Mac's Shell Service, Inc. v. Shell Oil Products Co. , 130 S. Ct. 1251 ( 2010 )

(Slip Opinion) OCTOBER TERM, 2009 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
MAC’S SHELL SERVICE, INC., ET AL. v. SHELL OIL
PRODUCTS CO. LLC ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FIRST CIRCUIT
No. 08–240. Argued January 19, 2010—Decided March 2, 2010*
The Petroleum Marketing Practices Act (Act) limits the circumstances
in which franchisors may “terminate” a service-station franchise or
“fail to renew” a franchise relationship. 15 U. S. C. §§2802, 2804.
Typically, the franchisor leases the service station to the franchisee
and permits the franchisee to use the franchisor’s trademark and
purchase the franchisor’s fuel for resale. §2801(1). As relevant here,
service-station franchisees (dealers) filed suit under the Act, alleging
that a petroleum franchisor and its assignee had constructively “ter
minate[d]” their franchises and constructively “fail[ed] to renew”
their franchise relationships by substantially changing the rental
terms that the dealers had enjoyed for years, increasing costs for
many of them. The dealers asserted these claims even though they
had not been compelled to abandon their franchises, and even though
they had been offered and had accepted renewal agreements. The
jury found against the franchisor and assignee, and the District
Court denied their requests for judgment as a matter of law. The
First Circuit affirmed as to the constructive termination claims, hold
ing that the Act does not require a franchisee to abandon its fran
chise to recover for such termination, and concluding that a simple
breach of contract by an assignee of a franchise agreement can
amount to constructive termination if the breach resulted in a mate
rial change effectively ending the lease. However, the court reversed
as to the constructive nonrenewal claims, holding that such a claim
cannot be maintained once a franchisee signs and operates under a
——————
* Together with No. 08–372, Shell Oil Products Co. LLC et al. v. Mac’s
Shell Service, Inc., et al., also on certiorari to the same court.
2 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Syllabus
renewal agreement.
Held:
1. A franchisee cannot recover for constructive termination under
the Act if the franchisor’s allegedly wrongful conduct did not compel
the franchisee to abandon its franchise. Pp. 6–15.
(a) The Act provides that “no franchisor . . . may . . . terminate
any franchise,” except for an enumerated reason and after giving
written notice, §2802(a)–(b), and specifies that “ ‘termination’ in
cludes cancellation,” §2801(17). Because it does not further define
those terms, they are given their ordinary meanings: “put [to] an
end” or “annul[ed] or destroy[ed].” Thus, the Act prohibits only fran
chisor conduct that has the effect of ending a franchise. The same
conclusion follows even if Congress used “terminate” and “cancel” in
their technical, rather than ordinary, senses. This conclusion is also
consistent with the general understanding of the constructive termi
nation doctrine as applied in analogous legal contexts—e.g., employ
ment law, see Pennsylvania State Police v. Suders, 542 U. S. 129,
141–143—where a termination is deemed “constructive” only because
the plaintiff, not the defendant, formally ends a particular legal rela
tionship—not because there is no end to the relationship at all. Al
lowing franchisees to obtain relief for conduct that does not force a
franchise to end would ignore the Act’s scope, which is limited to the
circumstances in which franchisors may terminate a franchise or de
cline to renew a franchise relationship and leaves undisturbed state
law regulation of other types of disputes between petroleum franchi
sors and franchisees, see §2806(a). This conclusion is also informed
by important practical considerations, namely, that any standard for
identifying those breaches of contract that should be treated as effec
tively ending a franchise, even though the franchisee continues to op
erate, would be indeterminate and unworkable. Pp. 6–12.
(b) The dealers’ claim that this interpretation of the Act fails to
provide franchisees with protection from unfair and coercive franchi
sor conduct that does not force an end to the franchise ignores the
availability of state-law remedies to address such wrongful conduct.
The Court’s reading of the Act is also faithful to the statutory inter
pretation principle that statutes should be construed “in a manner
that gives effect to all of their provisions,” United States ex rel. Eisen
stein v. City of New York, 556 U. S. ___, ___, because this interpreta
tion gives meaningful effect to the Act’s preliminary injunction provi
sions and its alternative statute-of-limitations accrual dates. Pp. 12–
14.
2. A franchisee who signs and operates under a renewal agreement
with a franchisor may not maintain a constructive nonrenewal claim
under the Act. The Act’s text leaves no room for such an interpreta
Cite as: 559 U. S. ____ (2010) 3
Syllabus
tion. It is violated only when a franchisor “fail[s] to renew” a fran
chise relationship for an enumerated reason or fails to provide the
required notice, see §2802, and it defines “fail to renew” as a “failure
to reinstate, continue, or extend the franchise relationship,”
§2801(14). A franchisee that signs a renewal agreement cannot carry
the threshold burden of showing a “nonrenewal of the franchise rela
tionship,” §2805(c), and thus necessarily cannot establish that the
franchisor has violated the Act. Signing their renewal agreements
“under protest” did not preserve the dealers’ ability to assert nonre
newal claims. When a franchisee signs a renewal agreement—even
“under protest”—there has been no “fail[ure] to renew,” and thus no
violation of the Act. The Act’s structure and purpose confirm this in
terpretation. Accepting the dealers’ contrary reading would greatly
expand the Act’s reach. Pp. 15–19.
