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IN THE SUPERIOR COURT OF THE DISTRICT OF COLUMBIA

CIVIL DIVISION

DISTRICT OF COLUMBIA, )

) Case No. 2013 CA 005874 B

Plaintiff, )) Judge Craig Iscoe

v. ) Next Event: Initial Scheduling Conference

) Date: December 13, 2013EXXONMOBIL OIL )

CORPORATION, et al., )

)Defendants. )

)

DISTRICT OF COLUMBIA’S MEMORANDUM OF POINTS AND AUTHORITIES INOPPOSITION TO MOTIONS TO DISMISS OF DEFENDANTS EXXONMOBIL OIL

CORP., CAPITOL PETROLEUM GROUP, ANACOSTIA PETROLEUM REALTY,LLC

AND SPRINGFIELD PETROLEUM REALTY, LLC

Defendants ExxonMobil Oil Corp. Capitol Petroleum Group, Anacostia Petroleum

Realty, LLC and Springfield Petroleum Realty, LLC have filed two motions to dismiss

Plaintiff’s District of Columbia’s (“District”) Complaint, arguing that the District has no

standing to bring its claim, and has failed in its Complaint to state a claim against Defendants.

The District files this Memorandum of Points and Authorities in opposition to both Motions filed

by Defendants, arguing that the Attorney General has parens patriae authority to seek injunctive

relief against enforcement of contractual terms that unlawfully restrict competition at one-quarter

of the gasoline stations in the District of Columbia (“D.C.”).

I. INTRODUCTION

The District filed this action against Defendants to enjoin Defendants’ enforcement of

marketing agreements for the purchase and sale of gasoline that violate the District’s Retail

Service Station Act (“RSSA”). The RSSA is a remedial statute enacted by the District of

Columbia Council (“Council”) to stop “unsavory and non-competitive practices” of wholesale

Filed

D.C. Superior Co

11/08/2013 19:22

Clerk of the Cou



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gasoline distributors that had “severe detrimental impacts on consumers” in the District of

Columbia (“D.C.”) The Council enacted Subchapter III of the RSSA (now codified at D.C.

Code § 36-303.01, et seq.) to regulate gasoline “marketing agreements,” in large part to protect

retail gasoline dealers from anti-competitive practices by distributors and to enhance “honest and

fair competition” in the distribution of gasoline. Subchapter III includes a provision that

prevents marketing agreements from restricting from whom a retail dealer may purchase

gasoline. D.C. Code § 36-303.01(a)(6). Defendants’ marketing agreements violate this

provision1 by forcing independent retail dealers of Exxon-branded gasoline in D.C. to purchase

their Exxon-branded gasoline only from Defendants Anacostia Petroleum Realty, LLC

(“Anacostia”) or Springfield Petroleum Realty, LLC (“Springfield”). Defendants’ unlawful

marketing agreements have harmed, and continue to harm, D.C.’s economy by depriving both

retail dealers and gasoline consumers of the benefits of competition that the RSSA seeks to

protect.

The first issue raised by Defendants’ Motions to Dismiss (“Motions”) is: Does the

District allege a harm to its quasi-sovereign interest that enables it to sue in its parens patriae

capacity to enforce a District law intended to protect the interests of the public, health, safety,

and welfare? The District has done so, by alleging that Defendants’ unlawful marketing

agreements deprive D.C. consumers and independent retail dealers of the benefits of competition

in the supply of Exxon-branded gasoline. The interest of ensuring competition in the supply of

gasoline in D.C.’s local economy is a proper quasi-sovereign interest for the District to assert as

parens patriae, and indeed is the very interest the Council asserted in passing the RSSA.

1 The District alleges violations of § 36-303.01(a)(6), based on Defendants’ exclusive supply

agreements, and § 36-303.01(a)(11), which prohibits marketing agreements that “[c]ontain any

term or condition which, directly or indirectly, violates this subchapter.”



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Moreover, protecting this type of public interest by enforcing District laws is well within the

authority of the District, acting by and through its Attorney General. Defendants’ challenges to

the District’s standing and authority to enforce § 36-303.01(a) fail.

The second issue raised by the Motions is whether the District’s allegations state a claim

that Defendants’ exclusive supply agreements violate § 36-303.01(a). The District’s Complaint

identifies the terms of Defendants’ marketing agreements that violate the express prohibitions of

§ 36-303.01(a), how those terms restrict D.C.’s independent retail dealers of Exxon-branded

gasoline (“independent retail dealers”), and how those terms harm competition in D.C. Compl.

¶¶ 6, 15-33. Defendants raise several challenges to the sufficiency of the District’s allegations,

including an argument that, strangely relying on an RSSA provision that prevents retailers from

misusing a distributor’s trademark when they sell gasoline, would create a new exemption from

retailers’ right under the RSSA to purchase gasoline from whomever they choose. Defendants’

implausible readings of the RSSA’s language are contradicted by the plain statutory language, its

legislative history, and relevant case law. Moreover, inferring a large exemption from the

protection offered by § 36-303.01(a) would be contrary to the purpose and public policy of the

RSSA, which requires that the statute be interpreted liberally to achieve its purposes, and would

hobble the RSSA’s public policy of protecting the interests of the public, health, safety and

welfare.

Defendants cannot show that the District’s action against them for violations of §§ 36-

303.01(a)(6) and (a)(11) fail as a matter of law. The District respectfully requests that the Court

deny the Motions.



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II. RELEVANT PROVISIONS OF THE RSSA AND ITS LEGISLATIVE HISTORY

A. The RSSA Prohibits Exclusive Agreements in the Supply of Gasoline in D.C.

D.C. Code § 36-303.01 of the RSSA states, in relevant part:

(a) . . . For the purposes of this section, the term “marketing

agreement” shall also include any oral or written collateral or

ancillary agreement. No marketing agreement shall:

* * *

(6) Prohibit a retail dealer from purchasing or accepting delivery

of, on consignment or otherwise, any motor fuels, petroleum

products, automotive products, or other products from any person

who is not a party to the marketing agreement or prohibit a retail

dealer from selling such motor fuels or products, provided that ifthe marketing agreement permits the retail dealer to use the

distributor's trademark, the marketing agreement may require suchmotor fuels, petroleum products, and automotive products to be of

a reasonably similar quality to those of the distributor, and

provided further that the retail dealer shall neither represent suchmotor fuels or products as having been procured from the

distributor nor sell such motor fuels or products under the

distributor's trademark;

* * *

. . . . or

(11) Contain any term or condition which, directly or indirectly,violates this subchapter.

D.C. Code § 36-303.01(a). A “marketing agreement” under the RSSA is:

[A]ny written agreement, or combination of agreements, including

any contract, lease, franchise, or other agreement, which is entered

into between a distributor and a retail dealer and pursuant towhich:

(A) The distributor agrees to sell, supply, or distribute motor fuelto the retail dealer for the purpose of engaging in the retail sale of

such motor fuel at a retail service station; and

(B) The retail dealer is granted the right, privilege, or authority, in

addition to whatever else may be provided, to:



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(i) Use any trademark owned, leased, or otherwise controlled by

the distributor for the purpose of engaging in the retail sale ofmotor fuel at a retail service station; or

(ii) Occupy a retail service station owned, leased, or otherwise

controlled by the distributor for the purpose of engaging in theretail sale of motor fuel.

D.C. Code § 36-301.01(7).

A marketing agreement is an agreement, or combination of agreements, between a

distributor and a retail dealer. The RSSA defines “Distributor” as

any person who is engaged in the business of selling, supplying, ordistributing on consignment or otherwise, motor fuels or petroleum

products to or through retail service stations which it owns, leases,

or otherwise controls and who also maintains a marketingagreement with a retail dealer for the sale or distribution of motor

fuels or petroleum products to a retail service station, whether or

not such distributor owns, leases, or otherwise controls such retailservice station.

D.C. Code § 36-301.01(2). The RSSA defines a “Retail dealer” as

any person, other than an employee of a distributor, who owns,

leases, operates, or otherwise controls a retail service station forthe purpose of engaging in the retail sale of motor fuel and who

also maintains a marketing agreement with a distributor.

D.C. Code § 36-301.01(13). The RSSA’s legislative history notes that “the same person may be

a ‘retail dealer’ in one relationship and a ‘distributor’ in another relationship.” D.C. Comm. on

Transp. and Envtl. Affairs, Report to the D.C. Council, “Bill No. 1-333, the ‘Retail Service

Station Act of 1976,’ and Bill No. 1-39, the ‘Retail Service Stations Act,’” at 49 (1976) (attached

as Exhibit A hereto).2

2 Defendants submitted excerpts of the Council’s Report on the RSSA with their Motions. The

District is submitting the Report in its entirety, except for appendices.



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B. The Council Enacted the RSSA to Promote Competition and Consumer Choice,

in the Interests of the Public, Health, Safety, and Welfare

The Council enacted the RSSA to “end the current unsavory and non-competitive

practices of distributors, to foster adequate and meaningful competition in the retail marketing

segment of the petroleum industry.” Exhibit A hereto at 20. “Forc[ing] the retail dealer to abide

by functional exclusion dealing arrangements” is one such “unsavory and non-competitive”

practice that “had and will continue to have severe detrimental impacts on consumers in the

District of Columbia.” Id . at 19.

