Hoskins Oil Company, LLC v. Equilon Enterprises LLC et al (JRG1)

Filing 251

ORDER granting 168 Motion in Limine; granting 174 Motion in Limine; granting 180 Motion in Limine. Signed by Magistrate Judge Debra C Poplin on 4/11/19. (JBR, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
HOSKINS OIL COMPANY, LLC,
Plaintiff,
v.
EQUILON ENTERPRISES, LLC d/b/a
SHELL OIL PRODUCTS US, et al.,
Defendants.

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No. 3:16-CV-417-JRG-DCP

MEMORANDUM AND ORDER
This case is before the undersigned pursuant to 28 U.S.C. § 636, the Rules of this Court,
and Standing Order 13-02.
Now before the Court are the following Motions in Limine [Docs. 168, 174, and 180].
Accordingly, the Court has considered the Motions in Limine, and for the following reasons,
Defendants’ Motions [Docs. 168, 174, and 180] are GRANTED.
I.

POSITIONS OF THE PARTIES
The Court will summarize the Motions in the order in which they were filed.
A.

Defendants’ Motion in Limine Number 5

Defendants move [Doc. 168] the Court to exclude any argument or testimony that they
improperly contacted wholesalers and/or Plaintiff’s retail sites regarding the pending termination
of the WMAs. Defendants state that on February 26, 2015, they sent Plaintiff termination notices
for the failure to purchase base volume in 2014. Defendants state that prior to the effective
termination date of June 30, 2015, Defendants reached out to Plaintiff’s retail stations to ensure
that they had plans to transition to new wholesalers so that they would not be left without any fuel.

Defendants argue that such evidence is irrelevant to the Petroleum Marketing Practices Act
(“PMPA”) claim and that Defendants’ decision to terminate Plaintiff’s WMAs was made prior to
their contact with Plaintiff’s retail locations and other wholesalers. Defendants argue that such
evidence is irrelevant because their actions occurred after the decision to terminate. Defendants
also argue that Plaintiff tried to prosecute claims based on these allegations and that the Court has
already dismissed such claims. Defendants further argue that Plaintiff abandoned this theory
entirely in its response to Defendants’ motion for summary judgment. Finally, Defendants contend
that Plaintiff will use the evidence to inflame the jury.
Plaintiff argues [Doc. 206] that the WMAs and Border Agreement were unreasonable,
made in bad faith, and constitute an improper and illusory renewal, which is a violation of the
PMPA. Plaintiff argues that Defendants preferred larger wholesalers and that communications
with larger wholesalers is evidence of bias against Plaintiff. Plaintiff requests that the Court not
rule on the issue until trial or until the Court has affirmatively ruled that such evidence cannot form
the basis of showing an unreasonable and bad-faith provision of a franchise agreement. Further,
Plaintiff seeks exemplary damages, which it argues require a showing of willfulness by
Defendants. Plaintiff states that the entirety of communications with larger wholesalers about
Plaintiff’s business may show that the provisions of the WMAs and Border Agreement executed
in May were not reasonable and not made in good faith.
B.

Defendants’ Motion in Limine Number 11

Defendants request [Doc. 174] that the Court exclude evidence or argument that they were
required to act in good faith when terminating Plaintiff’s WMA. Defendants argue that such
evidence is irrelevant to the issues in this case and that the testimony will likely confuse or mislead
the jury. Defendants argue that Plaintiff is attempting to blur the line between a cause of action

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for a violation of the covenant of good faith and fair dealing and a cause of action for violating the
PMPA. Defendants assert that whether they terminated the agreement in good faith is not relevant
to this dispute. Defendants argue that they have not relied on a good-faith defense and that such
evidence will confuse or mislead the jurors into believing that good faith is somehow relevant to
the claims and defenses at issue at trial.
Plaintiff asserts [Doc. 174] that in its response to the motion for summary judgment, it
asserted that the franchise agreements must be reasonable and in good faith. Plaintiff argues that
it should not be prohibited from arguing good faith as it relates to the minimum gallon provision
of the 2014 WMAs and Border Agreement. Plaintiff requests that if the Court maintains that good
faith is not a requirement for a franchisor’s termination decision, the Motion be denied to the extent
it seeks to exclude argument of good faith being required for a materiality determination when
used as a basis for termination. Plaintiff asserts that testimony and evidence regarding good faith
are highly relevant and more probative than prejudicial.
C.

