Shell's Gas Station Lease Dispute Hits Supreme Court

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Shell's Gas Station Lease Dispute Hits Supreme Court

HOUSTON -- The U.S. Supreme Court will rule in a case involving Shell Oil Co. to determine how much leverage oil companies have to change lease agreements with independent service station owners, Bloomberg News reported.

A group of Massachusetts gas station owners sued Shell and Motiva Enterprises LLC, charging the company with using rent increases to try to end franchise arrangements so the companies could take over operation of the stations, according to the report.

The station owners won a $3.3 million jury verdict, but a federal appeals court upheld part of the award, and both sides appealed to the Supreme Court, the report stated. The Supreme Court justices agreed to see the case at the suggestion of the Obama administration, which backs Shell and Motiva on the legal issues, Bloomberg News stated.

The case involves the U.S. Petroleum Marketing Practices Act, a 1978 law that gave independent station owners more power in dealings with oil companies. The station owners are suing under provisions in the law barring improper lease terminations, but Shell and Motiva contend the station owners can’t cite the provisions since they accepted new lease terms and continued to operate the franchises.

The case includes eight of more than 50 Massachusetts station owners pressing lawsuits. The station owners objected to a decision to phase out a rent subsidy that was tied to gasoline sales and instead, calculate rent based on the real estate value.

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