SUPERIOR COURT OF THE DISTRICT OF COLUMBIACIVIL DIVISION

ORDER

This matter comes before the Court on separate Motions to Dismiss filed on October 7,

2013 by Defendant ExxonMobil Oil Corporation’s (“ExxonMobil”) and by Defendants Capitol

Petroleum Group, LLC, Anacostia Realty, LLC, (“Anacostia”) and Springfield Petroleum

Realty, LLC (“Springfield”) (referred to collectively as “CPG Defendants”). The District filed

Opposition to both motions on November 8, 2013. ExxonMobil and the CPG Defendants filed

separate replies on November 19, 2013. The Court held oral argument on the motions to dismiss

on January 9, 2014. Upon consideration of the pleadings and the record as a whole, Defendants’

Motions to Dismiss are GRANTED.

Background

The District seeks declaratory and injunctive relief against Defendants’ enforcement of

marketing agreements for the purchase and sale of gasoline that allegedly violate the Retail

Service Station Act (“RSSA”), D.C. Code § 36-303.01, et seq. It is undisputed that the CPG

Defendants own about 60% of the approximately 107 total retail gasoline service stations in the

District of Columbia. This concentration of ownership is relatively recent. Before about

December of 2008, the CPG Defendants had been run primarily by independent retail dealers

DISTRICT OF COLUMBIA,

Plaintiff,

v.

EXXONMOBIL OIL CORP., et al.,

Defendants.

***** Case No. 2013 CA 005874 B* Judge Craig Iscoe****

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pursuant to franchise agreements under which the independent dealers purchased gasoline from

ExxonMobil and sold it under the ExxonMobil brand. In 2008, ExxonMobil sold or assigned its

franchise agreements in the District to the CPG Defendants.1 ExxonMobil also sold or assigned

the stations’ real estate and equipment. Although there is some dispute about the precise nature

of what ExxonMobil and the CPG Defendants characterize as “Distribution Agreements,” the

agreements at issue give Anacostia and Springfield the nonexclusive right (or obligation) to

distribute ExxonMobil gas at the stations at issue. The District alleges that the agreements

violate the RSSA because they deny independent retailers the benefit of competition.

Accordingly, the District requests that the Court enjoin enforcement of the marketing agreements

and issue declaratory relief that the marketing agreements violate the RSSA.

In their motions to dismiss, Defendants contend that District does not have standing under

the RSSA or any other statute or principle of law to bring the action before the Court or to seek

the requested relief. The District contends that it has standing under the RSSA and also through

parens patriae. The Court turns first to the District’s statutory arguments that it has standing and

then to parens patriae authority.

Standard of Review

A plaintiff’s complaint must contain a short and plain statement of the claim for relief,

such that it “puts the defendant on notice of the claim against him.” Sarete, Inc. v. 1344 U St.

Ltd. P’ship, 871 A.2d 480, 497 (D.C. 2005); see generally Super. Ct. R. Civ. P. 8(a). Defendants

may contest the legal sufficiency of the complaint by filing a motion to dismiss pursuant to

Superior Court Rule 12(b)(6). See, e.g., Luna v. A.E. Eng’g Servs., LLC, 938 A.2d 744, 748

1 The facts presented above are a general summary of complex and detailed transactions. To the extent that the

summary omits certain facts and details, recitation of those facts is not necessary to a full consideration of the legal matters at issue in this Order.

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(D.C. 2007); see generally Super. Ct. R. Civ. P. 12(b). Upon receipt of a motion to dismiss, the

court must determine (1) whether the complaint includes well-pleaded factual allegations, and

(2) whether such allegations plausibly give rise to an entitlement for relief. See Ashcroft v. Iqbal,

129 S.Ct. 1937, 1949-52 (2009); see also Potomac Dev. Corp. v. District of Columbia, 28 A.3d

531 (D.C. 2011), Mazza v. House Craft LLC, 18 A.3d 786, 790 (D.C. 2011) (adopting Iqbal’s

heightened pleading standard), vacated as moot, No. 09-CV-1068 (D.C. June 30, 2011) (per

curiam). The complaint need not include “detailed factual allegations,” but must include “more

than an unadorned, the defendant-unlawfully-harmed-me accusation.” Potomac Dev. Corp., 28

A.3d at 544.

When considering a motion to dismiss, the court must accept, as true, all of the

allegations in the complaint, and construe all facts and inferences in favor of the non-moving

party. See Murray v. Wells Fargo Home Mort., 953 A.2d 308, 316 (D.C. 2008). The allegations

must, however, be sufficient “to raise a right to relief above the speculative level.” Clampitt v.

Am. Univ., 957 A.2d 23, 29 (D.C. 2008). Further, the complaint must provide more than mere

labels and conclusions. Grayson v. AT&T Corp., 980 A.2d 1137, 1144 (D.C. 2009).

Discussion

I. The District Does Not Have Express Statutory Authority to Bring This Action

A state may bring a civil action if there is express statutory authority authorizing the

Attorney General2 or other official to enforce the statutory provision at issue. It is undisputed

that the RSSA does provide an express statutory right for the Attorney General or Mayor to

2 The plain text of the RSSA expressly allows for the Mayor to enforce Subchapters II and IV. For the purposes

of this Order, the Court refers to D.C. Attorney General and Mayor interchangeably when referring to the District official responsible for enforcing the law.

