Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—S.D. Fla.: 7-Eleven franchisees allege breach over gasoline pricing, (Jul 25, 2016)

7-Eleven, Inc. breached the consigned gasoline amendment to a franchise agreement by not maintaining competitive gasoline prices at the locations of complaining franchisees, according to a complaint filed in the federal district court in Fort Lauderdale (Mahaliza, Inc. v. 7-Eleven, Inc., July 21, 2016).

According to the complaint, Mahaliza, Inc. and Mahliza, Inc. entered into four franchise agreements to operate 7-Eleven retail convenience stores. The plaintiffs also executed a consigned gasoline amendment for each location. The amendment provided, among other things, that 7-Eleven had sole discretion in establishing retail pricing for the gasoline sold.

The plaintiffs only executed the consigned gasoline amendments after 7-Eleven’s representatives advised the plaintiffs’ principal, Zahid Anwar, that each location would make a tremendous amount of money on the sale of gasoline and that gasoline sales would drive-in store product sales. Specifically, Anwar was advised that 7-Eleven would price its gasoline one and two cents lower than branded gasoline outlets and match the prices of nearby unbranded gasoline outlets. Anwar was further advised that, if 7-Eleven priced gasoline higher than that of an unbranded outlet, it would only exceed the unbranded price by one or two cents.

The complaint further states that 7-Eleven did not honor its agreement to maintain competitive gasoline prices and, over the past few years, increased its gasoline prices at the plaintiffs’ convenience stores well over that of its nearby competitors. As a result, sales at the plaintiffs’ stores decreased. The plaintiffs’ efforts to get 7-Eleven to reconsider its gasoline pricing were unsuccessful.

The plaintiffs assert claims for: (1) breach of consigned gasoline amendment; (2) breach of the implied covenant of good faith and fair dealing; and (3) violation of the Florida Deceptive and Unfair Trade Practices Act (FDUPTA). The action seeks damages, punitive damages, interest, attorney fees and costs, and such further relief as the court may deem just and proper.

The case is No: 16-cv-61754-RNS.

Attorneys: Himanshu M. Patel, Alaina B. Simonovsky, and Robert Zarco (Zarco Einhorn Salkowski & Brito) for Mahaliza, Inc. and Mahliza, Inc.

Companies: 7-Eleven, Inc.; Mahaliza, Inc.; Mahliza, Inc.

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