Efram Dori v. Exxonmobil Oil Corp , 632 F. App'x 328 ( 2015 )

FILED
NOT FOR PUBLICATION
DEC 24 2015
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
LIGHT PETROLEUM, INC., No. 13-56909
Plaintiff, D.C. No. 2:12-cv-04689-PA-VBK
and
MEMORANDUM*
EFRAM DORI, an Individual; et al.,
Plaintiffs - Appellants,
v.
EXXONMOBIL CORPORATION, a New
Jersey corporation, Erroneously Sued As
Exxon Mobil Corporation and CIRCLE K
STORES INC., a Texas corporation,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
Percy Anderson, District Judge, Presiding
Argued and Submitted December 11, 2015
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: GOULD and BERZON, Circuit Judges and ZOUHARY,** District Judge.
1. Plaintiffs are franchisees of ExxonMobil (“Exxon”) who operate retail
service stations leased from Exxon. When a franchisor such as Exxon seeks to sell
a service station in which it owns a fee interest, California Business & Professions
Code § 20999.25(a) requires the franchisor to make a bona fide offer to sell to the
franchisee before selling to another party. Plaintiffs, to whom Exxon made offers
of sale, brought this diversity suit, contending that Exxon’s offers were not bona
fide within the meaning of Section 20999.25(a). The district court granted
summary judgment to Defendants, concluding that Exxon’s offers were objectively
reasonable and therefore bona fide. We affirm.
2. Exxon’s offers of sale contained covenants and deed restrictions that,
among other things, limited the properties’ commercial uses and required Plaintiffs
to enter into a fifteen-year supply agreement with convenience store chain Circle
K. Plaintiffs contend that Exxon’s offers did not convey its entire “interest” in the
service station properties, in violation of Section 20999.25(a). But a California
appellate case interpreting Section 20999.25(a) has held that the statute establishes
only “minimal standards” to limit governmental intrusion into a franchisor’s
**
The Honorable Jack Zouhary, District Judge for the U.S. District
Court for the Northern District of Ohio, sitting by designation.
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property rights. Forty-Niner Truck Plaza, Inc. v. Union Oil Co., 58 Cal. App. 4th
1261, 1274 (1997). A franchisor’s offer must convey its interest in the “marketing
premises,” meaning premises that are “employed by the franchisee in connection
with the sale, consignment, or distribution of fuel.” Id. at 1282 (quoting Cal. Bus.
& Prof. Code § 20999(h)). As such, “a bona fide offer includes the sale of pumps,
dispensers, storage tanks, piping and other equipment necessary for the continued
operation of a service station.” Id. This view of the “interest” that a franchisor’s
offer must convey is consistent with courts’ broader reading of the purpose of
Section 20999.25(a) as “allow[ing] franchisees a reasonable opportunity to
continue operating their facilities if they exercise their right to buy.” Id.; see also
Ellis v. Mobil Oil, 969 F.2d 784, 787 (9th Cir. 1992) (stating the purpose of an
analogous federal statute, the Petroleum Marketing Practices Act). Exxon’s offers
convey sufficient interest in the premises to satisfy Section 20999.25(a).
3. Plaintiffs claim that Exxon’s offers were not bona fide, as Section
20999.25(a) requires, because some of their terms were objectively unreasonable.
For our review of whether Section 20999.25(a) has been satisfied, it is not
necessary to conduct a term-by-term analysis to determine whether an offer is
reasonable. We hold that the non-price terms in Exxon’s offers, taken as a whole,
were commercially reasonable, especially considering that thirty-six franchisees
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have already accepted Exxon’s offers of sale. Exxon’s offers satisfied Section
20999.25(a), which establishes only “minimal standards,” so as to limit
governmental intrusion into a franchisor’s property rights. Forty-Niner, 58 Cal.
App. 4th at 1274.
AFFIRMED.
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