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pursue violations of Subchapter3 III. The failure to give the Mayor authority to enforce

violations of Subchapter III is not a mere oversight. The RSSA expressly allows the Mayor to

enforce its Subchapters II and IV, but includes no similar statutory authority to enforce

Subchapter III. D.C. Code § 36-302.04(c) provides, “[t]he Mayor is authorized to promulgate all

other rules and regulations necessary for the proper implementation and enforcement of

Subchapters II and IV of this chapter.” D.C. Code § 36-302.05(a) further provides,

Whenever the Mayor has reason to believe that any person has violated or is violating any provision of subchapter II or IV of this chapter or the rules and regulations promulgated pursuant thereto, he shall cause written notice to be served upon such person in the manner provided by law … If the person so ordered refuses or fails to comply with such order, the Mayor shall be authorized to apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or permanent injunction restraining such person from continuing such violation. The court shall have jurisdiction to grant such temporary restraining order, preliminary injunction, permanent injunction, or other relief as may be appropriate under the circumstances.

(emphasis added). The District, however, is not alleging that Defendants violate either

Subchapters II or IV, but only that the Defendants’ marketing agreements with retail dealers

violate Subchapter III of the RSSA (D.C. Code § 36-303.01(a)(6) and (a)(11)).

Subchapter III expressly provides remedies only to retail dealers. See D.C. Code § 26-

303.04 (providing terms for the sale or repurchase of products and equipment in the event of

termination of, cancellation of, or failure to renew a marketing agreement). In addition,

Subchapter III expressly allows for a retail dealer to file a civil action against distributors,

providing

(a)(1) In addition to any and all other remedies available to the retail dealer under this subchapter, the marketing agreement, any other statute or act, or law or equity, a retail dealer may maintain a civil action against a distributor for:

(A) Failure to make such disclosures as are required by § 36-303.02;

3 Although “subchapter” is not capitalized in the text of the RSSA, the Court capitalizes “Subchapter” in this

Order to make it easier for the reader to locate citations.

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(B) Failure to repurchase as required by § 36-303.04(b)(C) Failure to pay the full value of any business goodwill as required by § 36-303.04(d);(D) Wrongful or illegal cancellation of, termination of, or failure to renew a marketing agreement with the retail dealer under § 36-303.03;(E) Unreasonably withholding approval of a proposed sale, assignment, or other transfer of the marketing agreement.

Id. Unlike Subchapters II and IV, the text of Subchapter III does not provide enforcement

authority to the Mayor, Attorney General, or any other public official.

II. The District Does Not Have Implied Statutory Authority to Bring This Action

Because there is no express provision for the Mayor, Attorney General or other District

official to maintain a right of action under Subchapter III, the District argues that the Court

should find it has standing or an implied right of action through the Attorney General’s broad

authority to enforce statutory regulations in the District. When considering whether a statute

contains implied authority, the rules of statutory construction are well established. District of

Columbia v. Place, 892 A.2d 1108, 1111 (D.C. 2006). “The first step in construing a statute is to

read the language of the statute and construe its words according to their ordinary sense and plain

meaning.” Hospitality Temps Corp. v. District of Columbia, 926 A.2d 131, 136 (D.C. 2007)

(quoting United States v. Bailey, 495 A.2d 756, 760 (D.C. 1985)). The Court is required to give

effect to a statute’s plain meaning if the words are clear and unambiguous. District of Columbia

v. Bender, 906 A.2d 277, 281-82 (D.C. 2006). “The literal words of a statute, however, are not

the sole index to legislative intent, but rather, are to be read in the light of the statute taken as a

whole, and are to be given a sensible construction and one that would not work an obvious

injustice.” Id. (internal quotation marks and citations omitted). “[E]ven 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.” District of Columbia v. Place, 892 A.2d 1108, 1111 (D.C. 2006)

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(quoting Peoples Drug Stores, Inc. v. District of Columbia, 470 A.2d 751, 753 (D.C. 1983)); see

also District of Columbia v. Gallagher, 734 A.2d 1087, 1091 (D.C.1999) (“[W]ords are inexact

tools at best, and for that reason there is wisely no rule of law forbidding resort to explanatory

legislative history . . . ”) (quoting Harrison v. Northern Trust Co., 317 U.S. 476, 479 (1943)).

“Because the legislature must be presumed to have acted rationally and reasonably, with an

awareness of the goals of the statutory scheme as a whole, the courts eschew interpretations that

lead to unreasonable results, that create obvious injustice, or that produce results at variance with

the policies intended to be furthered by the legislation.” In re C.L.M., 766 A.2d 992, 996-97

(D.C. 2001) (internal citations omitted).

Courts have found that states have implied authority when the plain language of a statute

includes a provision contemplating broad enforcement of its provisions, for example that the

statute is enforceable by “any person” injured or aggrieved. In, Massachusetts v. Environmental

Protection Agency, 549 U.S. 497, 526 (2007), the Supreme Court found that Massachusetts had

standing to challenge the deferral of federal regulations affecting costal development because the

harm to the state’s coastal property was sufficiently concrete and “the risk of catastrophic harm,

though remote, is nevertheless real. That risk would be reduced to some extent if

[Massachusetts] received the relief they seek. We therefore hold that petitioners have standing to

challenge EPA’s denial of their rulemaking petition.” The statute under which Massachusetts

brought its action allowed for “any person” to challenge the deferral of regulations, but did not

expressly provide that states could challenge the deferral. See 42 U.S.C. § 7607(b)(2).

