Barney Holland Oil Co. v. FleetCor Technologies, Inc. , 275 F. App'x 351 ( 2008 )


Menu:
  •            IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT United States Court of Appeals
    Fifth Circuit
    FILED
    April 23, 2008
    No. 07-10130                   Charles R. Fulbruge III
    Clerk
    BARNEY HOLLAND OIL COMPANY,
    Plaintiff-Appellant,
    v.
    FLEETCOR TECHNOLOGIES, INC
    FLEETCOR TECHNOLOGIES OPERATING COMPANY, LLC,
    Defendants-Appellees.
    Appeal from the United States District Court
    for the Northern District of Texas
    USDC No. 4:06-CV-183
    Before JONES, Chief Judge, and GARWOOD and JOLLY, Circuit Judges.
    PER CURIAM:*
    Appellant challenges the district court’s grant of summary judgment on
    its breach-of-contract and tort claims, arguing that the district court erred by
    (1) prematurely ending discovery; (2) concluding there were no disputed issues
    of material fact; and (3) concluding appellee had not terminated the parties’
    license agreement. Because the district court’s judgment is supported by the
    record, we AFFIRM.
    *
    Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
    be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
    R. 47.5.4.
    No. 07-10130
    BACKGROUND
    Defendant-appellees     FleetCor       Technologies,   Inc.   and   FleetCor
    Technologies Operating Company, LLC (collectively “FleetCor”), own and
    operate a fuel-management system under the name “Fuelman” marketed to
    businesses and government entities that operate fleets of vehicles. FleetCor
    provides Fuelman cards to participating fleet owners to give to their drivers.
    The cards function like normal credit cards and can be used to purchase fuel and
    maintenance services at thousands of merchants around the country that have
    agreed to accept the Fuelman card. But unlike normal credit cards, Fuelman
    cards have a number of built-in limitations, called “pre-purchase controls,” on
    how they can be used. Fleet-owners generally set limits on what can be
    purchased with Fuelman cards, as well as permissible locations for purchase.
    For instance, a fleet-operator could limit the Fuelman card’s use to a specified
    grade of a gasoline at a particular gasoline vendor such as ExxonMobil. Not
    surprisingly, the Fuelman system’s chief selling point is the ability to prevent
    drivers and employees from using company resources to purchase lottery tickets,
    beer, cigarettes, or even gasoline for their personal vehicles.
    FleetCor originally marketed Fuelman indirectly through licensees in 30
    territories and directly in three territories. Each licensee was responsible for
    developing client relationships with both merchants and fleet owners, but
    FleetCor continued to operate the computer system that processed the purchases
    made with the Fuelman card. Each licensee was given the exclusive right to
    market the Fuelman system in its assigned territory.
    One original licensee, plaintiff-appellant Barney Holland Oil Co.
    (“BHOC”), was licensed to market the Fuelman system in the Dallas/Fort Worth
    (“DFW”) area. Although BHOC was originally a licensee of Gascard, one of
    2
    No. 07-10130
    FleetCor’s competitors, FleetCor purchased Gascard in 1995 and entered into a
    Bridging Agreement with BHOC to continue the relationship.            A License
    Agreement was later implemented with the earlier Bridging Agreement in mind.
    The Bridging Agreement contains a “favored nations” provision that affects the
    Fuelman system License Agreement by allowing BHOC to incorporate favorable
    provisions in other licensing agreements into its own License Agreement. The
    “favored nations” provision (“FNP”) is an important component of this litigation.
    In 2001, FleetCor decided to increase its direct marketing and began to
    terminate the exclusive Fuelman licenses around the country and convert those
    to direct markets. FleetCor has since terminated all of the 30 licenses it
    originally issued except for that of BHOC. After extensive negotiations in 2002,
    the parties were unable to reach any agreement to end BHOC’s Fuelman license.
    BHOC continues successfully to market the Fuelman system in the DFW area,
    and has clients including retail service stations and unattended fuel sites
    (“merchants”), and commercial fleet owners, municipalities, and school districts
    (“customers”). BHOC has long-term contracts with some of these entities.