524 F. 3d 33, reversed in part, affirmed in part, and remanded.
ALITO, J., delivered the opinion for a unanimous Court.
Cite as: 559 U. S. ____ (2010) 1
Opinion of the Court
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SUPREME COURT OF THE UNITED STATES
_________________
Nos. 08–240 and 08–372
_________________
MAC’S SHELL SERVICE, INC., ET AL., PETITIONERS
08–240 v.
SHELL OIL PRODUCTS COMPANY LLC, ET AL.
SHELL OIL PRODUCTS COMPANY LLC, ET AL.,
PETITIONERS
08–372 v.
MAC’S SHELL SERVICE, INC., ET AL.
ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIRST CIRCUIT
[March 2, 2010]
JUSTICE ALITO delivered the opinion of the Court.
The Petroleum Marketing Practices Act (PMPA or Act),
92 Stat. 322, 15 U. S. C. §2801 et seq., limits the circum
stances in which petroleum franchisors may “terminate” a
franchise or “fail to renew” a franchise relationship.
§2802. In these consolidated cases, service-station fran
chisees brought suit under the Act, alleging that a fran
chisor had constructively “terminate[d]” their franchises
and had constructively “fail[ed] to renew” their franchise
relationships. They asserted these claims even though the
conduct of which they complained had not compelled any
of them to abandon their franchises and even though they
had been offered and had accepted renewal agreements.
We hold that a franchisee cannot recover for constructive
termination under the PMPA if the franchisor’s allegedly
2 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Opinion of the Court
wrongful conduct did not compel the franchisee to aban
don its franchise. Additionally, we conclude that a fran
chisee who signs and operates under a renewal agreement
with a franchisor may not maintain a claim for construc
tive nonrenewal. We therefore reverse in part and affirm
in part.
I
A
Petroleum refiners and distributors supply motor fuel to
the public through service stations that often are operated
by independent franchisees. In the typical franchise
arrangement, the franchisor leases the service-station
premises to the franchisee, grants the franchisee the right
to use the franchisor’s trademark, and agrees to sell motor
fuel to the franchisee for resale. Franchise agreements
remain in effect for a stated term, after which the parties
can opt to renew the franchise relationship by executing a
new agreement.
Enacted in 1978, the PMPA was a response to wide
spread concern over increasing numbers of allegedly un
fair franchise terminations and nonrenewals in the petro
leum industry. See, e.g., Comment, 1980 Duke L. J. 522,
524–531. The Act establishes minimum federal standards
governing the termination and nonrenewal of petroleum
franchises. Under the Act’s operative provisions, a fran
chisor may “terminate” a “franchise” during the term
stated in the franchise agreement and may “fail to renew”
a “franchise relationship” at the conclusion of that term
only if the franchisor provides written notice and takes the
action in question for a reason specifically recognized in
the statute. 15 U. S. C. §§2802, 2804. Consistent with the
typical franchise arrangement, a “franchise” is defined as
“any contract” that authorizes a franchisee to use the
franchisor’s trademark, as well as any associated agree
ment providing for the supply of motor fuel or authorizing
Cite as: 559 U. S. ____ (2010) 3
Opinion of the Court
the franchisee to occupy a service station owned by the
franchisor.1 §2801(1). The Act defines a “franchise rela
tionship” in more general terms: the parties’ “respective
motor fuel marketing or distribution obligations and re
sponsibilities” that result from the franchise arrangement.
§2801(2).
To enforce these provisions, a franchisee may bring suit
in federal court against any franchisor that fails to comply
with the Act’s restrictions on terminations and nonrenew
als. See §2805. Successful franchisees can benefit from a
wide range of remedies, including compensatory and
punitive damages, reasonable attorney’s fees and expert
costs, and equitable relief. See §2805(b), (d). The Act also
requires district courts to grant preliminary injunctive
relief to aggrieved franchisees, if there are “sufficiently
serious questions going to the merits” that present “a fair
ground for litigation” and the balance of hardships favors
such relief. §2805(b)(2).
B
This litigation involves a dispute between Shell Oil
Company (Shell), a petroleum franchisor, and several
Shell franchisees in Massachusetts.2 Pursuant to their
franchise agreements with Shell, each franchisee was
required to pay Shell monthly rent for use of the service
station premises. For many years, Shell offered the fran
chisees a rent subsidy that reduced the monthly rent by a
set amount for every gallon of motor fuel a franchisee sold
above a specified threshold. Shell renewed the subsidy
annually through notices that “explicitly provided for
——————
1 Courts sometimes describe these three types of agreements as the
“statutory elements” of a petroleum franchise. See, e.g., Marcoux v.
Shell Oil Prods. Co., 524 F. 3d 33, 37, n. 1 (CA1 2008).
2 Shell Oil Products Company LLC, another party in this litigation, is
a wholly owned subsidiary of Shell Oil Company. See Brief for Peti
tioners in No. 08–372, p. iii.
4 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Opinion of the Court
cancellation [of the rent subsidy] with thirty days’ notice.”
