LC Williams Oil Co., Inc. v. Exxon Corp.

627 F. Supp. 864, 1985 U.S. Dist. LEXIS 20614
CourtDistrict Court, M.D. North Carolina
DecidedApril 19, 1985
DocketC-84-622-D
StatusPublished
Cited by7 cases

This text of 627 F. Supp. 864 (LC Williams Oil Co., Inc. v. Exxon Corp.) is published on Counsel Stack Legal Research, covering District Court, M.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
LC Williams Oil Co., Inc. v. Exxon Corp., 627 F. Supp. 864, 1985 U.S. Dist. LEXIS 20614 (M.D.N.C. 1985).

Opinion

MEMORANDUM OPINION

GORDON, Senior District Judge.

This matter is before the Court on a motion by the defendant Exxon Corp. (Exxon) for partial summary judgment as to the plaintiff L.C. Williams Co.’s (Williams) wrongful franchise termination claim under the Petroleum Marketing Practices Act, 15 U.S.C. § 2801, et seq. (PMPA).

For the reasons set forth below, the Court will grant Exxon’s motion for partial summary judgment and thereby render moot Williams’ prayer for a preliminary injunction. The Court also concludes that, contrary to the defendant’s assertion, the PMPA does not preempt the plaintiff’s North Carolina unfair trade practices claims. These state claims will be retained under this Court’s diversity jurisdiction for later adjudication.

FACTS

Construing the facts “in the light most favorable to the party opposing the motion,” Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir.1979) quoting U.S. v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962), the Court finds first that the plaintiff L.C. Williams Oil Co. is a North Carolina corporation based in Pittsboro, North Carolina which distributes petroleum products to numerous retail outlets in central and eastern North Carolina. Defendant Exxon Corp. is a New Jersey corporation with its principal place of business in New York which supplies petroleum fuel and other products in North Carolina. Williams and Exxon, on May 13,1981 and February 4,1984, entered into “Distributor Agreements” under which Exxon was to provide specified amounts of its brand of automobile fuel to Williams which then distributed the fuel to retailers. The 1984 agreement replaced the earlier one. Before the execution of at least the first agreement, Exxon’s representative explained and provided copies of Exxon’s “deidentification guidelines” to the plaintiff’s president, Mr. L.C. Williams, Jr. (Mr. Williams) (Deft.’s pretrial Exhibit B— W.F. Gaskins affidavit). These guidelines were to be followed in the event that Williams started selling any brand in addition to Exxon in the Exxon branded retail stations.

Sometime in 1982, while preparing to expand its distribution network, Williams received a verbal agreement from John A. Hagerty (Hagerty), Exxon’s Raleigh, North Carolina District Manager, that “Exxon *866 would provide [Williams] as much Exxon gasoline as was necessary to accomodate the proposed expansion.” (L.C. Williams, Jr. affidavit, p. 1). From 1981 through 1984 Williams did actively pursue and establish numerous new accounts and ultimately increased its retail outlets from 12 in 1981 to 50 in 1984. In turn, Exxon provided Williams with steadily increasing amounts of gasoline and, from 1981 through 1984, allowed Williams to purchase quantities in excess of its contractually allocated allotments. 1

The “Product Schedules” which were incorporated by reference into and referred to numerous times in the Distributor Agreements specified that the “source” of Williams’ annual quantity would be Exxon’s Greensboro terminal. Indeed, despite several verbal and written requests by Williams to allow it to utilize Exxon’s Selma, North Carolina distribution terminal so as to more economically service its growing retailer network, Exxon consistently refused Williams’ requests and cited supply problems at Selma as its rationale.

On May 11, 1983, after Hagerty again refused to allow Williams to use the Selma terminal, Williams notified Exxon by letter that it regretfully would have to start purchasing and distributing another brand of gasoline in addition to Exxon. This practice is known in the industry as “double branding” and is lawful so long as the appropriate brand names and trademarks are displayed for each gasoline dispenser.

Exxon responded to Williams’ letter by again citing its “limitation in supplying current and future demands in eastern North Carolina from our Selma terminal.” (Ptf’s pre-trial Exhibit 7 — 5/20/83 letter from W.R. Carter (Carter), retail sales manager for Exxon’s Southern Region, to Mr. Williams).

Following next in chronological order— though not necessarily causally linked to Williams’ double branding decision 2 — is Carter’s 9/1/83 intra-office memo to W.N. Menefee (Menefee), another Exxon manager. This memo read, in pertinent part:

In the recent reorganization, I believe you picked up L.C. Williams Oil Co. in Pittsboro, N.C.
The attached memo will be of interest as background... Based on his interest in developing stores in Raleigh and Greensboro markets, we need to look closely at designating Williams as a ‘no-growth’ distributor.

Attached to this intra-office memo were Williams’ 5/11/83 letter and Carter’s 5/20/83 reply letter. In handwriting on the intra-office memo, Menefee noted:

... let’s take action necessary to designate Williams as ‘no-growth’ if that is appropriate.

The term “no-growth” apparently originates in Exxon’s “Distributor Business Strategies” under which it serves major metropolitan or “A-l” markets by encour-ag[ing] growth through direct served dealer operations [while] minimiz[ing] existing A-l market [branded] distributor growth. (Ptf’s pre-trial Exhibit 8, p. 220, 227). Williams, as a wholesale distributor of Exxon products, constituted a “branded distributor” which Exxon utilized to serve the less densely populated “C” markets. 3

*867 As the plaintiff admits, “on November 11, 1983, based upon a report from a competitor of plaintiff, Exxon initiated an investigation and subsequently determined that plaintiff had obtained petroleum from a non-Exxon source and deposited it at an Exxon-branded” retailer. (Ptf’s brief p. 5). This “investigation” consisted of taking samples of gas from the suspect retailer’s tanks. The sample analysis revealed both Exxon and non-Exxon petroleum in the fuel.

Following the investigation, on February 29, 1984, several Exxon representatives met with Mr. Williams to discuss their discovery. Mr. Williams admitted at that time that he had purchased non-Exxon gasoline and knowingly provided it to his retail outlets to be sold under the Exxon name. (Mr. Williams’ deposition at p. 95 & 170, Bailey & Gaskins’ affidavits). Mr. Williams admitted to not notifying his retailers nor the public that non-Exxon gasoline was being sold until soon after this February 29, 1984 meeting. Even after this meeting, Williams performed the proper deidentification of retail stations at only two of its forty-one total outlets and also has admitted that some dealers were not ever informed that Williams had sold them non-Exxon products. (Mr. Williams’ deposition at pp. 171 & 120). In fact, even after the franchise termination notice, plaintiff admits to having furnished non-Exxon fuel to stations branded as Exxon outlets. (Mr.

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Bluebook (online)
627 F. Supp. 864, 1985 U.S. Dist. LEXIS 20614, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lc-williams-oil-co-inc-v-exxon-corp-ncmd-1985.