United States District Court, D. Maryland
L. RUSSELL, III UNITED STATES DISTRICT JUDGE
MATTER is before the Court on Defendant Southside Oil,
LLC's (“Southside”) Motion for Judgment on
the Pleadings (the “Motion for Judgment”) (ECF
No. 43) and Plaintiffs' Motion for Leave to File a Second
Amended Complaint (the “Motion to Amend”) (ECF
No. 47). This action arises from a contract dispute between
Southside, a wholesale distributor of ExxonMobil motor fuels,
and Plaintiffs, who are ten Maryland retail gasoline
stations. The Motions are ripe for disposition, and
no hearing is necessary. See Local Rule 105.6 (D.Md.
2018). For the reasons outlined below, the Court will grant
Southside's Motion and deny Plaintiffs' Motion.
2009, ExxonMobil sold its marketing assets, including some
gas stations. (Am. Compl. ¶ 6, ECF No. 14).
Plaintiffs' stations were some of those sold from
ExxonMobil to Southside. (Id.). Southside bought
Exxon-branded fuel for resale directly from ExxonMobil under
a dealer agreement wherein Southside “step[ped] into
the shoes of” ExxonMobil as Plaintiffs' landlord
and supplier of fuels. (Id. ¶¶ 5-6). Prior
to closing the deal, Plaintiffs, along with others,
instituted lawsuits against ExxonMobil and the proposed
purchasers, including Southside. (Id. ¶ 7).
Those lawsuits settled on the basis of individualized
agreements between Southside and each Plaintiff (the
“Settlement Agreements”). (Id. ¶
in the Settlement Agreements were terms permitting Plaintiffs
to purchase the service stations they had previously leased
from ExxonMobil. (Id. ¶ 9). Each
Plaintiff's right to purchase was conditioned upon
entering into twenty-year fuel supply contracts with
Southside (the “Supply Contracts”).
(Id.). The Settlement Agreements required each
Plaintiff to purchase all of its fuel from Southside for the
twenty-year term of the Supply Contracts and to purchase a
minimum number of gallons every year. (Id.).
Settlement Agreement negotiations focused on the per-gallon
price for each grade of gasoline and diesel fuel in the
Supply Contracts. (Id. ¶ 10). Plaintiffs sought
a price that would enable their business to be profitable
while meeting the minimum volume requirement. (Id.).
Plaintiffs also did not want an “open-price term”
contract because they wanted to limit the amount Southside
could increase the fuel prices. (Id. ¶¶
10-11). An open-price term contract permits the seller to
increase the price to whatever the market will bear.
(Id. ¶ 12).
and Southside ultimately agreed on a “rack plus”
pricing formula. (Id. ¶ 13). The “rack
plus” pricing formula involves two numbers: the rack
price and the mark-up. (Id. ¶ 13). The rack
price is the per-gallon price refiners, like ExxonMobil,
charge to distributors, like Southside, when distributors
purchase fuel in full transport loads. (Id. ¶
14). The rack price is essentially the distributor's cost
for the product. (Id. ¶¶ 13-15). The
mark-up is the distributor's built-in profit margin,
which when added to the rack price yields the mark-up price.
(Id. ¶¶ 16-17).
Settlement Agreements provided that Southside would add a
cents-per-gallon mark-up of between 1.5¢ and 6.5¢,
and each Plaintiff negotiated its particular rack-plus price
in their individual Supply Contracts with Southside.
(Id. ¶¶ 17, 26). The parties also agreed
that Plaintiffs would pay federal and state taxes,
environmental fees, and freight charges on top of the
rack-plus per-gallon price. (Id. ¶ 18). The
Supply Contracts contained identical arbitration provisions
(the “Arbitration Provisions”), which provided
that, “[a]ny monetary claim arising out of or relating
to this agreement, or any breach thereof, shall be submitted
to arbitration . . .” (Id. ¶ 30).
2015, Southside began charging Plaintiffs a per-gallon price
that was considerably more than the rack price plus the
agreed-upon cents-per-gallon mark-up. (Id. ¶
38). Southside charged Plaintiffs a mark-up of as much as
12¢ or 13¢. (Id.). Southside had
negotiated an agreement with ExxonMobil wherein ExxonMobil
would sell its fuels to Southside at a per gallon price that
was “considerably lower” than the price it
charged to other distributors. (Id. ¶ 39).
Southside then calculated the rack price based on the
non-discounted prices ExxonMobil charged other distributors
instead of its own discounted price, which it regarded as
“something different.” (Id.).
Plaintiffs realized that the prices Southside charged other
Maryland ExxonMobil stations with open-price term contracts
were “considerably lower than the prices”
Southside charged Plaintiffs “for the very same
products, at the very same time, ” they asked Southside
to provide ExxonMobil's rack prices so they could
determine if Southside was charging them more than the
permitted cents-per-gallon amounts. (Id. ¶ 40).
Southside provided Plaintiffs with price information, which
showed that Southside's prices to Plaintiffs were
considerably higher than the applicable cents-per-gallon
amount above the rack prices, despite Southside's claim
that they were not. (Id. ¶¶ 41, 43).
Southside told Plaintiffs that “rack prices”
within the meaning of their contracts were not what Southside
paid to ExxonMobil but rather the prices ExxonMobil charged
other distributors who did not have a special discounted
agreement. (Id. ¶¶ 42-43).
order to earn a profit, Plaintiffs had to raise their retail
prices above a competitive level. (Id. ¶ 45).
As a result, Plaintiffs lost business to their lower-priced
competitors, including other Maryland Exxon dealers who
purchased from Southside at lower prices. (Id.).
March 27, 2017, Plaintiffs sued Southside. (ECF No. 1). In
their five-count Amended Complaint, they allege: Breach of
Contract - Pricing (Count I); Breach of Contract - Rebates
(Count II); violation of 15 U.S.C. § 13 (2018) - Price
Discrimination (Count III); Lack of Consideration for the
Arbitration Provision (Count IV); and Arbitration Provision -
Unlawful Waiver of Rights (Count V). (Am. Compl. ¶¶
March 30, 2018, the Court dismissed Counts IV and V, and
compelled Plaintiffs to arbitrate Counts I and II. (Mar. 30,
2018 Mem. Op. at 27, ECF No. 38). The only remaining claim
before this Court, therefore, is Count III, for which
Plaintiffs request declaratory and injunctive relief. (Am.
Compl. at 23).
April 30, 2018, Southside filed its Motion for Judgment on
the Pleadings. (ECF No. 43). On May 14, 2018, Plaintiffs
filed an Opposition. (ECF No. 46). Plaintiffs
contemporaneously filed their Motion for Leave to File a
Second Amended Complaint, seeking to address the deficiencies
in Count III of its Amended Complaint. (ECF No. 47). On May
29, 2018, Southside filed its Reply, (ECF No. 48), and its
Opposition to Plaintiffs' Motion (ECF No. 49). To date,
the Court has no record the Plaintiffs filed a Reply.
Southside's Motion for Judgment ...