Marcoux v. Shell Oil Prods. Co., 524 F. 3d 33, 38 (CA1
2008). Nonetheless, Shell representatives made various
oral representations to the franchisees “that the [s]ubsidy
or something like it would always exist.” Ibid.In 1998, Shell joined with two other oil companies to
create Motiva Enterprises LLC (Motiva), a joint venture
that combined the companies’ petroleum-marketing opera
tions in the eastern United States. Id., at 37. Shell as
signed to Motiva its rights and obligations under the
relevant franchise agreements. Motiva, in turn, took two
actions that led to this lawsuit. First, effective January 1,
2000, Motiva ended the volume-based rent subsidy, thus
increasing the franchisees’ rent. Id., at 38. Second, as
each franchise agreement expired, Motiva offered the
franchisees new agreements that contained a different
formula for calculating rent. For some (but not all) of the
franchisees, annual rent was greater under the new
formula.
C
In July 2001, 63 Shell franchisees (hereinafter dealers)
filed suit against Shell and Motiva in Federal District
Court. Their complaint alleged that Motiva’s discontinua
tion of the rent subsidy constituted a breach of contract
under state law. Additionally, the dealers asserted two
claims under the PMPA. First, they maintained that Shell
and Motiva, by eliminating the rent subsidy, had “con
structively terminated” their franchises in violation of the
Act. Second, they claimed that Motiva’s offer of new fran
chise agreements that calculated rent using a different
formula amounted to a “constructive nonrenewal” of their
franchise relationships.3
——————
3 The dealers also claimed that Shell and Motiva had violated the
Uniform Commercial Code, as adopted in Massachusetts, by setting
unreasonable prices under the open-price terms of their fuel-supply
Cite as: 559 U. S. ____ (2010) 5
Opinion of the Court
After a 2-week trial involving eight of the dealers, the
jury found against Shell and Motiva on all claims. Both
before and after the jury’s verdict, Shell and Motiva moved
for judgment as a matter of law on the dealers’ two PMPA
claims. They argued that they could not be found liable
for constructive termination under the Act because none of
the dealers had abandoned their franchises in response to
Motiva’s elimination of the rent subsidy––something Shell
and Motiva said was a necessary element of any construc
tive termination claim. Similarly, they argued that the
dealers’ constructive nonrenewal claims necessarily failed
because seven of the eight dealers had signed and oper
ated under renewal agreements with Motiva, and the
eighth had sold his franchise prior to the expiration of his
franchise agreement. The District Court denied these
motions, and Shell and Motiva appealed.
The First Circuit affirmed in part and reversed in part.
In affirming the judgment on the dealers’ constructive
termination claims, the Court of Appeals held that a fran
chisee is not required to abandon its franchise to recover
for constructive termination under the PMPA. See 524
F. 3d, at 45–47. Instead, the court ruled, a simple breach
of contract by an assignee of a franchise agreement can
amount to constructive termination under the Act, so long
as the breach resulted in “such a material change that it
effectively ended the lease, even though the [franchisee]
continued to operate [its franchise].” Id., at 46 (internal
quotation marks omitted). Turning to the dealers’ con
structive nonrenewal claims, the First Circuit agreed with
Shell and Motiva that a franchisee cannot maintain a
claim for unlawful nonrenewal under the PMPA “where
the franchisee has signed and operates under the renewal
——————
agreements with the dealers. The jury found in favor of the dealers on
this claim, and the Court of Appeals affirmed. 524 F. 3d, at 51. That
issue is not before us.
6 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Opinion of the Court
agreement complained of.” Id., at 49. The court thus
reversed the judgment on those claims.
We granted certiorari. See 557 U. S. ___ (2009).
II
The first question we are asked to decide is whether a
service-station franchisee may recover for constructive
termination under the PMPA when the franchisor’s alleg
edly wrongful conduct did not force the franchisee to
abandon its franchise. For the reasons that follow, we
conclude that a necessary element of any constructive
termination claim under the Act is that the franchisor’s
conduct forced an end to the franchisee’s use of the fran
chisor’s trademark, purchase of the franchisor’s fuel, or
occupation of the franchisor’s service station.4
A
When given its ordinary meaning, the text of the PMPA
prohibits only that franchisor conduct that has the effect
of ending a franchise. As relevant here, the Act provides
that “no franchisor . . . may . . . terminate any franchise,”
except for an enumerated reason and after providing
written notice. 15 U. S. C. §2802(a)–(b). The Act specifies
that “[t]he term ‘termination’ includes cancellation,”
§2801(17), but it does not further define the term “termi
nate” or the incorporated term “cancel.” We therefore give
——————
4 Becauseresolving this question is sufficient to decide these cases,
we need not address Shell and Motiva’s alternative argument that the
PMPA does not embrace claims for constructive termination at all.
Several Courts of Appeals have held that the Act does create a cause of
action for constructive termination. See, e.g., 524 F. 3d, at 44–45 (case
below); Clark v. BP Oil Co., 137 F. 3d 386, 390–391 (CA6 1998); Shukla
v. BP Exploration & Oil, Inc., 115 F. 3d 849, 852–853 (CA11 1997).
Others have reserved judgment on the issue. See, e.g., Abrams Shell v.
