909 F.

2d 425

John A. KETTERLE and John E. Ketterle,

Plaintiffs-Counter-Defendants-Appellants,
v.
B.P. OIL, INC., Defendant-Counter-Plaintiff-Appellee.
No. 89-3058.

United States Court of Appeals,

Eleventh Circuit.
Aug. 15, 1990.

Maura T. Smith, Smith, MacKinnon, Mathews, Harris & Christiansen,

P.A., Orlando, Fla., and Richard W. Farrell, Farrell & Barr, Stamford,
Conn., for plaintiffs-counter-defendants, appellants.
Jeffry R. Jontz, Holland & Knight, Orlando, Fla., for defendant-counterplaintiff, appellee.
Appeal from the United States District Court for the Middle District of
Florida.
Before TJOFLAT, Chief Judge, and ANDERSON and CLARK, Circuit
Judges.
CLARK, Circuit Judge:

I.

The plaintiffs in this case appeal the district court's denial of their motion for
attorneys' fees under section 2805 of the Petroleum Marketing Practices Act of
1978 ("PMPA").1 The district court refused to award fees after granting the
defendant's unopposed motion to dismiss the case as moot. The court held that
because the dismissal on the merits came before the plaintiffs received a final
determination of their claims, they did not "prevail" under the Act. Because we
find that the district court incorrectly interpreted the Act and that the plaintiffs
did indeed prevail under the Act, we now reverse.

The plaintiffs, John A. Ketterle and John E. Ketterle (the "Ketterles"), operate a
"Gulf" gasoline service station in Orlando, Florida. The Ketterles have operated
the station at this location for over 25 years and it is the family's major source
of income. In 1987, the Ketterles operated the station under a franchise
agreement with the defendant, B.P. Oil, Inc. ("B.P."). The franchise agreement
relevant to this case allowed the Ketterles to operate the station during the
period from October 1, 1985 to September 30, 1988.

One of the terms in the franchise agreement specified that the Ketterles were
required to keep the station open until midnight. During the period from August
10, 1987 to August 21, 1987, the Ketterles' station closed before midnight each
of these twelve nights. The Ketterles allege that during this period their regular
night operator was on vacation. Affidavits of the Ketterles filed in district court
state that the temporary night operator closed the station early contrary to their
explicit instructions, and that they had checked on the temporary operator on
more than one occasion and were unaware of his failure to keep the station
open. B.P. became aware of the early closures, and on September 1, 1987, the
Ketterles were notified that their franchise would be terminated effective
December 1, 1987.

On November 25, 1987, the Ketterles filed this action seeking to prevent B.P.'s
termination of their franchise agreement. The Ketterles' suit alleged that the
threatened termination of their franchise agreement violated the PMPA, which
prevents termination of the franchise agreement by the oil company for reasons
other than the grounds for termination explicitly specified in the Act. See 15
U.S.C. Sec. 2802 (1982). In its answer, B.P. alleged that termination of the
agreement for failure to keep the station open was permitted under sections
2802(b)(2)(A) and 2802(b)(2)(B) of the PMPA.2

Pursuant to section 2805 of the Act,3 the Ketterles moved for a preliminary
injunction in order to prevent the termination of the agreement before their
claim could be adjudicated. After holding an evidentiary hearing, the district
court granted the preliminary injunction. The district court recognized that a
violation of an "hours of operation" provision has been held to be sufficient
grounds for termination of a franchise agreement. Nevertheless, the district
court granted the preliminary injunction, finding (1) that the circumstances of
this case presented a fair ground for litigation, and (2) that the hardship that
B.P. would face from granting the injunction would be less than the hardship to
the Ketterles if the injunction was not granted.

The parties then conducted discovery. The Ketterles requested internal B.P.

marketing reports that detailed the company's plan for the stations in the
Orlando and Tampa area. B.P. strenuously opposed production of these
documents, even in the face of an order to produce from the district court. A
few days before the date that the pretrial stipulation was due to be filed, the
Ketterles filed a motion for imposition of sanctions against B.P. for its failure to
comply with the court's discovery order.
7

The next day B.P. withdrew its notice of termination and moved to have the
case dismissed as moot. Thereafter, the Ketterles filed a motion for attorneys'
fees and costs pursuant to Sec. 2805(d) of the PMPA.4 The district court denied
the motion holding:

This case was concluded by the unopposed Motion of Defendants to Dismiss

which was granted by the Court in an Amended Order filed November 15,
1988. There was no determination that the Plaintiffs Franchisees were the
prevailing party in this litigation which involved substantial issues of breach of
a Franchise Agreement; therefore, the Franchisees are not the prevailing party
on the merits of their claim. To award costs and attorneys' fees at this juncture
of the proceeding would necessitate the Court hearing the evidence and making
a determination on the merits, a judicial proceeding which has been obviated by
the dismissal of the case.

