Metroil, Inc . v. Exxon Mobil Oil Corporation

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 20, 2011 Decided March 20, 2012
No. 10-7168
M ETROIL, INC .,
APPELLANT
v.
EXXON M OBIL O IL C ORPORATION, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:09-cv-01860)
Peter H. Gunst argued the cause and filed the briefs for
appellant.
Mark A. Klapow argued the cause and filed the brief for
appellees ExxonMobil Oil Corporation and Exxon Mobil
Corporation.
Alphonse M. Alfano argued the cause and filed the brief
for appellee Anacostia Realty, LLC.
Before: GARLAND and K AVANAUGH , Circuit Judges, and
EDWARDS , Senior Circuit Judge.

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Opinion for the Court filed by Circuit Judge
KAVANAUGH .
KAVANAUGH , Circuit Judge: This case involves a
dispute over operation of an Exxon gas station located next to
the Watergate in Washington, D.C. Until 2009, Exxon owned
the station and leased it to Metroil, a gas station franchisee
that operated the station. In 2009, Exxon sold the station to
Anacostia, a gasoline distributor. After Exxon sold the station
to Anacostia, Metroil continued to operate the station. But
Metroil nonetheless sued Exxon and Anacostia, claiming
three violations of federal and D.C. law relating to the sale of
the station by Exxon to Anacostia.
First, Metroil contends that Exxon’s sale to Anacostia
violated a D.C. law, the Retail Service Station Amendment
Act of 2009. That Act granted existing gas station franchisees
(such as Metroil) a right of first refusal before the sale of a
station. However, the Act did not take effect until after
Exxon’s sale to Anacostia, and the law therefore did not give
Metroil a right of first refusal in this case.
Second, Metroil alleges a violation of the federal
Petroleum Marketing Practices Act, which as relevant here
requires gas station franchisors to continue franchise
relationships except under certain circumstances. According
to Metroil, after the sale from Exxon to Anacostia, Anacostia
illegally failed to continue the pre-existing franchise
relationship. However, it is undisputed that Metroil still
operates the gas station, buys and sells Exxon fuel, and uses
the Exxon trademark. Under the Act, those three facts mean
that the franchise relationship has continued.

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Third, Metroil claims that Exxon violated the D.C.
Code’s prohibition against contract assignments that
materially increase the burden or risk on the non-assigning
party. Metroil argues that Exxon’s assignment of the
franchise agreement to Anacostia materially increased the
burdens and risks imposed on Metroil. But all of the burdens
and risks alleged by Metroil were permitted by the original
contract and are not attributable to the assignment.
In a thorough and well-reasoned opinion, the District
Court dismissed Metroil’s complaint. We affirm.
I
Until 2009, Exxon owned the gas station at 2708 Virginia
Avenue, N.W., next to the Watergate in the District of
Columbia. In 2006, Exxon signed a three-year franchise
agreement with Metroil under which Metroil would operate
the gas station. Exxon thus acted as the franchisor, and
Metroil acted as the franchisee.
Under the franchise agreement, Metroil was to operate
the Exxon gas station, sell Exxon fuel at the station, and use
Exxon’s trademarks. The 2006 agreement also provided that
“ExxonMobil may transfer or assign all or part of its rights or
interest . . . without restriction . . . to any person or entity.”
J.A. 209. In the agreement, Metroil acknowledged that an
assignment could affect its rights and obligations to the extent
that an assignee had different policies or programs than
Exxon, and Metroil agreed that such an impact was
contemplated by the parties under the agreement. The
agreement further stated that the fuel prices charged by Exxon
to Metroil were “subject to change by ExxonMobil at any
time and without notice,” and that the method of payment (by

