Coast Village, Inc. v. Equilon Enterprises, LLC

• Decision Date: 17 August 2001
• Docket Number: No. CV00-05498ABC(JWJX).,CV00-05498ABC(JWJX).
• Citation: 163 F.Supp.2d 1136
• Parties: COAST VILLAGE, INC., et al., Plaintiffs, v. EQUILON ENTERPRISES, LLC, Defendant.
• Court: U.S. District Court — Central District of California

163 F.Supp.2d 1136

COAST VILLAGE, INC., et al., Plaintiffs, v. EQUILON ENTERPRISES, LLC, Defendant.

No. CV00-05498ABC(JWJX).

United States District Court, C.D. California.

August 17, 2001.

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Thomas Bleau, Esq., Martin Fox, Esq., Bleau, Fox & Associates, Los Angeles, CA, for Plaintiffs.

David Destino, Esq., Peter James, Esq., Nigel Jacques, Esq., Baker & Hostetler, Los Angeles, CA, for Defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW RE: PHASE ONE OF TRIAL; PETROLEUM MARKETING PRACTICES ACT, 15 U.S.C. § 2801 et seq.

COLLINS, District Judge.

This case involves Plaintiffs' claims pursuant to the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. § 2801 et seq. ("contract claims"), as well as their claims under California pricing and unfair competition statutes ("pricing claims"). On April 23, 2001, as agreed to by the parties, trial of these two types of claims was bifurcated: a Phase One trial of the PMPA contract claims; and a Phase Two trial of the state pricing claims. On May 7, 2001, this Court determined that Phase One did not require a jury. Accordingly, a non-jury trial (Phase One) was held before the Honorable Audrey B. Collins, District Judge presiding, from July 3, 2001 to July 18, 2001, on Plaintiffs' PMPA claim(s). Having considered all the evidence presented at trial, and the arguments of counsel, the Court ENTERS the following Findings of Fact and Conclusions of Law, pursuant to Fed. R. Civ. Pro. 52(a):

I. FINDINGS OF FACT

Trial Presentation and Glossary of Basic Terms

1. Plaintiffs called a total of thirty-one witnesses during the nine-day court trial. Defendant (also hereinafter called "Equilon") called a total of six witnesses of its own. The parties were each allotted a total of twenty-five (25) hours to be divided at their discretion between direct and cross-examination, and opening statements. An additional two (2) hours was allotted for closing arguments, such that each side was afforded a total time of twenty-seven (27) hours.

2. Nine of Plaintiffs' witnesses are/ were employees of Equilon or its affiliates: EUGENE GOLL ("Goll"), Business Operations Manager in Sales and Marketing for Equilon since its 1998 formation/creation; MICHAEL HANLEY ("Hanley"), Manager of Asset Management for Equiva Services until September, 2000; LARRY TURNER ("Turner"), Area Real Estate Manager for Equiva Services in the Pacific South Region ("PSR") of Equilon's network; DOUG ELSTON ("Elston"), Project Manager for Equilon since August, 1999, and previous Real Estate Manager for Equiva Services; DAN LITTLE ("Little"), General Manager of Merchandising for Equiva Services, and General Manager of Sales for Equilon in the PSR from April, 1998 to May, 2000; PETER HALLBERG ("Hallberg"), Planning Manager for the PSR; DAVID BURROW ("Burrow"), General Manager of the PSR since June, 2000; ROBERT MUSTAIN ("Mustain"), Contract Operator Retail Outlet Sales Manager for the PSR; and JOHN LUCIANI ("Luciani"), Pricing Manager for the PSR since May, 1998. These titles are based on the witnesses' own testimony.

3. Plaintiffs also called seventeen Equilon lessee dealers, all of whom are named Plaintiffs: HANI MAKSIMOUS ("Maksimous"), a Shell Oil Company-branded lessee dealer ("Shell dealer") for (approximately) 16 years as of trial; KEVORK SISLIAN ("Sislian"), Shell dealer for 9 years; RON ABEL ("Abel"), Shell dealer for 37 years; ALFRED BUCZKOWSKI ("Buczkowski"), Shell dealer for 31 years; SAMI MERHI ("Merhi"), Shell dealer for 30 years; FOUAD DAGHER ("Dagher"), Shell dealer for 18 years; EDGARDO PARUNGAO ("Parungao"), Shell dealer for 10 years; ZULEIKA KAPLAN ("Kaplan"), Shell dealer for 12 years; SHAROKH KASHANIROTH ("Kashaniroth"), Texaco dealer for 14 years; LINDA UELLNER ("Uellner"), Shell dealer for 30 years; SHAILA MANTRI ("Mantri"), Shell dealer for 6 years; JOHN RABADI ("Rabadi"), (former) Shell dealer for 17 years; KADJIC TERLSIAN ("Terlsian"), Shell dealer for 28 years; PAUL WILSON ("Wilson"), Shell dealer for 5 years; WALID NOUR AYOUB ("Ayoub"), Shell dealer for 4 years; CARLOS MARQUEZ ("Marquez"), Shell dealer for 22 years; and ESEQUIEL DELGADO ("Delgado"), Shell dealer for 38 years (Estimated tenures).