District Court Order Denying Attorneys' Fees at 1-2. The plaintiffs now appeal
this denial.

II.
10

We begin with an analysis of the five cases applying Sec. 2805(d)(1) when the
plaintiffs failed to receive a PMPA damage award. In Lippo v. Mobil Oil Co.,
776 F.2d 706 (7th Cir.1985), the only appellate consideration of Sec. 2805(d)
(1), the franchisee obtained injunctive relief under the PMPA and monetary
relief based upon a state breach of contract claim. The district court awarded
attorneys' fees and the defendant appealed, arguing that the injunction provided
an insufficient basis to support a fee award. The court of appeals affirmed the
award of fees, holding that "a franchisee who obtains injunctive relief under the
PMPA is entitled to attorney's fees even though the franchisee does not obtain
either actual or exemplary monetary damages." Id. at 720.

11

The Lippo court referred to the decision in Lyons v. Mobil Oil Co., 554 F.Supp.
199 (D.Conn.1982), to support its conclusion that injunctive relief is sufficient
to allow a plaintiff to receive an attorneys' fee award. In Lyons, the court

entered a permanent injunction after finding the defendant's attempt to

terminate the franchise violated the PMPA. In finding that the injunctive
provisions of the PMPA were important provisions of the Act, the court noted:
12

Injunctive relief is an important part of the PMPA scheme, being specifically

provided for in 2805(b). History of the development of PMPA, combined with
a basic understanding of the inequity sought to be corrected in the franchise
relationship by the legislation, and the irreparable harm that necessarily would
arise from the termination of a franchise relationship, leads logically to only
one conclusion. The basic premise of PMPA is that injunctive relief should be
available to preserve the franchise in question, so as to avoid the termination of
the franchise with inevitable litigation following on the damages issues.
Therefore it seems to this court that a franchisee who obtains injunctive relief
should be considered a "prevailing party" for the purposes of 2805(d)(1),
regardless of whether actual or exemplary monetary damages are awarded.
Such would be in keeping with the remedial purpose of PMPA to equalize the
otherwise drastically unequal bargaining power of petroleum franchisees and
franchisors. In view of the importance of the injunctive relief concept under the
statute, it would appear to frustrate the purpose of PMPA if this court were to
fail to recompense the franchisee in this case who was required to litigate in
order to preserve his franchise.

13

Id. at 202. Consistent with this view, the court awarded attorneys' fees. Id. at
202-03. Finally, in Trulock v. Union Oil Co, No. C83-1553M (D.Wash. March
23, 1984), a case with facts similar to this case, the court also relied on Lyons.

14

There are, however, two cases where the court refused to award attorneys' fees.
The first is Thompson v. AMOCO Oil Co., 705 F.Supp. 1349 (M.D.Ill.1989).
In Thompson, the defendant sought to terminate the franchise because the
franchisee had moved 300 miles away from the station allegedly in violation of
a contractual provision requiring the franchisee "to devote his personal
attention upon the premises to managing the business activities of the gasoline
sales facility." Id. at 1551-52. The plaintiff prevailed on his claim for injunctive
relief after the court found that the franchisee's conduct did not violate the
agreement. The plaintiff had not suffered any damages because the parties
agreed to maintain the status quo; therefore, no damages were awarded. The
court also rejected the franchisee's claim for exemplary damages. Since
Thompson had not received any monetary relief, the court evaluated the
attorneys' fee request under the proviso in Sec. 2805(d)(1)(C) allowing the
court discretion to award the attorneys' fees when the plaintiff only receives
nominal relief. The court declined to award the fees holding:

15 in our discretion we decline to charge defendant with these fees. As noted, this
[S]o
has been a close, hard fought battle. Thompson is not clearly in the right here-Clause 15(f) can be read to require actual presence, and AMOCO was not
unreasonable in attempting to enforce its policy against a franchisee living 300 miles
from the franchised premises. Moreover, ... Thompson can afford to pay his own
fees, and so AMOCO will not be required to.
16

705 F.Supp. at 1359.

17

In Noe v. Mobil Oil Co., 503 F.Supp. 213 (D.Mo.1980), the court found the
franchisee had given improper notice to the franchisor because the notice failed
to state the reasons for the termination. The court enjoined termination based
upon the improper notice, but expressly refused to forbid the defendant from
terminating the franchise after complying with the PMPA. Id. at 216. The court
refused to award any monetary damages as none were shown. As to attorneys'
fees, the court noted:

18

The court will also not require the defendant to pay the plaintiff's attorney's
fees, as the plaintiff has not recovered actual or punitive damages.