Shell Oil Co., 343 F. 3d 482, 486–488 (CA5 2003); Portland 76
Auto/Truck Plaza, Inc. v. Union Oil Co. of Cal., 153 F. 3d 938, 948
(CA9 1998). We leave the question for another day.
Cite as: 559 U. S. ____ (2010) 7
Opinion of the Court
those terms their ordinary meanings. See Asgrow Seed
Co. v. Winterboer, 513 U. S. 179, 187 (1995).
The word “terminate” ordinarily means “put an end to.”
Webster’s New International Dictionary 2605 (2d ed.
1957); see also The Random House Dictionary of the Eng
lish Language 1465 (1967). The term “cancel” carries a
similar meaning: to “annul or destroy.” Webster’s, supra,
at 389; see also Random House, supra, at 215 (“to make
void; revoke; annul”). The object of the verb “terminate” is
the noun “franchise,” a term the Act defines as “any con
tract” for the provision of one (or more) of the three ele
ments of a typical petroleum franchise. §2801(1). Thus,
when given its ordinary meaning, the Act is violated only
if an agreement for the use of a trademark, purchase of
motor fuel, or lease of a premises is “put [to] an end” or
“annul[ed] or destroy[ed].” Conduct that does not force an
end to the franchise, in contrast, is not prohibited by the
Act’s plain terms.
The same conclusion follows even if Congress was using
the words “terminate” and “cancel” in their technical,
rather than ordinary, senses. When Congress enacted the
PMPA, those terms had established meanings under the
Uniform Commercial Code.5 Under both definitions,
——————
5 The difference between a “termination” and a “cancellation” under
the Uniform Commercial Code relates to how the contracting party
justifies its ending of the contractual relationship. A “termination”
occurs when “either party pursuant to a power created by agreement or
law puts an end to the contract otherwise than for its breach.” U. C. C.
§2–106(3) (1972 ed.). By contrast, a “cancellation” occurs when “either
party puts an end to the contract for breach by the other.” §2–106(4).
That difference might well explain why Congress felt compelled to
specify that “cancellation[s],” no less than “termination[s],” are covered
by the Act. Prior to the PMPA, franchisors often leveraged their
greater bargaining power to end franchise agreements for minor or
technical breaches by the franchisee. See, e.g., Chestnut Hill Gulf, Inc.
v. Cumberland Farms, Inc., 940 F. 2d 744, 746–747 (CA1 1991). By
specifying that the Act covers “cancellation[s]” as well as “termina
8 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Opinion of the Court
however, a “termination” or “cancellation” occurs only
when a contracting party “puts an end to the contract.”
U. C. C. §2–106(3)–(4) (1972 ed.); see also U. C. C. §2–
106(3)–(4), 1 U. L. A. 695, 695–696 (2004). Thus, a fran
chisee who continues operating a franchise—occupying the
same premises, receiving the same fuel, and using the
same trademark—has not had the franchise “termi
nate[d]” in either the ordinary or technical sense of the
word.
Requiring franchisees to abandon their franchises before
claiming constructive termination is also consistent with
the general understanding of the doctrine of constructive
termination. As applied in analogous legal contexts—both
now and at the time Congress enacted the PMPA—a
plaintiff must actually sever a particular legal relationship
in order to maintain a claim for constructive termination.
For example, courts have long recognized a theory of
constructive discharge in the field of employment law. See
Pennsylvania State Police v. Suders, 542 U. S. 129, 141–
143 (2004) (tracing the doctrine to the 1930’s). To recover
for constructive discharge, however, an employee gener
ally is required to quit his or her job. See 1 B. Lindemann
& P. Grossman, Employment Discrimination Law 1449
(4th ed. 2007); 3 L. Larson, Labor and Employment Law
§59.05[8] (2009); 2 EEOC Compliance Manual §612.9(a)
(2008); cf. Suders, supra, at 141–143, 148; Young v. South
western Savings & Loan Assn., 509 F. 2d 140, 144 (CA5
1975); Muller v. United States Steel Corp., 509 F. 2d 923,
929 (CA10 1975). Similarly, landlord-tenant law has long
recognized the concept of constructive eviction. See Ra
pacz, Origin and Evolution of Constructive Eviction in the
United States, 1 DePaul L. Rev. 69 (1951). The general
——————
tion[s],” Congress foreclosed any argument that a termination for
breach is not covered by the Act because it is technically a “cancella
tion” rather than a “termination.”
Cite as: 559 U. S. ____ (2010) 9
Opinion of the Court
rule under that doctrine is that a tenant must actually
move out in order to claim constructive eviction. See id.,
at 75; Glendon, The Transformation of American Land
lord-Tenant Law, 23 Boston College L. Rev. 503, 513–514
(1982); 1 H. Tiffany, Real Property §§141, 143 (3d ed.
1939).6
As generally understood in these and other contexts, a
termination is deemed “constructive” because it is the
plaintiff, rather than the defendant, who formally puts an
end to the particular legal relationship—not because there
is no end to the relationship at all. There is no reason why
a different understanding should apply to constructive
termination claims under the PMPA. At the time when it
enacted the statute, Congress presumably was aware of
how courts applied the doctrine of constructive termina
tion in these analogous legal contexts. See Fitzgerald v.
