LA PALMA, Calif. -- A group of Southern California ARCO and Thrifty Oil gas station franchisees filed suit in federal court last week against BP and Thrifty Oil Co. to stop the companies from not renewing their leases and effectively putting the station owners out of business, reported the Orange County Register. They seek $1 billion in damages.
More than 40 ARCO and Thrifty Oil station owners who sublease property from BP claim the oil company failed to give proper notice of its intention in July 2010 not to renew its master lease with Thrifty Oil.
BP subsequently advised the station owners that since the company opted not to renew its deal with Thrifty Oil, they would have to vacate their station property as their leases expire over the next two years beginning in April.
Tesoro Corp., San Antonio, has signed new lease agreements with Thrifty Oil and will take over a total of 240 ARCO and Thrifty stations that are losing their leases. They will be rebranded as USA Gas (see Related Content below for previous CSP Daily News coverage).
According to the Register report, the franchisees said they were told that Tesoro plans to hire its own people so the current owners and their employees will be out of jobs.
In their suit, the franchisees have asked the federal court for a temporary restraining order to stop them from being ousted from their property.
BP, anticipating the franchisee lawsuit, filed a separate suit last weekend, said the report. BP asked the federal court to find that the company followed the rules for notifying the franchisees of its decision not to renew the leases and lawfully terminated the franchises.
"Although BP doesn't typically comment on the details of pending litigation ... we are not the owner or landlord of these properties. We are simply a lessee who's lease is expiring and we are taking this step to ensure that the sites are vacated as required by the lease," BP said in a statement provided to CSP Daily News. "There are more than 900 ARCO-branded sites in the Southern California region and the vast majority of them are not affected by this litigation."
Thrifty Oil did not respond to a request for comment by the newspaper.
The issue turns on when BP knew it was not going to renew its Thrifty Oil leases and whether it complied with the federal and state rules for terminating a franchise, the report said.
David A. Schiller, an attorney for the franchisees, contends BP knew in 2009 and possibly as early as 2001 that it would exit the Southern California gasoline market by 2012, but never told the franchisees, some of whom bought their stations in the last year.
He claims the franchisees also were never given the master lease with Thrifty Oil, which says they had the right of first refusal to negotiate a lease directly with Thrifty Oil if BP chose not to renew in July 2010.
"There was no good faith dealing with BP saying [to the franchisees], 'You need to make some plans because two years from now you're not going to have a lease,'" Schiller said.
BP announced last year that it intends to sell its Carson refinery and about 700 other ARCO gas stations in Southern California. The sale of those stations is separate from the nonrenewal of the 240 franchises (see Related Content below for previouscoverage).
As part of that sale, BP said it will retain rights to the ampm gas station market brand. Dean Scott, a BP spokesperson, told the paper that any decision about keeping the ARCO name for the gas stations will be up to the buyer.
The franchisee lawsuit says the finalists to purchase BP's refinery and the 700 Arco stations are Marathon, Reliance Group of India and Tesoro, according to the report. BP has said it expects the sale to go through by the end of the year.
London-based BP, with U.S. headquarters in La Palma, Calif. (West), and Warrenville, Ill. (East), markets more than 15 billion gallons of gasoline every year to U.S. consumers through more than 11,000 BP- and ARCO-branded retail outlets and supplies more than four billion gallons of fuel annually to fleets, industrial users, auto and truck manufacturers, railroads and utilities. More than 1,300 ARCO-branded sites currently operate in five western states: California, Nevada, Oregon, Washington and Arizona.
BP is the single, global brand formed by the combination of the former British Petroleum, Amoco, Atlantic Richfield (ARCO) and Burmah Castrol. BP is a global producer, manufacturer and marketer of oil, gas, chemicals and renewable energy sources.
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