    In January 2006, BHOC sued FleetCor in Texas state court alleging
    FleetCor breached its License Agreement, de facto terminated the License
    Agreement, and tortiously interfered with its business relationships. FleetCor
    removed the case to the Northern District of Texas and later moved for summary
    judgment on all of BHOC’s claims. BHOC moved to compel production of
    documents, and sought FleetCor’s licensing agreements with other Fuelman
    licensees. BHOC filed a second motion to compel release of documents related
    to damages. On November 28, 2006, the district court granted BHOC’s motions
    in part, ordering FleetCor to produce the relevant licensing agreements by
    December 18, 2006. On December 27, 2006, BHOC filed a motion for sanctions
    3
    No. 07-10130
    arguing that the license agreements FleetCor produced were incomplete. The
    district court denied the motion because, according to FleetCor, the court agreed
    during the telephone hearing that FleetCor produced every page of every
    agreement it could locate.1
    On December 28, 2006, the district court granted FleetCor’s motion for
    summary judgment on all of BHOC’s claims except its claim related to FleetCor’s
    modification of the “pre-purchase controls.”               BHOC elected to dismiss the
    remaining claim with prejudice and appeal the summary judgment.
    DISCUSSION
    This court reviews a district court’s grant of summary judgment de novo.
    Morris v. Equifax Info. Servs., L.L.C., 
    457 F.3d 460
    , 464 (5th Cir. 2006).
    Summary judgment is appropriate when, after considering the pleadings,
    depositions, answers to interrogatories, admissions on file, and affidavits, “there
    is no genuine issue as to any material fact and . . . the moving party is entitled
    to a judgment as a matter of law.” FED. R. CIV. P. 56(c); Bulko v. Morgan Stanley
    DW Inc., 
    450 F.3d 622
    , 624 (5th Cir. 2006). The moving party has the initial
    burden of showing there is no genuine issue of material fact. Anderson v. Liberty
    Lobby, Inc., 
    477 U.S. 242
    , 256 (1986). The movant may discharge this burden
    by pointing out the absence of evidence to support one or more essential
    elements of the non-moving party’s claim “since a complete failure of proof
    concerning an essential element of the nonmoving party’s case necessarily
    renders all other facts immaterial.” Celotex Corp. v. Catrett, 
    477 U.S. 317
    , 325
    (1986).
    I. Discovery
    1
    The transcript of this hearing is not in the record.
    4
    No. 07-10130
    BHOC makes two principal arguments why the district court’s decision to
    end discovery and rule on FleetCor’s Motion for summary judgment was an
    abuse of discretion. Each will be dealt with in turn.
    Generally, summary judgment may be granted only after an “adequate
    time for discovery.” 
    Catrett, 477 U.S. at 322
    . The courts of appeal generally
    review for abuse of discretion a claim that summary judgment was prematurely
    entered because additional discovery was needed. Paul Kadair, Inc. v. Sony
    Corp. of Am., 
    694 F.2d 1017
    , 1029 (5th Cir. 1983). A plaintiff’s entitlement to
    discovery prior to a ruling on a motion for summary judgment is not unlimited,
    and may be cut off when the record shows that the requested discovery is not
    likely to produce the facts needed by plaintiff to withstand a Rule 56(e) motion
    for summary judgment.2           
    Id. at 1029-30.
         And district courts have broad
    discretion to enforce the integrity of pretrial scheduling orders. Turnage v.
    General Elec. Co., 
    953 F.2d 206
    , 208 (5th Cir. 1992).
    A. Undiscovered licensing provisions
    First, BHOC argues that the district court abused its discretion by
    prematurely ending discovery before BHOC could adequately review the
    documents FleetCor was compelled to produce. Thus, BHOC argues, the court
    was not aware of the full extent of FleetCor’s contractual obligations when it
    ruled on FleetCor’s Motion for summary judgment. In other words, because
    2
    The Seventh Circuit has concluded in a similar case involving a favored-nations
    provision that “Rule 56 does not require that discovery take place in all cases before summary
    judgment can be granted.” Waterloo Furniture Components, Ltd. v. Haworth, Inc., 
    467 F.3d 641
    , 648 (7th Cir. 2006). It further stated, “the fact that discovery is not complete — indeed
    has not begun — need not defeat a motion for summary judgment. Thus, the mere fact that
    the district court granted [defendant’s] summary judgment motion prior to allowing any
    discovery is irrelevant.” 
