Mobil Oil Corp. v. Attorney General

747 F. Supp. 1173, 1990 U.S. Dist. LEXIS 13175, 1990 WL 146454
CourtDistrict Court, E.D. Virginia
DecidedOctober 4, 1990
DocketCiv. A. No. 3:90CV00381
StatusPublished
Cited by1 cases

This text of 747 F. Supp. 1173 (Mobil Oil Corp. v. Attorney General) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mobil Oil Corp. v. Attorney General, 747 F. Supp. 1173, 1990 U.S. Dist. LEXIS 13175, 1990 WL 146454 (E.D. Va. 1990).

Opinion

MEMORANDUM AND ORDER

SPENCER, District Judge.

This matter is before the court on the defendants’ motion to dismiss, pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. For the reasons stated in this memorandum, the motion will be granted as to both defendants.

I

Mobil Oil Corporation (“Mobil”) seeks declaratory and injunctive relief against the Attorney General and the Commissioner of Agriculture and Consumer Services (“Commissioner” — collectively, “the Commonwealth”) of Virginia. It contends that recent amendments to the Virginia Petroleum Products Franchise Act (“the Act," or “VPPFA”), Va.Code Ann. §§ 59.1-21.8 to [1175]*1175-21.18:1 (1987 & Cum.Supp.1990) are unlawful because they:

1.) conflict with and are preempted by part of two federal acts regulating the same activities, the Petroleum Marketing Practices Act - (“PMPA”), 15 U.S.C. §§ 2801-2806, and the Lanham Act, 15 U.S.C. §§ 1111-1127;
2.) deprive Mobil of its property, specifically its investment in Mobil brand service stations in Virginia and its federally registered trademarks, without just compensation, in violation of the takings clause of the fifth amendment to the United States Constitution;
3.) violate the special laws prohibition of the Virginia Constitution, article IV, sections 14-15, because they create arbitrary distinctions between types of service stations, with no reasonable relationship to the Act’s purposes; and
4.) violate the contract clause, article I, section 10 of the United States Constitution (and comparable Virginia Constitution article I, section 11), because they will substantially impair Mobil's contracts with dealers and potential lessors of service station properties in Virginia.

The Commonwealth has moved to dismiss the complaint, on grounds that it is barred as to the Commissioner by the eleventh amendment to the United States Constitution, and that it fails to raise a “case or controversy” with respect to the Attorney General, as required by article III to the Constitution. The parties offered extensive briefs and oral argument on the issues presented, and the motion is ripe for decision.

II

Mobil’s 37-page complaint may be summarized as follows.

Mobil’s franchise agreements with service station operators all include certain uniform or minimum requirements, related to hours of operation, physical layout, appearance, quantity of Mobil products purchased, advertising and trademark use, participation in the Mobil credit card program, etc.1 See Complaint at paras. 19-23. Mobil views these standards as crucial to building brand loyalty in Virginia, where Mobil has invested over $27.9 million for a piece of the competitive retail motor fuels market. Id. at paras. 8, 23-24. Mobil especially emphasizes the importance of requirements regarding minimum Mobil product volume, and hours of operation, and declares that it would be “unable to recover its substantial investment and ensure the uniformity of its franchise system” without them. Id. at para. 34.

Congress since 1978 has extensively regulated most of Mobil’s franchise relationships, via the PMPA, 15 U.S.C. §§ 2801-2806. The PMPA regulates the creation, enforcement, and termination of petroleum products franchise agreements, and expressly preempts conflicting state and local laws relating to termination or nonrenewal of franchise relationships. 15 U.S.C. § 2806(a).

Mobil alleges its franchise agreements and franchise renewal plans are valid under the PMPA, but violate or would violate at least the following provisions of Virginia law:

1.) § 59.1-21.16:2(0, precluding imposition of “purchase or sales quotas,” in new or renewed leases and supply contracts;
2.) § 59.1-21.11(1), providing that dealers “shall not be required” to keep retail outlets open for more than 16 hours a day, or six days per week;
3.) § 59.1-21.11(6), requiring service station rental agreements to reflect “commercially fair and reasonable standards, uniformly applied to all similarly situated dealers of the same refiner in the same geographic area;”
4.) § 59.1-21.11(4), which bars petroleum refiners from limiting the number of stations operated by a franchisee-dealer;
[1176]*11765.) § 59.1-21.11(6), which requires renewals of franchise agreements to be for a period of at least three years;
6.) § 59.1-21.11(7), which forbids credit card service fees to dealers “in excess of the customary fee charged by credit card services to retailers who authorize use of credit card purchases;”
7.) § 59.1-21.16:2(A), banning refiners from constructing or operating with company personnel any new retail outlets in the Commonwealth, from July 1, 1990 through June 30, 1991, except on certain property purchased or under option to purchase by March 1, 1990.

Mobil claims these “offending provisions” collectively infringe on its contract rights, supervisory authority, and federally protected trademark,2 and constitute unconstitutional or otherwise unlawful enactments, as briefly described above, supra pages 1-2. It prays that this Court declare the offending provisions unlawful, and enjoin “enforcement by the Commonwealth” of any of the provisions so declared.

Ill

The grounds for dismissing each defendant are discussed separately below.

The Eleventh Amendment Argument

The Eleventh Amendment to the United States Constitution states:

The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.

It is settled law that the same jurisdictional bar applies, in suits against a state by the state’s own citizens. E.g., Hans v. Louisiana, 134 U.S. 1, 10 S.Ct. 504, 33 L.Ed. 842 (1890).

Federal courts nonetheless have the authority to grant equitable relief against state officials charged with enforcing unconstitutional statutes, under the doctrine established in Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). Mobil and the Commonwealth robustly dispute the applicability of that doctrine in this case, however. Resolution of this dispute requires detailed examination of certain provisions of the VPPFA.

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Bluebook (online)
747 F. Supp. 1173, 1990 U.S. Dist. LEXIS 13175, 1990 WL 146454, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mobil-oil-corp-v-attorney-general-vaed-1990.