Shell Co. v. Los Frailes Service Station, Inc.

United States Court of Appeals
For the First Circuit

No. 09-1279

THE SHELL COMPANY (PUERTO RICO) LIMITED,

Plaintiff, Appellee,

v.

LOS FRAILES SERVICE STATION, INC.,

Defendant, Appellant.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. Francisco A. Besosa, U.S. District Judge]

Before

Lynch, Chief Judge,
Selya and Lipez, Circuit Judges.

Yvonne M. Menéndez-Calero for appellant.
Raul M. Arias-Marxuach with whom Nannette Berríos Haddock,
Frank LaFontaine, and McConnell Valdes LLC were on brief for
appellee.

May 6, 2010
 LYNCH, Chief Judge. This Petroleum Practices Marketing

Act suit is between the plaintiff, Shell Company (Puerto Rico)

Limited ("Shell"), and defendant, the Los Frailes Service Station,

Inc. ("LFSS"), which owned and operated the Los Frailes gasoline

service station in Guaynabo, Puerto Rico as a Shell franchisee

from 1997 until 2003. Shell terminated LFSS's franchise, and this

appeal by LFSS primarily concerns the permanent injunction awarding

Shell relief against LFSS and the dismissal of LFSS's

counterclaims. The complications in this case arise from LFSS's

dual status as the owner of the service station and surrounding

property, in which capacity it leased the property to Shell, and as

a retailer-franchisee, in which capacity LFSS subleased the service

station from Shell to operate it.

Since December 2003, when Shell first obtained a

preliminary injunction, LFSS has been ordered to cease using

Shell's trademarks, trade dress, and color patterns; to comply with

all post-termination contractual provisions; and to "immediately

surrender the station in question, the storage tanks and all

pertinent equipment to Shell, in order for Shell to designate a

third party to operate the same." The Shell Co. (P.R.) Ltd. v. Los

Frailes Serv. Station, Inc. (Shell I), No. 03-1623, slip op. at 35

(D.P.R. Dec. 2, 2003).

On January 23, 2007, the district court granted Shell

summary judgment on LFSS's counterclaims. See The Shell Co. (P.R.)

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Ltd. v. Los Frailes Serv. Station, Inc. (Shell II), 551 F. Supp. 2d

127, 134 (D.P.R. 2007). The district court converted the

preliminary injunction to a permanent injunction on January 29,

2007, ordering and compelling LFSS to cease any use of Shell

trademarks, trade dress, or color patterns, to comply with the

post-termination provisions of its franchise agreements with Shell,

and, in addition, to allow Shell "to continue in possession of the

Los Frailes Service Station, along with the subterraneous storage

tanks and all pertinent equipment, until the expiration of

[Shell's] rights under the lease agreement between the parties,"

set to expire in 2014. The Shell Co. (P.R.) Ltd. v. Los Frailes

Serv. Station, Inc. (Shell III), No. 03-1623, slip op. at 2-3

(D.P.R. Jan. 31, 2007).1 In the same order, the district court

denied LFSS's motion to reconsider its grant of summary judgment to

Shell on LFSS's counterclaims and dismissed LFSS's breach of

contract counterclaim for failure to prosecute. Id. at 1-2. In

the meantime, LFSS has gone through bankruptcy, and Shell has

changed its name to Sol Puerto Rico Limited following an

1
The district court later issued an amended order
clarifying that Shell was entitled to injunctive relief only under
Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), to compel
LFSS to stop further use of Shell's trademarks, trade dress, and
color patterns. See The Shell Co. (P.R.) Ltd. v. Los Frailes Serv.
Station, Inc. (Shell V), No. 03-1623, slip op. at 1-2 (D.P.R. Dec.
30, 2008) (amended judgment); The Shell Co. (P.R.) Ltd. v. Los
Frailes Serv. Station, Inc. (Shell IV), 596 F. Supp. 2d. 193, 201-
03, 205 (D.P.R. 2008) (opinion and order).

-3-
acquisition and share purchase in 2006.2 See Shell IV, 596 F.

Supp. 2d at 196 n.1. Shell has been in control of the property

since 2003.

LFSS appeals from various provisions of the permanent

injunction, the grant of summary judgment to Shell on LFSS's

federal and state law counterclaims against Shell, and the

dismissal of LFSS's state law breach of contract counterclaim with

prejudice (for failure to prosecute). We hold that the district

court did not abuse its discretion by enjoining LFSS from further

use of Shell's trademarks, trade dress, and color patterns under

Section 43(a) of the Lanham Act. We further hold that the district

court did not abuse its discretion by compelling LFSS to comply

with the post-termination provisions of its franchise agreements

with Shell. The district court did, however, abuse its discretion

by extending the injunction to compel LFSS "to allow [Shell] to

continue in possession of the Los Frailes Service Station . . .

until the expiration of [Shell]'s rights under the lease agreement

between the parties" in 2014. Shell III, slip op. at 2. We vacate

that provision of the injunction, without prejudice to Shell's

seeking further injunctive relief at a future date. We also hold

that the district court properly granted Shell summary judgment on

2
In order to accurately describe the parties' interactions
and the events leading up to this suit, all of which occurred
before the merger, we refer to the plaintiff as "Shell" throughout
and discuss the significance of the merger where relevant.