    Id. (internal citation
    and quotations omitted).
    5
    No. 07-10130
    BHOC did not have an opportunity to comb through other Fuelman licensing
    agreements for favorable provisions it could have incorporated into its own
    License Agreement, the district court did not know the full scope of FleetCor’s
    contractual obligations and, therefore, it was premature to rule on FleetCor’s
    motion for summary judgment.
    The district court ruled, however, on the only three licensing provisions
    that BHOC had already sought to incorporate into its License Agreement. After
    finding that these provisions yielded no benefit to BHOC, the district court
    concluded that others were unlikely to do so either. The court’s refusal to await
    further revelations from BHOC’s review of other franchisees’ licensing
    agreements was not done to prejudice BHOC, nor did it do so. The court
    specifically concluded its discussion of the three proffered provisions by noting
    that:
    Such an adjudication [against BHOC] will be without prejudice to
    the right the court has concluded that plaintiff has to receive from
    FleetCor on request for review license agreements between FleetCor
    and other licensees, see Epic Sys. Corp. v. Allcare Health Mgmt.,
    
    2002 WL 31051023
    (N.D. Tex. 2002), and to urge that it is entitled
    to the benefit of any more favorable terms and provisions of which
    plaintiff learns as a result of such review or by other means.
    (emphasis added); (footnote omitted).
    The district court’s decision to rule follows closely the mid-January 2007
    discovery deadline as stated in its original scheduling order. 
    Turnage, 953 F.2d at 208
    . Furthermore, BHOC’s failure to make a Rule 56(f) motion prior to
    summary judgment, object to the district court’s action, or ask for a rehearing
    of FleetCor’s Motion for summary judgment “indicates that [appellant] had no
    further evidence to present or argument to make regarding any material dispute
    of fact.” Exxon Corp. v. St. Paul Fire and Marine Ins. Co., 
    129 F.3d 781
    , 786–87
    6
    No. 07-10130
    (5th Cir. 1997). We also note that although nine days is not a lot of time to comb
    through 1,000 pages of documents, it is certainly sufficient. Had BHOC found
    anything truly beneficial in the documents, it could have made the
    aforementioned motion. In fact, BHOC was not precluded from referring to any
    additional favorable contract provisions in its brief to this court, for the purpose
    of demonstrating prejudice from the district court’s prompt ruling. Based on all
    these considerations, the district court did not abuse its discretion by ending
    discovery of unincorporated provisions and ruling on FleetCor’s Motion for
    summary judgment.
    B. “Incorporated” provisions
    BHOC next contends that the court abused its discretion by prematurely
    ending discovery related to the WESCO provision it claimed to incorporate into
    its License Agreement. BHOC’s argument initially depends upon the effect of
    the Bridging Agreement’s FNP, which must be established before BHOC can
    incorporate any provisions from other agreements. However, the district court
    declined to rule on whether the FNP was applicable; it simply assumed
    applicability for the purpose of its analysis.3 BHOC’s contention that the district
    court essentially rejected FleetCor’s contention that the FNP did not apply is
    thus inaccurate. Instead, the district court concluded that neither the WESCO
    nor other cited provisions could be construed to lend any benefit to BHOC.
    Further, the district court concluded that BHOC had not produced any evidence
    related to a breach of the “WESCO” “new products and services” provision4
    3
    By not ruling on the applicability of the FNP, the district court aided BHOC by not
    prejudicing its possible future claims against FleetCor.
    4
    The relevant provision states:
    7
    No. 07-10130
    through FleetCor’s MasterCard and FleetAll fuel cards, and that FleetCor’s
    Commercial Fuel Network (“CFN”) business was not a “new product or service”
    under the provision.