On the other hand, where, as here, a legislative body has made clear that it does not

intend to convey broad enforcement authority, courts have understandably been reluctant to find

implicit standing. For example, in Connecticut v. Physicians Health Services of Connecticut,

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Incorporated, 287 F.3d 110, 112 (2nd Cir. 2002), the Second Circuit held that Connecticut did

not have standing to sue because Congress “carefully crafted” the Employment Retirement

Income Security Act of 1974, 29 U.S.C. § 1132, so that “parties other than those explicitly

named therein – plan participants, beneficiaries, and fiduciaries – may not bring suit.” The

language of the statute specifically did not allow enforcement by “any person” injured or

aggrieved, but instead contemplated specific complainants. See Connecticut, 287 F.3d at 121.

The Second Circuit found,

Because states are not mentioned in § 1132(a)(3), Congress -- which carefully drafted [the] provisions of § 1132 -- did not intend for them to have the ability to bring suit pursuant to § 1132(a)(3). Furthermore, as the district court explained, the inference that Congress intentionally omitted states from section [1132(a)(3)] finds strong support in the fact that states are expressly empowered by section [1132(a)(7)] to bring only a very limited class of cases to enforce qualified medical child-support orders.

Id.

Here, it is clear that the plain language of Subchapter III of the RSSA also does not

include a provision for “any person” to pursue a lawsuit, but specifically provides instead that the

right to a cause of action is vested in retail dealers. Moreover, the Court finds that the RSSA, in

its entirety, does not contain a broad enforcement provision that would permit suit by a person

who is injured or aggrieved. Accordingly, the District is not be able to step in to the shoes of

“any person” injured or aggrieved. See, generally, Massachusetts, 549 U.S. 497 (2007),

Louisiana ex rel. Ieyoub v. Borden Inc., No. 94-3640, 1995 U.S. Dist. Lexis 1921 (E.D.La. Feb

10, 1995); Alabama ex rel. Galanos v. Star Serv. & Petroleum Co., 616 F.Supp. 429 (D.C.Ala.

1985); New York v. General Motors Corporation, 547 F.Supp. 703 (S.D.N.Y. 1982).

Therefore, because there is no express statutory provision for the Attorney General or

Mayor and no broad implied authority allowing the District to bring a cause of action on behalf

of “any person,” the Court must examine the RSSA’s legislative history and determine whether

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the D.C. Council intended for the Attorney General to have implied enforcement authority in

pursuing violations of the statute.

The District argues that the Attorney General has an implied authority to maintain a suit

because the District has broad authority to uphold the public interest. D.C. Code § 1-301.81

provides,

(a)(1) The Attorney General for the District of Columbia (“Attorney General”) shall have charge and conduct of all law business of the said District and all suits instituted by and against the government thereof, and shall possess all powers afforded the Attorney General by the common and statutory law of the District and shall be responsible for upholding the public interest. The 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.

The District contends that the broad authority vested in the Attorney General may be construed

to allow enforcement of the RSSA. According to the District, the RSSA should be liberally

interpreted because D.C. Code § 36-305.01 encompasses the broad goal of upholding the public

interest, providing, “[t]his chapter shall constitute a statement of the public policy of the District

of Columbia. The provisions of this chapter 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.”

The District argues further that the D.C. Council enacted the RSSA to foster adequate and

meaningful competition in the retail marketing segment of the petroleum industry. In its Draft

Report dated September 10, 1976 discussing the enactment of Bill No. 1-333, the “Retail Service

Station Act of 1976” and Bill No. 1-39, the “Retail Service Station Act,” the D.C. Council stated,

“the Committee believes that competition in the retail marketing segment of the petroleum

industry is currently inadequate.” See Dist. Opp. to Mot. to Dismiss, Ex. A. at 20, Committee on

Transportation and Environmental Affairs Report No. 1 on Bill Nos. 1-333 and 1-39, Nov. 16,

1976. The Council further found, “[c]ompetition is directly related to the total number of retail

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service stations and their proximity to each other. Furthermore, the type of

distribution/marketing system utilized in the operation of each retail service station is extremely

important in assessing the adequacy of competition.” Id. at 20-21. The District argues that the

legislative history in enacting the RSSA is clear that it “meant to stem the tide of such non-

competitive practices.” Dist. Opp. to Mot. to Dismiss at 18.

The District of Columbia Court of Appeals considered interpreting the RSSA liberally in

Dege v. Milford, 574 A.2d 288 (D.C. 1990) and Davis v. Gulf Oil Corp., 485 A.2d 160 (D.C.

1984). In Davis v. Gulf Oil Corp., the Court of Appeals found

Although the RSSA explicitly authorizes civil actions and the imposition of a wide range of remedies for violations of a number of RSSA provisions, D.C. Code § 10-226(a) (1981), it does not expressly provide any remedy for a violation of § 10-221(a)(10) [which provided that no franchise agreement should be for a term of less than one year]. We are certain, nonetheless, that the legislature intended to permit franchisees to seek relief from franchisors' violations of § 10-221(a)(10); the only question is what remedies are appropriate.

485 A.2d at 171 n.12. At issue in Davis was whether the Petroleum Marketing Practices Act

preempted the Retail Service Stations Act and whether a franchisee could use the RSSA as a

defense against a franchisor’s nonrenewal actions. Id. In Dege v. Milford, the Court of Appeals

was concerned with the “significant disparity in bargaining power” between oil company

distributors and retail dealers and found explicitly that one of the Council's objectives in

adopting the RSSA was to rectify the imbalance between independent service station retailers

and their franchisors. 574 A.2d 288. Specifically, the Council sought “to grant increased legal

protection to retail dealers” and “to insure that distributors will treat retail dealers in an equitable

manner.” Dege, 574 A.2d at 291-92.

Although the Court of Appeals recognized a liberal interpretation of the RSSA in both

Dege and Davis, a franchisee [retail dealer] was litigating a private action against a franchisor.