19

Id. at 216.

20

Understandably, the plaintiffs argue that the text of the Act and the Lippo and
Lyons cases all support the contention that injunctive relief satisfies the Act's
requirement that they prevail in order to be entitled to an attorneys' fee award.
The Ketterles emphasize that in Trulock a TRO was sufficient injunctive relief
to constitute prevailing party status. They reason that, if a TRO is to be
considered sufficient to permit an attorneys' fee award, a preliminary injunction
should also be sufficient since the requirements for obtaining a preliminary
injunction require a greater showing than a TRO.

21

In determining whether a plaintiff is a "prevailing party," it is necessary to

evaluate the facts of each particular case. The fact that this is an action under
the PMPA does not alter the analysis. The question of whether a party who
does not obtain a final judgment on all of his claims prevails for the purpose of
a fee shifting statute is one that the federal courts have been called on to answer
many times. See, e.g., Texas State Teachers Assoc. v. Garland Independent
School Dist., 489 U.S. 782, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989); Dunn v.
Florida Bar, 889 F.2d 1010, 1015 (11th Cir.1989); Royal Crown Cola v. CocaCola, 887 F.2d 1480 (11th Cir.1989); Martin v. Heckler, 773 F.2d 1145 (11th
Cir.1985) (en banc). Many times the courts have used cases interpreting one fee

shifting statute when faced with the interpretation of another. For example, in
this court's opinion in Royal Crown Cola, 887 F.2d at 1485, the court relied on
Sec. 1988 cases in interpreting, section 16 of Clayton Act, the attorney fee
provision applicable in antitrust cases. In addition, the Supreme Court noted in
Texas State Teachers, that it granted certiorari in the case "because of the
importance of the term 'prevailing party' to the application of Sec. 1988 and
other federal fee shifting statutes." 489 U.S. at ----, 109 S.Ct. at 1489 (emphasis
added).
22

We now turn to the question of whether the Ketterles prevailed in their action
against B.P. The Ketterles present a simple argument for why they prevailed.
Had they not filed the suit against B.P., they would have been forced out of
their station on December 1, 1987 by the termination letter. The preliminary
injunction removed the threat of the termination and protected them until the
defendant withdrew the termination. They argue that the defendant's decision to
sell the station and thus withdraw from the litigation is irrelevant to this
analysis because, had they not filed the PMPA action, they would have been
required to vacate and would not have been operating the station at the time the
defendant sold it.

23

The defendant alleges that the district court was correct in concluding that the
defendant's termination mooted the controversy. B.P. argues that the standard
for granting a preliminary injunction in PMPA cases is a rather lax one that
does not relate to the merits of the action. Furthermore they argue that because
the injunctive relief was preliminary, it did not survive the order dismissing the
action. See Cypress Barn, Inc. v. Western Electric Co., 812 F.2d 1363, 1364
(11th Cir.1987). Finally, they assert that their decision to withdraw the
termination was based upon the business decision not to press their right to
terminate the franchise agreement in the face of a business decision to sell the
station. In essence, this argument is an assertion by the defendant that the
company voluntarily gave the plaintiffs the relief they sought, and therefore,
the plaintiffs cannot contend that the relief was obtained because of the lawsuit.
Under these circumstances, B.P. argues that the district court's denial of
attorneys' fees was not an abuse of discretion.

24

The defendant's first argument is relevant to the question of whether the

plaintiffs had a claim against B.P. This circuit has recognized that to recover
attorneys' fees after the defendant has voluntarily agreed to the relief sought by
the plaintiffs, the plaintiffs must show that they had a "colorable claim" or
"reasonable likelihood of success on the merits." Dunn, 889 F.2d at 1015
(quoting Hennigan v. Ouachita Parish School Bd., 749 F.2d 1148, 1153 (5th
Cir.1985). In this case the district court granted the preliminary injunction after

finding that the plaintiffs had presented "a serious question [constituting] a fair
ground for litigation." District Court Order Granting Preliminary Injunction at
6. The defendant has not suggested that this finding was incorrect--only that it
did not amount to a finding of success on the merits. Additionally, our review
of the record provides us no basis to dispute this finding. While the court did
not make a finding that the plaintiffs presented a colorable claim, the above
quoted finding is sufficient to allow us to conclude that they did.5
25