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LFSS's counterclaims and that there was no abuse of discretion in

dismissing LFSS's breach of contract counterclaim for failure to

prosecute.

I. Factual Background

The following facts are either uncontested or were

stipulated by the parties.

The gasoline service station located at the corner of

State Road 177 and Muró Street in the Los Frailes area of Guaynabo

has long been one of the busiest in the region. LFSS has owned

this station and the property surrounding it since 1977. For

several decades, LFSS sold Shell-brand gasoline as an independent

retailer under a lease arrangement with Shell. In 1997, LFSS

became a Shell franchisee.

Three contracts, all signed on April 11, 1997, defined

the franchise relationship between Shell and LFSS: an amended lease

agreement, a retailer/sublease agreement, and a trademark and

equipment agreement.

The amended lease agreement extended Shell's 1992 lease

of the service station and its surrounding property until February

28, 2014. The "primary and essential purpose" of the lease was to

maintain a service station there, and, under the amended lease,

Shell did not need LFSS's permission to sublease the station to a

third party retailer to operate. In exchange for this leasehold,

Shell agreed to pay graduated rent to LFSS based on the number of

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gallons of gasoline the retailer (whether LFSS or a third party)

bought from Shell each month.

Under the retailer/sublease agreement, Shell then

subleased the station back to LFSS to operate as a Shell

franchisee. As a Shell franchisee, LFSS had the right to operate

the station under the Shell name, as an exclusive retailer of

Shell-brand petroleum products. In exchange, LFSS agreed to

certain obligations, including to purchase a minimum average of

300,000 gallons of fuel from Shell each month, to pay for Shell

products on time each month on the check or credit terms set by

Shell, to keep the station open and running during its hours of

operation, and to operate the station for the exclusive purpose of

selling only Shell-brand products.

The trademark and equipment agreement governed LFSS's

exclusive use of Shell trademarks and of equipment Shell provided

to LFSS and also set out LFSS's maintenance, inventory, and

delivery obligations. This agreement recognized Shell's ownership

of the underground storage tanks and other equipment at the station

and gave LFSS the right to use this equipment only to sell and

store Shell-brand fuel when operating the station.

These three agreements also included important provisions

governing when the agreements could be terminated and the

consequences of termination. The parties contest the

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interpretation of many of these provisions, and we discuss them

further below.

From 1997 to 2000, LFSS operated the Los Frailes station

as a Shell station under the terms of these agreements. Beginning

in 2000, the parties made several amendments to the lease

agreement. A February 15, 2001, amendment, at issue in this case,

gave LFSS a temporary rent benefit from Shell to encourage a higher

volume of gasoline sales.3 Under the amendment, this rent benefit

would automatically continue every month unless Shell notified LFSS

otherwise in writing.

On July 2, 2001, Shell informed LFSS and its other

Puerto Rican franchisees that it was implementing a Competitive

Adjustment Program (CAP), and LFSS agreed to participate. The

program established certain price zones for retailers and set

maximum retail prices for Shell's retailers in those zones. In

exchange, the CAP gave retailers discounts on wholesale fuel

prices, again based on those zones. Following an investigation,

the Puerto Rico Department of Justice ordered Shell to cease the

CAP program on January 30, 2004, on the ground that it violated

Puerto Rican antitrust law. Shell complied.

3
Specifically, in addition to the rent specified in the
lease, Shell agreed to pay LFSS an additional $0.02 per gallon for
the first 480,000 gallons sold, and an additional $0.03 per gallon
for every gallon over 490,000 that LFSS sold.

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 LFSS participated in the CAP for the duration of its

franchise with Shell. Though LFSS now contests whether the CAP

displaced the temporary rent benefit Shell implemented in February

2001, LFSS does not contest the district court's factual finding

that LFSS sent Shell an April 9, 2002 letter proposing "a temporary

adjustment in rent for LFSS as we had in the first quarter of last

year." We discuss the CAP in further detail below.

By early 2003, LFSS was suffering from cash flow problems

and so did not pay for more than $80,000 worth of Shell's fuel

deliveries. Shell, pursuant to the retailer/sublease agreement,

also implemented a hard cash payment policy and required LFSS to

pay for Shell products by certified check at delivery.

During the weekend of May 17 and 18, 2003, LFSS instead

tried to pay for two deliveries with personal checks. On Monday,

May 19, Shell told LFSS that until LFSS paid for the weekend

deliveries with certified checks, Shell would not make any further

deliveries. LFSS did not comply; there were no further deliveries,

LFSS ran out of fuel to sell, and the station temporarily closed.

That same day, May 19, LFSS sent Shell a letter stating that Shell

had not paid the February 2001 additional rent benefit since July

2001 (when the CAP went into effect), that Shell had not sent

written notice of its cancellation, and that Shell therefore

immediately owed the balance of the additional rent from July 2001

until April 2003.

