Eden v. Amoco Oil Co., Inc.
| Decision Date | 20 July 1990 |
| Docket Number | Civ. No. PN-86-3421. |
| Citation | 741 F. Supp. 1192 |
| Parties | Paul G. EDEN v. AMOCO OIL COMPANY, INC. |
| Court | U.S. District Court — District of Maryland |
Harry C. Storm, Abrams, West & Storm, P.C., Bethesda, Md., for plaintiff.
Ward B. Coe, III, Whiteford, Taylor & Preston, Baltimore, Md., and Thomas J. Ciechanowski, Amoco Oil Co., Chicago, Ill., for defendant.
Paul G. Eden was terminated in November 1986 by Amoco Oil Company as a franchised gasoline station operator when Amoco refused to renew the franchise agreement with Eden. Eden filed suit against Amoco and included a claim that the termination violated the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. § 2801 et seq. (1988). After a two-week trial the jury returned a verdict in favor of Eden, awarding him $104,000 in damages. Because the PMPA provides that the Court is to determine whether plaintiff receives exemplary damages, Eden has filed a motion requesting that judgment include an award for exemplary damages. He also requests that the Court include an award for pre-judgment interest. For the reasons given hereafter, the Court will deny both requests.
The PMPA was enacted to protect motor fuel franchisees "`from arbitrary and discriminatory terminations or nonrenewals of their franchises.'" See Darling v. Mobil Oil Corp., 864 F.2d 981, 983 (2d Cir.1989) (citation omitted). The Act provides that a prevailing franchisee is entitled to an award of exemplary damages, "where appropriate," if the franchisor acted in "willful disregard of the requirements of section 2802 or 2803 of this title, or the rights of the franchisee thereunder." 15 U.S.C. § 2805(d)(1)(B). The Act further provides that "the question of whether to award exemplary damages and the amount of any such award shall be determined by the court and not by a jury." 15 U.S.C. § 2805(d)(2). Neither the PMPA nor its legislative history defines the standard to be applied in determining whether a franchisor acted in "willful disregard" of the statutory requirements or the rights of a franchisee.
Amoco contends that when finding that a defendant acted in "willful disregard" of the provisions of the PMPA, the Court should require proof of actual malice, drawing guidance from the law of Maryland land on punitive damages. See H & R Block, Inc. v. Testerman, 275 Md. 36, 338 A.2d 48 (1975). Actual malice under Maryland law requires a finding of "the performance of an unlawful act, intentionally or wantonly, without legal justification or excuse but with an evil or rancorous motive influenced by hate; the purpose being to deliberately and wilfully injure the plaintiff." Drug Fair of Maryland, Inc. v. Smith, 263 Md. 341, 352, 283 A.2d 392 (1971).
Eden, on the other hand, argues that the Court should not look for proof of a bad motive and should not weigh evidence of good faith to negate willfulness. Eden urges the Court to adopt the definition of "willful" as that term has been defined in cases which involve "willful adulteration, mislabeling or misbranding of motor fuels or other trademark violations" under 15 U.S.C. § 2802(c)(10). See, e.g., L.C. Williams Oil Co. v. Exxon Corp., 627 F.Supp. 864 (M.D.N.C.1985); Haynes v. Exxon Co., U.S.A., 512 F.Supp. 543 (E.D. Tenn.1981).
In L.C. Williams Oil Co., the court held that "the `willful' requirement of 15 U.S.C. § 2802(c)(10) contemplates `a conscious, intentional, deliberate and voluntary act, and that the provision does not require "proof of bad motive, nor does evidence of good faith negate the willfulness of an act covered by said provision."'" 627 F.Supp. at 870 (citation omitted). More recently, the Ninth Circuit defined a willful act under 15 U.S.C. § 2802(c)(10) as a "voluntary action, done either with an intentional disregard of, or plain indifference to, the requirements of the franchise agreement." Retsieg Corp. v. ARCO Petroleum Products Co., 870 F.2d 1495, 1498 (9th Cir.1989).
