Emmanuel Joseph v. Sasafrasnet, LLC

In the
United States Court of Appeals
For the Seventh Circuit
No. 13-1202
EMMANUEL JOSEPH,
Plaintiff-Appellant,
v.
SASAFRASNET, LLC,
Defendant-Appellee.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 11 C 402 — Harry D. Leinenweber, Judge.
ARGUED OCTOBER 1, 2013 — DECIDED NOVEMBER 4, 2013
Before CUDAHY, RIPPLE, and HAMILTON, Circuit Judges.
HAMILTON, Circuit Judge. Plaintiff Emmanuel Joseph
appeals from the district court’s denial of his motion for a
preliminary injunction under the Petroleum Marketing
Practices Act (“PMPA”), 15 U.S.C. § 2801 et seq. Joseph operates
a British Petroleum service station franchise in Chicago,
Illinois. Defendant Sasafrasnet, LLC is an authorized distribu-
tor of BP products and is Joseph’s franchisor.
2 No. 13-1202
In November 2010, Sasafrasnet provided Joseph with notice
of its intent to terminate his franchise based on three occasions
in July 2010 when Sasafrasnet attempted to debit Joseph’s bank
account to pay for fuel deliveries but payment was denied for
insufficient funds (“NSF”). Joseph sought a preliminary
injunction to enjoin Sasafrasnet’s termination. In May 2011, the
district court denied an injunction, finding that Joseph failed to
meet his burden for a preliminary injunction under 15 U.S.C.
§2805(b)(2)(A)(ii) to show that “there exist sufficiently serious
questions going to the merits to make such questions a fair
ground for litigation.”
Joseph appealed that denial, and we remanded to the
district court for additional findings and conclusions on very
specific questions regarding whether Joseph’s NSFs in July
2010 amounted to “failures” under the PMPA. Joseph v.
Sasafrasnet, LLC, 689 F.3d 683 (7th Cir. 2012). A brief explana-
tion of the statute is necessary to understand our remand.
Section 2802(b)(2)(C) authorizes a franchisor to terminate a
franchise if an event occurs that is relevant to the franchise
relationship. 15 U.S.C. §2802(b)(2)(C). Section 2802(c) lists
twelve types of events that constitute such a relevant event
“and as a result of which termination of the franchise … is
reasonable,” but the list is not exhaustive of the category of
relevant events. One such type of event is a “failure by the
franchisee to pay the franchisor in a timely manner when due
all sums to which the franchisor is legally entitled.” 15 U.S.C.
§2802(c)(8). But such an event does not count as a “failure”
under the PMPA if it was “only technical or unimportant to the
franchise relationship,” 15 U.S.C. §2801(13)(A), or if the event
No. 13-1202 3
was “for a cause beyond the reasonable control of the franchi-
see.” 15 U.S.C. §2801(13)(B).
There is no dispute about whether Joseph failed to make
timely payments in July 2010, but the statutory exceptions for
“technical or unimportant” events or events beyond the
reasonable control of the franchisee might have protected
Joseph from termination. In its first denial of Joseph’s motion
for preliminary injunction, the district court did not address
whether Joseph’s NSFs might not have been “failures,” either
because they were technical or unimportant to the parties’
franchise relationship or because they were beyond Joseph’s
reasonable control. On remand, the district court considered
those questions and found that two of Joseph’s NSFs in July
2010 should count as “failures” under the PMPA justifying
termination, at least to the extent that he did not show he was
entitled to preliminary injunctive relief. Joseph v. Sasafrasnet,
LLC, 2012 WL 6727263 (N.D. Ill. Dec. 28, 2012). Joseph has
appealed again. This time we find no error and affirm.
As we said in our earlier opinion, our review of the district
court’s decision to deny Joseph preliminary relief under the
PMPA is “narrow.” Joseph, 689 F.3d at 689, quoting Moody v.
Amoco Oil Co., 734 F.2d 1200, 1217 (7th Cir. 1984). We “will not
reverse a district court’s grant or denial of a preliminary
injunction absent a clear abuse of discretion by the district
court.” Moody, 734 F.2d at 1217. We review questions of law de
novo and questions of fact for clear error. Burlington N. & Santa
Fe Ry. Co. v. Bhd. of Locomotive Eng'rs, 367 F.3d 675, 678 (7th Cir.
2004).
4 No. 13-1202
Joseph argues that the district court erred in assigning the
burden of proof, putting the burden on Joseph. But as the party
seeking a preliminary injunction, Joseph had the burden of
proof. To merit a preliminary injunction, 15 U.S.C.
§2805(b)(2)(A)(ii) required Joseph to show that “there exist
sufficiently serious questions going to the merits to make such
questions a fair ground for litigation.” The district court
properly applied this standard.
On remand, the district court found that the second July
2010 NSF was beyond Joseph’s control but the first and the
third were within his control. Joseph, 2012 WL 6727263, at *5–6.
Joseph’s bank account was not adequately funded for
Sasafrasnet’s debit of the account on those occasions because
Joseph had decided to change banks. The first NSF occurred
because he had failed to give Sasafrasnet adequate notice of the
change. The third NSF occurred because Joseph had failed to
ensure a smooth transition between his two open
accounts—the old and the new. The district court found that
these circumstances were entirely within Joseph’s control, and
we find no clear error in those findings.
The district court then went on to consider whether the
NSFs were only “technical” or “unimportant” to the parties’
franchise relationship. Joseph, 2012 WL 6727263, at*7–8. It found
that Joseph had a history of making late payments in substan-
tial amounts because of insufficient funds—the invoice amount
for each of the three July 2010 NSFs was over $22,000—and
that Joseph’s delinquent payments were not “technical” or
“unimportant.” Joseph attempts to reargue the facts on appeal,
contending that his late payments were isolated incidents, that
Sasafrasnet’s deadlines were arbitrary, and that his payments
No. 13-1202 5
were late by only a few days, sometimes a few hours. But our
role on appeal is not to reweigh the evidence, but to review
only for clear error. Finding none, we affirm.
AFFIRMED.