Judge May Dismiss ExxonMobil Lawsuit

Attorney says preemptive case is unnecessary

BALTIMORE -- An attorney for Exxon Mobil Corp. argued Monday in federal court for the dismissal of a lawsuit filed by dozens of Maryland gas-station operators who have sued the petroleum giant for making moves to sell their stations in a way that they say could violate federal and state laws and possibly force them out of their own businesses, according to a report in The Baltimore Sun.

The dispute between the operators and Exxon Mobil Corp. was sparked by a decision the company made in June 2008 to sell off gas stations it still owned and leased to the small-business [image-nocss] owners who ran them essentially under a franchise system. ExxonMobil wanted to exit the direct-retail gasoline market because of its hyper-competitiveness and low profit margins, and it has sought to sell its holdings to other smaller companies, such as distributors, which would continue to sell gasoline under its brand name.

The station operators claim ExxonMobil should give them the first chance to buy the stations that they lease and operate from the oil refiner, under a federal law known as the Petroleum Marketing Practices Act.

But ExxonMobil's attorney, Mark Lillie, argued that ExxonMobil hasn't yet moved to sell the properties of the 55 dealers who filed the lawsuit, so the lawsuit and a temporary restraining order weren't necessary.

"The essence of the case is they're concerned something might happen in the future, but hasn't happened yet," Lillie told Judge Alexander Williams Jr., according to the report.

Harry C. Storm, who represents the 55 station operators, said in court that ExxonMobil's contractual language with its station operators went "way too far," forcing them to give up basic rights as gasoline dealers that were enshrined in federal and state law. "The dealers have seen this coming," Storm told Williams.

Dozens of ExxonMobil gas station operators in Maryland sat in a courtroom during a hearing at the District Court House in Greenbelt, Md., the newspaper reported.

After ExxonMobil announced its intention last year to begin selling off its gas-station assets in several states, the Maryland station operators formed Local Dealers United LLC to protect their interests.

At the time of the announcement of its plan to sell the stations in coming years, ExxonMobil had about 12,000 branded stations in the United States but owned only about 2,200 of them.

Of those 2,200, about 1,400 were operated by dealers, and the remaining 800 were owned and operated by ExxonMobil. In Maryland, about 170 gas stations were run by station operators who had leased the businesses from ExxonMobil. Last month, 55 of those station operators filed a lawsuit for injunctive relief last month in the U.S. District Court.

Williams told both sides he would reflect on the attorneys' arguments and give his decision in about a week on whether to dismiss the lawsuit or allow it to continue. He is also expected to decide whether to issue a temporary restraining order that blocks ExxonMobil from selling any more stations in Maryland while the lawsuit wends its way through court.

A similar dispute related to ExxonMobil and its gas-station operators cropped up in New Jersey. In that state, legislators passed a law this year granting operators the "right of first refusal" whenever a retail gas-station property was about to be sold.