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 On May 21, 2003, LFSS sent Shell a letter purportedly

cancelling their entire commercial relationship, including the

lease, citing Shell's alleged failure to pay LFSS the additional

rent and its alleged obligation to deliver fuel to LFSS. LFSS then

purchased fuel from other refiners and distributors, covered some

but not all of the Shell trademarks at the station, and began

selling non-Shell-brand fuel. LFSS also put up signs saying "We Do

Not Sell Shell Gasoline." The signs were not prominently

displayed.

On May 23, 2003, Shell informed LFSS by letter that it

was terminating LFSS's franchise, which Shell said terminated the

retailer/sublease agreement and trademarks and equipment agreement

but not the underlying lease agreement under which Shell leased the

property from LFSS. Shell said that LFSS's termination of the

lease was invalid because LFSS had not complied with the lease

termination provisions. Shell then demanded that LFSS honor its

obligations under the lease and under the post-termination

provisions of the retailer/sublease and equipment and trademark

agreements by immediately vacating the service station premises and

turning over Shell's equipment.

LFSS instead continued to operate the service station by

selling non-Shell-brand fuel at the service station. Shell then

brought assorted federal and state law claims against LFSS in the

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federal district court of Puerto Rico less than two weeks later, on

June 3, 2003, eventually culminating in this appeal.

II. The Parties' Claims

Before delving into the legal analysis, we summarize

Shell and LFSS's respective claims and counterclaims.

Shell's claims against LFSS proceed from Shell's

contention that it validly terminated LFSS's franchise on May 23,

2003. Shell says it was entitled to do so under the Petroleum

Marketing Practices Act ("PMPA"), 15 U.S.C. § 2801 et seq., a

federal law that regulates franchisors' termination of franchises,

because of LFSS's failure to pay for fuel deliveries, its

unreasonable closing of the station, and its sale of non-Shell fuel

while displaying Shell trademarks.

Shell claims LFSS's post-termination actions violated

Shell's rights in two respects. First, Shell says that LFSS

created a likelihood that consumers would be confused or deceived

when it sold non-Shell products while displaying Shell trademarks,

in violation of Section 43(a) of the Lanham Act, 15 U.S.C.

§ 1125(a). On this basis, Shell requested, and the district court

granted, injunctive relief to stop LFSS from using Shell

trademarks, trade dress, or color patterns. See Shell IV, 596 F.

Supp. 2d at 203-05; Shell I, slip op. at 29-31.

Second, Shell says its termination of the franchise left

its underlying lease of the station from LFSS intact. Shell

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further claimed that LFSS's refusal to vacate the premises and to

allow Shell to exercise its property rights over the station as a

lessor violated the terms of the lease, as well as various post-

termination provisions in the retailer/sublease and trademark and

equipment agreements requiring LFSS to relinquish possession of the

station. This was the district court's basis for compelling LFSS

to comply with all post-termination contractual provisions and for

the separate provision of the injunction allowing Shell to remain

in possession of the service station until the expiration of its

lease in 2014. See Shell I, slip op. at 27-29, 32-34.

LFSS makes several arguments as to why the district court

abused its discretion in granting Shell a permanent injunction.

LFSS first claims that it validly terminated all contracts,

including the lease, on May 21, 2003, two days before Shell

purportedly terminated the franchise. In the alternative, LFSS

says, Shell's termination of the franchise was not valid under the

PMPA, and the district court erred in finding otherwise.

LFSS further argues that the district court erred in

granting injunctive relief. It contests the injunction on Shell's

Lanham Act claim, urging that the evidence was contradictory and

insufficient to support a likelihood of confusion. In any event,

LFSS says, Shell is not entitled to the specific remedy of an

injunction to enforce the lease, which gives Shell possession until

2014, whether under the PMPA or any of Shell's other claims, and

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the district court erred in finding otherwise. This last issue is

potentially the most difficult in the case, raising questions about

the scope of injunctive relief available to franchisors under the

PMPA.

LFSS also argues that the district court erred in

granting Shell summary judgment on LFSS's counterclaim that Shell's

CAP program violated federal and Puerto Rican antitrust law.

Specifically, LFSS argues that the district court abused its

discretion by striking LFSS's cross-motion for summary judgment and

denying its motion for reconsideration. Its main substantive

challenge, however, is that the district court erroneously made

factual inferences in Shell's favor when granting summary judgment

to Shell on LFSS's antitrust claims and that there were material

issues of fact precluding summary judgment. Finally, LFSS says the

district court abused its discretion by dismissing its state law

breach of contract counterclaim for failure to prosecute, because,

LFSS insists, it diligently asserted this claim.

We analyze LFSS's challenges to the permanent injunction,

summary judgment, and dismissal of its breach of contract

counterclaim in turn. We vacate only the portion of the district

court's injunction allowing Shell to continue in possession of the

Los Frailes service station until 2014, when its lease expires, and

we affirm the district court's judgment on all other grounds.

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 III. Shell's Claims against LFSS

We review a district court's grant of a permanent

injunction for abuse of discretion; we review its underlying

conclusions of law de novo and any factual findings for clear

error.4 García-Rubiera v. Calderón, 570 F.3d 443, 455-56 (1st Cir.