    Like the district court, we need not construe the License Agreement5 and
    determine the applicability of the FNP because we agree, infra, that BHOC has
    produced no evidence that FleetCor has breached the WESCO provision by
    competing in the DFW area. It was within the court’s discretion to rule on
    FleetCor’s Motion for summary judgment based on its conclusion that the three
    licensing agreements submitted into evidence did not contain any favorable
    provisions for BHOC that would defeat summary judgment, and because BHOC
    submitted no evidence of breach. Paul Kadair, 
    Inc., 694 F.2d at 1029-30
    .
    II. FleetCor’s Competition in the DFW Area
    BHOC vigorously contends that the district court erred by granting
    judgment for FleetCor based on a factual finding that FleetCor was not
    competing with BHOC, when there was no summary judgment evidence to
    support such a finding, and when such a finding was contrary to FleetCor’s
    admissions. BHOC argues that FleetCor’s motion for summary judgment was
    premised on its purported admission that it was competing in the DFW area
    through its MasterCard and CFN business, and that it had the right to do so.
    FleetCor argues it did not admit competing with BHOC, it did meet its summary
    Exclusive Rights to New Products/Services. Marketer will have the exclusive
    rights to market in the Licensed Territory new products and services offered by
    Licensor. Neither the Licensor nor anyone acting on its behalf will circumvent
    Marketer to market directly to their customers.
    5
    It would be imprudent to construe the License Agreement because the parties did not
    brief the issue.
    8
    No. 07-10130
    judgment burden, and in any event, summary judgment was appropriate on
    grounds not reached by the district court.
    A.     MasterCard
    BHOC argues that FleetCor breached the License Agreement because
    FleetCor is competing in the DFW area through its MasterCard fuel card.
    FleetCor offered a sworn affidavit that it had never marketed the MasterCard
    fleet card in the DFW area. The district court found that BHOC produced no
    evidence in support of its MasterCard claim.               BHOC’s only        evidence of
    competition is an affidavit by Barney Holland, Jr., that he believed BHOC
    suffered financially due to FleetCor’s marketing of “competitive products” in the
    DFW area. This does not raise a genuine issue of material fact.6 See Reese v.
    Anderson, 
    926 F.2d 494
    , 499 (5th Cir. 1991) (conclusory affidavit did not defeat
    summary judgment because, “[w]hat is needed in an affidavit of this sort are
    facts, reasons, observations, and explanations—in a word, evidence—not
    conclusions”).    BHOC essentially admits there is no evidence other than
    FleetCor’s “admission,” and the record supports the district court’s finding. See
    Boudreaux v. Swift Transp. Co., 
    402 F.3d 536
    , 544 (5th Cir. 2005) (“On summary
    judgment, the moving party is not required to present evidence proving the
    absence of a material fact issue. . . .”); see also Liberty 
    Lobby, 477 U.S. at 257
    .
    On this record, we find no error in the district court’s finding.
    B.     CFN
    6
    As FleetCor notes, Barney Holland’s statement “does not mention CFN or MasterCard,
    identify any customers or sales that Mr. Holland believes BHOC has lost, or state what facts
    support his opinion that BHOC lost them.”
    9
    No. 07-10130
    BHOC also argues that section 1.1A of the original License Agreement and
    the “new products and services” provision in the WESCO license agreement7
    prohibit FleetCor’s subsidiary CFN business. As mentioned above, BHOC
    argues that FleetCor failed to satisfy the evidentiary burden necessary to obtain
    summary judgment on this issue.              FleetCor responds that its subsidiary
    purchased a business from CFN that works with independent marketers of the
    CFN card, but the FleetCor subsidiary only processes transactions using the
    CFN cards. FleetCor does not market them to potential customers and is not
    competing with BHOC. The district court agreed that the undisputed evidence
    shows FleetCor has not marketed a competing fuel card nor, with CFN as a card-
    processing arrangement, furnished a new “product or service” in the DFW area.