Subchapter III of the RSSA (called “Title II” in the legislative history), D.C. Code §§ 36-

303.01, et seq., serves in part to:

enhance the independence of retail dealers in the operation of theirretail service stations by reducing the control that distributors mayexert on the retail prices and marketing practices on independentlyoperated stations through both the marketing agreement andunjustified threats of termination, cancellation, and non-renewaland , thereby, enhance fair and honest competition and the abilityof retail dealers to tailor their operations to the needs, preferences,and conveniences of their local customers.

Exhibit A hereto at 28. Title II achieved “these purposes by: . . . (6) Prohibiting the inclusion of

certain restrictive provisions in marketing agreements . . . (Section 4-201) [now § 36-

303.01(a)(6)].” Id . at 52.

The RSSA states that it “shall constitute a statement of the public policy of the District of

Columbia” and that its “provisions . . . shall be liberally construed in order to effectively carry

out the purposes of this chapter in the interests of the public, health, safety, and welfare.” D.C.

Code § 36-305.01.



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III. DEFENDANTS’ ILLEGAL AGREEMENTS

A. Provisions of Defendants’ Marketing Agreements

Prior to 2009, the Exxon-branded gasoline stations in D.C. were owned by, and

exclusively supplied by, Exxon. Compl. ¶¶ 2, 15. Exxon’s exclusive supply arrangements were

part of its “franchise agreements” with the independent retail dealers that operated the Exxon

stations. Id . The relevant supply provisions of Exxon’s franchise agreements have stated:

“DEALER agrees to buy and receive directly from EXXONMOBIL all of the EXXON-branded

gasoline diesel sold by DEALER.” Id. ¶ 24. Exxon’s franchise agreements have also granted

the independent retail dealers the right to use Exxon’s proprietary trademarks to sell Exxon-

branded gasoline at the dealer’s stations. Id. ¶ 15.

In December 2008, Exxon and DAG Enterprises (“DAG”), a company affiliated with

Defendants Capitol Petroleum Group, Anacostia Petroleum Realty, LLC and Springfield

Petroleum Realty, LLC (collectively the “CPG Defendants”), agreed to a purchase and sale

transaction for the majority of Exxon’s D.C. gasoline stations. Id. ¶¶ 3-5, 17-18; Exxon Mem.,

Paolino Decl. Exh. A. In January 2010, Exxon and DAG agreed to a similar transaction covering

Exxon’s single remaining D.C. gasoline station. Compl. ¶¶ 3-5, 17, 19; Exxon Mem., Paolino

Decl. Exh. B. These transactions transferred the relevant features of Exxon’s supply

arrangements to Anacostia and Springfield by: (1) assigning, to Anacostia and Springfield,

Exxon’s exclusive supply rights from its franchise agreements with independent retail dealers;

(2) assigning, to Anacostia and Springfield, the right to use Exxon’s proprietary trademarks to

sell Exxon-branded gasoline at the Exxon-branded D.C. gasoline stations; (3) requiring

Anacostia and Springfield, as a condition precedent to the transaction, to enter into distribution

agreements with Exxon; and (4) transferring ownership of Exxon’s D.C. gasoline stations to



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Anacostia and Springfield. Compl. ¶¶ 3-5, 16-19; Exxon Mem., Paolino Decl., Exh. A-B

[“Assignments”] at 1.

Exxon’s assignment to Anacostia transferred all of Exxon’s “rights, title, interests, duties,

and obligations, legal and equitable, from and after the date of this Assignment, under the PMPA

franchise agreements . . . and all other agreements constituting the franchise relationship” with

respect to all but one of Exxon’s independent retail dealers in D.C. Exxon Mem., Paolino Decl.,

Exh. A, at 1, 3. Exxon’s Assignment to Springfield assigned all of Exxon’s “rights, title, duties

and interest (including any options) in, to and under” the franchise agreement with respect to

Exxon’s one other independent retail dealer in D.C. Id., Exh. B, at 1, 4. The Assignments

transferred to Anacostia and Springfield, without exception, Exxon’s exclusive rights to supply

Exxon-branded gasoline to these dealers, and the right to use Exxon’s proprietary trademarks to

sell Exxon-branded gasoline. Id., Exh. A, at 1, 3, 4, Exh. B, at 1, 3, 44; Compl. ¶¶ 4, 15. These

assignments were made “in consideration of the covenants contained in” Anacostia’s and

Springfield’s respective purchase and sale agreements with Exxon. Id., Exh. A, at 1, Exh. B, at

1.

Exxon required Anacostia and Springfield to enter into its standard distribution

agreements as a “condition precedent” to executing the purchase and sale transactions. Compl.

¶¶ 18-19. Exxon’s distribution agreements state:

Exxon Mem., Paolino Decl., Exh. C § 12(a)(3), Exh. D § 12(a)(3) (“distribution agreements”).

Redact

Redact



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Id., Exh.

C § 1(a), Exh. D § 1(a). The effect of these distribution agreements is to “allow only one

supplier to supply [Exxon-branded] gasoline to each Exxon-branded gasoline station in D.C.”

Compl. ¶ 5. The distribution agreements also grant Anacostia and Springfield, and their

“franchised independent dealers,” the use of Exxon’s proprietary trademarks, which are

Exxon Mem., Paolino Decl. Exh. C § 1(a), Exh. D

§ 1(a).

Anacostia has entered into successor versions of these franchise agreements with some of

the independent retail dealers. Compl. ¶¶ 4, 25. These successor agreements perpetuate the

exclusive supply arrangements by providing:

. . . .” Anacostia’s Contract of Sale (Branded) at 18, ¶ 1 (Commodity Schedule) (attached as

Exhibit B hereto).3 The successor franchise agreements permit the independent retail dealers to

occupy and operate gasoline stations owned by Anacostia and to use Exxon’s proprietary

trademarks for the purposes of selling Exxon-branded gasoline at these stations. Id . at 6, ¶ 14;

Exxon Mem., Paolino Decl., Exh. A, at 1, 3.

B. Illegality of Defendants’ Marketing Agreements

Defendants’ franchise agreements are marketing agreements, as defined in § 36-

301.01(7). Each of these agreements is between (i) a distributor, “engaged in the business of

selling, supplying, or distributing” gasoline” “to or through service stations which it owns, leases

or otherwise controls,” and (ii) a retail dealer. D.C. Code §§ 36-301.01 (2), (7), (13). The

3 Exhibit B hereto is an exemplar of Anacostia’s successor franchise agreements with D.C. retail

dealers. The Complaint references these successor franchise agreements at paragraphs 4 and 25,

and thus incorporates those agreements by reference.

Redact

Redac

t

Redact



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303.01(a)(6) and (a)(11) because they prohibit independent retail dealers, both directly and

indirectly, from purchasing Exxon-branded gasoline from any supplier that is not a party to the

agreement. Id . ¶ 23.

C. Effects of Defendants’ Marketing Agreements

Defendants’ unlawful marketing agreements have allowed the CPG Defendants to

exclude suppliers, other than Anacostia or Springfield, from supplying Exxon-branded gasoline

in D.C.; to supply all of the Exxon-branded gasoline sold in D.C.; and to fix the wholesale prices

paid for Exxon-branded gasoline in D.C. Compl. ¶ 30. The District’s Complaint alleges that

Defendants’ marketing agreements harm residents and other retail customers in D.C.:

The CPG companies set the wholesale prices paid for Exxon- branded gasoline in D.C., depriving D.C. residents and others who purchase Exxon-branded gasoline in D.C., including retailcustomers of the Exxon-branded gasoline stations in D.C., of the benefits of competition in the wholesale supply of Exxon-brandedgasoline.

Id . ¶ 6.

The District therefore alleges that Defendants’ illegal marketing agreements “deny

independent retail dealers selling Exxon-branded gasoline in D.C., and the many thousands of

consumers in D.C. who purchase such gasoline, the benefits of competition in the supply of

Exxon-branded gasoline.” Id. ¶ 33. Moreover, the CPG Defendants, and affiliated companies,

are the exclusive gasoline suppliers for about 60% of the 107 retail gasoline stations in D.C. Id.

¶¶ 1, 29. These stations include the 27 Exxon-branded gasoline stations in D.C. currently

operated by independent retail dealers, which make up about 25% of all the gasoline stations in

D.C. Id. ¶¶ 5, 28-29. Therefore, the effect of Defendants’ unlawful marketing agreements is to

increase, from about 35% to about 60%, the percentage of retail gasoline stations in D.C. where

the CPG Defendants are the exclusive suppliers of gasoline.



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IV. ARGUMENT

A. The District Has Parens Patriae Standing To Bring An Action For InjunctiveRelief Against Widespread Violations RSSA.

The District brings this action, by and through its Attorney General, as “ parens patriae

on behalf of the residents, general welfare, and economy of D.C., to enjoin widespread violations

of the [RSSA] affecting about one-quarter of the gasoline stations in D.C.” Compl. ¶ 7. The

District, like state and territorial governments, has a distinct interest in ensuring the health and

well-being of its people and economy. Parens patriae standing is a judicial construct that

provides the states and territories, including the District, with a legal tool necessary to protect

this quasi-sovereign interest. Thus, courts permit such governments to have standing as parens

patriae when they allege an injury to their quasi-sovereign interest in preventing generalized

harm to the physical and economic well-being of their people or economies.

