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Rare Move By the U.S. Supreme Court
The U.S. Supreme Court rarely tackles commercial law issues, but has addressed an important franchise law issue this year. Recently, a franchise law case did raise a federal question involving the Petroleum Marketing Practices Act (Act). The Act is intended to protect service station dealers from unjust terminations and non-renewal, but did not address constructive termination or nonrenewal. On March 2, 2010, the Court unanimously held that a franchisee that stays in business cannot sue for constructive termination under the Act. The Court also decided that a franchisee waives its constructive nonrenewal claim when it actually enters into a renewal agreement.
These decisions by the Supreme Court are more than mere questions of whether the dealers can obtain a federal forum. Under the Act, not only are the dealers entitled to a federal forum, but in addition, they are granted a relaxed standard in order to obtain a preliminary injunction against termination or nonrenewal and enhanced recovery of damages in the form of counsel and expert fees.
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