Nev. Deanza Family Ltd. P'ship v. Tesoro Ref. & Mktg. LLC
| Decision Date | 27 July 2020 |
| Docket Number | Case No. 5:19-cv-03773-NC |
| Parties | NEVADA DEANZA FAMILY LIMITED PARTNERSHIP, Plaintiff, and First Element Fuel, Inc., Plaintiff-in-Intervention, v. TESORO REFINING & MARKETING LLC, Marathon Petroleum Corporation and Marathon Petroleum Company LP., Defendants. |
| Court | U.S. District Court — Northern District of California |
Rebecca Furman, Marc Robert Lewis, Lewis & Llewellyn LLP, San Francisco, CA, for Plaintiff.
Scott Thomas Tropio, Tropio & Morlan, Woodland Hills, CA, Nanette Gay Reed, Wilson Elser Moskowitz Edelman & Dicker LLP, Los Angeles, CA, for Defendants.
Cheryl Stephanie Chang, Jessica A. McElroy Blank Rome LLP, Los Angeles, CA, for Plaintiff-in-Intervention.
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT-IN-INTERVENTION; GRANTING LEAVE TO AMEND
Re: Dkt. No. 60.
Plaintiff Nevada DeAnza Family Limited Partnership brings this case against Defendants Tesoro Refining & Marketing Company and Marathon Petroleum Corporation for rescission of contract and fraud arising out of a gas station franchising agreement. Intervening Plaintiff FirstElement Fuel, who leased portions of the gas station from NDF, intervened in the lawsuit. Before the Court is Defendants’ motion to dismiss FirstElement's complaint-in-intervention for lack of jurisdiction due to the presence of a political question under Rule 12(b)(1) and for failure to state a claim under Rule 12(b)(6). The Court concludes that no political question is present, but that FirstElement fails to state a claim under Rule 12(b)(6) as to all of its causes of action. Accordingly, the Court GRANTS Defendants’ motion to dismiss and GRANTS FirstElement leave to amend the complaint-in-intervention.
The following facts are alleged in the complaint-in-intervention. Dkt. No. 54. The Court takes these allegations as true for the purposes of deciding this Order. Cahill v. Liberty Mut. Ins. Co. , 80 F.3d 336, 337–38 (9th Cir. 1996).
Plaintiff Nevada DeAnza Family Limited Partnership ("NDF") owns a fueling station in Sunnyvale, California. See Dkt. No. 54 ¶ 3. In July 2016, NDF agreed to lease part of the Sunnyvale Station to Plaintiff-Intervenor FirstElement to install hydrogen fuel dispensers; their agreement is known as the Site Lease. Id. ¶¶ 3, 7. The site plan for the Sunnyvale Station showed that the hydrogen dispensers were to be located under its canopy because that was the only possible location for hydrogen dispensers at the station. Id. ¶¶ 6, 7, 31, 36. Since 2016, FirstElement and NDF have expended tremendous time and money to install hydrogen dispensers at the Sunnyvale Station. Id. ¶ 7, 42–51.
Also in 2016, NDF began negotiating an exclusive petroleum supply and branding contract with Defendant Tesoro Refining & Marketing Company. Id. ¶ 5, 32. Before agreeing to brand the Sunnyvale Station, NDF informed Tesoro that it intended to install a hydrogen dispenser under the canopy. Id. ¶ 6, 35–41. Tesoro did not object or otherwise indicate that the location of the hydrogen dispenser was an issue. Id. In December, Tesoro and NDF signed the Retail Service Agreement (RSA) for rebranding the Sunnyvale Station as a "Mobil" station. Id. ¶ 8, 32, 53. Following the rebranding, NDF informed Tesoro and Tesoro's successor, Defendant Marathon Petroleum Corporation, about its hydrogen dispenser plans and received no objection. Id.
In 2019, Marathon notified NDF for the first time that NDF would not be allowed to install hydrogen dispensers under the canopy. Id. ¶ 9, 68. The following year, Tesoro terminated the RSA and stated that the reason for the termination was the construction of the hydrogen dispensers. Id. ¶ 11, 73. Dkt. No. 54, Ex. 3. As a result, the NDF lost its supply of petroleum and lost its branding contract. See Dkt. No. 54 ¶ 11. FirstElement lost $130,019 from missing the California Energy Commission Grant's opening deadline for the hydrogen dispensers and $607,500 in missed credit generation. Id. ¶¶ 84, 85.
NDF filed its complaint against Defendants for rescission of contract, fraud, and violation of California's Unfair Competition Law. See Dkt. No. 1. FirstElement subsequently moved to intervene in the case. See Dkt. No. 44. After the court granted the motion, FirstElement filed a complaint in intervention against Defendants for: (1) interference of contractual relationship, (2) violation of California's Unfair Competition Law, and (3) declaratory judgment. See Dkt. No. 54.
