Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—N.D. Cal.: Shell franchise loses PMPA franchise termination, lease non-renewal claims, at summary judgment, (Jul 9, 2026)

By Justin Marcus Smith, J.D.

The assignment of some, but not all three elements of a PMPA franchise, did not amount to PMPA termination.

A California Shell-brand gasoline franchise did not have triable issues under the Petroleum Marketing Practices Act (PMPA) in connection with its former franchisor Peninsula Petroleum, LLC, having assigned retail sales agreements to a third party, held the federal district court in San Francisco. Notice of franchise nonrenewal was adequate under the PMPA because it was formal, it stated a lawful reason for nonrenewal, and to that end, it did not need to explicitly cite to a specific PMPA section. Peninsula also showed there was no triable issue as to whether Peninsula’s assignment of the RSAs, but not the premises leases, constituted a termination of the franchise under the PMPA. Last, the court found there was no triable issue as to whether Peninsula acted both in good faith and in the normal course of business in offering lease renewals (Edwards and Anderson, Inc. v. Peninsula Petroleum, LLC, No. 3:25-cv-00882-MMC (N.D. Cal. Jul. 8, 2026)).

Background. Edwards and Anderson, Inc. (E&A) operated three Shell brand gasoline stations in Salinas, Seaside, and Freedom, California as the franchisee of Peninsula Petroleum, LLC. Peninsula owned the station premises and leased them to E&A. Peninsula terminated the respective franchises for those three stations. On January 27, 2025, E&A sued Peninsula, alleging improper termination of the franchises under the franchise protection provisions of the Petroleum Marketing Practices Act (PMPA). E&A alternatively alleged that Peninsula wrongly denied renewal of two of the lease agreements.

In May 2025, the court dismissed the E&A amended complaint because it did not plausibly allege causes of action under the PMPA. Peninsula allegedly transferred to a third party (H&S) (1) the gasoline supply agreements; and (2) the right to use the “Shell” brand name and logo on March 19, 2024, but did not transfer the realty leases for the subject gas stations. The court rejected Peninsula's argument that it was no longer subject to the PMPA termination requirements because it was no longer a franchisor with respect to E&A, finding that Congress intended the lease agreement to be incorporated into the franchise agreement. The court nevertheless found the complaint, devoid of any allegation that E&A no longer occupied the same premises or that it was no longer receiving and selling Shell-branded fuel at those locations, did not plausibly plead wrongful termination under PMPA.

The court also found that E&A's first amended complaint did not plausibly plead improper nonrenewal of the franchise agreements under the PMPA. Peninsula had offered E&A renewed leases on the Salinas and Seaside stations for a one-year period, which E&A did not agree to. The court granted leave to file a second amended complaint (see Antitrust Law Daily, May 9, 2025).

In August 2025, the court dismissed E&A’s claim that a 2024 assignment of two franchise elements, trademark and fuel supply, effected an unlawful termination or nonrenewal under the PMPA. It also dismissed the nonrenewal of the Freedom station lease as not ripe. However, the court denied dismissal in connection with nonrenewal of the Salinas and Seaside leases (see Antitrust Law Daily, Aug. 5, 2025).

In the third amended complaint, E&A asserted three causes of action: (1) wrongful termination and non-renewal of franchise or lease and lease relationship without proper PMPA notice; (2) wrongful non-renewal of PMPA franchise regarding the Freedom station; and (3) breach of contract and conversion.

At this point, Peninsula moved for summary judgment as to the two wrongful renewal causes of action. Peninsula articulated three grounds for summary disposition: (1) E&A could not establish termination or nonrenewal at the time of assignment of retail sales agreements (RSAs); (2) Peninsula had grounds under the PMPA to choose nonrenewal and provided proper notice; and (3) E&A was not entitled to a bona fide offer of sale of the premises.

Notice adequacy. Peninsula showed there was no triable issue as to whether it satisfied the notice requirements of PMPA § 2804. The parties did not dispute that Peninsula sent essentially identical notices of nonrenewal to E&A for the Salinas and Seaside stations in February 2025, and for the Freedom station later that year. Peninsula sent notices by writing and by certified mail. They contained the requisite PMPA summary statement by the Secretary of Energy.

E&A argued the notices were “fatally defective” because they did not refer to the PMPA provision Peninsula relied on and “did not even state” that Peninsula was providing PMPA notice. E&A contended here that Peninsula had to cite to a PMPA section for ground to terminate.

The court found Peninsula stated it was providing “formal notification” of nonrenewal. Peninsula also specified that one reason for nonrenewal was E&A’s failure to agree to the terms of renewal offered in good faith and in the normal course of business.

The court noted that failure to agree to terms is ground for nonrenewal under the PMPA, § 2802(b)(3)(A), but there was no need to expressly cite that section or even track the language. The notice was sufficiently substantive to be clear that failure to agree to terms was the reason for nonrenewal. The language also tracked § 2802(b)(3)(A). There was no triable issue about PMPA notice.

Termination. Peninsula showed there was no triable issue as to whether Peninsula’s assignment of the RSAs, but not the leases, constituted a termination of the franchise under the PMPA. As the court said it held on two prior occasions in these proceedings, the assignment of some but not all three elements of a PMPA franchise (i.e., use of refiner’s trademark; contract for fuel supply to be sold under trademark; and lease of retail premises), did not constitute a PMPA termination. The key to franchise survival here was that E&A “[did] not contend” that, any point after assignment of the RSAs, it no longer occupied the same premises, no longer received the same fuel, or lost the right to use the same trademark.

Lease nonrenewal. The court found there was no triable issue as to whether Peninsula acted in good faith in offering the renewal leases. Peninsula submitted undisputed evidence that it offered to renew the lease agreements for the Salinas and Seaside stations before expiration. It also submitted undisputed evidence that it offered 3 and 4 -year lease extensions and even revised renewal terms to comport with lower rents suggested by the RSA assignee.

Given the undisputed evidence that Peninsula tried to meet the demands of both E&A and the RSA assignee, and given that E&A did not point to any unfairness of any of terms ultimately offered to it, there was no triable issue about good faith.

As for whether Peninsula did not offer the proposed renewal leases in the “normal course of business,” because it involved RSA assignee, that was a Peninsula business decision. It also worked to the advantage of E&A. Peninsula’s decision to offer a traditional commercial lease, without referencing the PMPA, was also in the normal course of business.

The Case is No. 3:25-cv-00882-MMC.

Judge: Chesney, M.

Attorneys: Michael Bruce Smith (Kenneth P. Roberts APLC) for Edwards and Anderson, Inc. Nicholas Barrett Pfeiffer (Morgan Lewis & Bockius LLP) for Peninsula Petroleum, LLC.

Companies: Edwards and Anderson, Inc.; Peninsula Petroleum, LLC

Cases: FranchisingDistribution CaliforniaNews