The District has alleged its parens patriae standing based on its quasi-sovereign interest

in the economic well-being of D.C.’s gasoline consumers and the gasoline market, and the injury

to the District’s quasi-sovereign interest caused by Defendants’ unlawful marketing agreements.

Because this type of widespread harm is a matter of “grave public concern” to a state-level

government tasked with ensuring the economic well-being of its population, it creates a distinct

and separate interest belonging to the state. Georgia v. Pa. R.R. Co., 324 U.S. 439, 451 (1945).

Injury to this quasi-sovereign interest is a concrete and particularized harm that satisfies the

injury-in-fact requirement of Article III standing. Denial of standing under these circumstances

would “whittle the concept of justiciability down to the stature of minor or conventional

controversies. There is no warrant for such a restriction.” Id.



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1. The District brings this action to protect its quasi-sovereign interest in the

well-being of its local economy.

Although quasi-sovereign interests do not lend themselves to bright-line definitions, they

fall into at least one of two categories: an interest in the health, physical and economic well-

being of the people, or an interest in being treated fairly within the federal system. Alfred L.

Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, 458 U.S. 592, 601 (1982) (“Snapp”). The first

category is the relevant one here, as the District’s particular quasi-sovereign interest is in

protecting the benefits of competition for its local gasoline market. Compl. ¶¶ 6-7, 33. Concern

for economic well-being relates equally to the health of the overall economy and to the economic

health of “the consuming public.” Georgia v. Pa. R.R. Co., 324 U.S. at 443, 447-450. Alleging a

quasi-sovereign interest in the economy requires no more rigorous pleading than alleging a

quasi-sovereign interest in the public health or the physical well-being of the population.4

A long line of Supreme Court cases define broadly a state’s quasi-sovereign interest in its

economic well-being. In Snapp, the Supreme Court upheld Puerto Rico’s right to allege

employment discrimination in its parens patriae capacity because Puerto Rico’s interest in

securing employment “among Puerto Rican residents is surely a legitimate object of the

Commonwealth’s concern.” 458 U.S. at 609. In Massachusetts v. E.P.A., 549 U.S. 497, 518-21

(2007), the interest of Massachusetts in protecting its coastal lands from the rise in sea level

resulting from global warming was a quasi-sovereign interest providing it with standing to

challenge the EPA’s failure to regulate greenhouse gas emissions. In Georgia v. Pa. R.R. Co.,

4 Defendants imply otherwise by repeatedly citing to antitrust cases and antitrust standing

requirements that are inapposite to the District’s action, particularly when those antitrust actionsinvolve parens patriae actions for damages. Antitrust laws generally differ from other statutes,

such as the RSSA, as to the “antitrust injury” that must be alleged. See, e.g., Brunswick Corp. v.

Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977).



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Georgia was entitled to sue, as “representative of the consuming public,” because the defendant-

railroads’ alleged price-fixing scheme “frustrate[d] and counteract[ed] the measures taken by the

State to promote a well-rounded agricultural program, encourage manufacture and shipping,

provide full employment, and promote the general progress and welfare of its people,” in

addition to harming the consuming public. 324 U.S. at 444, 449. In Hawaii v. Standard Oil

Company, 431 U.S. 251, 261-62 (1972), Hawaii was entitled to sue in its parens patriae capacity

for injunctive relief from petroleum overcharges that allegedly harmed its general economy.

Case law holds that an interest in an honest marketplace is a cognizable, quasi-sovereign

interest. See Louisiana ex rel. Ieyoub v. Borden Inc., No. 94-3640, 1995 U.S. Dist. Lexis 1921 at

*6 (E.D. La. Feb. 10, 1995) (Louisiana had parens patriae standing to seek relief from the

inflated prices Louisiana school districts and school children paid for defendant’s milk products

because the defendant’s price-fixing scheme harmed Louisiana’s quasi-sovereign interest “in

[an] honest marketplace” and in protecting school children generally); Alabama ex rel. Galanos

v. Star Serv. & Petroleum Co., 616 F. Supp. 429, 431 (D.C. Ala. 1985) (Alabama’s interests “in

preventing unfair or dishonest competition, monopolies, and price wars” was “obviously” a

distinct and “quasi-sovereign” interest); N ew York v. Gen. Motors Corp., 547 F.Supp. 703, 703,

707 (S.D.N.Y. 1982) (New York, through its Attorney General, had standing to sue under its

consumer protection law to obtain “wide-ranging injunctive relief designed to vindicate [its]

quasi-sovereign interest in securing an honest marketplace for all consumers” that was allegedly

injured by GM’s “repeated and persistent fraudulent and illegal business practices in connection

with its sale, warranting, and repair of automobiles.”).

The District’s action concerns an important consumer product: gasoline. The District

alleges that Defendants’ unlawful marketing agreements “deny independent retail dealers selling



15

Exxon-branded gasoline in D.C., and the many thousands of consumers in D.C. who purchase

such gasoline, the benefits of competition in the supply of Exxon-branded gasoline.” Compl. ¶

33 (emphasis added). The benefits of such intra-brand competition would inure to D.C. gasoline

consumers who purchase Exxon-branded gasoline, and to the wholesale and retail dealers that

participate in supplying Exxon-branded gasoline to the D.C. market. The District’s quasi-

sovereign interest in preserving a competitive market for the supply of Exxon-branded gasoline

in D.C., and thereby promoting the general well-being of the D.C. economy, provides it with

parens patriae standing.

While the District’s parens patriae standing is clear based on Snapp, Massachusetts v.

E.P.A., and the other authorities cited above, two additional factors weigh strongly in favor of

finding that the District has alleged a quasi-sovereign interest in enforcing the RSSA:

(1) whether the asserted parens patriae interest is one that the government would attempt to

remedy through the legislative process , Snapp, 458 U.S. at 607; and (2) whether the request is for

injunctive relief as opposed to damages, Standard Oil Co., 405 U.S. at 262 (suits for damages

may be subject to greater scrutiny given the “striking contrast between the potential impact of

suits for injunctive relief and suits for damages”); United States v. Borden Co., 347 U.S. 514,

519 (1954) (the government is entitled to an injunction against defendant milk producers’ price

fixing scheme even if the same behavior was already subject to a private party’s injunction, as

the government has interests in “the continued protection of the public” distinct from those of

private plaintiffs.)

First, an interest addressed, or furthered, through legislation is likely to be a cognizable

quasi-sovereign interest for parens patriae purposes. Snapp, 458 U.S. at 609 (Puerto Rico could

sue for violation of the Wagner-Peyser Act and the Immigration and Nationality Act of 1952



16

because those laws furthered its interest in securing employment for Puerto Rican workers);

Georgia v. Pa. R.R. Co., 324 U.S. at 444, 449; Alabama ex rel. Galanos, 616 F. Supp. at 431

(Alabama’s interest in enforcing a state law enacted to protect both independent retailers and the

general consuming public from anticompetitive practices “obviously” was a “quasi-sovereign”

interest). The RSSA, the law the District seeks to enforce in this action, was enacted to enhance

competition in the D.C. gasoline market. The RSSA’s legislative history states the law was

intended to “enhance fair and honest competition and the ability of retail dealers to tailor their

operations to the needs, preferences, and conveniences of their local customers.” Exhibit A

hereto at 28 (emphasis added). Section 36-303.01(a) of the RSSA accomplishes this purpose, in

part, by prohibiting the inclusion of “certain restrictive provisions in marketing agreements.” Id.

at 29. The District’s quasi-sovereign interest alleged in this action was directly addressed by the

Council’s passage of the RSSA.

Second, the District’s action seeks injunctive relief on behalf of the public, not damages.

Compl, ¶ 31-33, Prayer for Relief. Accordingly, it avoids the “thorny issues” posed by parens

patriae damages actions. See Puerto Rico ex rel. Quiros v. Alfred L. Snapp & Son, Inc. , 469 F.

Supp. 928, 931 (W.D. Va. 1979) rev'd on other grounds, 632 F.2d 365 (4th Cir. 1980) aff'd sub

nom., Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, 458 U.S. 592 (1982).

Furthermore, the District’s particular interest in protecting the consuming public and enhancing

competition in the supply of gasoline in D.C. is distinct from the interests of the retail dealers

who may seek judicial relief in their individual capacity. Private remedies cannot remove, or be

a substitute for, broad injunctive relief sought by a state in its parens patriae capacity, as private

decrees likely will not “adequately protect[]” the public interest. See Borden Co., 347 U.S. at

519.



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Thus, not only does the District’s public-protection interest fall squarely within the well-

recognized “economic well-being” category of quasi-sovereign interests, but the appropriateness

of the District seeking relief as parens patriae is strengthened by the RSSA’s explicit recognition

of the public interest in enhancing honest competition in D.C.’s gasoline supply and by the fact

that the District does not seek damages in this case.

2. The District alleges a cognizable injury to its quasi-sovereign interestfrom the widespread denial of competition in the supply of Exxon-brandedgasoline.

In addition to alleging the existence of a quasi-sovereign interest, the District must allege

an injury to its quasi-sovereign interest that has a “sufficiently substantial” impact on the local

population. See Snapp, 458 U.S. at 607. The District need not quantify the harm to its interest in

numbers or percentages, as there are no “definitive limits on the proportion of the population of

the State that must be adversely affected by the challenged behavior” to qualify as a “sufficiently

substantial portion of the population.” Id.; see Pennsylvania v. Kleppe, 533 F.2d 668, 675 (D.C.

