CAIN v. SHELL OIL COMPANY
Filing
67
ORDER GRANTING 50 SHELL OIL CO.'S MOTION FOR SUMMARY JUDGMENT. This Court does not direct the entry of judgment under Federal Rule of Civil Procedure 54(b). Signed by JUDGE MARK E WALKER on 1/10/2014. (dlt)
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF FLORIDA
TALLAHASSEE DIVISION
RALPH REGINALD CAIN,
Plaintiff,
v.
CASE NO. 4:13-cv-77-MW/CAS
SHELL OIL CO. and
CIRCLE K STORES, INC.,
Defendants.
_______________________________/
ORDER GRANTING SHELL OIL CO.’S
MOTION FOR SUMMARY JUDGMENT
This case concerns Shell Oil Co.’s liability for a shooting and the resulting
injuries to Ralph Reginald Cain that occurred at a Circle K convenience store
located at 2807 South Monroe Street in Tallahassee, Florida (the “store”). The
store purchased and sold Shell fuels pursuant to a wholesale marketing agreement
(the “agreement”), ECF No. 24-3. Mr. Cain brought a complaint, ECF No. 26,
against Shell for his injuries based on an alleged agency relationship between Shell
and Circle K, and Shell filed the instant motion for summary judgment, ECF No.
50. Upon consideration of the parties’ papers and exhibits, the motion is granted.1
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Shell also argues that it is not a party to the agreement. Inasmuch as this Court grants
summary judgment on other grounds, this issue need not be addressed.
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It is well-established that a franchise relationship does not by itself create an
agency relationship between the franchisor and franchisee. See Estate of Miller v.
Thrifty Rent-A-Car System, Inc., 637 F. Supp. 2d 1029, 1039 (M.D. Fla. 2009).
However, “[f]ranchisors may well enter into an agency relationship with a
franchisee if, by contract or action or representation, the franchisor has directly or
apparently participated in some substantial way in directing or managing acts of
the franchisee . . . .” Mobile Oil Corp. v. Bransford, 648 So. 2d 119, 120 (Fla.
1995). The determination of whether an agency relationship exists is generally a
question of fact for the jury unless the sole basis for the alleged agency rests in the
interpretation of a single contract in which case the determination may be a
question of law to be determined by the court. See Villazon v. Prudential Health
Care Plan, Inc., 843 So. 2d 842, 853 (Fla. 2003) (“While an evaluation of a single
contract may be a question of law to be determined by the court, when there are
multiple relationships along with multiple practices and procedures to be
evaluated, and the totality of the evidence is susceptible to multiple inferences and
interpretations, the existence and scope of an agency relationship are generally
questions of fact.”); Banco Espirito Santo Intern., Ltd. v. BDO Intern., B.V., 979
So. 2d 1030, 1032 (Fla. 3d DCA 2008) (“Unless the alleged agency relationship is
to be proven exclusively by analysis of the contract between the principal and
agent (in which case the question is an issue of law), the relationship is generally a
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question of fact and should be analyzed by looking at the totality of the
circumstances.”).
In the instant, Mr. Cain alleges in the complaint that Shell’s participation in
management and right to control derives from the agreement, ECF Nos. 26, ¶¶ 17,
29, 31. Likewise, in his response to this motion, Mr. Cain argues that Shell’s
control derives from the agreement, ECF No. 57, ¶ 7. Absent from the papers and
exhibits are allegations or facts that any representations were made that Shell
controlled or had a right to control the operations at the store or that Shell actually
exercised or attempted to exercise control over the operations at the store. See
Estate of Miller, 637 F. Supp. 2d at 1039 (“[C]ourts are directed to presume that
members of the public know that an ordinary franchise relationship is not a
representation of agency. Thus, for tort liability to attach, the franchisor must
make a representation that goes beyond the basic franchise relationship ‘by
indicating that the franchisor was in substantial control of the business.’” (internal
citations omitted)); Bransford, 648 So. 2d at 120 (“[I]t is well understood that the
mere use of franchise logos and related advertisements does not necessarily
indicate that the franchisor has actual or apparent control over any substantial
aspect of the franchisee’s business or employment decisions.”). As such, the sole
issue before this Court is whether the terms of the agreement create an agency
relationship by contract. Importantly, it is Shell’s right to control the store, and not
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whether control was actually exercised, that is crucial to determining the existence
of an agency relationship. See Villazon, 843 So. 2d at 853; Patterson v. Western
Auto Supply Co., 991 F. Supp. 1319, 1323 (M.D. Ala. 1997).
First, Mr. Cain argues and this Court agrees that the labels and titles given to
the parties in the agreement are not determinative of their true relationship for
agency purposes. See Villazon, 843 So. 2d at 853-54; Patterson, 991 F. Supp. at
1223. Therefore, the agreement’s identification of Circle K as an independent
contractor with complete control over the store’s operations and interpretive
guidance that no terms in the agreement should be read to give Shell any right of
control over operations is not determinative. ECF No. 24-3, ¶ 27.
Next, Mr. Cain’s complaint and response focus on a particular set of
minimum standards set forth in the agreement. He argues that Circle K’s operation
of the store is bound by the agreement’s following minimum standards which gives
Shell a right to control:
(i)
Buyer’s Outlets must be kept in a clean, sanitary, and safe
condition and all property and equipment kept in good operating
condition and repair . . . .
...