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Metroil to Exxon for the fuel) could include “any” method “as
ExxonMobil may designate from time to time.” J.A. 186,
187. The agreement had an expiration date of June 30, 2009,
which was later extended to July 31, 2009.
In 2008, Exxon announced that it intended to sell its U.S.
gas stations to gasoline distributors. Distributors often
purchase and resell multiple brands of gasoline. Sometimes,
they also operate gas stations. Many Exxon franchisees were
alarmed by Exxon’s decision. They feared that the
distributors would jack up rents and prices in order to force
the gas station franchisees out of business, which would allow
the distributors to take over operation of the stations.
On January 22, 2009, in response to Exxon’s decision to
sell its gas stations to distributors, D.C. City Council Member
Mary Cheh introduced a bill to give franchisees “a right of
first refusal in the event that a franchisor sells, transfers, or
assigns its interest in the premises of a retail service station to
a third-party.” Committee on Government Operations and the
Environment, Council of the District of Columbia, Report on
the Retail Service Station Amendment Act of 2009, Bill 18-
89, at 8 (Apr. 2, 2009).
On April 2, 2009, the D.C. Council’s Committee on
Government Operations and the Environment met to consider
and vote on the bill. Council Member Cheh explained “the
urgent need for the legislation because of [the] proposed sale
by Exxon of its interests in the District’s retail service
stations.” Id. at 9. Council Member Harry Thomas offered an
amendment, clarifying that “the right of first refusal would
not apply to contracts executed before April 1, 2009, in order
to avoid potential constitutional problems related to
impairment of contracts.” Id. at 10. The Committee then

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voted unanimously to approve the bill with the Thomas
amendment.
On May 5, 2009, the D.C. Council passed the legislation.
On May 20, 2009, Mayor Fenty signed the legislation, as is
generally required for a D.C. bill to be enacted. See D.C.
C ODE § 1-204.04(e).1 In light of D.C.’s unique constitutional
status, Congress also has an opportunity to review D.C.
legislation before a new D.C. law may take effect. See D.C.
C ODE § 1-206.02(c). Here, as a result of that congressional
review, the law did not take effect until July 18, 2009. See 56
D.C. Reg. 6137 (Aug. 7, 2009).
Meanwhile, in June 2009 – after the Council passed and
the Mayor signed the new law, but before the law took effect
– Exxon sold the gas station and assigned the franchise
agreement to Anacostia Realty, a gasoline distributor.
Council Member Cheh viewed this and other Exxon sales
in D.C. that occurred at the same time as a beat-the-clock step
by Exxon. On June 30, 2009, she introduced an “Emergency
Declaration Resolution.” The Resolution stated in pertinent
part:
(c) Notwithstanding the clear legislative intent that the
right of first refusal attach to transfers, sales, or
assignments made after April 1, 2009, a franchisor
transferred its interest in approximately 29 stations in the
1 A bill can also be enacted if the Mayor fails to act on the bill
within 10 days after it is presented or if a mayoral veto is
overridden by two-thirds of the Council. See D.C. CODE § 1-
204.04(e).

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District without offering a right of first refusal. That
transfer occurred on or about Monday, June 15, 2009.
(d) This emergency will confirm the Council’s intent to
ensure that a franchisee possesses the right of first refusal
before any sale, transfer, or assignment of a franchisor’s
interest in a leased marketing premises occurring on or
after April 1, 2009, as established under the Retail Service
Station Amendment Act of 2009.
Retail Service Station Amendment Emergency Declaration
Resolution of 2009, D.C. Council PR18-397 (unenacted).
Under D.C. law, nine votes (out of the 13 Council
Members) are needed to pass that kind of emergency
legislation. See D.C. C ODE § 1-204.12(a); D.C. Council Rule
412 (2009). The Cheh proposal failed to obtain the necessary
nine votes.
Since Exxon’s sale to Anacostia in June 2009, Metroil
and Anacostia have not signed a new franchise agreement.
But Anacostia still allows Metroil to operate the gas station,
still supplies Exxon fuel to Metroil, and still allows Metroil to
use Exxon trademarks. According to Metroil, however,
Anacostia has charged higher prices for the fuel and required
a new means of payment.
Metroil later sued Exxon and Anacostia, claiming as
relevant here that: (1) Exxon violated the D.C. Retail Service
Station Amendment Act when Exxon sold the gas station to
Anacostia without offering Metroil a right of first refusal, (2)
Anacostia violated the federal Petroleum Marketing Practices
Act when Anacostia failed to continue the franchise