Cir. 1976) (holding that relevant case law shows that “the nature and degree of essential harm

can not be characterized with any precision”). The primary concern is that the harm is

widespread. Snapp, 458 U.S. at 609 (injury is one that “carr[ies] a universal sting”); Kleppe, 533

F.2d at 675 (“substantial generalized economic effects” provide injury to the state’s quasi-

sovereign interest).

The District alleges that Defendants’ exclusive supply agreements – affecting about one-

quarter of the gasoline stations in D.C. – violate the RSSA and deny D.C. consumers and

independent retail dealers the benefits of competition that the RSSA seeks to protect. Compl. ¶¶

6, 30-33. The RSSA was enacted to “end the current unsavory and non-competitive practices of

distributors” including “forc[ing] [retail dealers]…to abide by functional exclusion [sic] dealing

arrangements,” and to “ foster adequate and meaningful competition in the retail marketing



18

segment of the petroleum industry [in the District of Columbia].” Exhibit A hereto at 19-20

(emphasis added). The Council determined that §36-303.01 benefits consumers, as well as

independent retail dealers, through “honest and fair competition.” Id. at 28. Defendants’ use of

supply restrictions expressly prohibited by § 36-303.01(a)(6) is per se unlawful and removes

wholesale competition from the supply of about one-quarter of the retail gasoline stations in D.C.

The effect – for a substantial portion of the D.C. gasoline market – is to replace the competitive

wholesale supply system envisioned by the RSSA with a non-competitive wholesale supply

system imposed by Defendants. Defendants’ agreements harm competition in the supply of

Exxon-branded gasoline by preventing all such competition.

5

The Council itself spoke to the potential severity of the anti-competitive harms addressed

by the RSSA. When retailers are subject to agreements that violate the RSSA, “independence in

the operation of the retail service station as well as [their] competitive influence in the market

place are severely limited.” Exhibit A hereto at 19 (emphasis added). The legislative history

indicates that the RSSA is meant to stem the tide of such “non-competitive practices,” which

“will continue to have severe detrimental impacts on consumers in the District of Columbia.” Id.

(emphasis added).

In addition to being potentially severe, the type of injury asserted by the District is

sufficiently widespread to implicate the District’s quasi-sovereign interest. In Georgia v. Pa.

5 Contrary to Defendants’ assertions, the Attorney General has never stated that the District’s

antitrust investigation of the CPG Defendants “found no evidence of harm to competition.” CPGMem. at 3. Instead, the Attorney General stated that its investigation found that gasoline pricesdid increase in some parts of the city. CPG Mem., Exh. B. The Attorney General’s decision not

to bring an antitrust enforcement action is irrelevant to the issues in this action, which concern

the District’s parens patriae authority and the lawfulness or unlawfulness of Defendants’marketing agreements under the RSSA. Defendants’ references to antitrust actions brought

against them are likewise irrelevant to the issues before the Court. CPG Mem. at 3; Exxon

Mem. at 2.



19

R.R. Co., the defendants’ price-fixing scheme was considered to have widespread effects

because:

They may affect the prosperity and welfare of a State as profoundly as any diversion of waters from the rivers. They maystifle, impede, or cripple old industries and prevent theestablishment of new ones. They may arrest the development of aState or put it at a decided disadvantage in competitive markets.

324 U.S. at 450. The conduct of companies acting within the public sphere may result in severe

and widespread economic harm just as it may result in severe and widespread physical harm. See

id. (“[discriminatory trade barriers] may cause a blight no less serious than the spread of noxious

gas over the land or the deposit of sewage in the streams”). In Snapp, the Supreme Court held

that because employment affected all Puerto Ricans, albeit indirectly, and the defendants’

discrimination affected employment, the injury from defendants’ discrimination was widespread.

458 U.S. at 609. Moreover, an injury can be widespread if it affects a broadly-stated category of

persons; it need not affect all possible residents or consumers. New York ex rel. Vacco v. Mid

Hudson Med. Grp., P.C., 877 F. Supp. 143, 147-48 (S.D.N.Y. 1995).

The effects of Defendants’ unlawful marketing agreements are sufficiently widespread in

D.C. to implicate a quasi-sovereign interest. Defendants’ unlawful marketing agreements

deprive consumers of the benefits of competition in the supply of Exxon-branded gasoline

whenever and wherever consumers purchase Exxon-branded gasoline in D.C. Compl. ¶¶ 28-30,

33. This impact is “substantial,” and certainly “generalized,” as the CPG Defendants’ Exxon-

branded gasoline stations comprise about 25% of the gasoline stations in D.C. Id. ¶¶ 5, 29.

Furthermore, as the CPG Defendants and their affiliates are the exclusive suppliers for about

60% of all D.C. gasoline stations, the lack of competition in Exxon-branded gasoline has the

indirect effect of further reducing consumer choice in an already concentrated market. Id. ¶¶ 1,

28-30. The impact of this harm to competition is generalized as to D.C. gasoline consumers on



20

any given day: the District alleges that “many thousands of consumers” are among those

affected by the lack of competition in the supply of Exxon-branded gasoline in D.C. Id. ¶ 33.

Defendants contend that the alleged effects of their conduct are not sufficiently

widespread because the Complaint does not allege that all District residents are affected. For

example, Defendants contend that any harm does not affect those who only use public

transportation or D.C. consumers who purchase their gasoline at stations outside of D.C. CPG

Mem. at 19. These contentions miss the mark, however, as the District need not quantify a

certain volume of harm or a certain number of consumers harmed to meet its injury-in-fact

requirement. Snapp, 458 U.S. at 607. The harm asserted by the District need not affect every

consumer in D.C., and the Complaint’s general characterization of affected persons as

“consumers in D.C. who purchase [Exxon-branded gasoline]” alleges a sufficiently generalized

harm. Compl. ¶ 33.

Thus, the District has parens patriae standing to sue to enjoin Defendants’ alleged

violations of § 36-303.01(a), as it has a quasi-sovereign interest in the welfare of its own local

economy and a cognizable injury to that interest, and has alleged widespread and generalized

harm to consumers in D.C.

B. As Parens Patriae, The District Does Not Need Express Statutory Authority To

Seek Injunctive Relief Against Marketing Agreements That Violate The RSSA.

The District has an unquestioned quasi-sovereign interest in the enforcement of its laws.

Snapp, 458 U.S. at 601. Defendants contend that the District’s ability to enforce its own law is

limited in this case, however, because Subchapter III of the RSSA, containing § 36-303.01(a),

does not contain explicit enforcement authority for the District or its Attorney General, and that

§ 36-303.01(a) concerns only “private rights.” But, as discussed below, § 36-303.01(a) does not

provide for any express judicial remedy, either public or private, so a private right of action is



21

only implied . In addition, the District may enforce § 36-303.01(a), based on the District’s parens

patriae standing, the RSSA’s public interest purpose, and the Attorney General’s broad powers

to litigate in the public interest in D.C.

Defendants emphasize that Subchapter III of the RSSA does not provide an explicit right

of action for the District, in contrast to certain other parts of the RSSA that do. Defendants

contend that the RSSA’s text means that the Council intended to deny the District and the

Attorney General any ability to enforce § 36-303.01.6 CPG Mem. at 20-21.

Defendants rely on

Connecticut v. Physicians Health Servs. of Connecticut , 287 F.3d 110, 121 (2nd

Cir. 2002), for

the general proposition that “if the cause of action is based on a statute, the statute must authorize

an action by the State.” CPG Mem. at 11. However, in Physicians Health Servs., the Second

Circuit took great care to limit their holding:

By holding that the State lacks parens patriae standing because§ 1132(a)(3) does not expressly provide for such standing, we donot of course intend to imply that states may only sue in their parens patriae capacity when a statute specifically provides forsuits by states. “[S]tates have frequently been allowed to sue in parens patriae to ... enforce federal statutes that ... do not

specifically provide standing for state attorney generals.”

Physicians Health Servs., 287 F.3d at 121 (quoting New York ex rel Vacco v. Mid Hudson Med.

Group, P.C., 877 F.Supp. 143, 146 (S.D.N.Y.1995) (citations omitted)). The Second Circuit also

noted that Connecticut was seeking to enforce ERISA, a federal statute, as opposed to a state

statute, and that ERISA limited its relief to “participants, beneficiaries, and fiduciaries.” Id . at

120. Defendants’ reliance on a federal ERISA case is inapposite to the issue of the District’s

authority to enforce its own RSSA.

6 Defendants’ references to the non-passage of Bill 19-299, the “Retail Service Station

Amendment of 2011,” are unpersuasive. CPG Mem. at 2, Attach. A. Although the AttorneyGeneral did support passage of this Bill to “assist” its efforts to investigate and remedy anti-

competitive practices in D.C.’s gasoline markets, the non-enactment of the bill does not establish

that the Attorney General cannot seek to enjoin the particular practices at issue here.



22

The District may enforce the RSSA if it is a real party in interest for the claim asserted.