2009).

A plaintiff seeking a permanent injunction before a

district court must ordinarily show: "(1) that it has suffered an

irreparable injury; (2) that remedies available at law, such as

monetary damages, are inadequate to compensate for that injury; (3)

that, considering the balance of hardships between the plaintiff

and defendant, a remedy in equity is warranted; and (4) that the

public interest would not be disserved by a permanent injunction."

eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006); see

also CoxCom, Inc. v. Chaffee, 536 F.3d 101, 112 (1st Cir. 2008).

LFSS's claims of error cut across these criteria.

4
LFSS's argument that the district court could not convert
the preliminary injunction into a permanent injunction without an
evidentiary hearing fails. The district court converted the
preliminary injunction into a permanent injunction only after
issuing a show cause order to LFSS, and only after determining that
LFSS had not advanced any new evidence or legal arguments beyond
what it had presented at the preliminary injunction hearing. Under
those circumstances, an evidentiary hearing would have served
little purpose, and the district court's conversion was not error.
See HMG Prop. Investors, Inc. v. Parque Indus. Rio Canas, Inc., 847
F.2d 908, 915 (1st Cir. 1988); cf. United States v. Owens, 54 F.3d
271, 276-77 (6th Cir. 1995).

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A. LFSS's Purported Termination of the Lease Agreement

LFSS's primary argument on appeal is that LFSS validly

terminated its lease of the Los Frailes station to Shell on May 21,

2003, and that the district court therefore erred by granting Shell

an injunction that gave Shell possession of the service station.

We reject this argument; LFSS's attempt to terminate the

lease on May 21 was plainly invalid.5 Even assuming dubitante that

Shell had defaulted on its lease obligations, article 17 of the

lease provided that LFSS could terminate the lease in the event of

default only after a sixty-day curative period. LFSS admits that

its May 21, 2003, letter of termination cited Shell's purported

breaches as the grounds for termination and did not comply with the

sixty-day curative requirement.

Instead, LFSS claims that a different part of the lease

agreement, article 7, authorized LFSS to terminate the lease with

Shell immediately, without any sixty-day curative period, on the

sole condition that LFSS pay Shell for the cost of the improvements

and alterations Shell had made to the station, less depreciation.

Because LFSS only developed this interpretation of

article 7 at oral argument and not in its briefs, this argument is

5
The parties have not briefed the question of whether this
court is, in any event, bound by the bankruptcy court's
determination that the lease remained in effect and Shell retained
all its rights as a lessor under that agreement, though the
district court relied on that judgment in rejecting LFSS's claims
below. See Shell III, slip op. at 3.

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waived. See Mass. Museum of Contemporary Art Found. v. Büchel, 593

F.3d 38, 65 (1st Cir. 2010). Even if the argument were properly

before this court, it would fail. Article 7 states in relevant

part that "[i]f this lease is terminated before the expiration of

its term . . . for causes attributable to [LFSS]," LFSS, "in

addition to any other remedy under the contract," must "immediately

pay [Shell] an amount equivalent to the amount not depreciated (or

amortized) of the improvements and permanent alterations made by

[Shell] in the Property, in the Station or in the surrounding

areas." This is plainly a liquidated damages provision addressing

the consequences of termination, not the conditions under which the

parties could terminate the agreement. It cannot be construed as

an open-ended alternative to the limitations on termination set out

in article 17.

B. Shell's PMPA Claim

In the alternative, LFSS argues that the district court

erred in concluding as a matter of law that Shell's termination of

LFSS's franchise complied with the PMPA. Absent a valid

termination, LFSS suggests, Shell suffered no irreparable injury,

since Shell's asserted harms arose from LFSS's alleged failure to

comply with the consequences of franchise termination. Those

consequences include the loss of LFSS's right to use Shell's

trademarks and equipment and to sublease and operate the service

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station. This argument also fails; we reject its assumption that

Shell's termination was invalid.

The PMPA, enacted in 1978, addressed franchisors'

"allegedly unfair franchise terminations and nonrenewals in the

petroleum industry" by "establish[ing] minimum federal standards

governing the termination and nonrenewal of petroleum franchises."

Mac's Shell Serv., Inc. v. Shell Oil Prods. Co. LLC, 130 S. Ct.

1251, 1255 (2010). Under provisions of the PMPA, franchisors can

terminate or fail to renew a franchise "only if the franchisor

provides written notice and takes the action in question for a

reason specifically recognized in the statute." Id.6

Reasons recognized in the statute for termination include

"[t]he occurrence of an event which is . . . relevant to the

franchise relationship and as a result of which termination of the

franchise . . . is reasonable." 15 U.S.C. § 2802(b)(2)(C). The

PMPA explicitly includes "failure by the franchisee to pay the

franchisor in a timely manner," id. § 2802(c)(8), "failure by the

franchisee to operate the marketing premises for . . . an

unreasonable period of time" under the circumstances, id.

§ 2802(c)(9)(B), and "willful adulteration, mislabeling or

misbranding of motor fuels or other trademark violations of the

franchisee," id. § 2802(c)(10), as examples of such events.