(k) Buyer’s Outlets must be kept clear of vehicles, other mobile
equipment, and obstructions that restrict traffic flow, endanger
customer safety, or detract from appearance . . . .
(l)
Buyer’s Outlets must be operated in a secure manner so that
criminal activity is adequately deterred from occurring there and so
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that all persons at Buyer’s Outlets are adequately protected from
injury, harm, or loss . . . .
ECF No. 24-3, ¶ 7(i), (k), (l). However, at the outset of section 7, the agreement
states that the minimum standards are necessary to maintain uniformity among
users of Shell’s identifying marks and sellers of its fuels but that the means and
manner of satisfying the minimum standards are solely within the discretion of
Circle K. ECF No. 24-3, ¶ 7. Therefore, while these conditions may be interpreted
to impose some control in the broadest sense over how the store is operated by
establishing uniform standards, they do not give Shell control over the means by
which such conditions are met. See Madison v. Hollywood Subs, Inc., 997 So. 2d
1270, 1270 (Fla. 4th DCA 2009) (“[T]he only control provided by the agreement
was to insure uniformity in the standardization of products and services offered by
the restaurant. The day to day operations were within the sole control of the
franchisee.”); Ortega v. General Motors Corp., 392 So. 2d 40, 43 (Fla. 4th DCA)
(“A consideration of all the provisions of the dealer franchise agreement between
GMC and South Bay compels the conclusion that, as a matter of law, the method
or mode of operation of South Bay’s business on a day-to-day basis is controlled
by South Bay as an independent contractor. South Bay, therefore, is not an agent
of GMC under the dealer franchise agreement of the parties.”).
While not referenced by Mr. Cain, this Court has considered a number of
other provisions in the agreement including but not limited to provisions regarding
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the use of Shell’s identifying marks; the appearance and condition of the store and
its equipment; the service provided by, appearance, and competency of employees;
the promotion of and sale benchmarks for Shell fuels; the maintenance of proper
insurance; and inspection rights to determine compliance with the agreement and
its conditions. ECF No. 24-3. However, like the aforementioned minimum
standards, the means of satisfying these conditions are left to the control and
discretion of Circle K.
While not binding, this Court finds several cases instructive. For example, a
sister court in Florida’s Middle District previously considered a contract with
similar terms and found that “[t]he most important factor, ‘the extent of control
which, by the agreement, the master may exercise over the details of the work,’
weighs heavily against [agency] status because the agreement . . . is ‘results’
oriented instead of ‘means’ oriented.” Estate of Miller, 637 F. Supp. 2d at 1042
(internal citation omitted). Among other terms, the agreement established
conditions that the franchisee maintain clean, orderly, and safe locations; comply
with franchisor’s customer dispute program; maintain a full time manager;
promote the business and achieve performance benchmarks; and maintain
insurance. Id. at 1041. The court found that such conditions were typical for
franchise agreements and were “left vague” so as not interfere with the
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franchisee’s means of satisfying the conditions or to impose substantial control
over the franchisee’s operation of its business. Id.
In contrast, under contrary facts, a sister court in Alabama’s Middle District
found the franchise agreement and acts of franchisor control created an issue of
fact for the jury to determine the existence of an agency relationship. Patterson,
991 F. Supp. at 1323-25. However, the facts of Patterson are notably different
from the instant case. Specifically, the franchise agreement in Patterson required
the franchisee to install a store layout and design plan promulgated by the
franchisor; to stock the store as directed by the franchisor; to purchase from the
franchisor a program for ordering and maintaining inventory; to spend a set
percentage of gross sales on advertising and to use advertising supplied or
approved by the franchisor; and to use the franchisor’s bookkeeping plan or
another plan approved by the franchisor. Id. at 1324. While many other terms of
the Patterson agreement are similar to the instant agreement, those particular terms
are markedly absent from the instant agreement and provided the franchisor in
Patterson with control over day to day business operations of the franchisee’s store
and detailed means of satisfying the conditions in the agreement. The instant
agreement lacks such terms. Further, the court in Patterson recognized that the
franchisor actually took actions to control the store’s operations, including
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directing the franchisee to paint, clean, and organize the store and stock and price
inventory in a particular manner. Id. at 1324-25.
In sum, Mr. Cain relies exclusively on the agreement’s terms as the basis for
creating an agency relationship between Shell and Circle K. Therefore, such
determination may be made by this Court as a matter of law. Upon a review of the
agreement in its entirety, this Court finds that the agreement’s conditions are
typical of franchise agreements to establish uniformity and reasonably protect
Shell’s business interests. The agreement sets standards and benchmarks for the
store’s operation which Circle K is responsible for satisfying by its own means and
in its own discretion. Shell’s right to terminate the agreement, which Mr. Cain
describes as a right of enforcement, is simply that--Shell’s right to bind Circle K to
the agreement. It in no way establishes a right to control the store’s operations.
Stated otherwise, Shell’s right is only to terminate or not to terminate the
agreement, and there is no intermediate right reserved to Shell to impose its own
means or use its own discretion to satisfy the agreement’s conditions.
For these reasons,
IT IS ORDERED:
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Shell’s motion for summary judgment, ECF No. 50, is GRANTED. This
Court does not direct the entry of judgment under Federal Rule of Civil Procedure
54(b).
SO ORDERED on January 10, 2014.
s/Mark E. Walker
United States District Judge
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