Parens patriae authority is “coextensive” with the real-party-in-interest requirement. West

Virginia ex rel. McGraw v. Comcast Corp., 705 F. Supp. 2d 441, 451 (E.D. Pa. 2010) (common

law parens patriae authority is coextensive with the real-party-in-interest requirement, whereas a

statutory grant may authorize the State to bring an action without common law parens patriae

authority, i.e., without being a real party in interest) (citing Louisiana ex. rel Caldwell v. Allstate

Ins. Co., 536 F.3d 418, 427 n.5 (5th Cir. 2008)); Gen. Motors Corp., 547 F. Supp. at 705 n.5

(“Because of the State’s quasi-sovereign interest in securing an honest marketplace, it would

have parens patriae standing to bring this action [to enforce its statute] even without the

authority provided by [the statute].”).

In addition to the District’s parens patriae standing, two other factors support a

determination that a state’s enforcement authority is implied in the absence of express authority

to sue. First, courts give significant weight to a state’s or state official’s general authority to sue.

Massachusetts v. EPA, 549 U.S. at 520. Sufficient authority may be found even if the statute

does not expressly apply to States, or specify the particular subject matter the statute is intended

to cover. See id. (holding that Massachusetts had procedural right to sue under 42 U.S.C. §

7607(b)(1) even though the section makes no mention of who may “petition for review” of

violations of the statute). In Massachusetts v. EPA, the Supreme Court gave significant weight

to the existence of a general procedural right to challenge federal agency rulemaking that is

arbitrary or capricious. Id. Because Massachusetts had both alleged an injury to a quasi-

sovereign interest and had a general procedural grant to challenge general agency rulemaking,

the state had parens patriae standing to challenge the EPA’s failure to promulgate regulations

that would alleviate global warming. Id. If the regulator has broad authority to protect the



23

public interest, the finding of authority to sue is even clearer. Allstate Ins. Co., 536 F.3d at 428.

In Allstate Insurance Company, the Louisiana Attorney general had express constitutional

authority to intervene in all civil suits and statutory authority to “institute and prosecute any and

all suits he may deem necessary for the protection of the interests and rights of the state.” Id. at

428-29 (quoting La. Const. art. IV § 8). This grant of authority to “vindicate the interests of the

state” supported Louisiana’s standing to sue as parens patriae in that case. Id.

Similarly, the Attorney General for the District of Columbia has been made “responsible

for upholding the public interest [and] [t]he Attorney General shall have the power to control

litigation and appeals, as well as the power to intervene in legal proceedings on behalf of this

public interest.” D.C. Code § 1-301.81. The Attorney General thus has the responsibility, and

the authority, to “uphold the public interest” in D.C. by litigating on behalf of the public.

Second, courts give weight to whether the law to be enforced protects the public interest,

as determined by the statutory text or legislative history. See Mid Hudson Med. Grp., 877 F.

Supp. at 146-49 (the federal ADA authorized suits by New York Attorney General as parens

patriae, even though such authority was not expressly provided, because the statute was intended

to protect the public from the harm of discrimination on the basis of disability). A public

purpose or public implication may arise even where private property or private interests are

concerned. See New Hampshire v. Hess, 20 A.3d. 212, 220 (N.H. 2011) (even though pollutants

were found in a private well, the State was permitted to seek damages for the cost related to

“investigating, monitoring, treating, remediating, replacing, or otherwise restoring such wells”).

The legislative history of Subchapter III shows it is intended to protect the public interest

and does not deal exclusively with “private rights.” A primary purpose of the subchapter is to

“enhance fair and honest competition and the ability of retail dealers to tailor their operations to



24

the needs, preferences, and conveniences of their local customers.” Exhibit A hereto at 28.

Furthermore, both the distributor’s ability to terminate and the retail dealers’ ability to prevent

enforcement of marketing agreements that violate § 36-303.01 are designed “to protect the

general public” and “serve the needs, preferences, and convenience of the consuming public.”

Id. at 29.

Moreover, the express policy of the RSSA is to favor “liberal[] constru[ction] in order to

effectively carry out the purposes of this chapter in the interests of the public health, safety, and

welfare.” D.C. Code § 36-305.01. The RSSA’s provisions are therefore liberally interpreted to

do so. Dege v. Milford , 574 A.2d 288, 292 (D.C. 1990). The District of Columbia Court of

Appeals has recognized that remedies must be available to retail dealers under § 36-303.01(a),

even though express remedies are not enumerated in the Act. See Davis v. Gulf Oil Corp., 485

A.2d 160, 171 n.12 (D.C. 1984). The Court of Appeals stated in Davis: “We are certain,

nonetheless, that the legislature intended to permit franchisees to seek relief from franchisors’

violations of § [36-303.01](a)(10); the only question is what remedies are appropriate.” Id.

In contrast to some other parts of the RSSA, the provisions of § 36-303.01(a) are not

covered by any express judicial remedy, either public or private. Given the RSSA’s stated

public-protection purpose, it would make little sense for the Court of Appeals to recognize, under

§ 36-303.01(a), an implied private right of action for retail dealers seeking to vindicate their

private interests, without also recognizing an implied parens patriae action for the District

seeking to vindicate the public interest.

Notwithstanding Defendants’ position to the contrary, the Supreme Court and lower

federal and state courts have consistently held that parens patriae standing is an adequate

substitute for, or is sufficient to meet, Article III’s essential standing requirements. Snapp, 458



25

U.S. at 607 (1982); Massachusetts v. E.P.A., 549 U.S. at 518 (2007) (holding strict adherence to

traditional standing analysis is improper in parens patriae cases) 7; Maryland People's Counsel v.

FERC , 760 F.2d 318, 321 (D.C. Cir. 1985) (quoting Valley Forge Christian Coll. v. Ams. United

for Separation of Church and State, Inc., 454 U.S. 464, 472 (1982)).

Defendants cite to inapposite decisions involving three situations not relevant to the

District’s action: foreign nations suing in U.S. courts; U.S. states suing the federal government;

and antitrust, RICO, and other class-action-type cases where damages are sought.

Foreign nations cannot assert a quasi-sovereign interest to sue in United States courts in

their parens patriae capacity, and they are held to the same Article III injury requirements as any

person suing in an individual capacity. See Serv. Emps. Int'l Union Health & Welfare Fund v.

Philip Morris, Inc., 249 F.3d 1068, 1073 (D.C. Cir. 2001) (citing Maryland People’s Counsel,

760 F.2d at 321); Arias v. Dyncorp, 738 F.Supp.2d 46, 53-54 (D.D.C. 2010) (quoting Estados

Unidos Mexicanos v. DeCoster, 229 F.3d 332, 336 (1st Cir. 2000)) 8. Defendants’ representation

that “the doctrine of parens patriae is merely a form of prudential standing” is premised on cases

involving a foreign nation’s attempt to assert a quasi-sovereign interest to achieve standing.

In cases where the federal government is the defendant, a state asserting parens patriae

standing is subject to more stringent consideration of the sufficiency of the state’s quasi-

7 In Massachusetts v. EPA, the Supreme Court rejected the very argument in Justice Scalia’s

dissent that the Defendants painstakingly try to make. 549 U.S. at 532 (“The Court, in effect,

takes what has always been regarded as a necessary condition for parens patriae standing—a

quasi-sovereign interest—and converts it into a sufficient showing for purposes of Article III.”).

8 The Defendants would require more for parens patriae standing than for normal standing underArticle III. See CPG Mem. at 12-16. In Arias the district court made clear that parens patriae

“is a doctrine that is reserved for U.S. States. It is a narrowly construed, judicially createdexception to the ‘normal rules of standing applied to private citizens in recognition of the special

role that a State plays in pursuing its quasi-sovereign interests in ‘the well-being of its populace.’” 738 F.Supp.2d at 53-54 (citations omitted) (emphasis added). Arias stands for the

proposition that more-generalized parens patriae injuries can satisfy Article III standing without

meeting the normal particularized-injury requirement.



26

sovereign interest. Kleppe, 533 F.2d at 676 (clarifying that “when a state seeks to sue…some

branch of the federal government, significant policy concerns, apart from the injury itself,

become relevant in determining the State’s fitness to bring suit”). These considerations are not

present in this action, as “[t]he private nature of the defendant does not, of itself, import any

substantial considerations, either pro or con, affecting the question of state standing.” Id.

Defendants rely most heavily on decisions involving the antitrust laws, class actions,

RICO, and damages actions. 9 Defendants try to equate the RSSA with an antitrust statute, and

impute to the District’s action the requirement that antitrust plaintiffs plead the antitrust injury in

the form of a specific anticompetitive effect. CPG Mem. at 16-19; see Atl. Richfield Co. v. USA

Petroleum Co., 495 U.S. 328, 334 (1990). Defendants also cite to Service Employees

International Union Health & Welfare Fund, 249 F.3d at 1072, a RICO case, for its discussion of

heightened causation requirements that are inapplicable to the District’s action. Finally, in

arguing that the District must plead injury-in-fact allegations as to the injuries to D.C. residents,

Defendants cite to parens patriae actions seeking damages. CPG Mem. at 15-17. In damages

actions, however, where a state is asserting claims on behalf of natural persons in its jurisdiction,

courts will inquire particularly into whether the state is asserting an interest more appropriately

asserted by a private party. See, i.e., Table Bluff Reservation (Wiyot Tribe) v. Philip Morris, Inc.,

256 F.3d 879, 885 (9th Cir. 2001); In re Tobacco Litigation, 83 F. Supp. 2d 125, 134 (D.D.C.

1999) aff'd sub nom. Serv. Emps. Int'l Union Health & Welfare Fund v. Philip Morris, Inc., 249

F.3d 1068 (D.C. Cir. 2001). This consideration is irrelevant to the District’s action for injunctive

9 Snapp., 469 F. Supp. at 931 (referencing “ Hawaii v. Standard Oil Co. of California, 405 U.S.

251, 92 (1972) (antitrust damages); California v. Frito-Lay, Inc., 474 F.2d 774 (9th Cir.1973)(class action); West Virginia v. Chas. Pfizer and Co., 440 F.2d 1079 (2d Cir. 1971) (class action); In re Motor Vehicle Air Pollution Control Equipment , 52 F.R.D. 398 (C.D.Cal.1970) (class

action); In re Montgomery County Real Estate Litigation, 452 F. Supp. 54 (D.Md.1978)).