    Unfortunately, BHOC has produced no evidence related to FleetCor’s
    corporate structure, the nature of the CFN subsidiary, or whether FleetCor is
    actually marketing CFN cards rather than simply processing transactions.
    Again, Barney Holland’s affidavit stating that he “believes” BHOC has suffered
    financially due to FleetCor’s marketing of competitive products does not raise a
    genuine issue of material fact. See 
    Reese, 926 F.2d at 499
    . And, as FleetCor
    notes, Barney Holland’s statement does not specifically mention CFN. See
    Forsyth v. Barr, 
    19 F.3d 1527
    , 1537 (5th Cir. 1994) (stating that the nonmovant
    must identify specific evidence in the record and articulate the precise manner
    in which that evidence supports its claims) (internal quotation omitted).
    7
    The WESCO provision states:
    Exclusive Rights to New Products/Services. Marketer will have the exclusive
    rights to market in the Licensed Territory new products and services offered by
    Licensor. Neither the Licensor nor anyone acting on its behalf will circumvent
    Marketer to market directly to their customers.
    10
    No. 07-10130
    BHOC complains that because FleetCor premised its motion for summary
    judgment on the legal inapplicability of the FNP, BHOC had no duty to produce
    evidence of CFN’s activities in the DFW area. Moreover, FleetCor offered no
    evidence of CFN’s actitivies in the district court on summary judgment, hence
    we cannot consider it here.8 Finally, the district court erred in basing summary
    judgment on facts of non-competition that were not proven as to CFN.9 These
    arguments are misplaced.
    The district court’s memorandum and order states that the “Grounds of
    FleetCor’s Motion” include “that there is no evidence to support one or more of
    the facts essential to the theories,” and that BHOC’s claims were precluded by
    both the “terms of the operative contracts and by undisputed facts” (emphasis
    added). Additionally, FleetCor’s motion for summary judgment specifically
    disputed BHOC’s claim that its CFN business competes with BHOC in the DFW
    area10 and thus put BHOC on notice that it was advancing this theory and
    8
    See Johnson v. Sawyer, 
    120 F.3d 1307
    , 1316 (5th Cir. 1997) (stating that “[a]lthough
    we can affirm a summary judgment on grounds not relied on by the district court, those
    grounds must at least have been proposed or asserted in that court by the movant”); FDIC v.
    Laguarta, 
    939 F.2d 1231
    , 1240 (5th Cir. 1991) (refusing to affirm summary judgment on
    grounds “neither raised below ... nor even raised sua sponte by the district court”); Frank C.
    Bailey Enter., Inc. v. Cargill, Inc., 
    582 F.2d 333
    , 334 (5th Cir. 1978).
    9
    This argument is a companion to BHOC’s argument in part 
    I.B., supra
    . The
    implication is that because the district court errantly granted summary judgment without any
    evidence related to CFN’s activities, it also prematurely ended discovery, which constituted an
    abuse of discretion. But based on our conclusion that BHOC’s failure to produce any evidence
    of CFN’s purported competition was before the district court on summary judgment, the
    district court did not err in ending discovery and granting FleetCor’s motion for summary
    judgment.
    10
    The citation to the record used by BHOC to support its argument that FleetCor
    admitted it was competing with BHOC actually supports FleetCor. In response to BHOC's
    claim that FleetCor was competing in the DFW area, FleetCor stated that the “factual premise
    of this allegation is wrong.” BHOC argues the statement is not “evidence” in support of
    11
    No. 07-10130
    placed the issue before the district court for consideration. See 
    Johnson, 120 F.3d at 1316
    . Although FleetCor’s assertion in its summary judgment briefs is
    not properly summary judgment evidence, BHOC failed to produce any evidence
    that FleetCor was competing with BHOC in the DFW area through the CFN
    business. And on summary judgment, FleetCor is not required to prove the
    contrary. See Liberty 
    Lobby, 477 U.S. at 257
    ; 
    Boudreaux, 402 F.3d at 544
    .
