Background
Can-Am operated a Vancouver, Washington gas station under Sinclair trademarks through a three-party arrangement involving Sinclair, Glovis, and Can-Am. Sinclair licensed its marks to Glovis, which sublicensed them to Can-Am. The arrangement contemplated that Can-Am would sell third-party, “Top Tier” fuel under the Sinclair brand because Sinclair did not then supply fuel in the Pacific Northwest.
In 2023, Glovis sought to assign its responsibilities, Sinclair stopped processing Can-Am’s credit-card sales, and Glovis declined to pay Can-Am’s third-party fuel supplier. Sinclair and Glovis then asserted that the trademark agreements had terminated and directed Can-Am to remove Sinclair branding. Can-Am sued, alleging among other claims that the termination violated the Petroleum Marketing Practices Act (PMPA). The district court dismissed the PMPA claim, reasoning that no PMPA franchise existed because Sinclair had not supplied the fuel sold by Can-Am.
The Court’s Holding
The Ninth Circuit reversed the dismissal and remanded. Under the PMPA’s definition of “franchise,” a retailer need only plausibly allege a qualifying contract that authorizes use of a refiner’s or distributor’s trademark in connection with selling, consigning, or distributing motor fuel. The statute does not require that the refiner supply the fuel ultimately sold under its trademark.
Can-Am plausibly alleged a franchise with Glovis because Glovis purchased fuel from third-party suppliers for distribution to Can-Am; physical delivery by Glovis was unnecessary. Can-Am also plausibly alleged a franchise with Sinclair because the parties’ reciprocal obligations—including Can-Am’s direct license payments and Sinclair’s credit-card processing and trademark oversight—supported a contractual relationship. The court did not decide the ultimate merits of the asserted PMPA violations.
Key Takeaways
- A PMPA franchise can exist even when the branded fuel is supplied by a third party rather than the trademark-owning refiner.
- A company may qualify as a PMPA distributor by purchasing fuel for distribution, even if it does not physically transport the fuel.
- A refiner and a retailer may have a PMPA franchise relationship alongside a distributor-retailer franchise when their direct reciprocal obligations plausibly form a contract.
Why It Matters
The decision rejects a fuel-source requirement not found in the PMPA’s franchise definition. Retailers operating under trademark-licensing arrangements may invoke the statute’s termination protections even where the refiner does not itself supply their fuel.
The ruling is limited to pleading sufficiency, but it confirms that contractual obligations and control between a refiner and retailer can matter independently of a conventional fuel-supply chain.