27

relief. Furthermore, “a state seeking to proceed as parens patriae need not demonstrate the

inability of private persons to obtain relief if parens patriae standing is otherwise indicated.” Mid

Hudson Med. Grp., P.C., 877 F. Supp. at 145, n.1 (quoting Puerto Rico v. Bramkamp, 654 F.2d

212, 217 (2d Cir.1981)).

Thus, the District has both parens patriae standing and authority to seek injunctive relief

against Defendants’ alleged violations of the RSSA.

C. Defendants’ Marketing Agreements Violate 36-303.01(a)(6) Of The RSSA

Defendants concede that the franchise agreements at issue in this case are marketing

agreements under the RSSA. CPG Mem. at 22-26; Exxon Mem. at 9-10, 12. In addition,

Defendants never dispute that these agreements create exclusive supply rights in the distributor,

whether Exxon (until 2009) or Anacostia (since 2009). See Compl. ¶¶ 3-4, 15, 21-23, 24.

Defendants contend, however, that these exclusive supply rights are somehow protected by the

language in § 36-303.01(a)(6) that restricts retail dealers from selling “under the distributor’s

trademark” any gasoline that the dealers did not actually purchase from that distributor. But

even assuming, for the sake of argument, that the Exxon trademark is considered to be “the

distributor’s trademark,” the dealers still have the right under § 36-303.01(a)(6) to purchase

Exxon-branded gasoline from any distributor they choose. The only issue raised by Defendants’

interpretation of § 36-303.01(a)(6) is whether, having purchased Exxon-branded gasoline from

another distributor, the dealers (i) are permitted to use the Exxon trademark when selling the

Exxon-branded gasoline, or (ii) must sell the Exxon-branded gasoline as if it were unbranded

gasoline. However this issue might be resolved, the Complaint has stated a claim for relief

because it alleges that Defendants’ agreements unlawfully prevent dealers from purchasing

Exxon-branded gasoline from any available distributor.



28

In any event, Defendants’ interpretation of § 36-303.01(a)(6) rests on the faulty notion

that Anacostia and Springfield’s rights in Exxon’s trademarks could prevent independent retail

dealers from selling any gas under Exxon’s trademark other than gas purchased from Anacostia

or Springfield. However, Exxon deliberately has not given such expansive trademark rights to

Anacostia or Springfield, and Defendants’ interpretation of § 36-303.01(a)(6) is inconsistent with

the relevant legislative history.

1. Defendants’ interpretation of § 36-303.01(a)(6) ignores the relevant

legislative history

Defendants’ argument relies primarily on the statutory language emphasized below:

Prohibit a retail dealer from purchasing or accepting delivery of,on consignment or otherwise, any motor fuels, petroleum products,automotive products, or other products from any person who is nota party to the marketing agreement or prohibit a retail dealer fromselling such motor fuels or products, provided that if the marketingagreement permits the retail dealer to use the distributor'strademark, the marketing agreement may require such motor fuels, petroleum products, and automotive products to be of a reasonablysimilar quality to those of the distributor, and provided further that the retail dealer shall neither represent such motor fuels or products as having been procured from the distributor nor sellsuch motor fuels or products under the distributor's trademark ;

D.C. Code § 36-303.01(a)(6) (emphasis added).

The legislative history of § 36-303.01(a)(6) sheds light on the meaning of the language

upon which Defendants rely. In the bill as introduced, § 36-303.01(a)(6) stopped after the phrase

“reasonably similar quality to those of the distributor.” CPG Mem., Attach. C, at 19. The

Council decided that additional language was needed because

[§ 36-303.01(a)(6)] prohibited provisions in marketing agreementsrequiring exclusive dealing arrangements. However, in the eventthat a marketing agreement authorized the use of the distributor’strademark, this section authorized the distributor to require that allmotor fuels and products sold at the retail service station be of areasonably similar quality to those trademarked motor fuels and products supplied by the distributor. The Committee receivedseveral communications which stated that the latter provisionwould authorize the retail dealer to commingle the distributor’s



29

motor fuels with competitive products, to violate trademark rights,and to use misrepresentation and deceptive advertising in the saleof motor fuels and other products. This provision was notintended to authorize these illegal practices, but was designed to provide some minimal protection to the distributor’s trademark .

Exhibit A hereto at 43 (emphasis added). The added language was “a prohibition against a retail

dealer misrepresenting the source of his motor fuels or products.” Id. at 40.

The Council’s analysis of the final version of §36-303.01(a)(6) stated the statute:

prohibits exclusive dealing arrangements. This subsection also prohibits such commingling of motor fuels and products as toconstitute fraud, misrepresentation, or trademark violations. Thissection does not authorize a distributor to establish a functionalexclusive dealing arrangement by an overly strict interpretation ofthe phrase “reasonably similar quality”.

Id. at 53 (emphasis added). The legislative history shows that the Council intended to prohibit

commingling of gasoline, even if the gasoline was of “reasonably similar quality,” and to

prohibit retail dealers from misrepresenting to consumers that the gasoline was of a particular

trademarked brand. This is the “minimal protection” of a distributor’s trademark to which the

legislative history refers. Exhibit A hereto at 43. None of the potential harms suggested in the

legislative history can occur when a retail dealer obtains the same brand of gasoline from a

distributor other than the distributor with which the retail dealer has a marketing agreement.

Nothing in the legislative history suggests that the Council ever intended the RSSA to prevent

dealers from truthfully representing branded gasoline to be the branded gasoline that it is.

Defendants’ omission of any legislative history is telling, because the legislative history

squarely contradicts Defendants’ interpretation. Even “where the words of a statute have a

‘superficial clarity,’ a review of the legislative history or an in-depth consideration of alternative

constructions that could be ascribed to statutory language may reveal ambiguities that the court

must resolve.” Peoples Drug Stores, Inc. v. District of Columbia, 470 A.2d 751, 754 (D.C.

1983) (citations omitted). Courts look beyond the words of the statute if



30

(2) the literal meaning of the statute “produces absurd results”; (3)the plain meaning construction leads to an “obvious injustice”; or(4) refusal to adhere to plain meaning is necessary in order to“effectuate the legislative purpose” of the statute as a whole.

Dobyns v. United States, 30 A.3d 155, 159 (D.C. 2011) (citation omitted). Defendants’

interpretation implicates all of these reasons for considering the legislative history. Also, the

RSSA is a remedial statute intended to protect the “interests of the public, health, safety, and

welfare,” and its provisions must be liberally interpreted to fulfill those purposes. D.C. Code

§ 36-305.01; Dege, 574 A.2d at 292.

Defendants’ interpretation of §36-303.01(a)(6) is clearly inconsistent with the legislative

history. See Peoples Drug Stores, 470 A.2d at 754 (quoting Dyer v. D.C. Dep’t of Hous. and

Cmty. Dev., 452 A.2d 968, 969-70 (D.C.1982) (“[t]he use of legislative history as an aid in

interpretation is proper when the literal words of the statute would bring about a result

completely at variance with the purpose of the Act”)); District of Columbia v. Orleans, 406 F.2d

957, 959 (D.C. Cir. 1968) (“the ‘plain meaning’ doctrine has always been subservient to a truly

discernible legislative purpose however discerned, by equitable construction or recourse to

legislative history”).

The statute prevents a retail dealer operating under a marketing agreement involving use

of a trademark from selling other-branded and non-branded fuels, even if of a “reasonably

similar quality,” under the branded trademark.10

The statute does not prevent such a dealer from

selling branded gasoline under the trademark for that brand.

10 The Superior Court’s Order in the Kazemzadeh case is consistent with the District’s

interpretation of § 36-303.01, although Kazemzadeh did not present the same issue as the

Complaint in this case. Defendants accurately note that the Kazemzadeh Order held that a

marketing agreement between retail dealers and BP-branded distributors that required the dealersto purchase all of their gasoline, BP-branded or otherwise, from those distributors violated § 36-

303.01(a)(6). The Court cited to § 36-303.01(a)(6)’s legislative history stating that the purpose

of the trademark language was to provide “some minimal protection” to the distributor’s



31

2. Anacostia and Springfield have no independent rights in Exxon’strademarks

Defendants argue that the phrase “distributor’s trademark” really means Exxon’s

trademark as “owned, leased, or otherwise controlled” by Anacostia or Springfield. CPG Mem.

at 23 n.16. Defendants assert that D.C. Exxon-branded retail dealers can only use the Exxon

trademark by virtue of Defendants’ illegal franchise agreements with Anacostia and Springfield,

and hence can only sell Exxon-branded gas purchased from Anacostia and Springfield. Id .