Barnstable School Comm., 555 U. S. ___, ___ (2009) (slip
op, at 11–12). And in the absence of any contrary evi
dence, we think it reasonable to interpret the Act in a way
that is consistent with this well-established body of law.
The Court of Appeals was of the view that analogizing to
doctrines of constructive termination in other contexts was
inappropriate because “sunk costs, optimism, and the
——————
6 Before Congress enacted the PMPA, at least one court, it is true,
had held that a tenant asserting constructive eviction could obtain
declaratory relief without abandoning the premises—although the court
observed that the tenant still would have to abandon the premises in
order to obtain rescission. See Charles E. Burt, Inc. v. Seven Grand
Corp., 340 Mass. 124, 129–130, 163 N. E. 2d 4, 7–8 (1959). But as even
the dealers concede, see Tr. of Oral Arg. 37–38, the clear majority of
authority required a tenant to leave the premises before claiming
constructive eviction.
For similar reasons, the Second Restatement of Property is of no help
to the dealers. Although it would allow a tenant to bring a constructive
eviction claim without moving out, it noted that this proposition was
“contrary to the present weight of judicial authority.” 1 Restatement
(Second) of Property §6.1, Reporter’s Note 1, p. 230 (1976).
10 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Opinion of the Court
habit of years might lead franchisees to try to make the
new arrangements work, even when the terms have
changed so materially as to make success impossible.” 524
F. 3d, at 46. But surely these same factors compel em
ployees and tenants—no less than service-station franchi
sees—to try to make their changed arrangements work.
Nonetheless, courts have long required plaintiffs asserting
such claims to show an actual severance of the relevant
legal relationship. We see no reason for a different rule
here.
Additionally, allowing franchisees to obtain PMPA relief
for conduct that does not force an end to a franchise would
extend the reach of the Act much further than its text and
structure suggest. Prior to 1978, the regulation of petro
leum franchise agreements was largely a matter of state
law. See Dersch Energies, Inc. v. Shell Oil Co., 314 F. 3d
846, 861 (CA7 2002); Comment, 32 Emory L. J. 273, 277–
283 (1983). In enacting the PMPA, Congress did not
regulate every aspect of the petroleum franchise relation
ship but instead federalized only the two parts of that
relationship with which it was most concerned: the cir
cumstances in which franchisors may terminate a fran
chise or decline to renew a franchise relationship. See 15
U. S. C. §2802; Dersch Energies, supra, at 861–862. Con
gress left undisturbed state-law regulation of other types
of disputes between petroleum franchisors and franchi
sees. See §2806(a) (pre-empting only those state laws
governing franchise terminations or nonrenewals).
The dealers would have us interpret the PMPA in a
manner that ignores the Act’s limited scope. On their
view, and in the view of the Court of Appeals, the PMPA
prohibits, not just unlawful terminations and nonrenew
als, but also certain serious breaches of contract that do
not cause an end to the franchise. See Brief for Respon
dents in No. 08–372, pp. 28–35 (hereinafter Respondents’
Brief); 524 F. 3d, at 44–47. Reading the Act to prohibit
Cite as: 559 U. S. ____ (2010) 11
Opinion of the Court
simple breaches of contract, however, would be inconsis
tent with the Act’s limited purpose and would further
expand federal law into a domain traditionally reserved
for the States. Without a clearer indication that Congress
intended to federalize such a broad swath of the law gov
erning petroleum franchise agreements, we decline to
adopt an interpretation of the Act that would have such
sweeping consequences. See, e.g., United States v. Bass,
404 U. S. 336, 349 (1971).7
Finally, important practical considerations inform our
decision. Adopting the dealers’ reading of the PMPA
would require us to articulate a standard for identifying
those breaches of contract that should be treated as effec
tively ending a franchise, even though the franchisee in
fact continues to use the franchisor’s trademark, purchase
the franchisor’s fuel, and occupy the service-station prem
ises.8 We think any such standard would be indetermi
nate and unworkable. How is a court to determine
——————
7 Adopting such a broad reading of the PMPA also would have serious
implications for run-of-the-mill franchise disputes. The Act requires
courts to award attorney’s fees and expert-witness fees in any case in
which a plaintiff recovers more than nominal damages. See 15 U. S. C.
§2805(d)(1)(C). The Act also permits punitive damages, §2805(d)(1)(B),
a remedy ordinarily not available in breach-of-contract actions, see
Barnes v. Gorman, 536 U. S. 181, 187–188 (2002). Accepting the
dealers’ reading of the statute, therefore, would turn everyday contract
disputes into high-stakes affairs.
8 The First Circuit, for example, approved of a test that asks whether
the breach resulted in “such a material change that it effectively ended
the lease, even though the plaintiffs continued to operate [their fran
chises].” 524 F. 3d, at 46 (internal quotation marks omitted). That
standard, it seems to us, does little more than restate the relevant
question. While we do not decide whether the PMPA contemplates
claims for constructive termination, we observe that the Court of
Appeals’ unwillingness or inability to establish a more concrete stan
dard underscores the difficulties and inherent contradictions involved
in crafting a standard for finding a “termination” when no termination
has in fact occurred.