6
It is clear, and LFSS does not contest, that Shell
provided adequate written notice of the termination here.

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 LFSS does not contest that it failed to make payments on

time, temporarily closed the station, and sold non-Shell-brand

fuel. Rather, it argues that the PMPA requires courts to determine

whether a termination based on these events was objectively

reasonable under the circumstances, not just whether an event

listed under § 2802(c) technically occurred. The circumstances

here, LFSS says, made Shell's termination unreasonable, because the

cash flow problems leading to these three events were caused by

Shell's alleged violation of antitrust laws and its purported

failure to pay LFSS the temporary rent benefit Shell agreed to in

February 2001. Those two allegations are also the basis for LFSS's

counterclaims against Shell.

The district court rejected this argument, holding as a

matter of law that Shell's termination of the franchise was per se

reasonable because the termination was based on those three,

explicitly listed statutory grounds for termination. See Shell I,

slip op. at 19-21. The district court's reasoning suggested that

the termination was valid even under an objective reasonableness

standard. It found that LFSS's claim that Shell's nonpayment of

the rent benefit caused LFSS's cash flow problems lacked merit

because of LFSS's April 2002 admission in its letter to Shell that

the February 2001 rent benefit was no longer in effect. Id. at 22.

We need not evaluate the wisdom of a per se rule that

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termination is reasonable if an event listed in § 2802(c) occurs.7

LFSS could not prevail even if we reviewed whether Shell's

termination was objectively reasonable. The district court did not

clearly err in finding that the February 2001 rent benefit was

temporary, long since terminated, and could not have been

responsible for LFSS's May 2003 cash flow problems. In any event,

uncontested record evidence shows that LFSS's cash flow problems,

culminating in its inability to pay Shell for deliveries, had a

number of causes unrelated to Shell's actions with respect to the

7
The district court's interpretation of the PMPA reflects
the law of this circuit: if any of the events listed in § 2802(c)
occur, "termination is conclusively presumed to be reasonable as a
matter of law." Desfosses v. Wallace Energy, Inc., 836 F.2d 22, 26
(1st Cir. 1987). At least one other circuit also adopted this
rule. See Hinkleman v. Shell Oil Co., 962 F.2d 372, 377 (4th Cir.
1992) (per curiam). But see Patel v. Sun Co., Inc., 141 F.3d 447,
456-57 (3d Cir. 1998) ("There is no question that at least some of
the § 2802(c) relevant event exceptions mandate some form of
judicial scrutiny."); Marathon Petroleum Co. v. Pendleton, 889 F.2d
1509, 1512 (6th Cir. 1989) (suggesting that all terminations for
events listed in § 2802(c) are subject to judicial scrutiny to
determine whether they were objectively reasonable); Sun Refining
& Mktg. Co. v. Rago, 741 F.2d 670, 672-74 (3d Cir. 1984) (holding
that in light of the PMPA's purpose of benefitting franchisees,
courts must look to whether franchisor terminations under
§ 2802(c)(8) and (9) are objectively reasonable and not presume
reasonableness per se).

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CAP or the temporary rent benefit.8 Shell's termination of the

franchise was valid under the PMPA.

C. Shell's Lanham Act Claim

LFSS also challenges the district court's grant of a

permanent injunction preventing LFSS from further using Shell

trademarks, trade dress, and color patterns. The district court

reasoned that this relief was warranted under Section 43(a) of the

Lanham Act, 15 U.S.C. § 1125(a), because LFSS's sale of non-Shell

products while displaying Shell trademarks was likely to cause

confusion as to the origin of LFSS's petroleum products. See Shell

I, slip op. at 29-32; Shell IV, slip op. at 17-18 (limiting

injunctive relief to § 1125(a)).

Section 43(a) of the Lanham Act creates civil liability

for "any person who . . . uses in commerce any word, term, name,

symbol, or device . . . which . . . is likely to cause confusion .

. . as to the origin, sponsorship, or approval of his or her goods,

services, or commercial activities by another person." 15 U.S.C.

§ 1125(a)(1)(A). This circuit generally looks to a non-exclusive,

multi-factor list to determine whether a likelihood of confusion

8
Specifically, in 2000, before the CAP or the February
2001 rent benefit were implemented, LFSS's net operating income was
$33,440, but it loaned more than $150,000 to its stockholders
during the fiscal year. LFSS also took out substantial loans
totaling about $675,000 before implementing the CAP, and LFSS paid
out more than $200,000 to its president, the station operator, in
2000, 2002, and 2003.

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exists.9 That list is merely illustrative, however; the purpose of

the inquiry is simply to determine whether "the allegedly

infringing conduct carries with it a likelihood of confounding an

appreciable number of reasonably prudent purchasers exercising

ordinary care." Int'l Ass'n of Machinists & Aerospace Workers v.

Winship Green Nursing Ctr., 103 F.3d 196, 201 (1st Cir. 1996).

The application of those factors to the record is a

highly fact-intensive inquiry. See Visible Sys. Corp. v. Unisys

Corp., 551 F.3d 65, 73-74 (1st Cir. 2008). That is especially so

given that LFSS is challenging the district court's decision to

limit the evidence to Shell's photographs and the persuasiveness of

that evidence. We accordingly review the district court's finding

of a likelihood of confusion for clear error, and hold that the

district court did not clearly err in its finding.