Defendants’ argument is inherently circular. Other D.C. area distributors have

distribution agreements with Exxon and the ability to permit independent retail dealers to use

Exxon’s trademarks to sell Exxon-branded gasoline. Compl. ¶¶ 2, 22. If Defendants were not

enforcing their exclusive supply agreements with these independent retail dealers, in violation of

the RSSA, then Exxon-branded retail dealers in D.C. could, and would, have supply agreements

with the other Exxon-branded distributors in the D.C. area. Exxon-branded independent retail

dealers could purchase the same Exxon-branded gasoline that they purchase from Anacostia or

Springfield from any Exxon-branded distributor in the D.C. area, and sell it under Exxon’s

trademark.

Moreover, the Council understood the difference between a distributor’s use of its own

trademark and a branded jobber’s use of a refiner’s trademark. Defendants supply “retail service

station[s] . . . operated by an independent dealer under a marketing agreement with a refiner (or a

branded jobber) pursuant to which the dealer” purchases gasoline “directly from the refiner (or

trademark, and held that the RSSA required the retail dealers to be able to purchase and sell non-

BP branded gasoline “so long as the quality of the fuel is similar and there is no representation

that the ‘other’ brands were obtained from BP or other brands under BP’s trademark.” (emphasis

in original). Kazemzadeh. v. E. Petroleum Corp., No. 2006-CA-9077B, slip op. at 11-12 (Super.Ct. D.C. Aug. 19, 2010). The Court’s emphasis on “and” indicates that the prohibition on selling

gasoline under a distributor’s trademark is consistent with that gasoline being something “other”

than the trademarked brand of gasoline.



32

indirectly through the branded jobber), is granted a right to use the refiner’s brand name.”

Exhibit A hereto at 4 (emphasis added). Because the brand name at issue is Exxon’s,

Defendants’ marketing agreements would not be described by the Council as agreements

“pursuant to which the dealer obtains motor fuels from the jobber, is granted a right to use a

brand name owned by the jobber.” See Exhibit A hereto at 4 (emphasis added). Along with the

rest of the RSSA’s legislative history, these definitions show that the Council understood the

distinction between a refiner’s trademark and a jobber’s trademark, and did not intend to conflate

the two in § 36-303.01(a)(6).

Moreover, Defendants’ own marketing agreements confirm that Anacostia and

Springfield have no independent rights to the use or protection of Exxon’s trademarks. The

distribution agreements state:

Exxon Mem., Paolino Decl., Exh. C § 11(k), Exh. D § 11(k); see id . Exh. C § 11(a), Exh. D

§ 11(a)

The distribution agreements also prohibit use of

Id. Exh. C § 11(i), Exh. D

§ 11(i). Defendants thus did not contract to provide any kind of independent rights in Exxon’s

trademarks to its distributors Anacostia and Springfield.

Defendants did contract to prohibit retail dealers from selling the “petroleum products of

others” or “unbranded petroleum products” under Exxon’s trademarks:

Redact

Redact

Redact

Redact



33

Exxon Mem., Paolino Decl., Exh. C § 11(a), Exh. D § 11(a) (emphasis added). Likewise,

Anacostia’s successor franchise agreements state that the contracting retail dealer

Exh. B

§ 14(a). Defendants’ marketing agreements show that Defendants’ purposes are consistent with

the purposes of § 36-303.01(a)(6)’s trademark language, and Defendants have structured their

business relationship accordingly. The position taken by their Motions, on the other hand, is

inconsistent with the legislative purpose of § 36-303.01(a)(6) and inconsistent with Defendants’

own agreements.

The “reasonableness of a construction can often be tested by considering the

consequences of a different one.” District of Columbia v. Seven-Up Wash., Inc., 214 F.2d 197,

201 (D.C. Cir. 1954). If the Council really intended § 36-303.01(a)(6) to exempt the purchase

of branded gasoline from its prohibition on exclusive marketing agreements, it could have done

so much more simply, with language such as “provided that if the marketing agreement permits

the retail dealer to use the distributor's trademark, the marketing agreement may require such

trademarked motor fuels, petroleum products, and automotive products to be purchased only

from the distributor.” There would be no concern about a retail dealer’s misrepresenting the

source of the branded gasoline because the retail dealer could only have purchased the branded

gasoline from the distributor that was a party to the marketing agreement. Defendants

undoubtedly wish that this was the language and intent of § 36-303.01(a)(6), but it is not. The

words of the statute and the legislative history show that the Council did not intend this result.

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Defendants’ contention that they are exempt from § 36-303.01(a)(6)’s prohibition on

exclusive supply agreements is unsupported by the legislative history, the language of the RSSA,

and the parties’ own agreements. Defendants’ marketing agreements are subject to § 36-

303.01(a)(6) and violate its terms.

D. Exxon Is A Proper Party To The District’s Action

Exxon separately claims that it is not subject to liability under the RSSA because it

arguably is not a distributor under the RSSA and does not currently have its own marketing

agreements under the RSSA. To prevail on its motion, Exxon must establish that its distribution

agreements, its assignments of franchise agreements, and its distributors’ current franchise

agreements, in combination, should not be considered marketing agreements. Exxon’s Motion

fails because the District has alleged the facts giving rise to Exxon’s liability under § 36-

303.01(a)(6) and (11) of the RSSA.

The District’s Complaint alleges that Exxon set up a series of unlawful distribution

agreements with the operators of the Exxon-branded gasoline stations in D.C., assigned those

agreements to the other Defendants, and is now enforcing the agreements or successor

agreements through its gasoline-distribution agreements with distributors in the D.C. area.

Complaint ¶¶ 15-23. These allegations entitle the District to relief under the RSSA, whether or

not Exxon is technically a “distributor” at this time.

Exxon also asserts that the District’s action is barred by the two-year statute of limitations

applicable to “[a] civil action brought by a retail dealer against a distributor pursuant to this

section.” D.C. Code § 36-303.06(c); Exxon Mem. at 9 n.7. However, this action is not “brought

by a retail dealer” and is not brought “pursuant to” § 36-303.06(c); therefore, the two-year statute

of limitations does not apply. Moreover, the general three-year statute of limitations that applies



35

when “a limitation is not otherwise specially prescribed” does not apply “to actions brought by

the District of Columbia government.” D.C. Code § 12-301.

1. Exxon is a party to marketing agreements under the RSSA

Exxon contends that since it is not currently a distributor, and since none of its current

agreements are directly with a retail dealer, it cannot be considered a party to a marketing

agreement. Exxon is wrong: its distribution agreements and assignments are marketing

agreements to which it is a party and which, in combination with the franchise agreements, form

an unlawful marketing agreement that violates § 36-303.01(a). Compl. ¶¶ 6, 22, 32.

Exxon’s unlawful marketing agreements are alleged in paragraphs 15-23 of the

Complaint. The District alleges that Exxon was originally a distributor; until 2009, Exxon was

“the owner and exclusive supplier of all the Exxon-branded gasoline stations in D.C.” and

maintained that exclusivity through its standard gasoline-distribution agreements” “with all of

[Exxon’s] gasoline distributors in and around D.C.” Id. ¶¶ 15-16. Exxon’s gasoline-distribution

agreements prohibited “its distributors from supplying Exxon-branded gasoline to a D.C.

gasoline station already supplied by Exxon or another Exxon-branded distributor.” Id. ¶ 16.

Pursuant to purchase and sale agreements, between December 2008 and February 2010, Exxon

(1) transferred its exclusive supply rights and its real estate rights for Exxon-branded gasoline

stations in D.C. to Anacostia and Springfield; and (2) “as a condition precedent to the

assignment,” required Anacostia and Springfield to enter into Exxon’s standard gasoline-

distribution agreements. Id. ¶¶ 17-19. Exxon has, and had, distribution agreements with its

other branded distributors in the D.C. area that likewise prohibit those distributors from

supplying Exxon-branded gasoline to a gasoline station already supplied by another Exxon-

branded distributor. Id . ¶ 16. Exxon thus maintained the exclusive supply rights for D.C.



36

Exxon-branded retail dealers found in Exxon’s franchise agreements with independent retail

dealers, having substituting Anacostia or Springfield as the distributors, and Exxon continues to

enforce this exclusivity through its distribution agreements with Anacostia and Springfield. Id.

¶¶ 20-22, 5.

Accordingly, “Exxon’s assignments of these dealer-franchise agreements to Anacostia or

Springfield, in combination with Exxon’s standard gasoline-distribution agreements with its

distributors in and around D.C., have been and are ‘marketing agreements’ within the meaning of

D.C. Code § 36-301.01(7).” Id. ¶ 22. Exxon’s, Anacostia’s, and Springfield’s:

dealer-franchise and gasoline-distribution agreements, individuallyand in combination, are marketing agreements that, in violation ofthe [RSSA’s] §§ 36-303.01(a)(6) and (a)(11), prevent theapproximately 27 independent retail dealers that operate Exxon- branded gasoline stations in D.C. from buying Exxon-brandedgasoline from suppliers other than those affiliated with the CPGDefendants.

Id. ¶ 6.