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In neither case, did the Court of Appeals consider whether the District could be a real party in

interest. This Court finds that allowing the District to enforce the RSSA is too broad an

interpretation of the statute. The plain language of the RSSA provides remedies specifically for

retail dealers, not the District. The Court finds that the D.C. Council clearly intended for retail

dealers to have a cause of action under Subchapter III of the RSSA because of potential

disparities in bargaining power. In addition, the D.C. Council recognized that the effects of

Subchapter III have an inconsequential impact on the District’s budget because Subchapter III

“deals exclusively with private rights, and therefore, should have negligible budgetary impacts

on the District of Columbia.” Dist. Opp. to Mot. to Dismiss, Ex. A. at 64, Committee on

Transportation and Environmental Affairs Report No. 1 on Bill Nos. 1-333 and 1-39, Nov. 16,

1976.

The District argues, without a substantial elaboration, that it should be able to enforce

violations of the RSSA because the competitive market that the D.C. Council wanted to see

when passing the RSSA is not the market that presently exists. The legislative history of the

RSSA clearly shows that the D.C. Council consciously chose not to grant the Attorney General

or Mayor the express ability to enforce penalties for violations of Subchapter III of the RSSA. In

2011, the Attorney General requested express authority to enforce D.C. Code § 36-303.01(a)(6)

through a proposed amendment to the RSSA, Bill Number 19-299, “Retail Service Station

Amendment of 2011.” Specifically, the Attorney General requested express authority to:

(1) Sue to enjoin violations by any refiner, distributor or retail dealer;(2) Sue to enjoin violations by any person or entity acting in concert with any refiner,

distributor or retail dealer; (3) Recover a civil penalty of up to $5,000 for each violation of the RSSA; (4) Recover attorney’s fees and costs incurred for RSSA enforcement actions; and (5) Issue and seek enforcement of pre-complaint, investigatory subpoenas.\

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Dist. Opp. to Mot. to Dismiss at 5. The District contends that the Council’s refusal to pass the

proposed amendment does not affect the implied authority already held by the District of

Columbia to enforce the statute. The District argues that the proposed amendment to the RSSA

would have allowed the Attorney General to pursue single, or more limited, violations of the

RSSA without having to allege that the violations affected the general public and were

sufficiently widespread as to evoke parens patriae authority.

That argument is not persuasive. The plain language of the statute explicitly provides for

a cause of action only for retail detailers, and not the Mayor or Attorney General of the District

of Columbia. The Court finds that the Council was aware that there were many concerns about

enforcement of the RSSA, but the Council still did not include language granting the Attorney

General express authority to enforce Subchapter III. The Draft Report of the D.C. Council’s

Committee on Government Operations and the Environment, submitted on July 11, 2011, found,

“the gasoline industry has changed significantly in the District. Over the years, the total number

of retail service stations has steadily decreased.” Reply of CPG Defendants, Ex. 2 at 3. The

Council’s Draft Report also recognized that “fewer companies actually control a larger share of

the market than in 2007,” with two jobbers account for nearly 70% of the District’s service

stations. Id. at 4.

The Council’s report expressly discussed the potential of market prices to increase if a

small concentration of jobbers had control over the majority of retail service stations in the

District. In addition, the Council’s report acknowledged that the Attorney General was “best

situated” to bring an action for violations of the RSSA on behalf of District residents and

consumers because individual consumers would be unlikely to assemble a suitably large class

and station operators might be hesitant to bring actions against distributors for fear of retaliation

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and the costs of litigation. Considering all of these concerns and recognizing a lack of

competition in the market, the D.C. Council, in a 6-6 vote on February 7, 2012, declined to

provide the Attorney General or Mayor standing to sue under Subchapter III. See Defs. Reply of

CPG Defendants, Ex. 3, D.C. Council Timeline for Bill Number 19-299, “Retail Service Station

Amendment Act of 2011.” It is clear that the Council recognized the current market and

potential impact of granting the Attorney General express authority to enforce Subchapter III

violations and deliberately chose not to grant the Attorney General that authority.

Accordingly, the Court finds that the District has neither express nor broad implied

statutory authority to pursue violations of the RSSA.

III. The District Does Not Have Parens Patriae Standing Through Common Law

The District also argues that it has standing to pursue violations of the RSSA because it is

a real party in interest through its parens patriae authority. Article III of the United States

Constitution requires that a party have standing in order to pursue its claim. In order to sue in its

parens patriae capacity, the District must first allege harm to a quasi-sovereign interest.

“Parens patriae, literally parent of the country, refers traditionally to role of state as

sovereign and guardian of persons under legal disability.” Alfred L. Snapp & Son v. Puerto Rico,

458 U.S. 592, 600 n.8 (1982) (citing Black's Law Dictionary 1003 (5th ed. 1979)). In order to

establish standing, “the State must assert an injury to what has been characterized as a quasi-

sovereign interest, which is a judicial construct that does not lend itself to a simple or exact

definition.” Puerto Rico, 458 U.S. at 601.

Quasi-sovereign interests stand apart from all three of the above: They are not sovereign interests, proprietary interests, or private interests pursued by the State as a nominal party. They consist of a set of interests that the State has in the well-being of its populace. Formulated so broadly, the concept risks being too vague to survive the standing requirements of Art. III: A quasi-sovereign interest must be sufficiently concrete to create

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an actual controversy between the State and the defendant. The vagueness of this concept can only be filled in by turning to individual cases.

