The justices, in an order Monday, said they will hear arguments next year in a case involving eight Shell station operators in Massachusetts who are fighting changes in lease terms that they say were intended to [image-nocss] convert stations run by franchisees to company-owned facilities.
The station operators said Shell and Shell marketing venture Motiva Enterprises LLC used rent increases to try to end their franchise arrangements so the companies could take over operation of the stations.
The case could shape the rights of the 75,000 independent U.S. station owners. "This court's decision will be felt immediately by franchisors and franchisees across the country," the operators argued in court papers urging the Supreme Court to intervene.
A federal jury awarded the gas station operators $3.3 million. The Boston-based 1st U.S. Circuit Court of Appeals upheld some aspects of the verdict and overturned others.
The court said the station owners could press claims for "constructive termination" even though they continued to operate their franchise. The court reached the opposite conclusion on the owners' allegations of "constructive non-renewal," saying they forfeited those claims by signing new leases.
Shell, owned by Royal Dutch Shell PLC, and the station operators all appealed to the Supreme Court. The Obama administration also asked the court to intervene and rule in Shell's favor.
The case turns on provisions of the 30-year-old Petroleum Marketing Practices Act. The operators are suing under provisions in the law barring improper lease terminations. Appeals courts around the country are divided on the issue.
The cases are Mac's Shell Service v. Shell Oil, 08-240, and Shell Oil v. Mac's Shell Service, 08-372. (Click here for details.)
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