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relationship with Metroil, and (3) Exxon violated the D.C.
Code by assigning the franchise agreement to Anacostia.
Anacostia and Exxon filed separate motions to dismiss.
The District Court granted the motions to dismiss, holding
that the D.C. Retail Service Station Amendment Act did not
apply retroactively to Exxon’s sale to Anacostia, that there
was not a failure to continue the franchise relationship (much
less an unlawful failure to continue) for purposes of the
federal Petroleum Marketing Practices Act, and that Exxon’s
assignment did not violate the D.C. Code.
Metroil now appeals. Our review of these questions of
law is de novo.
II
Metroil first argues that Exxon violated the D.C. Retail
Service Station Amendment Act of 2009 by selling the gas
station to Anacostia without affording Metroil a right of first
refusal to buy the station.
The Retail Service Station Amendment Act of 2009
provided that:
In the case of leased marketing premises as to which the
franchisor owns a fee interest, the franchisor shall not
sell, transfer, or assign to another person the franchisor’s
interest in the premises unless the franchisor has first
either made a bona fide offer to sell, transfer, or assign to
the franchisee the franchisor’s interest in the premises,
. . . or, if applicable, offered to the franchisee a right of
first refusal of any bona fide offer acceptable to the

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franchisor made by another person to purchase the
franchisor’s interest in the premises.
D.C. C ODE § 36-304.12(a) (expired Jan. 1, 2011).
The Act took effect on July 18, 2009, and expired on
January 1, 2011. The key question here is whether the Act
applied to a sale that occurred in June 2009, before the Act’s
effective date.
Under D.C. law, statutes are presumed not to apply
retroactively.2
2 The relevant state’s retroactivity principles – here, D.C.’s –
govern the analysis of whether a particular state law applies
retroactively. See, e.g., Centro Familiar Cristiano Buenas Nuevas
v. City of Yuma, 651 F.3d 1163, 1168 n.12 (9th Cir. 2011) (Arizona
law); Holt v. State Farm Fire & Casualty Co., 627 F.3d 188, 191-
95 (5th Cir. 2010) (Louisiana law); In re Professionals Direct
Insurance Co., 578 F.3d 432, 441 (6th Cir. 2009) (Ohio law);
BankWest, Inc. v. Baker, 446 F.3d 1358, 1366 (11th Cir. 2006) (per
curiam) (Georgia law); Central Kansas Credit Union v. Mutual
Guaranty Corp., 102 F.3d 1097, 1110-11 (10th Cir. 1996) (Kansas
law); Centre Beverage Co. v. Miller Brewing Co., 779 F.2d 168,
169-70 (3d Cir. 1985) (Pennsylvania law). See generally Abbe R.
Gluck, Intersystemic Statutory Interpretation: Methodology as
“Law” and the Erie Doctrine, 120 YALE L.J. 1898 (2011).
That presumption stems from bedrock rule of
law values that counsel against retroactive application of new
laws. See generally Landgraf v. USI Film Products, 511 U.S.
244, 265-67 (1994). Therefore, if a statute would attach new
legal consequences to events completed before its effective
date – by impairing rights a party possessed when it acted,
increasing a party’s liability for past conduct, or imposing
new duties with respect to transactions already completed –
then the statute does not apply retroactively to those events