Defendants’ Motion in Limine No. 16

Defendants request [Doc. 180] that the Court exclude Plaintiff’s Exhibit 39, which is an
internal email from Manny Payan to other employees of Defendants listing Plaintiff’s retail
locations and indicating the status of their future transfer to new wholesalers. Defendants assert
that the Motion should be granted for the same reasons set forth in its Motion in Limine No. 5.
Plaintiff asserts [Doc. 218] that the provisions of the WMAs must be reasonable and in
good faith. Plaintiff argues that evidence of communication between Defendants and large
wholesalers and Plaintiff’s customers at any time before the effective date of Plaintiff’s termination
presents an alternative reason for Defendants’ actions regarding the WMAs and Border Agreement
from which a jury could infer a violation of the PMPA. Plaintiff argues that in the alternative,

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such evidence shows that Defendants preferred larger wholesalers and had a negative opinion of
Plaintiff based on its size and provides an explanation for why Defendants included an
unreasonable and bad-faith material provision in the WMAs and Border Agreement with Plaintiff.
Further, Plaintiff asserts that it seeks exemplary damages, which require a showing of willfulness.
Plaintiff submits that the entirety of communications with larger wholesalers about Plaintiff’s
business and the fact that many of Plaintiff’s customers were reassigned to larger wholesalers as a
result of the termination may show that the provisions of the WMAs and the Border Agreement
were not reasonable and not made in good faith and were part of a purposeful effort to eliminate
Plaintiff in favor of larger wholesalers.
II.

ANALYSIS
The Court has considered the parties’ positions outlined above, and the Court finds

Defendants’ Motions [Docs. 168, 174, and 180] well taken, and they are GRANTED.
The Court will first address Defendants’ Motions in Limine [Docs. 168 and 180] because
they raise the same issue. Specifically, Defendants request that the Court exclude evidence or
argument that Defendants contacted other wholesalers with respect to Plaintiff’s retail sites
pending the termination of the parties’ agreements and to exclude the email (Plaintiff’s Exhibit
No. 36) reflecting the same. Plaintiff argues that the parties’ agreements must be reasonable and
made in good faith and that such evidence shows bias against Plaintiff. In addition, Plaintiff states
that such evidence is relevant to its request for exemplary damages.
In the Court’s Memorandum and Order [Doc. 246], the undersigned acknowledged that in
the summary judgment filings, Plaintiff argued that the 6.75 million annual minimum gallon
requirement set out in the WMAs was unreasonable. The District Judge found “that the annual
minimum gallon requirements in the Motiva and SOPUS WMAs were reasonable and of material

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significance to the franchise relations.” [Doc. 227 at 12]. As previously explained, the primary
issue in this case is whether the parties intended to count the contribution by Red Hed Oil Company
(“Red Hed”) towards Plaintiff’s requirement. Thus, the parties must establish what they did, or
did not, agree to and whether Defendants properly applied the agreement as the parties intended.
Evidence of any alleged bias against Plaintiff is not helpful to the jury in determining whether
Defendants misapplied the parties’ agreement. Further, the Court finds that the probative value, if
any, of such evidence is outweighed by the danger of unfair prejudice and confusion of the issues
in this case. With respect to Plaintiff’s argument that it must show Defendants’ actions were
willful in order to obtain exemplary damages, the Court finds that such does not equate to Plaintiff
needing to establish Defendants acted with a bad motive. Eden v. Amoco Oil Co., Inc., 741 F.
Supp. 1192, 1195 (D. Md. 1990). Accordingly, the Court finds Defendants’ Motions in Limine
[Docs. 168 and 180] well taken, and they are GRANTED.
With respect to Defendants’ Motion [Doc. 174] that the Court should exclude evidence or
testimony that Defendants were required to act in good faith, the Court also finds this request well
taken. Plaintiff argues that it should not be prohibited from arguing good faith as it relates to the
minimum gallon provision, but the District Judge found “that the annual minimum gallon
requirements in the Motiva and SOPUS WMAs were reasonable and of material significance to
the franchise relationships.” [Doc. 227 at 12]. The District Judge continued that “the parties have
framed the crux of this litigation as whether or not the plaintiff purchased 6.75 million gallons”
from Defendants. [Id.]. Given the crux of this litigation, the Court finds that argument or
testimony as to bad faith not relevant. As explained above, the issues in this case are whether
Defendants violated the PMPA by not counting Red Hed’s contribution towards Plaintiff’s
requirements, and if so, whether Defendants knew that Red Hed’s contribution should have been

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counted. Finally, the Court finds that even if such argument or testimony were relevant, the danger
of unfair prejudice outweighs any probative value.
III.

CONCLUSION
Accordingly, for the reasons discussed above, the Court GRANTS Defendants’ Motions

in Limine [Docs. 168, 174, and 180].
IT IS SO ORDERED.
ENTER:
________________________
Debra C. Poplin
United States Magistrate Judge

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