12 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Opinion of the Court
whether a breach is serious enough effectively to end a
franchise when the franchisee is still willing and able to
continue its operations? And how is a franchisor to know
in advance which breaches a court will later determine to
have been so serious? The dealers have not provided
answers to these questions. Nor could they. Any standard
for identifying when a simple breach of contract amounts
to a PMPA termination, when all three statutory elements
remain operational, simply evades coherent formulation.
B
The dealers suggest that this interpretation of the
PMPA fails to provide franchisees with much-needed
protection from unfair and coercive franchisor conduct
that does not force an end to the franchise. That argu
ment, however, ignores the fact that franchisees still have
state-law remedies available to them. The pre-emptive
scope of the PMPA is limited: The Act pre-empts only
those state or local laws that govern the termination of
petroleum franchises or the nonrenewal of petroleum
franchise relationships. See 15 U. S. C. §2806(a). Outside
of those areas, therefore, franchisees can still rely on
state-law remedies to address wrongful franchisor conduct
that does not have the effect of ending the franchise.
Indeed, that happened in this very lawsuit. The dealers
argued in the District Court that Motiva’s elimination of
the rent subsidy not only constructively terminated their
franchises in violation of the PMPA but also amounted to
a breach of contract under state law. The jury found in
their favor on their state-law claims and awarded them
almost $1.3 million in damages. See App. 376–379. Thus,
the dealers’ own experience demonstrates that franchisees
do not need a PMPA remedy to have meaningful protec
tion from abusive franchisor conduct.
The dealers also charge that this interpretation of the
PMPA cannot be correct because it renders other provi
Cite as: 559 U. S. ____ (2010) 13
Opinion of the Court
sions of the Act meaningless. Respondents’ Brief 21–22,
24–25. While we agree that we normally should construe
statutes “in a manner that gives effect to all of their provi
sions,” we believe our interpretation is faithful to this
“well-established principl[e] of statutory interpretation.”
United States ex rel. Eisenstein v. City of New York, 556
U. S. ___, ___ (2009) (slip op., at 5)
To begin, the dealers insist that our reading of the term
“terminate” will require franchisees to go out of business
before they can obtain preliminary relief and thus will
render useless the Act’s preliminary injunction mecha
nism. We disagree. To obtain a preliminary injunction, it
is true, a franchisee must show, among other things, that
“the franchise of which he is a party has been terminated.”
15 U. S. C. §2805(b)(2)(A)(i) (emphasis added). But that
does not necessarily mean that a franchisee must go out of
business before obtaining an injunction. For example, in
cases of actual termination, the Act requires franchisors to
provide franchisees with written notice of termination well
in advance of the date on which the termination “takes
effect.” §2804(a). A franchisee that receives notice of
termination “has been terminated” within the meaning of
§2805(b)(2)(A)(i), even though the termination “takes
effect” on a later date, just as an employee who receives
notice of discharge can be accurately described as having
been discharged, even though the employee’s last day at
work may perhaps be weeks later. Thus, franchisees that
receive notice of impending termination can invoke the
protections of the Act’s preliminary injunction mechanism
well before having to go out of business.9 Contrary to the
——————
9 The Government reads the Act to permit a dealer to seek prelimi
nary injunctive relief if a franchisor announces its “intent to engage in
conduct that would leave the franchisee no reasonable alternative but
to abandon” one (or more) of the franchise elements. Brief for United
States as Amicus Curiae 21. Because we do not decide whether the
PMPA permits constructive termination claims at all, see n. 4, supra,14 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Opinion of the Court
dealers’ assertions, therefore, our interpretation of the Act
gives meaningful effect to the PMPA’s preliminary injunc
tion provisions.
Our interpretation also gives effect to the Act’s alterna
tive statute-of-limitations accrual dates. The 1-year limi
tations period governing PMPA claims runs from the later
of either (1) “the date of termination of the franchise” or
(2) “the date the franchisor fails to comply with the re
quirements of” the Act. §2805(a). Some violations of the
PMPA, however, cannot occur until after a franchise has
been terminated. See, e.g., §2802(d)(1) (franchisor must
share with a franchisee certain parts of a condemnation
award when the termination was the result of a condem
nation or taking); §2802(d)(2) (franchisor must grant a
franchisee a right of first refusal if the franchise was
terminated due to the destruction of the service station
and the station subsequently is rebuilt). The second ac
crual date listed in §2805(a), therefore, shows only that
the limitations period runs from the date of these types of
post-termination violations. It does not suggest that
Congress intended franchisees to maintain claims under
the PMPA to redress franchisor conduct that does not
force an end to the franchise.
* * *
We therefore hold that a necessary element of any con
structive termination claim under the PMPA is that the
complained-of conduct forced an end to the franchisee’s
use of the franchisor’s trademark, purchase of the franchi
sor’s fuel, or occupation of the franchisor’s service station.
Because none of the dealers in this litigation abandoned
any element of their franchise operations in response to
Motiva’s elimination of the rent subsidy,10 they cannot
——————
we need not address this argument.
10 After Motiva withdrew the rent subsidy, seven of the dealers con
tinued operating their franchises for the full terms of their franchise
Cite as: 559 U. S. ____ (2010) 15
Opinion of the Court
maintain a constructive termination claim on the basis of
that conduct.