4. The five remaining witnesses called by Plaintiffs were: EVE WILLIAMS ("Williams"), an M.A.I.-certified commercial real estate appraiser; RON RAVILLE ("Raville"), a commercial real estate broker specializing in sales of gasoline stations; KEITH FULLINGTON ("Fullington"), a former Shell dealer (for 13 years) who is not a Plaintiff in this case; DR. RICHARD HANSON ("Hanson"), a forensic economist called as an expert to establish Equilon's book value for exemplary damages; and STEPHEN SHELTON ("Shelton"), a petroleum marketing expert.

5. Plaintiffs also read portions of deposition testimony from two additional witnesses into the trial record: CHRISTOPHER MURDOCK ("Murdock"), General Manager of Company Operations for Equilon; and JOHN DARNLEY ("Darnley"), Vice President of Sales and Marketing for Equilon since its formation.

6. Defendant called six witnesses — four employees of Equilon or its affiliates, and two non-employees: LAURA STYSLINGER ("Styslinger"), Manager of Rent Programs for Equiva Services since April, 2000, before that part of the legal departments at Shell Oil Company (10 years) and Equilon; JEFFREY ROUSE ("Rouse"), commercial real estate appraiser specializing in gasoline stations, employee of Hopkins Appraisal Services, Inc.; TERRY RUNNELS ("Runnels"), a Sales Manager in the PSR overseeing some of the Plaintiffs' stations; GEORGE RADICI ("Radici"), a Sales Manager in the PSR; DR. JOHN UMBECK ("Umbeck"), an economist focusing on the petroleum marketing industry; and ROBERT MORRIS ("Morris"), General Manager of Equilon's Southwest Region since June, 2000, prior General Manager of Marketing Development & Network Development for Equilon. Descriptions are based on witnesses' testimony.

7. Given the large number of acronyms and abbreviations which appeared in trial evidence and testimony, the Court had the parties jointly prepare a glossary of terms. Among the more important terms to which the parties have stipulated are the various "classes of trade" into which Equilon's (and before that Shell's and Texaco's) dealer network is divided. There are essentially four different avenues through which Equilon delivers petroleum products to the purchasing public:

(a) Retailer Operated Retail Outlets ("ROROs"): These are stations where Equilon (or an alliance company)¹ either owns the premises, or retains the master lease, and leases it to a lessee-dealer. All Plaintiffs fit this class of trade, and may hereinafter be called ROROs.

(b) Contractor Operated Retail Outlets ("COROs"): These are stations owned by Equilon or an alliance company which are operated by a contractor with/through Equilon.

(c) Salary Operated Retail Outlets ("SOROs"): These are also stations owned by Equilon or an alliance company, which are operated by Equilon/alliance employees.

(d) Open Retail Outlets ("OROs"): These are stations where the retailer owns the property him or herself and has a supply agreement with Equilon or an alliance company.²

8. A fifth "class of trade" is less focused on retail sales, though apparently this is also a possibility. This is the class of trade known interchangeably as both "Jobbers" and "WOROs" (standing for Wholesaler Operated Retail Outlets). These intermediary wholesalers purchase petroleum products from Equilon or alliance companies and resell to retailers. See, e.g., Goll testimony; see also Little testimony.

9. Other terms discussed in varying detail throughout the trial testimony and exhibits, which it may be helpful to define in one location, include the following acronyms/abbreviations:

(a) APC-an Ancillary (or Alternative) Profit Center, which is a non-gasoline source of revenue, such as a car wash or convenience store, or a fast food restaurant (QSR).

(b) QSR-a Quick Service Restaurant, which is a fast food restaurant located on or near a retail station (e.g., McDonald's, Taco Bell, Subway, or other brands).

(c) C-Store-abbreviation for a station convenience store.

(d) PSR-Pacific South Region, which is the regional market within the Equilon network surrounding Los Angeles and adjoining cities (from Fresno down to Orange County).

(e) NTI-New to Industry, which is a terminology adopted to described a wholly new station to be opened under an Equilon (or alliance company) brand name.

(f) NTA-New to Alliance, a terminology adopted to describe an existing retail station formerly operating under a non-Equilon (or alliance company) brand name.

(g) SMI-the Strategic Marketing Initiative, a marketing strategy study and planning process begun by Equilon soon after the consolidation of the alliance companies.

(h) RPS-the Regional Planning System, an extension of SMI to study and plan marketing in individual geographic regions within the dealer networks (e.g., the PSR).

(i) SMERF-Star Model for Evaluation of Retail Facilities, a spreadsheet model used to predict return on investment and/or net present value of retail stations.

(j) Starfire Report-financial analysis of site potential.

(k) TSF-Total Site Franchise, which is a term attached to a new channel of trade proposed/identified by SMI under which an alliance company and a retail dealer would share in some or all revenue streams. Also called a Virtual Site Franchise ("VSF") or a "CORO II."

(l) TDA-Territory Developer Alliance (or Agreement), which is another term apparently developed during SMI for an extension of the WORO or Jobber concept where alliance companies would enter into a joint venture with WOROs or Jobbers and share in revenue streams from APCs.³

(m) Equilon was formed in 1998 by Texaco Inc. ("Texaco") and Shell Oil Company ("Shell") affiliated companies; Texaco and Shell transferred their U.S. marketing and refining assets west of the Appalachians to...