Id. at 602. To assert a quasi-sovereign interest, the State “must articulate an interest apart from

the interests of particular private parties, i.e., the State must be more than a nominal party.’ Id. at

607. The Supreme Court clarified the concept, by stating that the “[i]nterests of private parties

are obviously not in themselves sovereign interests, and they do not become such simply by

virtue of the State's aiding in their achievement. In such situations, the State is no more than a

nominal party.” Id. at 602. In addition, courts have also examined whether the State has a quasi-

sovereign interest if the injury is one that the State, if it could, would likely attempt to address

through its sovereign lawmaking powers.” Id. at 607. “It is the nature of the state's interest, not

the remedy it seeks, that governs whether a parens patriae action lies.” Louisiana ex rel. Ieyoub,

1995 U.S. Dist. Lexis 1921 at *12.

Courts have construed the scope of parens patriae authority of a state narrowly, finding

that a state has a quasi-sovereign interest in the health and well-being of its citizens when the

articulated injury is sufficiently concrete and affects a substantial segment of its population. See

Puerto Rico, 458 U.S. 592. In Pennsylvania v. West Virginia, 262 U.S. 553 (1923), the Supreme

Court found that Pennsylvania had standing to pursue an action when its access to natural gas

produced in West Virginia was threatened. The Supreme Court found that

The private consumers in each State . . . constitute a substantial portion of the State's population. Their health, comfort and welfare are seriously jeopardized by the threatened withdrawal of the gas from the interstate stream. This is a matter of grave public concern in which the State, as representative of the public, has an interest apart from that of the individuals affected.

Id. at 592. The Supreme Court has also found that a state has standing when it may be placed in

an economically inferior position by the challenged action. In Georgia v. Pennsylvania Railroad

Company, 324 U.S. 439 (1945), Georgia alleged that 20 railroads had conspired to fix freight

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rates, discriminating against Georgia shippers, in violation of federal antitrust laws. The Court

found that Georgia had parens patriae authority to bring suit because, if it were true,

the economy of Georgia and the welfare of her citizens have seriously suffered as the result of this alleged conspiracy […] Georgia was a representative of the public is complaining of a wrong which, if proven, limits the opportunities of her people, shackles her industries, retards her development, and relegates her to an inferior economic position among her sister States. These are matters of grave public concern in which Georgia has an interest apart from that of particular individuals who may be affected.

Id. at 450-451.

If a state’s economic wellbeing is not a central issue, courts have also found that a state

may have standing to ensure that its citizens are protected from discrimination. For example, in

Alfred L. Snapp & Son v. Puerto Rico, the Supreme Court found that unemployment was a

legitimate state concern and Puerto Rico was able “to pursue the interests of its residents in the

Commonwealth's full and equal participation in the federal employment service scheme

established pursuant to the Wagner-Peyser Act and the Immigration and Nationality Act of

1952” against private defendants. 458 U.S. at 609-10. Therefore, Puerto Rico had parens

patriae standing to protect residents from the “harmful effects of discrimination” finding that

“deliberate efforts to stigmatize the labor force as inferior carry a universal sting.” Id.

In addition to asserting a quasi-sovereign interest, the State must also allege that the

injury affects a “substantial segment” of its population. Id. at 599. Courts have not quantified

the proportion of a state’s affected population that would be considered “substantial.” In Puerto

Rico, petitioners challenged Puerto Rico’s contention that the statutes at issue affected a

substantial segment of the population by arguing that there were only 787 job opportunities in

Virginia that affected Puerto Rican citizens. Id. at 609. But, the Supreme Court rejected that

argument finding instead recognized the more general effect of protecting all residents from the

“harmful effects of discrimination.” Id. In Illinois, the Bankruptcy Court of the Northern

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District of Illinois found that 55 investors, who were affected in a fraudulent lender scheme, did

not represent a “few isolated incidents” and could constitute a “sufficiently substantial” segment

of the population. See People ex rel. Ryan v. Volpert (In re Volpert), 175 B.R. 247, 1994 Bankr.

LEXIS 1858 (Bankr. N.D.Ill. 1994).

These and other cases establish that although courts have not established strict boundaries

on what constitutes a “substantial segment” of the populations, they have recognized the general

nature of injuries that states allege to their populations. Courts have identified those injuries as

the effects of discrimination in Puerto Rico and the effects of fraudulent misrepresentation in

Illinois. In Hawaii v. Standard Oil Company, 405 U.S. 251, 255-56 (1972), Hawaii initiated a

parens patriae action to protect the general welfare of its citizens for violations of Section 4 of

the Clayton Act, 15 U.S.C. § 15, including, “[t]he unlawful contracts, combination and

conspiracy in restraint of trade, unlawful combination and conspiracy to monopolize and

monopolization, hereinbefore alleged, have injured and adversely affected the economy and

prosperity of the State of Hawaii in, among others, the following ways” affecting citizens’

revenues, taxes, opportunities in manufacturing, shipping and commerce, natural wealth, and

frustrating the state of the Hawaiian economy. The Supreme Court affirmed the Ninth Circuit’s

decision to dismiss Hawaii’s claim in 1972. Id.

The Court rejected Hawaii’s argument that it must have parens patriae authority because

otherwise private citizens would not have the resources to bring actions under the Clayton Act.

See Hawaii, 405 U.S. at 266. The Supreme Court noted that class actions provided a method for

individuals to bring actions. Id. The Court also found that the legislative history of the Clayton

Act made clear that

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[T]he United States was authorized to recover, not for general injury to the national economy or to the Government’s ability to carry out its functions, but only for those injuries suffered in its capacity as a consumer of goods and services.

Id. at 264. Similarly, in the matter before this Court, the DC Council authorized retail dealers to

bring actions but did not authorize the Mayor or Attorney General to bring actions for general

injuries to the District’s economy, or to its regulation of marketing agreements between retail

dealers and distributors.