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absent “a clear legislative showing” favoring such a result.
Bank of America, N.A. v. Griffin, 2 A.3d 1070, 1076 (D.C.
2010) (citation omitted); see also Holzsager v. D.C. Alcoholic
Beverage Control Board, 979 A.2d 52, 57 (D.C. 2009); Giant
Food, Inc. v. D.C. Dep’t of Employment Services, 934 A.2d
921, 923 (D.C. 2007).3
Here, if the D.C. Act applied to sales occurring before
July 18, 2009, it would attach new legal consequences to
events completed before the law’s effective date. In
particular, it could impose damages on franchisors for already
completed commercial transactions, and it might also require
franchisors to unwind completed transactions. Because of the
consequences that would ensue from retroactive application
3 In the D.C. cases, the presumption has been phrased several
ways, but for present purposes we find no meaningful difference in
the varying formulations. See, e.g., Nixon v. D.C. Dep’t of
Employment Services, 954 A.2d 1016, 1023 (D.C. 2008)
(“legislation must be considered as addressed to the future, not to
the past unless such be the unequivocal and inflexible import of the
statutory terms”) (alterations omitted) (quoting Mayo v. D.C. Dep’t
of Employment Services, 738 A.2d 807, 811 (D.C. 1999)); District
of Columbia v. Gallagher, 734 A.2d 1087, 1093 (D.C. 1999)
(“well-established rule” that statutes “are not to be given retroactive
effect . . . unless the legislative purpose so to do plainly appears”)
(citation omitted); Redman v. Potomac Place Associates, LLC, 972
A.2d 316, 319 n.4 (D.C. 2009) (“well-settled principle that
retroactive applications of legislation are not to be presumed absent
express legislative language or other clear implication that such
retroactivity was intended”).
Under D.C. law, statutes that implement procedural changes
generally apply retroactively to events completed before their
effective dates even absent a clear legislative showing favoring
such a result. See, e.g., Lacek v. Washington Hospital Center
Corp., 978 A.2d 1194, 1197-98 (D.C. 2009).

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of this Act, we must apply the D.C. presumption against
retroactivity. Under the presumption against retroactivity, the
D.C. Act cannot apply to sales before July 18, 2009, absent a
clear showing that the Council intended retroactive
application. There is no such clear showing.
To overcome the presumption against retroactivity,
Metroil relies heavily on the Act’s language that it “shall not
apply to any sale of leased marketing premises made pursuant
to a contract which has been executed by duly authorized
representatives of the parties prior to April 1, 2009.” D.C.
C ODE § 36-304.15 (expired Jan. 1, 2011). From that clear
statement of non-retroactivity as to sales before April 1, 2009,
Metroil asks us to infer that the Act was intended to apply
retroactively to sales after April 1, 2009, but before the Act’s
effective date of July 18, 2009. The problem for Metroil is
that the Act does not say or otherwise indicate that it applies
to sales made before the Act’s effective date of July 18, 2009.
A mere inference from the Act’s clear statement of non-
retroactivity does not constitute the “clear showing” necessary
to overcome the presumption against retroactivity. Stated
more directly, we do not discern in the text of the law a clear
legislative intent that the Act apply retroactively to sales in
the interim between April 1, 2009, and July 18, 2009.4
4 The April 1 date was inserted into the legislation for the
stated reason of avoiding potential constitutional problems in
upsetting settled expectations with respect to contracts that were
executed before the Committee voted on the bill on April 2. See
Committee on Government Operations and the Environment,
Council of the District of Columbia, Report on the Retail Service
Station Amendment Act of 2009, Bill 18-89, at 10 (Apr. 2, 2009);
see also U.S. CONST. art. I, § 10, cl. 1. But there is no indication of
an affirmative legislative intent that the Act apply retroactively to