All parties consented to the jurisdiction of a magistrate judge under 28 U.S.C.A. § 636(c). See Dkt. Nos. 5, 12, 46.
Dismissal under Federal Rule of Civil Procedure 12(b)(1) is appropriate when the complaint fails to establish the court's subject matter jurisdiction over the action. Roberts v. Corrothers , 812 F.2d 1173, 1177 (9th Cir. 1987). The court has a "responsibility to decide[ ] cases properly before it, even those it would gladly avoid." Zivotofsky ex rel. Zivotofsky v. Clinton , 566 U.S. 189, 195, 132 S.Ct. 1421, 182 L.Ed.2d 423 (2012). However, the "presence of a political question deprives a court of subject matter jurisdiction." Corrie v. Caterpillar, Inc. , 503 F.3d 974, 980 (9th Cir. 2007). This "narrow" exception, known as the political question doctrine, "excludes from judicial review those controversies which revolve around policy choices and value determinations constitutionally committed for resolution to the halls of Congress or the confines of the Executive Branch." Zivotofsky , 566 U.S. at 195, 132 S.Ct. 1421 ; Japan Whaling Ass'n v. Am. Cetacean Soc. , 478 U.S. 221, 230, 106 S.Ct. 2860, 92 L.Ed.2d 166 (1986).
A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block , 250 F.3d 729, 732 (9th Cir. 2001). On a motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the non-movant. Cahill , 80 F.3d at 337–38. The Court, however, need not accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). A complaint need not give detailed factual allegations but must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible when it "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). If a court grants a motion to dismiss, the plaintiff should be given leave to amend unless the pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith , 203 F.3d 1122, 1127 (9th Cir. 2000).
Whether hydrogen fuel is considered a renewable fuel under the Petroleum Marketing Practices Act (PMPA), 15 U.S.C.A. § 2807, is a central question to the motion before the Court. Plaintiff-in-intervention FirstElement contends that hydrogen should be protected by the PMPA, which would mean that its installation of hydrogen dispensers at NDF's gas station does not violate any agreement with the defendants. Defendants, on the other hand, argue that their contract rescission was legitimate because hydrogen is not a renewable fuel under the PMPA. The Court addresses this issue before turning to the parties’ arguments on the motion to dismiss.
Courts generally interpret a statute by the "ordinary public meaning of its terms at the time of its enactment," because "only the words on the page constitute the law adopted by Congress and approved by the President." Bostock v. Clayton Cty. , Georgia, ––– U.S. ––––, 140 S. Ct. 1731, 1738, 207 L.Ed.2d 218 (2020). In interpreting a statute, courts may look to the statute's design, object, and policy—but if the statute's language is "clear and unambiguous," then that is the end of the matter. Crandon v. United States , 494 U.S. 152, 158, 110 S.Ct. 997, 108 L.Ed.2d 132 (1990) ; United States v. Chhun , 744 F.3d 1110, 1116 (9th Cir. 2014) (quoting United States v. Bahe , 201 F.3d 1124, 1128 (9th Cir. 2000) ). Indeed, statutory interpretation should not deviate from or add to the ordinary meaning of statutory terms "inspired only by extratextual sources and ... imaginations" because doing so risks "amending statutes outside the legislative process." Bostock , ––– U.S. ––––, 140 S. Ct. at 1738.
The PMPA prohibits franchise agreements from restricting the installation of renewable fuel pumps. It states that "[n]o franchise-related document ... shall contain any provision allowing a franchisor to restrict the franchisee or any affiliate from installing on the marketing premises of the franchisee a renewable fuel pump or tank." See Dkt. No. 60 at 12; 15 U.S.C.A. § 2807(b)(1)(A). The PMPA also prohibits the restriction of converting, advertising, and selling renewable fuel. Id. The PMPA includes a definition for what constitutes a "renewable fuel." 15 U.S.C.A. § 2807(a)(1). To constitute a renewable fuel for the purposes of § 2807, a fuel needs to be either: "(A) at least 85 percent of the volume of which consists of ethanol; or (B) any mixture of biodiesel and diesel or renewable diesel determined without regard to any use of kerosene and containing at least 20 percent biodiesel or renewable diesel." Id. The parties agree that hydrogen fuel does not satisfy either statutory definition. See Dkt. No. 54 ¶¶ 102–05.
Here, the meaning of "renewable fuel" under the PMPA is unambiguous: the statute provides two clear definitions for what it protects. No language in the statute suggests that it is intended to include fuel...
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