Can-Am Fuel Distribution, LLC v. Sinclair Oil, LLC
The Ninth Circuit reversed the district court's dismissal under Rule 12(b)(6) of Can-Am Fuel Distribution, LLC's claims under the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. §§ 2801–2807, against Sinclair Oil, LLC and Glovis America, Inc., and remanded for further proceedings. Can-Am operated a gas station rebranded under Sinclair's trademarks pursuant to licensing agreements with Sinclair (refiner) and Glovis (distributor), but the motor fuel sold was not supplied by Sinclair—instead, Glovis contracted with a third-party supplier for delivery of Top Tier fuel to Can-Am's station. When Sinclair and Glovis terminated the licensing agreements, Can-Am alleged PMPA violations for failure to comply with the statute's termination requirements. The district court held that Can-Am failed to plausibly allege a PMPA "franchise" under § 2801(1)(A) because Sinclair never supplied motor fuel to Can-Am or Glovis. The Ninth Circuit held that § 2801(1)(A) requires only that the retailer have a contract authorizing use of the refiner's trademark "in connection with the sale, consignment, or distribution of motor fuel," without requiring that the refiner supply the fuel actually sold. The court further held that Can-Am plausibly alleged a franchise with both defendants: Glovis qualified as a "distributor" under § 2801(6)(A) because it purchased fuel for distribution to Can-Am even though third parties physically delivered it, and Sinclair had a direct contractual relationship with Can-Am based on reciprocal obligations including Sinclair's processing of Can-Am's credit card sales and Can-Am's payment of license fees directly to Sinclair and participation in Sinclair's Secret Shopper program.
The decision matters for its interpretation of the PMPA's franchise definition in non-traditional supply arrangements. The court rejected the proposition that § 2801(1)(A) embeds a fuel-supply requirement, holding that trademark licensing alone suffices if connected to motor fuel sales regardless of the fuel's origin—a reading that extends PMPA protection to "white labeling" arrangements where retailers market non-refiner fuel under refiner trademarks. On the "distributor" question, the court held that § 2801(6)(A)'s language ("purchases motor fuel for . . . distribution to another") does not require physical delivery by the distributor itself, only that the distributor purchase fuel destined for the retailer, thereby foreclosing refiners and intermediaries from evading PMPA obligations by characterizing themselves as mere "brokers" when they control purchasing but outsource logistics. The court also broke new ground by recognizing simultaneous PMPA franchises between a retailer and both a refiner and a distributor in a three-tier relationship, a result it attributed to the "unusual nature" of Sinclair's direct reciprocal obligations with Can-Am—specifically, Sinclair's processing of credit card transactions, receipt of license fees, and imposition of brand-compliance requirements—which the court found sufficient to establish a direct contract under § 2801(10) despite Sinclair not being a signatory to the primary sublicense agreement. This holding expands potential franchisor liability for refiners who maintain operational control or financial integration with retailers even when a distributor intermediates the trademark sublicense.