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Metroil also points to the Act’s legislative history.
Putting aside the question of the extent to which legislative
history may inform the retroactivity analysis under D.C. law,
the Act’s legislative history falls far short of a clear showing
in favor of retroactivity. As Metroil notes, Council Member
Cheh expressed an “urgent need for the legislation.”
Committee on Government Operations and the Environment,
Council of the District of Columbia, Report on the Retail
Service Station Amendment Act of 2009, Bill 18-89, at 9
(Apr. 2, 2009). But a general sense of urgency for legislation
is far from a clear showing in favor of retroactive application
of that legislation.
Metroil also cites the subsequent unenacted Cheh
Emergency Resolution as support for retroactive application
of the Act. That Resolution would have applied the D.C. Act
retroactively to sales between April 1, 2009, and July 18,
2009. But the story of this proposed Resolution actually
undermines Metroil’s position. To begin with, the Resolution
did not pass, suggesting if anything that the necessary super-
majority of the D.C. Council did not believe that the Act
should apply retroactively to sales between April 1, 2009, and
July 18, 2009. Moreover, although we must be cautious about
reading too much into failed legislative proposals, the fact that
Council Member Cheh felt the need to propose the subsequent
Emergency Resolution suggests that she (correctly) feared
that, absent this supplemental law, the original legislation
would not apply retroactively to Exxon’s June 2009 sales,
including the sale to Anacostia.
sales before the Act’s ultimate effective date (which turned out to
be July 18, 2009).

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In sum, the text and history of the Act do not demonstrate
the requisite clear intent that the Act apply retroactively.
Therefore, because Exxon sold the service station to
Anacostia in June 2009 – before the Act’s effective date of
July 18, 2009 – the Act did not give Metroil a right of first
refusal with respect to this sale.
III
Metroil next argues that Anacostia failed to renew the
franchise relationship in violation of the federal Petroleum
Marketing Practices Act.5
The Petroleum Act provides that motor fuel franchisors
may terminate a franchise agreement or fail to renew a
franchise relationship only in limited circumstances. See 15
U.S.C. § 2802; see also Mac’s Shell Service, Inc. v. Shell Oil
Products Co., 130 S. Ct. 1251, 1254 (2010). The Act thus
affords gas station franchisees federal legal protection beyond
that granted by state contract law.
The threshold Petroleum Act question in this case is
whether Anacostia failed to renew the franchise relationship.
As defined by the Petroleum Act, a failure to renew is “a
failure to reinstate, continue, or extend the franchise
relationship . . . at the conclusion of the term, or on the
5 Metroil initially argued that Exxon, not just Anacostia, also
failed to renew the franchise relationship in violation of the
Petroleum Act. However, at oral argument, Metroil acknowledged
that if Exxon’s assignment to Anacostia was valid, then only
Anacostia had an obligation to renew the franchise relationship
under the Petroleum Act. See Tr. of Oral Arg. at 40-41. Because
Exxon’s assignment to Anacostia was valid, we address only
Anacostia’s alleged failure to renew the franchise relationship.

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expiration date, stated in the relevant franchise.” 15 U.S.C.
§ 2801(14) (emphasis added). The obligation to renew goes
to the “franchise relationship,” not to the franchise contract.
A “franchise relationship” consists of “the respective motor
fuel marketing or distribution obligations and responsibilities
of a franchisor and a franchisee which result from the
marketing of motor fuel under a franchise.” 15 U.S.C.
§ 2801(2). As that definition reveals, a franchise relationship
results from a franchise – that is, from a “‘contract’ that
authorizes a franchisee to use the franchisor’s trademark, as
well as any associated agreement providing for the supply of
motor fuel or authorizing the franchisee to occupy a service
station owned by the franchisor.” Mac’s Shell, 130 S. Ct. at
1255; see also 15 U.S.C. § 2801(1). Those three specified
responsibilities of the franchisor – authorizing use of the
trademark, supplying fuel, and authorizing use of the station –
thus constitute the three statutory pillars of a franchise
relationship.
Because the statutory requirement for renewal applies to
franchise relationships, not to franchise contracts, a
franchisor is not required to renew an expiring franchise
contract under all the same terms and conditions as the
original contract. As the Senate Report accompanying the
Act explained, the statute “requires renewal of the
relationship between the parties as distinguished from a
continuation or extension of the specific provisions of the
franchise agreement.” S. R EP . NO. 95-731, at 30 (1978).
To meet its obligation of continuing the “franchise
relationship,” the franchisor thus must continue to provide the
three statutory pillars of the franchise relationship: The
franchisor must continue to authorize use of the franchisor’s
trademark, to supply fuel to the franchisee, and to authorize