    BHOC insists that it tried to uncover CFN’s DFW activities but was
    stonewalled by FleetCor’s “dilatory” tactics.            Although FleetCor had to be
    compelled by the district court to produce documents related to CFN’s activities,
    this does not relieve BHOC of producing evidence necessary to survive a motion
    for summary judgment. As the Supreme Court stated in Liberty Lobby: “[T]he
    plaintiff must present affirmative evidence in order to defeat a properly
    supported motion for summary judgment. This is true even where the evidence
    is likely to be within the possession of the defendant . . . 
    .”). 477 U.S. at 257
    . If
    BHOC was convinced that additional evidence should have been adduced to the
    district court, it could have filed a Rule 56(f) motion or asked for rehearing. Its
    failure to do so suggests the futility of further evidentiary efforts. Exxon 
    Corp., 129 F.3d at 786
    –87. On this record, the district court did not err in granting
    FleetCor’s motion for summary judgment.11
    FleetCor’s argument that it was not competing in the DFW area. That argument is correct,
    but FleetCor’s assertion is supported by evidence in Charles Freund’s affidavit.
    11
    BHOC also argues it is entitled to a preliminary injunction to prevent FleetCor from
    competing in the DFW area. But, as FleetCor argues, one seeking injunctive relief must
    demonstrate a real and immediate threat that he will be subject to the behavior he seeks to
    enjoin. See Gladden v. Roach, 
    864 F.2d 1196
    , 1198 (5th Cir. 1989). BHOC has presented no
    evidence of any threatened competition in violation of the License Agreement and, therefore,
    is not entitled to an injunction. Further, BHOC did not seek a declaratory judgment in the
    district court and may not create such a claim on appeal.
    12
    No. 07-10130
    III. De Facto Termination
    BHOC argues the district court erred in granting summary judgment on
    its de facto termination claim by requiring BHOC to prove FleetCor’s intent to
    injure BHOC, when such an element is not part of BHOC’s claim. Specifically,
    BHOC argues that by competing in the DFW area, altering the basic tenets of
    the Fuelman program through elimination of the pre-purchase controls, and
    altering the financial structure of the program through the use of the retail-
    minus formula, FleetCor has terminated the agreement. The district court
    concluded that “[t]here is no summary judgment evidence . . . that FleetCor took
    any of the actions of which plaintiff complains for the purpose of destroying, or
    interfering with, the operation by plaintiff of its FleetCor System business.”
    In general, constructive termination requires that the licensee be
    effectively forced out of business. See, e.g., Portland 76 Auto/Truck Plaza, Inc.
    v. Union Oil Co. of Ca., 
    153 F.3d 938
    , 948 (9th Cir. 1998); see also Petereit v. S.B.
    Thomas, Inc., 
    63 F.3d 1169
    , 1183 (2d Cir. 1995) (holding that a constructive
    termination claim requires proof of a “substantial decline in franchisee net
    income”). But here, BHOC has presented no evidence that its business has
    declined as a result of BHOC’s alleged termination of the License Agreement.
    Furthermore, the three activities that BHOC argues constitute the
    termination fail to support its claim. First, although BHOC relies on the fact
    that FleetCor’s use of a retail-minus revenue formula will undermine its
    business, it does not challenge the district court’s conclusion that FleetCor’s use
    of the formula with Shell did not constitute a breach of the License Agreement.
    Second, BHOC abandoned its “pre-purchase controls” claim, allowing it to be
    dismissed with prejudice in order to pursue its appeal of the summary judgment.
    13
    No. 07-10130
    BHOC cannot now use FleetCor’s elimination of the pre-purchase controls as a
    rationale that it terminated the contract, especially because the issue did not go
    to trial. Third, as shown above, BHOC failed to produce any evidence that
    FleetCor was competing in breach of the License Agreement, nor did it
    demonstrate that the challenged activities violated the agreement. Absent these
    predicate breaches of the Licensing Agreement, BHOC cannot claim de facto
    termination. This argument lacks merit.
    CONCLUSION
    For these reasons, the judgment of the district court is AFFIRMED.
    14