the open market;

(4)defendants

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