There is no need to go through a mechanical application

of the multi-factor list to reach this conclusion. The district

court properly rejected LFSS's argument that Shell's photographs of

9
Specifically, this circuit looks to
(1) the similarity of the marks; (2) the similarity of
the goods (or, in a service mark case, the services); (3)
the relationship between the parties' channels of trade;
(4) the juxtaposition of their advertising; (5) the
classes of prospective purchasers; (6) the evidence of
actual confusion; (7) the defendant's intent in adopting
its allegedly infringing mark; and (8) the strength of
the plaintiff's mark.
Int'l Ass'n of Machinists v. Winship Green Nursing Ctr., 103 F.3d
196, 201 (1st Cir. 1996); see also Visible Sys. Corp. v. Unisys
Corp., 551 F.3d 65, 73 (1st Cir. 2008).

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still-visible Shell trademarks at the Los Frailes service station

are unpersuasive and unreliable evidence. LFSS presented evidence

squarely challenging Shell's photographs only in 2007 and had

previously made stipulations at odds with the 2007 evidence that it

presented. See Shell IV, 596 F. Supp. 2d at 201-02.

Moreover, beyond the photographic evidence, it is

uncontested that LFSS had operated a Shell station on the premises

for more than a decade, and that LFSS covered up some, but not all,

of the Shell trademarks displayed at the Los Frailes station while

selling non-Shell-brand fuel. It is also uncontested that LFSS

failed to alter the overall appearance of the service station,

which retained the trade dress of a Shell station. LFSS further

conceded before the district court that the fuel it sold after May

21, 2003, was of inferior quality to the fuel it had previously

sold under Shell trademarks. Shell I, slip op. at 24. LFSS's

brief on appeal concedes that the station continued to serve the

same potential customers before and after the franchise

termination.

These facts amply support the district court's finding

that when LFSS began selling non-Shell-brand fuel without

completely obscuring the Shell trademarks at the station, LFSS's

actions were substantially likely to confuse reasonably prudent

consumers. Given that the Los Frailes station had been identified

with the Shell brand for over a decade and that Shell trademarks

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were still visible at the station, LFSS's signs stating "We Do Not

Sell Shell Gasoline" were not enough to avoid likely confusion, not

least because customers could only see those signs after they were

already at the gas pump.10

D. The Provision of the Injunction Ordering LFSS to Allow
Shell to Retain Possession of the Service
Station until the Expiration of the Lease

We next address LFSS's argument that the district court

abused its discretion in granting the portion of the injunction

that compelled LFSS "to allow [Shell] to continue in possession of

the Los Frailes Service Station . . . until the expiration of

[Shell]'s rights under the lease agreement between the parties" in

2014. Shell III, slip op. at 2.

The district court did not provide any specific reasoning

in its opinion as to why this particular provision of the

injunction, guaranteeing Shell's continued presence for a number of

years into the future, was necessary to remedy the irreparable

10
We likewise reject LFSS's argument that Shell lacked
standing to assert an injury on its Lanham Act claims because of
Shell's 2006 acquisition and share purchase and its rebranding as
Sol Puerto Rico, and specifically because Sol is not the registrant
of the relevant Shell trademarks. Anyone "who may suffer adverse
consequences from a violation of section 1125(a) has standing to
sue regardless of whether he is the registrant of the trademark."
Quabaug Rubber Co. v. Fabiano Shoe Co., Inc., 567 F.2d 154, 160
(1st Cir. 1977); see also Waldman Publ'g Corp. v. Landoll, Inc., 43
F.3d 775, 784-85 (2d Cir. 1994). Sol, as the owner of numerous
Shell stations, plainly has an interest in preventing the confusion
of the Shell brand with the inferior-quality fuel that LFSS sold
while still displaying some Shell trademarks.

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harms associated with Shell's loss of goodwill and market presence.

Those harms derived from LFSS's failure to comply with the

consequences of its franchise termination, including the

termination of LFSS's sublease of the service station from Shell

and LFSS's obligation to cease operating the station as Shell's

designated retailer/sublessee. Shell I, slip op. at 28-29. But

the district court's injunction included a separate provision

specifically requiring LFSS to comply with the post-termination

provisions of the retailer/sublease agreement and the trademark and

equipment agreement. Id. The portion of the injunction requiring

LFSS to also allow Shell to remain in possession of the service

station until its rights under the lease expired in 2014 was in

addition to, and separate from, that provision. Id. The district

court appears to have reasoned that the PMPA allows franchisors to

obtain injunctions based on an underlying lease agreement, not

merely injunctions to enforce post-termination provisions of

franchise agreements. Id. at 27-29.

