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Lawletter No. 169 Appeals court says Shell dealers waited too long to sue Facts: In September, 1986, Shell notified a group of its Portland, Oregon dealers that it was selling all of their stations to a jobber, Panoco, Inc. Shell also assigned all of the dealer leases and supply contracts to Panoco. The Shell contracts with most of dealers expired by the end of 1988, by which time they had signed franchise agreements with Panoco. On October 1, 1990, the dealers again filed suit against Shell under the PMPA. The PMPA provides that a dealer must file suit for damages for wrongful termination within one-year after the termination. The trial court dismissed the suit against Shell, holding that the dealers waited too long to bring the second action. The dealers appealed. Ruling: The U.S. Circuit Court of Appeals held that the dealers waited too long to sue. By January 1, 1989, each dealer knew that his franchise agreement would be with Panoco rather than Shell. The dealers therefore should not have waited more than one year after that to file suit. Recommended procedures: We would recommend the following procedures in this area: (1) Obtain legal advice when making your initial decision: If you receive a notice of franchise termination or nonrenewal, be sure to obtain legal advice before you make a final decision to give up the station. Remember that in most cases, you must file suit within 90 days of receiving the notice if you want to stay in the station while the lawsuit is pending. (2) Do not sign a mutual termination agreement or release without legal advice: Unfortunately, too many dealers sign such documents believing that it is part of the normal "check out" procedure. By doing so, however, you will in most cases be giving up all rights. (3) Do not wait too long before seeing a lawyer and making a decision on whether to sue: If you elect to leave the station, do not wait too long before seeing your lawyer and giving him all the facts. Although it appears that the date specified in the termination or nonrenewal notice is the date on which the one year period starts running, each case will turn on its own individual facts. (4) If your station is sold, see your lawyer: If you have any reason to believe that your station might be sold, see your lawyer right away. |
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