III
The second question we are asked to decide is whether a
franchisee who is offered and signs a renewal agreement
can nonetheless maintain a claim for “constructive nonre
newal” under the PMPA. For reasons similar to those
given above, we agree with the Court of Appeals that a
franchisee that chooses to accept a renewal agreement
cannot thereafter assert a claim for unlawful nonrenewal
under the Act.11
The plain text of the statute leaves no room for a fran
chisee to claim that a franchisor has unlawfully declined
——————
agreements and then signed new agreements that did not include the
subsidy. See App. 161, 164, 316–321 (Mac’s Shell Service, Inc.); id., at
138–139, 314–315 (Cynthia Karol); id., at 154–155, 310–311 (Akmal,
Inc.); id., at 185–186, 268–269 (Sid Prashad); id., at 190, 312–313 (J &
M Avramidis, Inc.); id., at 179–182, 322–323 (RAM Corp., Inc.); id., at
148–153, 324–325 (John A. Sullivan). These dealers necessarily cannot
establish that the elimination of the subsidy “terminate[d]” their
franchises “prior to the conclusion of the term” stated in their franchise
agreements. 15 U. S. C. §2802(a)(1). Whether they ceased operations
after their franchise agreements expired, moreover, is irrelevant.
Indeed, in the Court of Appeals, the dealers abandoned any claim for
constructive termination based on the subsequent franchise agree
ments. See Appellees’ Brief in No. 05–2770 etc. (CA1), p. 40, n. 29.
One dealer did leave his franchise before his franchise agreement
expired. App. 204, 330–331 (Stephen Pisarczyk). But that dealer not
only continued to operate for seven months after the subsidy ended, id.,
at 204, but also during that period entered into an agreement with
Motiva to extend the term of his franchise agreement, id., at 330–331.
Moreover, that dealer had been planning to leave the service-station
business before Motiva eliminated the subsidy, and he never claimed
that his decision to leave had anything to do with Motiva’s rent policies.
See id., at 202–207.
11 As is true with respect to the dealers’ constructive termination
claims, it is not necessary for us to decide in these cases whether the
Act at all recognizes claims for “constructive nonrenewal.” We there
fore do not express a view on that question.
16 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Opinion of the Court
to renew a franchise relationship—constructively or oth
erwise—when the franchisee has in fact accepted a new
franchise agreement. As relevant here, a franchisor vio
lates the PMPA only when it “fail[s] to renew” a franchise
relationship for a reason not provided for in the Act or
after not providing the required notice. See 15 U. S. C.
§2802. The Act defines the term “fail to renew,” in turn,
as a “failure to reinstate, continue, or extend the franchise
relationship.” §2801(14). Thus, the threshold require
ment of any unlawful nonrenewal action—a requirement
the franchisee bears the burden of establishing, see
§2805(c)—is that the franchisor did not “reinstate, con
tinue, or renew” the franchise relationship once a fran
chise agreement expired. But if a franchisee signs a re
newal agreement, the franchisor clearly has “reinstate[d],
continue[d], or extend[ed]” the franchise relationship.
True, the franchisee might find some of the terms in the
new agreement objectionable. But the Act prohibits only
unlawful “fail[ures] to renew” a franchise relationship, not
renewals of a franchise relationship on terms that are less
than favorable to the franchisee. A franchisee that signs a
renewal agreement, in short, cannot carry the threshold
burden of showing a “nonrenewal of the franchise rela
tionship,” §2805(c), and thus necessarily cannot establish
that the franchisor has violated the Act.
The dealers point out that several of them signed their
renewal agreements “under protest,” and they argue that
they thereby explicitly preserved their ability to assert a
claim for unlawful nonrenewal under the PMPA. That
argument misunderstands the legal significance of signing
a renewal agreement. Signing a renewal agreement does
not constitute a waiver of a franchisee’s legal rights—
something that signing “under protest” can sometimes
help avoid. See, e.g., U. C. C. §1–207, 1 U. L. A. 318.
Instead, signing a renewal agreement negates the very
possibility of a violation of the PMPA. When a franchisee
Cite as: 559 U. S. ____ (2010) 17
Opinion of the Court
signs a renewal agreement—even “under protest”—there
has been no “fail[ure] to renew,” and thus the franchisee
has no cause of action under the Act. See 15 U. S. C.
§2805(a).
The Act’s structure and purpose confirm this interpreta
tion. By requiring franchisors to renew only the “franchise
relationship,” as opposed to the same franchise agreement,
see §2802; see also §2801(2), the PMPA contemplates that
franchisors can respond to market demands by proposing
new and different terms at the expiration of a franchise
agreement. To that end, the Act authorizes franchisors to
decline to renew a franchise relationship if the franchisee
refuses to accept changes or additions that are proposed
“in good faith and in the normal course of business” and
that are not designed to convert the service station to
direct operation by the franchisor. §2802(b)(3)(A). Addi
tionally, the Act creates a procedural mechanism for re
solving disputes over the legality of proposed new terms.