The formulation in Retsieg is akin to the standard for willfulness established by the Supreme Court in cases brought under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-34 (1982). In Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985), the Court held that an ADEA violation is "willful" if the employer knew its conduct was prohibited or if the employer acted with reckless disregard for the matter of whether its conduct was prohibited. Id. at 125-28, 105 S.Ct. at 623-25. The Supreme Court also has applied the Thurston standard of willfulness to explain the statute of limitations for willful violations of the Fair Labor Standards Act. In McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988), the Court noted:
In common usage the word "willful" is considered synonymous with such words as "voluntary," "deliberate," and "intentional." The word "willful" is widely used in the law, and, although it has not by any means been given a perfectly consistent interpretation, it is generally understood to refer to conduct that is not merely negligent. The standard of willfulness that was adopted in Thurston — that the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute — is surely a fair reading of the plain language of the FLSA.
Id. at 133, 108 S.Ct. at 1681 (citation omitted).
In light of the discussions in Thurston and McLaughlin, the Court concludes that the formulations of willfulness given in those cases should be applied to determine whether exemplary damages should be awarded to a prevailing franchisee under the PMPA. Thus, willfulness as used in the PMPA describes conduct that is pursued with a consciousness of wrongdoing or with a considered disregard to whether it violates the Act. It requires more than deliberate conduct that, in fact, violates the Act, so that an aspect of guilty knowledge or imputed guilty knowledge is required. As used in the Act, however, willfulness does not encompass a requirement of showing maliciousness in motive. See Thurston, 469 U.S. at 126 n. 19, 105 S.Ct. at 624 n. 19. Thus, a franchisor will be found to have acted with "willful disregard" of the statutory requirements or the rights of a franchisee if the franchisor either knew its conduct was prohibited by the PMPA or if the franchisor acted with plain indifference to its prohibitions.
This conclusion is supported by analogous decisions of the Fourth Circuit defining willfulness in other contexts. For example, the Fourth Circuit has indicated that Thurston does not mandate a finding of "willfulness" in ADEA cases simply because an employer's explanations for its actions were found to be mere pretexts for conduct which violated the statute. See, e.g., Herold v. Hajoca, 864 F.2d 317, 323-24 (4th Cir.1988), cert. denied, ___ U.S. ___, 109 S.Ct. 3159, 104 L.Ed.2d 1022 (1989); Gilliam v. Armtex, Inc., 820 F.2d 1387, 1389-90 (4th Cir.1987). In both Hajoca and Gilliam, the Fourth Circuit upheld a motion for judgment notwithstanding the verdict, overturning a jury award of liquidated damages, because "there was no evidence that `the employer acted in bad faith or with knowledge that its action was so lacking in justification as to warrant a jury's characterization of its conduct as willful.'" Hajoca, 864 F.2d at 323 (quoting Gilliam, 820 F.2d at 1390).
Eden contends that the facts in this case justify an award of exemplary damages because Amoco demonstrated its knowledge of prohibited conduct by advancing reasons for the termination of the franchise relationship which were pretextual. Eden suggests that Amoco had already decided in March 1986, about three months before he was terminated, to abandon the station. He argues that Amoco wanted to close the station because of a general dissatisfaction with its relationship with him and his family and that it accordingly seized upon minor violations of the franchise agreement, upon which Amoco otherwise would not have relied, to rationalize terminating the franchise relationship in accordance with the PMPA. Because the alleged minor infractions were but a pretext for the true motivations of Amoco, Eden contends that Amoco's disregard of the requirements of the PMPA was willful, as that term is used in the statute.
Amoco points out that in March 1986 company officials had merely recommended abandoning the Eden gas station site and that this recommendation had to be approved by Amoco's capital investment manager who did not issue his approval until late June 1986. By that time, another arm of Amoco had already decided not to renew the franchise agreement with Eden because of a series of violations of the agreement by Eden. Such violations included Eden's closing the station early, failing to meet prescribed levels of appearance and cleanliness, and failing to devote sufficient time to the franchise. Eden's station suffered from declining sales during the course of his relationship with Amoco, and Amoco contends that this decline resulted directly from the...
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