In the Ninth Circuit decision that the Supreme Court affirmed in Hawaii, the Ninth

Circuit found that “damages for injury done to the general economy of a state are not recoverable

by the state under § 4 of the Clayton Act.” Id. at 1284. This case, of course, does not involve

the Clayton Act, but the Ninth Circuit’s examination of the nature of a state’s claim for

generalized damages is instructive. The Circuit observed:

does not constitute an effort to prevent unjust enrichment by the wrongdoers through recovery by the state, for the affected consumers or for itself, of the total of direct injuries suffered by persons who are unable to seek recovery for themselves. Hawaii's claim is over and above all such recovery by persons, or on behalf of classes, and is asserted to have independent existence quite apart from such direct injuries. In light of Hawaii's inability yet to articulate a more precise theory or measure of such damages, we are skeptical of the existence of an independent harm to the general economy. The general economy is an abstraction. It has no value in itself, save as it may (in a representational capacity on behalf of business and property generally) serve to confer value on the specific items of business or property it affects. It exists only as a reflection of the business or property values it represents.

Id. The Court assumed, arguendo, that the “general economy can suffer injury from antitrust

violations independent of the injuries suffered by private persons or by the state in its proprietary

role.” Id. at 1285. But, the Ninth Circuit found that, if Hawaii sought to recover because of

injuries to its general economy, those injuries were “incidental or remote consequence of

defendant’s violations” and therefore appeared too “attenuated” enable Hawaii to have standing.

Id.

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Here, the District argues that it has a quasi-sovereign interest in ensuring the health and

well-being of its people and economy. Specifically, the District argues that it must ensure the

well-being of the District’s gasoline consumers and the gasoline market and the marketing

agreements between Defendants and retail dealers prevent consumers from obtaining the benefits

of competition.

The District alleges that the harm is specific and generalized because the marketing

agreements affect a substantial portion of the District’s retail service stations. The CPG

Defendants own 60% of the 107 retail gasoline service stations in the District, and 31 of the 31

ExxonMobil-branded stations. The District argues that the marketing agreements hinder

competition by preventing dealers from purchasing ExxonMobil-branded gasoline from other

suppliers. Defendants argue that the District cannot conclusorily assert an interest in the

economic well-being of its citizens and any alleged injury to the residents of D.C. is not

sufficiently widespread.

The Court finds that the District has not alleged a quasi-sovereign interest sufficiently

concrete as to create an actual controversy between the District and Defendants. Courts have

considered the effect on a state’s economy critically in assessing whether the state may have an

independent interest. See Georgia, 324 U.S. 439 (finding that Georgia had parens patriae

authority to protect it from being in an economically inferior position); Pennsylvania, 262 U.S.

553 (considering the economic status of Pennsylvania when its access to natural gas in West

Virginia was threatened).4 In the case before the Court, unlike cases in which the Supreme

4 In addition, although the District relies upon several cases to assert its quasi-sovereign interest, in the jurisdictions considered in those cases, the courts have also found a supplemental statutory authority allowingviolations of the statute to be pursued by “any person” or the Attorney General specifically. The District cites Louisiana ex rel. Ieyoub, 1995 U.S. Dist. Lexis 1921 at *6, for the proposition that Louisiana had parens patriae

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Court has found parens patriae authority to exist, the District does not allege specific effects of

the unlawful marketing agreements, which affect the economy of the District. In its Complaint,

the District alleges broadly, that the marketing agreements threaten competition because they

“compel each independent retail dealer operating an ExxonMobil-branded gasoline station in

D.C. to obtain ExxonMobil-branded gasoline from a CPG company…these 27 stations represent

about 25% of the gasoline stations in D.C.” Pl. Complaint at 3:5. The District also alleges that

[Footnote continued from previous page]standing to seek relief for inflated prices in Louisiana school districts because Louisiana had a “quasi-sovereign” interest in an honest marketplace and protecting school children generally. See Dist. Opp. to Mots. to Dismiss at 14. The District Court for the Eastern District of Louisiana found that Louisiana brought its action parens patriae, but also pursuant to statutory authority delineated in La. R.S. 51:132, 51:137, and 51:138. Louisiana statutes expressly provided that “[a]ll suits for the enforcement of this Part [Chp. 1, Part 4: Monopolies] shall be instituted in the district courts by the Attorney General. La. R.s. 51:138 (2013). In addition, Louisiana Statute 51:137 provided, “any person who is injured in his business or property by any person by reason of any act or thing forbidden by this Part [Chp. 1 Part 4: Monopolies] may sue in any court of competent jurisdiction. (emphasis added). The District Court found that, “In the instant case, Article 4 Section 8 of the Louisiana Constitution, together with La. R.S. 13:5036, affording the attorney general broad powers to institute civil suits in the interest of the state, the grant of enforcement authority in La. R.S. 51:138, and the applicable jurisprudence, support the attorney general's parens patriae authority.” Louisiana ex rel. Ieyoub, 1995 U.S. Dist. Lexis 1921 at * *9-10.