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the franchisee to use the station. To allege a failure to renew
a franchise relationship, a franchisee must allege that it is
unable to use the franchisor’s trademark, to obtain the
franchisor’s motor fuel, or to use the franchisor’s service
station. See Dersch Energies, Inc. v. Shell Oil Co., 314 F.3d
846, 860 (7th Cir. 2002) (“when a franchisee alleges that a
franchisor has ‘failed to renew’ the parties’ franchise
relationship, . . . it must demonstrate that at least one of the
three essential components of a petroleum franchise has been
discontinued”).
In this case, however, Metroil acknowledges that it still
uses Exxon’s trademark, obtains Exxon motor fuel, and uses
the service station in question. Therefore, Metroil has not
alleged sufficient facts to show that there was a failure to
renew the franchise relationship, much less that there was an
unlawful failure to renew. For that reason, Metroil’s
Petroleum Act claim was properly dismissed.
IV
Finally, Metroil argues that Exxon’s assignment to
Anacostia violated a D.C. Code provision that states:
“[U]nless otherwise agreed all rights of either seller or buyer
can be assigned except where the assignment would . . .
increase materially the burden or risk imposed” on the non-
assigning party by the “contract, or impair materially” the
non-assigning party’s “chance of obtaining return
performance.” D.C. C ODE § 28:2-210(2).
Metroil claims that Exxon’s assignment to Anacostia
materially increased the burden or risk on Metroil because
Anacostia has charged “excessive prices for motor fuel” and
“insisted on obtaining access to Metroil’s bank account.”

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Metroil Br. 36. However, the original franchise contract itself
stated that prices were “subject to change . . . at any time and
without notice,” J.A. 186, and that the method of payment
could include automated direct debit “or any other method as
. . . designate[d] from time to time,” J.A. 187. The franchise
contract also provided that Exxon could assign any or all of
its rights or interests, without restriction, to any person or
entity. Finally, in the franchise contract, Metroil expressly
acknowledged that an assignment by Exxon could affect
Metroil’s rights and obligations under the agreement to the
extent an assignee had policies or programs different from
Exxon’s. Higher prices and direct debiting by the franchisor
were thus anticipated and permitted by the original franchise
contract; the assignment did not materially increase the
burdens or risks for Metroil with respect to those issues.
Courts interpreting other states’ similar code provisions have
come to similar conclusions. See, e.g., Clark v. BP Oil Co.,
137 F.3d 386, 393 (6th Cir. 1998); Beachler v. Amoco Oil
Co., 112 F.3d 902, 907-08 (7th Cir. 1997); May-Som Gulf,
Inc. v. Chevron U.S.A., Inc., 869 F.2d 917, 924-25 (6th Cir.
1989).
Metroil also contends that Anacostia could not
adequately perform its obligation under the assigned contract
because Anacostia competes directly with Metroil and lacks
the significant financial assets of Exxon. Of course, the
assigned contract expired on July 31, 2009, shortly after the
assignment. In any event, Metroil’s allegations on this point
rely on mere speculation and do not suffice to state a claim.
See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007).6
6 On appeal, Metroil argues that Exxon, aware of Anacostia’s
inability to perform adequately, assigned the contract to Anacostia

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* * *
We affirm the judgment of the District Court.
So ordered.
in bad faith. However, Metroil did not assert that claim in its
complaint, and we therefore do not consider it.

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