Lawsuit Over Gas Pricing Revived
An appeals court rules that a class-action case alleging a conspiracy by oil refiners in the 1990s should proceed.
The U.S. 9th Circuit Court of Appeals on Friday revived a class-action
lawsuit accusing Arco, Chevron and several other refiners of conspiring
to fix gasoline prices during the mid-1990s. But the same panel
expressed doubt that the plaintiffs would be able to prove their case.
The ruling stems from a suit filed by William O. Gilley on behalf of
other wholesale buyers of the cleaner-burning fuel that since 1996 has
been required in California.
Attorneys for Gilley contend that the defendants had violated the
Sherman Antitrust Act by limiting the supply of gasoline to raise
prices and keep them high.
A federal judge dismissed the case in 2002, arguing that Gilley was
precluded from re-litigating claims from a 1996 case that had
determined no such conspiracy existed.
On Friday, two members of the three-judge appeals panel ruled that the
Gilley case explored a new area: whether the total effect of
production-sharing agreements entered into individually by refiners
could squeeze supply.
The panel also ruled that the lower court had erred in not allowing the
plaintiffs to argue that there could have been an anti-competitive
effect on pricing even without evidence of collusion.
"It had to be concluded that the district court erred in not allowing
Gilley to aggregate the agreements to demonstrate their
anti-competitive effects," judges Stephen S. Trott and Richard R.
Clifton wrote in sending the case back to the lower court. The appeals
court also noted that the lower court judge might be correct in
thinking "the prospects of Gilley actually proving the allegations…
to be highly improbable."
Judge Consuelo M. Callahan dissented.
Plaintiffs’ attorney Timothy D. Cohelan said it was a major
breakthrough for the case. "Now, we can analyze the combined effect of
these contracts to determine whether or not they are having an
anti-competitive effect," Cohelan said.
Defense lawyer Peter H. Mason said it was too early to comment on what would happen next in the case.
"We’re reviewing the opinion and we’ll take a look at our options," Mason said.
Judy Dugan of Consumer Watchdog said she wasn’t sure whether the case
could be proven, but added that "almost any gas station will tell you
that the refiners are fixing the price to keep it high."
Dugan said that the state attorney general’s office "ought to demand
more and better information from refineries about what they pay and on
exactly how they set their prices."
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