The District also cites Alabama ex rel. Galanos v. Star Serv. & Petroleum Co., 616 F.Supp. 429, 431 (D.C.Ala. 1985) for the proposition that Alabama’s interest “in preventing unfair or dishonest competition, monopolies and price wars” was “obviously” a distinct and “quasi-sovereign” interest. See Dist. Opp. to Defs. Mot.to Dismiss at 14. The Motor Fuel Marketing Act, Code of Ala. § 8-22-16, contained a provision for violations of its subchapter allowing that “[t]he penalty may be assessed and recovered in a civil action brought by the Attorney General, or by any district attorney in any court of competent jurisdiction.” Code of Ala. § 8-22-16 (2013). In New York v. General Motors Corporation, 547 F.Supp. 703 (S.D.N.Y. 1982), which the District also cites for the proposition that New York has standing “to obtain wide-ranging injunctive relief designed to vindicate [its] quasi-sovereign interest in securing an honest marketplace for all consumers.” Dist. Opp. to Defs. Mots. to Dismiss at 14. In New York, its Attorney General sued pursuant to New York Executive Law §63(12), which provides, in part,

whenever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business, the attorney general may apply, in the name of the people of the state of New York, to the supreme court of the state of New York, on notice of five days, for an order enjoining the continuance of such business activity or of any fraudulent or illegal acts, directing restitution and damages and, in an appropriate case, cancelling any certificate filed under and by virtue of the provisions of section four hundred forty of the former penal law or section one hundred thirty of the general business law, and the court may award the relief applied for or so much thereof as it may deem proper.

New York, 547 F.Supp, at 704. The Southern District of New York found that, “The State's goal of securing an honest marketplace in which to transact business is a quasi-sovereign interest” and the Court found that it would have standing to bring the action even without statutory authority. Id. at 705-706 n.5.

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none of the 27 retail dealers can purchase “ExxonMobil-branded gasoline at prices below the

prices charged by the CPG companies,” and those ExxonMobil-branded retail dealers comprise

41% of the gasoline stations in D.C. that are supplied by CPG companies. Pl. Complaint at 9:28-

29. Therefore, at issue, according to the District, are denial of potential benefits to competition

and denial of an independent retailer’s ability to purchase gasoline at below the market price set

by the CPG Defendants.

The District’s allegations are conclusory and unsupported by any factual allegations. The

District fails to allege the potential effects of the marketing agreements to stifle competition or to

include even supporting factual allegations that construct a market ripe for competition. The

Complaint does not allege that the price of ExxonMobil’s fuel is too high at service stations, it

does not allege that there is another dealer who would want to purchase motor fuel from a third-

party supplier, and it does not allege that there exists a third-party supplier, which would sign

contracts with retail dealers for lower prices.5 The Complaint only alleges that these marketing

agreements concern 27 retail dealers in the District, who are not included as co-Plaintiffs or have

not filed co-existing complaints. In essence, the District complains of a lack of competition, but

fails to allege that retail dealers desire such competition.

According to the marketing agreements in effect, if a dealer wanted to purchase gasoline

from a third-party supplier, it would have to install another island at their service station and

ensure that Exxon’s branding is not associated with the third-party supplier. It would likely be

5 At oral argument, the District argued that the other suppliers, who are interested in the market, may be other ExxonMobil suppliers outside the D.C. metropolitan area. The District argued that it was also aware of retail dealers who wanted to seek other suppliers or distributors who would sell gasoline for a lower price. But, these allegations are not in the Complaint and the District stated, in response to the Court’s question regarding the Complaint’s lack of factual detail, that it believed such level of specificity in its Complaint was not necessary. The District also did not explain why a retail dealer could not bring an action on its own.

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prohibitively expensive for the retail dealer to contract with a third-party supplier. But, the

Complaint does not allege that there are third-party suppliers who would like to participate.

Moreover, the Complaint does not allege that if a retail dealer were to purchase gasoline

from a third-party supplier, then that relationship would create or ensure lower prices for

consumers. In addition, the District does not address the prices of other distributors and their

effect on the District’s economy or allegedly inflated gasoline prices. Rather, the District

appears only concerned with the price of gasoline for consumers at ExxonMobil stations. Those

concerns, although reasonable, do not provide a basis for the District to bring an action under

Subchapter III.6 The Council thus far has chosen not to provide the Attorney General with

authority to bring actions under Subchapter III. Until such time as the Council changes its

position, the Court finds that the Attorney General has no standing to bring actions under that

Subchapter of III of the RSSA, more specifically, D.C. Code § 36-303.01(a)(6) and (a)(11).

In addition, the District is requesting purely injunctive relief and has not alleged any

specific future harm. In Massachusetts v. Environmental Protection Agency, the Supreme Court

found that Massachusetts had standing because it asserted a distinct interest in preventing further

erosion to its coastal lands and the potential for future harm could be affected by the regulation

of greenhouse gases. See 549 U.S. 497. In contrast, the District has not alleged future harm

other than generally alleging that the marketing agreements damage the competitive effects of

the gasoline markets. The District does not even allege that the prices of gasoline in the

6 In addition, as discussed earlier, the District’s argument that it sought an amendment permitting it to bring actions under Subchapter III only to enable it to bring limited actions that it could not bring under its alleged parens patriae authority is unpersuasive. Nothing in the legislative history supports the District’s assertion and the District never suggested that it believed that it already had parens patriae authority to bring actions under Subchapter III.

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consumer market are inflated or that the prices will continue to increase over time due to alleged

unlawful marketing agreements.

The District is essentially alleging an abstract and hypothetical injury to a substantial

segment of the population.7 The District summarily stated in its pleading and at oral argument

that thousands of consumers in the District of Columbia have been deprived of the benefits of

competition. See Pl. Opp. to Mot. to Dismiss at 15. But, the District’s abstract characterization

of the alleged injury to the general population is not persuasive. As in the Ninth Circuit’s

analysis in Hawaii v. Standard Oil Corporation, the injuries allegedly suffered by the District are

“attenuated.” See 431 F.2d at 1285. Neither the Ninth Circuit and the Supreme Court made a

final determination on whether Hawaii proffered sufficient proof of injury to the general

economy, but the Ninth Circuit did indicate that it was skeptical of potential damages without

Hawaii articulating a “more precise theory or measure of such damages” to its economy. Id.