The defendant's second argument is that the plaintiffs did not obtain the relief
they requested. For this proposition, the defendant cites the opinion in Texas
State Teachers which held that to be considered prevailing the plaintiff must
obtain success on a "significant issue in [the] litigation which achieves some of
the benefit the parties sought in bringing suit." 489 U.S. at ----, 109 S.Ct. at
1491. This case, however, is factually distinguishable from that case. In Texas
State Teachers, the court dealt with a case where the plaintiff only obtained
relief on one of several claims. Id. at ----, 109 S.Ct. at 1490. Even under the
more restrictive "primary relief sought" test which was the law of this circuit6
before it was rejected by the Texas State Teachers Court, the plaintiff was the
prevailing party. The first relief sought by the Ketterles was to stay in their
station pending the litigation--notwithstanding the violation of the hours of
operation provision. The ultimate relief sought by plaintiffs was the
continuation of the franchise contract. This could have been accomplished by
completion of the lawsuit and a judgment being entered on behalf of the
plaintiffs. The defendant made further litigation unnecessary by filing a motion
to dismiss the case and saying in its motion:

26 Oil Company has now decided to withdraw the Notice of Termination of Dealer
B.P.
Lease and Supply Agreement and Notice of Termination of Residential Property
Lease, and all related agreements contained in the September 1, 1987 letter to the
Plaintiffs. Attached is a letter from undersigned counsel to Maura Smith, counsel for
the Plaintiffs, dated October 13, 1988 advising the Plaintiffs that B.P. Oil Company
withdraws the notices of termination.
27

R2-45 at 2.

28

The district court dismissed the case as moot. The defendant had conceded
defeat and the litigation was over. The fact that B.P. was selling its stations in
the area to another company is no reason for conceding defeat. The buyer could
have been substituted as a party defendant for the defendant/seller as a part of
the contract. This is done daily in the business world. Whatever the reason, the
plaintiffs secured full relief from the withdrawal of the termination notice and
were the prevailing parties.

29

The order of the district court denying attorneys' fees is REVERSED and the
case is REMANDED to the district court for the award of attorneys' fees if the
parties cannot settle the issue.

30

REVERSED and REMANDED.

The Act is codified at 15 U.S.C. Sec. 2801, et seq

Paragraph 2(A) provides that termination of the franchise agreement is

permissible if the franchisee fails to "comply with any provision of the
franchise, which provision is both reasonable and of material significance to the
franchise relationship." 15 U.S.C. Sec. 2802(b)(2)(A). Paragraph 2(B)
authorizes termination if the franchisee fails to "exert good faith efforts to carry
out the provisions of the franchise." Id. at Sec. 2802(b)(2)(B)

The Act provides that:

[T]he court shall grant a preliminary injunction if-(A) the franchisee shows
(i) the franchise of which he is a party has been terminated or the franchise
relationship of which he is a party has not been renewed, and
(ii) there exist sufficiently serious questions going to the merits to make such
questions a fair ground for litigation; and
(B) the court determines that, on balance, the hardships imposed upon the
franchisor by the issuance of such preliminary injunctive relief will be less than
the hardship which would be imposed upon such franchisee if such preliminary
injunctive relief were not granted.
15 U.S.C. Sec. 2805(b)(2).

That section provides:

(1) If the franchisee prevails in any action under subsection (a) of this section,
such franchisee shall be entitled-(C) to reasonable attorney and expert witness fees to be paid by the franchisor,
unless the court determines that only nominal damages are to be awarded, in
which case the court, in its discretion, need not direct that such fees be paid by

the franchisor.
15 U.S.C. Sec. 2805(d)(1).
5

The district court held that the letter revoking the termination mooted the
controversy. Under these circumstances, the court was reluctant to hear
evidence and make a determination on the merits. This interpretation of the
mootness doctrine was incorrect. While the issues dealing with the merits of the
case were moot, the court acknowledged in its November 15, 1988 order that it
retained jurisdiction to determine the question of attorney fee awards. Thus, the
question of attorney fees was not moot. The fact that the court would have been
forced to hold additional proceedings to determine whether the plaintiff
prevailed is not in any sense unusual. See Royal Crown, 887 F.2d at 1483
(district court held oral argument and considered additional briefs before
entering attorney fee award in case resolved on stipulated dismissal); see also
Dunn, 889 F.2d at 1011 (district court resolved question of whether plaintiffs
were prevailing parties on the merits after stipulated dismissal was entered)

See Martin v. Heckler, 773 F.2d 1145, 1149 (11th Cir.1985) (en banc)