On appeal, LFSS does not challenge the portion of the

injunction ordering it to comply with post-termination clauses in

the franchise agreements. Nor does LFSS dispute that those

contractual clauses provided that "[i]f this Contract is terminated

or non-renewed, [LFSS] will deliver the Station and the Equipment

to [Shell]" within twenty-four hours of termination. Once LFSS's

sublease of the station from LFSS ended, LFSS had to vacate the

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premises. Shell then could presumably enter into another sublease

with a new retailer to operate the service station. It is unclear

from the record whether that has in fact happened.

Instead, LFSS's argument is that the district court

should not have added the additional portion of the injunction

compelling LFSS to allow Shell to possess the station until Shell's

rights under the lease expire in 2014. LFSS is essentially arguing

that franchisors like Shell cannot use the PMPA to obtain this kind

of injunctive remedy, as distinct from whatever post-termination

obligations LFSS has under the franchise agreements.11

We agree that the district court abused its discretion in

ordering LFSS to allow Shell to continue in possession of the Los

Frailes service station until Shell's rights under the lease

expired.

Here, Shell made no showing of irreparable harm that

might justify an order giving it possession of the property for the

11
Though LFSS broadly asserts that the PMPA does not allow
franchisors to obtain injunctive relief against franchisees if the
relief would give the franchisors property rights, LFSS does not
claim that this prevents the district court from ordering LFSS to
comply with its post-termination contractual obligations. In any
event, we need not decide whether the PMPA allows franchisors to
obtain injunctions to enforce those kinds of obligations. Shell's
complaint also included a claim to judicially dispossess LFSS of
the service station premises and equipment under Puerto Rican law,
and Shell can obtain enforcement of the relevant post-termination
contractual provisions on that basis. Shell did not, however,
bring any state law claims that would provide an alternate basis
for it to obtain an injunctive remedy involving the lease agreement
in this suit.

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full term of the lease, until 2014. The post-termination

provisions of the retailer/sublease and trademark and equipment

contracts adequately protected Shell's right to resume possession

of the station and its equipment. We see no basis for further

ordering LFSS to allow Shell to possess the property until 2014

under the lease; the district court's order compelling LFSS to

comply with these post-termination provisions sufficiently

protected Shell's interests. The district court did not hold that

any violations of the lease by LFSS may have caused discrete,

irreparable harms to Shell or that injunctive relief would be the

remedy for such harms.

Moreover, the terms of this portion of the injunction

appear to allow Shell to continue possessing the property and

service station until the lease expires even if Shell, in the

future, breaches its obligations under the lease. Shell plainly

cannot be entitled to that remedy, which goes even beyond ordering

enforcement of the lease agreement.

We vacate this portion of the injunction alone, without

prejudice. Shell is free to try to obtain this remedy at a later

date if future events warrant it.

IV. LFSS's Antitrust Counterclaim against Shell

LFSS also appeals the district court's decision to strike

LFSS's cross-motion for summary judgment and its grant of summary

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judgment to Shell on LFSS's federal and state law antitrust

counterclaims.

We review a district court's decision to strike a motion

for summary judgment for an abuse of discretion when it is stricken

for a failure to comply with the terms of a case-management order.

See Rosario-Diaz v. Gonzalez, 140 F.3d 312, 315 (1st Cir. 1998)

(holding that case management-related decisions are generally

reviewed for an abuse of discretion). We review the district

court's grant of summary judgment de novo and make all reasonable

factual inferences in the light most favorable to the non-movant,

LFSS. Boston & Me. Corp. v. Mass. Bay Transp. Auth., 587 F.3d 89,

98 (1st Cir. 2009). Summary judgment is appropriate when "there is

no genuine issue as to any material fact and . . . the movant is

entitled to judgment as a matter of law." Id. (internal quotation

marks omitted). "We may affirm . . . on any basis in the record."

Chiang v. Verizon New England, Inc., 595 F.3d 26, 34 (1st Cir.

2010). We affirm both rulings.

A. The District Court Did Not Abuse Its Discretion in
Striking LFSS's Summary Judgment Motion

LFSS's argument that the district court erred in striking

its motion for summary judgment ignores the salient fact that

LFSS's motion was filed on January 3, 2007, weeks after the

conclusion of discovery, and well after the September 1, 2006,

deadline the district court imposed for dispositive motions.

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 LFSS argues on appeal that the district court's extension

of discovery until November 30, 2006, effectively extended or

vacated the September 1 deadline. That argument, however, does not

provide a persuasive ground for questioning the district court's

discretionary case management decisions. See Perez-Cordero v.

Wal-Mart P.R., 440 F.3d 531, 533 (1st Cir. 2006); Rosario-Diaz, 140

F.3d at 315. LFSS had numerous opportunities to request a filing

extension for its summary judgment motion at various status

conferences after the September deadline; it took none of them.

Nor has LFSS presented any convincing reason for the delay in

filing this motion.12 There was no abuse of discretion in denying

LFSS's summary judgment motion.

B. The District Court Properly Granted Summary Judgment to
Shell on LFSS's Antitrust Counterclaim

LFSS further argues that the district court improperly

granted summary judgment against it on its claims under the

Robinson-Patman Act and equivalent provisions of Puerto Rican

antitrust law because, it says, there were contested material

issues of fact as to various elements of that claim even absent the

12
In any event, as the district court noted in its opinion
granting summary judgment to Shell, the outcome would have been no
different even if it had considered this untimely motion. LFSS's
purported evidence that it was in actual competition with other,
nearby retailers that it said received better prices from Shell was
weak at best, and it failed to show price differentials. See Shell
II, 551 F. Supp. 2d at 134 n.3.

