BP, Conoco, Others Agree To $21.6M Deal In Hot Fuel MDL

By Jess Davis

Law360, New York (June 18, 2012, 5:05 PM ET) — Six refiners and four retailers asked a Kansas federal judge Friday for preliminary approval of a $21.6 million agreement to settle claims in a multidistrict litigation alleging they illegally sold motor fuel without revealing or accounting for temperature expansion.

BP, ConocoPhillips, Exxon Mobil Corp. and Royal Dutch Shell PLC each agreed to pay $5 million and Citgo Petroleum Corp. and Sinclair Oil Corp. each agreed to pay $800,000 to settle the claims from the MDL, which encompassed lawsuits brought by consumers in 26 states as well as the District of Columbia and Guam. The plaintiffs claimed that because the defendants sold motor fuel for a specified price per gallon without disclosing or adjusting for temperature expansion, they were liable under state law theories including breach of contract, breach of warranty, fraud and consumer protection.

In addition, four retailers — Sam’s Club, Casey’s General Stores Inc., Dansk Investment Group Inc. and Valero Energy Group Inc. — agreed to post information about fuel temperatures at their gas pumps and will contribute up to $8.65 million to cover the cost of providing notice to the class and for attorneys’ fees and costs, according to the proposed settlement.

None of the companies has admitted liability.

The settlements are intended to modify retail sale of gas to better account for its temperature and to disclose to the consumer “meaningful information about the effects of temperature on motor fuel,” according to the unopposed motion for preliminary approval of the settlement agreement.

“Individually and together, the settlements provide significant relief to the class members to prevent future damage to the class members,” the motion said.

The money from the refiners would go toward retailers and wholesalers to help defray the costs of installing automatic temperature compensation equipment or making meaningful disclosures to consumers at retail stations. States that are part of the settlement will also get contributions to their weights and measures departments to assist them in inspecting and regulating the temperature-adjusted pumps and disclosures.

Sam’s, Casey’s and Dansk agreed to gradual conversion of their pumps to adjust for fuel temperature. Valero agreed to post the actual temperature of the motor fuel in its underground storage tanks and to convert to temperature-adjusted pricing when certain market conditions are present.

In April, U.S. District Judge Kathryn H. Vratil rejected plaintiffs’ claims that the energy companies, gas stations and their trade associations conspired to keep technology that accounts for temperature expansion in motor fuels from being adopted in the U.S.

Trial is expected to proceed for the remaining defendants Aug. 27 in Kansas.

The plaintiffs are represented by Robert A. Horn of Horn Aylward & Bandy LLC, Thomas V. Girardi of Girardi & Keese, George A. Zelcs of Korein Tillery LLC and Thomas Bender of Walters Bender Strohbehn & Vaughan PC, among others.

BP is represented by Phillips Murrah PC and Arnold & Porter LLP, among others. Citgo is represented by Husch Blackwell LLP and Pillsbury Winthrop Shaw Pittman LLP, among others. ConocoPhillips is represented by Zelle Hofmann Voelbel & Mason LLP and Butler Snow O'Mara Stevens & Cannada PLLC, among others. ExxonMobil is represented by Fields & Brown LLC and Weil Gotshal & Manges LLP. Shell is represented by Greensfelder Hemker & Gale PC. Sinclair is represented by Lathrop & Gage LLP and Mohr Hackett Pederson Blakly & Randolph PC.

The case is In re: Motor Fuel Temperature Sales Practices Litigation, MDL number 07-1840, in the U.S. District Court for the District of Kansas.

–Additional reporting by Juan Carlos Rodriguez. Editing by Lindsay Naylor.