## Facts

- George Arnott, an Amoco (Standard) service-station dealer, was solicited by Amoco’s sales manager to relocate from Minneapolis to operate a new interstate-location station in Sioux Falls, South Dakota.
- Arnott alleged Amoco represented the Sioux Falls station as a substantially better financial opportunity and implied that satisfactory performance would lead to renewal beyond the initial one-year lease term.
- Arnott entered the lease expecting renewal and believing he would have meaningful operational and pricing discretion consistent with Amoco’s stated dealer-independence policies.
- Arnott alleged Amoco dictated retail gasoline prices and enforced compliance through threats of termination or nonrenewal and other coercive pressure.
- On August 6, 1973, Amoco terminated Arnott’s lease and evicted him; Arnott contended the termination was without good cause and in bad faith.
- Arnott also alleged Amoco misrepresented the benefits of installing a car wash and breached a promise to reimburse $393.75 in legal fees from related litigation.
- A jury found for Arnott on fraud, breach of fiduciary duty/good faith, antitrust retail price-fixing, and breach of the promise to pay legal fees, awarding $100,000 actual damages (trebled to $300,000) and $25,000 punitive damages; Amoco appealed.

## Issues

1. Whether sufficient evidence supported findings that Amoco made material misrepresentations that fraudulently induced Arnott to execute the station lease.
2. Whether the dealer relationship could support a fiduciary or special duty of good faith and fair dealing, and whether Amoco breached that duty by terminating without good cause and dealing in bad faith.
3. Whether Amoco’s use of threats and coercion to obtain adherence to retail prices supported a finding of an unlawful retail price-fixing combination under federal antitrust law.
4. Whether the damages award was supported by the evidence, and whether any excess could be cured through remittitur rather than reversal.

## Decision

- The Eighth Circuit affirmed the judgment as to liability on fraud, breach of fiduciary duty/good faith, antitrust price-fixing, and the promise to pay legal fees.
- The court held the record contained substantial evidence supporting the jury’s findings, viewing the evidence in the light most favorable to the verdict.
- The court found any shortcomings in instructions on fiduciary duty or the antitrust claim did not warrant reversal because, taken as a whole, the charge did not mislead the jury and any error was harmless.
- The court concluded the combined recovery (including treble antitrust damages and punitive damages) was excessive and conditionally affirmed subject to remittitur.
- The judgment was affirmed on the condition that Arnott remit all damages exceeding $125,000 plus interest and costs; otherwise, a new trial would be required.

## Legal Principles

- A fraud verdict may be sustained where there is substantial evidence of material misrepresentation, intent or culpable falsity, justifiable reliance, and resulting damage, assessed under a verdict-favorable evidentiary view on appeal.
- In a franchise-like dealer relationship where the supplier retains substantial control, duties of good faith and fair dealing may be imposed and may support liability for bad-faith conduct, including termination without good cause.
- Vertical retail price direction may violate antitrust law when the supplier goes beyond suggesting prices and instead secures adherence through coercion such as threats of termination or nonrenewal, supporting a finding of a price-fixing combination.
- An appellate court may affirm liability yet require remittitur where the evidence supports substantial damages but the overall award is excessive, particularly when treble damages and punitive damages compound the recovery.

## Conclusion

The Eighth Circuit sustained verdicts that Amoco fraudulently induced a dealer to lease a station, breached good-faith obligations in a franchise-like relationship, and coerced retail price adherence in violation of antitrust law, but reduced the recoverable damages by conditioning affirmance on a remittitur to $125,000 plus interest and costs.


Arnott v. Am. Oil Co., 609 F.2d 873 (8th Cir. 1979)