If the parties cannot agree, the franchisor has the option
of either modifying the objectionable terms or pursuing
nonrenewal, in which case it must provide the franchisee
with written notice well in advance of the date when the
nonrenewal takes effect. §2804(a)(2). Once the franchisee
receives notice of nonrenewal, it can seek a preliminary
injunction under the Act’s relaxed injunctive standard,
maintaining the status quo while a court determines the
lawfulness of the proposed changes. See §2805(b)(2);
supra, at 13.12
——————
12 The availability of preliminary injunctive relief under the Act also
explains why the dealers are wrong to suggest that our holding will
force franchisees “to choose between accepting an unlawful and coercive
contract in order to stay in business [or] rejecting it and going out of
business in order to preserve a cause of action.” Respondents’ Brief 51
(internal quotation marks omitted). A franchisee presented with
“unlawful and coercive” terms can simply reject those terms and, if the
franchisor pursues nonrenewal, seek a preliminary injunction under
18 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Opinion of the Court
Allowing franchisees to pursue nonrenewal claims even
after they have signed renewal agreements would under
mine this procedural mechanism and, in the process,
would frustrate franchisors’ ability to propose new terms.
Under the dealers’ theory, franchisees have no incentive to
object to burdensome new terms and seek a preliminary
injunction if a franchisor pursues nonrenewal. Instead, a
franchisee could simply sign the new franchise agreement
and decide later whether to sue under the PMPA. Fran
chisees would then have the option of either continuing to
operate under the new agreement or, if the terms of the
agreement later proved unfavorable, bringing suit under
the PMPA alleging that the newly imposed terms are
unlawful. And because the PMPA has a 1-year statute of
limitations, see §2805(a), franchisees would retain that
option for the entire first year of a new franchise agree
ment. Accepting the dealers’ argument, therefore, would
cast a cloud of uncertainty over all renewal agreements
and could chill franchisors from proposing new terms in
response to changing market conditions and consumer
needs.
Finally, accepting the dealers’ argument would greatly
expand the PMPA’s reach. Under the balance struck by
the plain text of the statute, a franchisee faced with objec
tionable new terms must decide whether challenging those
terms is worth risking the nonrenewal of the franchise
relationship; if the franchisee rejects the terms and the
——————
the Act once the franchisee receives notice of nonrenewal. Indeed, the
PMPA substantially relaxes the normal standard for obtaining prelimi
nary-injunctive relief, §2805(b)(2)(A)(ii), thus allowing a franchisee
with anything close to a meritorious claim to obtain relief.
It is possible, of course, that a franchisor could fail to renew a fran
chise relationship without providing the statutorily required notice.
But in that circumstance, a franchisee would not only have a surefire
claim for unlawful nonrenewal, see §2802(b)(1)(A), but also presumably
could seek a preliminary injunction forcing the franchisor to resume
providing the franchise elements for the duration of the litigation.
Cite as: 559 U. S. ____ (2010) 19
Opinion of the Court
franchisor seeks nonrenewal, the franchisee runs the risk
that a court will ultimately determine that the proposed
terms were lawful under the PMPA. See §2802(b)(3)(A).
That risk acts as a restraint, limiting the scope of franchi
sor liability under the Act to that with which Congress
was most concerned: the imposition of arbitrary and un
reasonable new terms on a franchisee that are designed to
force an end to the petroleum franchise relationship. See,
e.g., ibid.; Comment, 32 Emory L. J., at 277–283. Allow
ing franchisees both to sign a franchise agreement and to
pursue a claim under the PMPA would eliminate that
restraint and thus permit franchisees to challenge a much
broader range of franchisor conduct—conduct to which the
dealer might object but not consider so serious as to risk
the nonrenewal of the franchise by mounting a legal chal
lenge. As explained, the PMPA was enacted to address
the narrow areas of franchise terminations and nonre
newals, not to govern every aspect of the petroleum fran
chise relationship. See supra, at 10; Dersch Energies, 314
F. 3d, at 861. We thus decline to adopt an interpretation
that would expand the Act in such a fashion.13
* * *
We hold that a franchisee who is offered and signs a
renewed franchise agreement cannot maintain a claim for
unlawful nonrenewal under the PMPA. We therefore
affirm the judgment of the Court of Appeals with respect
——————
13 It also is worth noting that, although the concept of “constructive
nonrenewal” does not arise frequently in other areas of the law, the
little authority on this concept supports our conclusion that a plaintiff
who signs a new agreement cannot maintain a claim for constructive
nonrenewal. See American Cas. Co. of Reading, Pa. v. Baker, 22 F. 3d
880, 892–894 (CA9 1994) (insured who accepts a successor insurance
policy cannot maintain a claim for constructive nonrenewal of the
previous policy); American Cas. Co. of Reading, Pa. v. Continisio, 17
F. 3d 62, 65–66 (CA3 1994) (same); Adams v. Greenwood, 10 F. 3d 568,
572 (CA8 1993) (same).
20 MAC’S SHELL SERVICE, INC. v. SHELL OIL
PRODUCTS CO.
Opinion of the Court
to the dealers’ nonrenewal claims.
IV
The judgment of the Court of Appeals is reversed in part
and affirmed in part. The cases are remanded for further
proceedings consistent with this opinion.
It is so ordered.