Humboldt Oil Co., Inc., and J.R. Mastelotto v. Exxon Company, U.S.A.

This is an appeal of a preliminary injunction, Humboldt Oil Co., Inc. v. Exxon Co., U.S.A., 532 F.Supp. 896 (D.Nev.1982), issued pursuant to provisions of the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. §§ 2801 et seq. We reverse and vacate the preliminary injunction.

BACKGROUND

Humboldt Oil Co., Inc. (Humboldt) and J.R. Mastelotto (Mastelotto) sell motor fuel and other products under franchise agreements with Exxon, Inc., U.S.A. (Exxon). Mastelotto is the owner of Humboldt, through another corporation, and is the franchisee under all the agreements with Exxon.

On July 28, 1981 Mastelotto was found guilty of ten counts of mail fraud and fraud by wire. The “essence of the crimes charged in the indictment was that Mastelotto sold fraudulently labeled and branded used motor oil to the public as major brand ‘virgin’ motor oil.” 532 F.Supp. at 898 . A judgment of conviction and sentence were entered against Mastelotto. An appeal is pending.

Shortly thereafter, Exxon notified Humboldt and Mastelotto that the respective distributorship agreements were terminated. Exxon’s sole reason for the termination was “the conviction of J.R. Mastelotto of a felony involving moral…