Robertson v. Mobil Oil Corp., 84-1687
| Decision Date | 13 December 1985 |
| Docket Number | No. 84-1687,84-1687 |
| Parties | John ROBERTSON, Appellant, v. MOBIL OIL CORPORATION, Appellee. |
| Court | U.S. Court of Appeals — Third Circuit |
Arnold E. Cohen, Norman P. Zarwin (Argued), Martin J. Resnick, Zarwin, Baum, Resnick & Cohen, P.C., Philadelphia, Pa., for appellant.
Thomas R. Trowbridge, III (Argued), Donovan, Leisure, Newton & Irvine, New York City, Brian T. Guthrie, Mobil Oil Corp., Valley Forge, Pa., for appellee.
Before SEITZ, and BECKER, Circuit Judges and ROSENN, Senior Circuit judge.
John W. Robertson, former operator of a Mobil gasoline station in King of Prussia, Pennsylvania, appeals from a judgment of the district court denying his application for a temporary and permanent injunction to prevent appellee Mobil Oil Corporation from refusing to renew his franchise. Robertson claims that Mobil's decision not to renew was impermissible under the Petroleum Marketing Practices Act (PMPA). 15 U.S.C. Sec. 2801 et seq. (1982). Mobil contends that its action was proper under 15 U.S.C. Sec. 2802(b)(3)(B) which reads:
(3) "For purposes of this subsection, the following are grounds for nonrenewal of a franchise relationship:
B) The receipt of numerous bona fide customer complaints by the franchisor concerning the franchisee's operation of the marketing premises, if--
i) the franchisee was promptly apprised of the existence and nature of such complaints by the franchisor; and
ii) if such complaints related to the conditions of such premises or to the conduct of any employee of such franchisee, the franchisee did not promptly take action to cure or correct the basis of such complaints.
After a trial, the district court made findings of fact leading it to the conclusion that Mobil was justified in not renewing Robertson's franchise. Robertson appeals and we affirm.
The facts adduced at trial may be summarized as follows. 1 In September, 1981, Robertson and Mobil entered into a franchise agreement. Shortly thereafter, Robertson followed appellee's "strong suggestion" that he provide a "mini-serve" gasoline island in addition to the "full-serve" island. As the mini-serve operates at little or no profit, dealers who introduce a mini-service island often compensate by increasing the price of gasoline at the full-serve island. Robertson raised the prices at the full-serve island substantially. He advertised the price of mini-serve gasoline with a large Mobil sign that was visible from the road. However, the sign advertised neither the price of full serve gasoline nor the hours the mini-serve was available. During the next three years, Mobil received 126 customer complaints about Robertson's operation (most of which were written, although some were communicated by telephone). In August 1984, when Robertson's franchise expired, Mobil informed him that, pursuant to 15 U.S.C. Sec. 2802(b)(3)(B), it had elected not to renew the franchise.
As the question before us is, in essence, whether the many customer complaints justified Mobil's decision not to renew Robertson's franchise, it is important to analyse these complaints carefully. The 126 complaints fall into three categories. First, Mobil received roughly twenty-five miscellaneous complaints including allegations of lost gas caps, discourteous service, unsatisfactory repair work and a rental charge assessed for a borrowed gas can. A second category of complaints, apparently numbering in the forties, simply asserted that Robertson charged excessive prices (roughly $1.65-1.75 per gallon) at the full-service island. One customer, for example, alleged that the full-serve price was forty-four cents above what he considered the prevailing market rate. A third category of complaints, numbering roughly fifty, charged that the sign advertising the price of mini-serve gasoline was misleading. These customers stated that the sign lured them into the station where they found the mini-serve island closed; Robertson concedes that he did not keep it open all the time. These customers were then referred to the full-serve island where they discovered often only after they had been served gasoline, that the price was roughly sixty cents a gallon higher than the advertised mini-serve price.
Robertson was informed of all of these complaints. He reimbursed some of the customers who complained about price deception, but took no action to prevent recurrences of the deception problem. The question before us is whether the district court's conclusion that these complaints justified Mobil in not renewing Robertson's franchise 2 is supported.
Although the district court suggested that the twenty-five miscellaneous complaints would have justified non-renewal, it focused its analysis on the price-related complaints because it found no evidence that Mobil would have elected not to renew Robertson's franchise on the basis of the twenty-five miscellaneous complaints alone. Because this finding is not clearly erroneous, our analysis must focus on the complaints about excessive price and price deception.
The critical issue is whether the complaints about Robertson's high prices and price deception were "bona fide" within the meaning of PMPA. 3 Robertson's approach to defining bona fide focuses on the subject matter of complaints. He suggests that bona fide complaints are those pertaining to the maintenance of unhealthy, unsafe or dirty premises or to illegal actions by the franchisee. He argues that complaints about matters wholly within his legal discretion, such as price-setting, 4 are not bona fide within the terms of the statute, and that the marketplace, not the franchisor, is the appropriate disciplining agent if his prices are too high.
Robertson alleges that his interpretation of PMPA is supported by the legislative history. His illustration, however, does not support his argument. He cites a Senate Report in which the slashing of tires is used as an illustration in a discussion of franchise non-renewal under PMPA, S.Rep. No. 731, 95th Cong., 2d Sess. 35 (1975), reprinted in 1978 U.S.Code Cong. & Ad.News 873, 894, and concludes that this is the kind of franchisee misdeed that justifies non-renewal. Robertson also cites the portion of the same Senate Report that discusses complaints about an unhealthy, unsafe or unclean environment and suggests that these too are conditions which give rise to bona fide complaints. He concludes that complaints pertaining to failure to maintain healthy, safe or clean premises or to illegal actions such as tire-slashing are the kinds of complaints congress considered "bona fide" under PMPA.
Robertson's conclusion reflects a misreading of the Senate report. The segment of the Senate Report that uses tire-slashing as an illustration plainly refers to the franchisee's obligation to take immediate corrective action in response to complaints; it sheds no light on the question of what constitutes a bona fide complaint. The portion of the Senate Report referring to unhealthy, unclean or unsafe premises clearly refers to 15 U.S.C. 2802(b)(3)(C), which establishes these conditions as independent grounds for non-renewal, unrelated to the basis for non-renewal invoked by Mobil pursuant to 15 U.S.C. 2802(b)(3)(B), i.e., the receipt of numerous bona fide complaints. Robertson's statutory definition of bona fide as referring only to complaints about illegal deeds or failure to maintain a safe, clean and healthful premises is untenable. It is not only unsupported by legislative history, but defies common legal usage. See Escondido Mutual Water Co. v. La Jolla, et al, 466 U.S. 765, 104 S.Ct. 2105, 2110, 80 L.Ed.2d 753 (1984) (); Paskel v. Heckler, 768 F.2d 540, 543 (3d Cir.1985) (supports same proposition).
The common legal definition of bona fide, consistent with the non-legal definition, is "[i]n or with good faith;...
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