The RSSA provides that multiple agreements may constitute unlawful marketing

agreements, as long as the multiple agreements violate the RSSA. A “marketing agreement”

under the RSSA can be “any written agreement, or combination of agreements, including any

contract, lease, franchise, or other agreement.” D.C. Code § 36-301.01(7). For purposes of D.C.

Code § 36-303.01(a), a marketing agreement includes “any oral or written collateral or ancillary

agreement.” Black’s Law Dictionary defines “ancillary” as “supplementary; subordinate” and

“collateral” as “Supplementary; accompanying, but secondary and subordinate.” Black’s Law

Dictionary 101, 297 (9th ed. 2009). A “collateral contract” may be “an agreement made before

or at the same time as, but separately from, another contract.” Id . at 367.

Exxon contends that each agreement constituting a marketing-agreement combination

must be between a distributor and retail dealer, due to the RSSA’s definition of the parties to a



37

marketing agreement. Exxon Mem. at 9-11. However, the statutory language in § 36-303.01(a)

does not require a combination of agreements to be merely a collection of “marketing

agreements,” but provides that “collateral or ancillary agreements” may violate that section as

well. Exxon’s plain-meaning argument fails.

Exxon also contends that even if the definition of “marketing agreement” is ambiguous,

the RSSA’s legislative history limits “marketing agreements” to “one or more of the following

agreements: a retail service station lease, a trademark agreement, and a motor fuel supply

agreement.” Exhibit A hereto at 49. Once more, Exxon’s argument is undone by its selective

citation of the RSSA and its legislative history. The legislative history Exxon cites does not

address the phrase “or other agreement” in § 36-301.01(7)’s definition of marketing agreement

as “any written agreement, or combination of agreements, including any contract, lease,

franchise, or other agreement.” It likewise is silent on the expansion of marketing agreements to

include “any oral or written collateral or ancillary agreement” for purposes of liability under §

36-303.01(a). The legislative history’s discussion of the types of agreements that may compose

a marketing agreement could not have been intended to be exhaustive, given the language of

§§ 36-303.01(a) and 36-301.01(7). Moreover, Exxon’s distribution agreements are both

trademark agreements and motor fuel supply agreements, and the assignments simply transfer

those types of rights from Exxon to Anacostia or Springfield. Exxon Mem., Exh. A, at 1, 3, 4,

Exh. B, at 1, 3, 4, Exh. C, § 1(a), Exh. D, §1(a); Compl. ¶¶ 17-22. The District’s allegations that

the assignments and distribution agreements are unlawful marketing agreements do not conflict

with the legislative history.

If the RSSA’s provisions regarding the types of documents that constitute marketing

agreements violating §§ 36-303.01(a)(6) and (a)(11) are given their ordinary meaning, it is clear



38

that the RSSA does not have the plain meaning Exxon claims. Carter v. State Farm Mut.

Automobile Ins. Co., 808 A.2d 466, 471 (D.C. 2002) (quoting Davis v. United States, 397 A.2d

951, 956 (D.C. 1979).) Exxon’s Motion raises at most a question of fact regarding the

interpretation of documents constituting marketing agreements, but that issue need not be

resolved to deny Exxon’s Motion. See Howard University v. Best , 484 A.2d 958, 966-67 (D.C.

1984). Exxon fails to show, as a matter of law, that the District has not alleged a combination of

agreements, including the assignments and distribution agreements, that violate §§ 36-

303.01(a)(6) and (a)(11).

In fact, the District has sufficiently alleged that the distribution agreements and the

assignments are part of a combination of agreements constituting Defendants’ unlawful

marketing agreements. Basic contract interpretation principles hold that a combination of

agreements may include agreements between different parties or those executed at different

times. See 17A C.J.S. Contracts § 401 (2013) (“Two or more documents may be construed as

one contract even though the parties are not all the same, such as where some of the documents

are executed by parties who do not have a part in executing the others, provided that the

agreements in question relate to the same subject matter.”); TVT Records v. Island Def Jam

Music Grp., 412 F.3d 82, 89-90 (2d Cir. 2005) (holding that two separate contracts “intended to

effectuate the same result” were parts of the same agreement, even though one agreement was

not fully executed). Here, the assignments and distribution agreements were executed as part of

a series of purchase and sale transactions that transferred Exxon’s exclusive supply arrangements

to Anacostia and Springfield and left Exxon with the ability to enforce the exclusivity provisions.

Compl. ¶¶ 15-19. The existence of multiple agreements instead of one, and the substitution of

Anacostia and Springfield as the “distributors” under the franchise agreements, simply means



39

there is now a combination agreements – and a combination of current and former distributors –

restricting independent retail dealers’ ability to purchase Exxon-branded gasoline. Id . ¶¶ 6, 23,

33.

Upholding Exxon’s interpretation of the RSSA would elevate form over substance,

allowing Exxon to escape RSSA liability while actively maintaining the exclusive supply

arrangements it set up in D.C. The D.C. Court of Appeals has declined to interpret the RSSA so

narrowly, holding it must be interpreted liberally to effectuate its public interest purposes. Dege

v. Milford , 574 A.2d 288, 290 n.3 (D.C. 1990). While interpreting another provision of 36-

303.01(a), the Court of Appeals stated:

We also note that the position advanced by [defendant] wouldenable a franchisor to easily undermine the purposes of the RSSA.Cf. Barnes v. Gulf Oil Corp. , 795 F.2d 358, 362 (4th Cir.1986)

(“[a] franchisor cannot circumvent the protections the [comparablefederal act] affords a franchisee by the simple expedient of

assigning the franchisor's obligation to an assignee.

Id .; see Kazemzadeh, slip op. at 13-14 (holding that a purchase and sale agreement was a

marketing agreement under the RSSA because it contained the types of terms required of

marketing agreements). The result would be equally untenable in this action.

2. Exxon’s marketing agreements contain exclusive dealing terms in

violation of § 36-303.01(a)

Exxon’s final contention is that the RSSA does not apply to its agreements because the

agreements do not “exclude competition” by their terms. Exxon Mem. at 11-13. But the District

has sufficiently pleaded that the agreements, in combination with other agreements, effectively

restrict from whom independent retail dealers in D.C. may purchase Exxon-branded gasoline, in

violation of D.C. Code § 36-303.01(a).

Exxon claims that neither the assignments nor the distribution agreements “create an

exclusive relationship for the retail dealers.” Exxon Mem. at 12. But the assignments



40

transferred, to Anacostia and Springfield, Exxon’s franchise rights to exclusive relationships

with the independent retail dealers. The franchise agreements stated, in relevant part: “DEALER

agrees to buy and receive directly from EXXONMOBIL all of the EXXON-branded gasoline

diesel sold by DEALER.” Compl. ¶¶ 21-28. The assignments therefore violate §§ 36-

303.01(a)(6) and (a)(11) by setting up unlawful marketing agreements between Exxon’s

distributors and Exxon’s retail dealers.

Exxon’s distribution agreements violate the RSSA by operating to enforce Anacostia’s

and Springfield’s exclusive supply rights with independent retail dealers. The distribution

agreements, titled “Market Development and Representation,” provides in relevant part:

Exxon Mem., Paolino Decl. Exh. C, § 12(a)(3), Exh. D, § 12(a)(3).

Id. Exh. C, § 1(a), Exh. D, § 1(a).

The distribution agreements have operated to prevent any D.C.-area Exxon-branded

distributor, other than Anacostia or Springfield, from supplying the independent retail dealers in

D.C., ever since the 2009-2010 purchase and sale transactions. Compl. ¶¶ 5. 18-19. The

distribution agreements thus have the same impact on the retail dealers’ rights, and are equally

violative of the RSSA, as the franchise agreements. Compl. ¶¶ 6, 23.

Exxon’s marketing agreements prohibit independent retail dealers, and the consumers

who purchase Exxon-branded gasoline from these dealers, from the benefits of competition in

the supply of Exxon-branded gasoline. The Court should deny Exxon’s Motion.

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V. CONCLUSION

For the reasons stated herein, Defendants’ Motions to Dismiss the District’s Complaint

should be denied. A proposed Order is submitted with this Opposition.

Respectfully submitted,

IRVIN B. NATHANAttorney General for the District of Columbia

ELLEN A. EFROSDeputy Attorney General, Public Interest Division

/s/ Bennett Rushkoff

BENNETT RUSHKOFF (Bar #386925)

Chief, Public Advocacy Section

/s/ Catherine A. Jackson

CATHERINE A. JACKSON (Bar #1005415)

NICHOLAS A. BUSH (Bar #1011001)

Assistant Attorneys GeneralOffice of the Attorney General

441 Fourth Street, N.W., Suite 600-S

Washington, DC 20001(202) 442-9864

[email protected]

Dated: November 8, 2013 Attorneys for the District of Columbia

CERTIFICATE OF SERVICE

I hereby certify that on November 8, 2013, I caused copies of the foregoing District of

Columbia’s Memorandum of Points and Authorities in Opposition to Motions to Dismiss ofExxonMobil Oil Corp., Capitol Petroleum Group, Anacostia Petroleum Realty, LLC and

Springfield Petroleum Realty, LLC and the attached Proposed Order to be served by the Court’s

electronic service on counsel for the parties in this action.

/s / Bennett Rushkoff

Bennett Rushkoff (Bar #386926)

opp mpa redacted (5)

Documents