Contracts — PMPA

Listen to this article

United States Court of Appeals For the Seventh Circuit

Civil

Contracts — PMPA

The occurrence of an event listed in 15 U.S.C. 2802(c) of the Petroleum Marketing Practices Act provides a franchisor with a per se reasonable basis for terminating a franchise.

“We have not determined definitively whether a termination based on an event listed in § 2802(c) is per se reasonable, although we have indicated an inclination to accept the analysis of the majority of our sister circuits. See Al’s Serv. Ctr. v. BP Prods. N. Am., Inc., 599 F.3d 720, 725 (7th Cir. 2010). Today, we make clear that the occurrence of an event listed in § 2802(c) justifies, as a matter of law, a franchisor’s decision to terminate a franchise under § 2802(b)(2)(C). In our view, the plain language of the PMPA ‘unambiguously permits termination of a petroleum franchise agreement upon failure of the franchisee to timely adhere to payment obligations.’ Hinkleman, 962 F.2d at 377. Of course, if the franchisor seeks to terminate the franchise under § 2802(b)(2)(C) because of the occurrence of an event other than those listed in § 2802(c), judicial scrutiny of the reasonableness of the termination is required. See Moody, 734 F.2d at 1217.”

Reversed and Remanded.

11-2065 Joseph v. Sasafrasnet, LLC

Appeal from the United States District Court for the Northern District of Illinois, Leinenweber, J., Ripple, J.