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evidence submitted in its stricken motion for summary judgment. We

disagree.

Section 2(a) of the Clayton Act, as amended by the

Robinson-Patman Act, prohibits price discrimination among different

purchasers of like commodities if "the effect of such

discrimination may be substantially to lessen competition or tend

to create a monopoly in any line of commerce," among other

consequences. 15 U.S.C. § 13(a). The Robinson-Patman Act

prohibits, inter alia, actions "directed at injuring competition

among the discriminating seller's customers," referred to as

"secondary line violations." See Able Sales Co., Inc. v. Compañía

de Azucar de P.R., 406 F.3d 56, 60 (1st Cir. 2005).

LFSS claims that Shell engaged in secondary-line

violations through the CAP program Shell implemented in July 2001.

LFSS says that in establishing price zones for retailers, the CAP

offered certain Shell retailers (those operating Shell-owned

stations) more favorable prices on Shell fuel than LFSS and other

retailer-owned stations received.

One of the basic requirements of competitive injury,

however, is a showing of "actual competition" between the

disfavored retailer (LFSS) and those retailers benefitting from the

price discrimination. Volvo Trucks N. Am., Inc. v. Reeder-Simco

GMC, Inc., 546 U.S. 164, 177 (2006).

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 The central reason LFSS's argument fails is because, as

the district court found, LFSS presented no evidence that it was

actually in competition with the retailers it said were the

beneficiaries of the CAP. LFSS's response to Shell's motion for

summary judgment simply asserted that under an August 2005 Puerto

Rican law, P.R. Laws. Ann., tit. 23, § 1104, the entire island

constituted a single price zone and that all retailers were

presumptively each other's competitors. But that law was

marginally relevant at best. It was a non-retroactive law

implemented two years after this suit began, and a year after the

CAP was discontinued. See Shell III, slip op. at 8-9.

We likewise reject LFSS's argument that the deposition

testimony showing three other Shell stations were within two miles

of LFSS meant that those stations were presumptively in competition

with the Los Frailes service station. This testimony was

exceptionally vague. LFSS neither presented corroboration nor

explained why consumers would in practice choose among these

stations. On the evidence submitted in this case, even viewing all

reasonable inferences in LFSS's favor, proximity does not does not

per se show actual competition.

LFSS's reply to Shell's motion for summary judgment

presented no other factual or legal basis for finding LFSS was in

competition with favored retailers, and its attempts on appeal to

create an issue of material fact on this point all depend on the

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exhibits in support of its stricken motion for summary judgment.

We need go no further.13 LFSS cannot satisfy the first prerequisite

of its antitrust claims, and thus the district court properly

granted Shell summary judgment.

V. LFSS's State Law Breach of Contract Counterclaim

Finally, we reject LFSS's argument that the district

court erred in dismissing for failure to prosecute LFSS's breach of

contract claim for additional rent due under the lease. We review

dismissals for failure to prosecute under Fed. R. Civ. P. 41(b) for

an abuse of discretion. See Malot v. Dorado Beach Cottages

Assocs., 478 F.3d 40, 43 (1st Cir. 2007). There was no abuse of

discretion here.

LFSS conceded before the district court in a 2007 show-

cause hearing that this claim had been included only in a section

of an earlier response to a motion to show cause. The district

court could reasonably find there was no real development of this

claim since 2003. LFSS's main argument before the district court

was that the district court should nonetheless exercise its

discretion not to deem the argument waived. LFSS made all its

present arguments as to the lack of hardship to Shell before the

13
We note that the district court amply explained why, even
assuming arguendo that LFSS presented an issue of material fact on
the question of whether it was in competition with favored
retailers, there were no material issues of fact on the other
required elements of this claim that would preclude Shell from
obtaining judgment on the merits. See Shell II, 551 F. Supp. 2d at
134-35.

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district court, which carefully considered them. Nor, despite the

extensive filings in this case, has LFSS at any point explained why

this claim has merit. LFSS has also not developed the argument as

to why this claim should not have been dismissed with prejudice;

in any event, the district court's decision to dismiss a claim for

failure to prosecute with or without prejudice is ordinarily within

its discretion. The district court did not abuse its discretion in

dismissing the claim with prejudice.

We affirm the district court's grant of a permanent

injunction ordering LFSS to refrain from further use of any Shell

trademarks, trade dress, or color patterns and ordering LFSS to

comply with relevant post-termination contractual obligations. We

vacate, without prejudice, the portion of the permanent injunction

ordering and compelling LFSS to allow Shell to continue in

possession of the Los Frailes Service Station until the expiration

of the lease in 2014. Shell is free to seek future injunctive

relief should it be warranted. The district court's grant of

summary judgment and its dismissal of LFSS's breach of contract

counterclaim with prejudice are affirmed. No costs are awarded.

So ordered.

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