Here, similarly, the District has failed to plead with specificity. The District seeks an injunction

against the harmful effects of the alleged unlawful marketing agreements without proffering

sufficient detail about those effects. Although the Complaint did not need to include detailed

accusations, it must still meet the heightened pleading standards adopted by the Court of Appeals

in Potomac Development Corporation v. District of Columbia and appear to be “more than an

unadorned, the defendant-unlawfully-harmed-me accusation.” 28 A.3d at 544.

Therefore, the Court need not reach the determination of whether the alleged unlawful

marketing agreements affect a substantial segment of the population because it finds, construing

7 Assuming, arguendo, that the District asserted a quasi-sovereign interest, here, the Court finds that 27 retail dealers and “thousands of consumers” may represent a substantial segment of the District’s population. See In re Volpert, 1994 Bankr. LEXIS 1858 (finding that only 55 investors constituted a substantial segment of the population and “more than isolated incidents”).

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all inferences in favor of the District, that the District did not allege a quasi-sovereign interest.

Accordingly, the Court finds that the District has not established standing through common law

parens patriae authority.

IV. Conclusion

The Court finds that the District does not have express or implied statutory authority to

file a civil action because the plain language of the RSSA is clear and the D.C. Council clearly

intended for only retail dealers to have a right of action pursuant to Subchapter III.8 In addition,

8 Assuming arguendo that the Court found that the District did have standing to bring this action; the Court finds that ExxonMobil would remain liable as a distributor and, were it to have reached that issue, would have denied ExxonMobil’s “Motion to Dismiss” on the grounds that the RSSA does not apply to ExxonMobil. Defendant ExxonMobil argues that it would not be liable for any violation of Subchapter III of the RSSA because it is not a distributor. The District argues that ExxonMobil is liable because it originally set up the agreements with retail dealers and then assigned the rights to those agreements to the CPG Defendants. ExxonMobil concedes that it was a distributor in 2008, but argues that those agreements are no longer in effect. Defendant ExxonMobil argues that it does not maintain marketing agreements with the retail dealers, does not contract in the District, does not sell gasoline in the District, and does not control at what price retail dealers sell gasoline to consumers. If it did, ExxonMobil argues against the merits of the District’s Complaint and states that its marketing agreements with distributors are not exclusive.

The RSSA defines distributor in D.C. Code §§ 36-301.01(2) as:

any person who is engaged in the business of selling, supplying, or distributing 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 marketing agreement 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 retail service station.”

D.C. Code § 36-301.01 provides that “[f]or the purposes of this section, the term "marketing agreement" shall also include any oral or written collateral or ancillary agreement.” (emphasis added).

Here, the Court finds that Defendant ExxonMobil would also be liable for any violation of the RSSA because a marketing agreement also constitutes collateral and ancillary agreements. Construed together, the “marketing agreement” at issue comprises of (1) ExxonMobil’s assignment agreement transferring the rights to the CPG Defendants, (2) Defendants Anacostia and Springfield’s retail distribution agreements, and (3) ExxonMobil’s wholesale distribution agreements with the CPG Defendants. The Court does not find that the statute requires that each collateral agreement exist only between the distributor and retail dealer. Accordingly, if the Court found that the District had parens patriae authority to maintain its action, Defendant ExxonMobil could also be liable for any alleged violations of the RSSA.

In addition, the Court need not reach a determination on the argument of Defendants Anacostia and Springfield that the District fails to establish that they have violated the “exclusivity” provision of the RSSA, D.C. Code § 36-303.01(a)(6). Defendants argue that the plain language of the exclusivity provision only concerns

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the Court finds that the District may not bring this action as parens patriae because it has not

alleged a quasi-sovereign interest. Therefore, Defendants’ motions to dismiss are GRANTED.

It is this 6th day of May 2014, hereby:

ORDERED, that Defendants’ “Motions to Dismiss” are GRANTED; and it is further

ORDERED, that this case is dismissed.

SO ORDERED.

CASE CLOSED.

[Footnote continued from previous page]allowing retail dealers to purchase motor fuels from other distributors, as long as those motor fuels are not sold under the trademark of the distributor with whom the retail dealer has a marketing agreement. The District’s Complaint alleges that the marketing agreements with Anacostia and Springfield “prohibit retail dealers from purchasing Exxon-branded gasoline from any supplier other than [Anacostia/Springfield].” Compl. ¶ 26. Because of its ruling on standing and because the parties did not fully brief the exclusivity issue or address it at oral argument, the Court does not reach a determination on whether the plain language of the “exclusivity” provision of the RSSA prohibits a retail dealer from purchasing motor fuels from a distributor who supplies the same-branded motor fuels as the distributor with whom it has a marketing agreement.

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Copies to:

Bennett Rushkoff, Esq.Nicholas Bush, Esq.Catherine Jackson, Esq.Counsel for the District of Columbia 441 Fourth Street NW, Suite 600-SWashington, DC 20001

Christina Sarchio, Esq.David Smutny, Esq.Ross Paolino, Esq.Counsel for ExxonMobil Corporation Orrick, Herrington, & Sutcliffe, LLPColumbia Center1152 15th Street NWWashington, DC 20005

Alphonse Alfano, Esq.Counsel for Capitol Petroleum Group, LLC; Anacostia Realty, LLC; Springfield Petroleum Realty, LLC 1707 L Street NW, Suite 560Washington, DC 20036