Gasoline & Automotive Service Dealers of America

Hot Fuel issue not over – Retailers Object to Hot-Fuel Deal – How can this effect you!

Published in CSP Daily News By-Samantha Oller, Senior Editor/Special Projects Coordinator

KANSAS CITY, Kan. — As a Kansas federal judge prepares to evaluate proposed settlements from long-running litigation involving “hot fuel” this summer, many of the industry’s largest fuel retailers— QuikTrip, Circle K, Kum & Go, Sheetz, Wawa and 7-Eleven, among them—have filed an objection over the terms.

Some Background

In a class-action lawsuit dating back seven years, plaintiffs had charged that more than two dozen fuel retailers were shortchanging customers who purchased “hot fuel”—referring to the fact that the volume of gasoline rises along with its temperature. Consumers were, in effect, paying a full gallon price for less than a gallon of fuel, plaintiffs alleged, because these retailers did not have automatic-temperature-compensation (ATC) devices installed at the pump that would adjust the price based on the fuel volume and did not alert consumers to the fuel’s temperature.

More than two dozen fuel retailers, ranging from major oils to retail chains such as Casey’s General Stores, Sam’s Club and Valero, had settled on the case, although they denied any wrong-doing. Three different settlement groups emerged. Six of the companies, including the major oil companies, agreed to settlements that would put $22.925 million into a fund to reimburse retailers for installing ATC equipment. Four of the defendants, including Casey’s and Valero, agreed to settlements to install ATC pumps at their branded sites over time. And the remaining 18 defendants—including CITGO and Thorntons—agreed to pay into a fund totaling $1.577 million that would help state weights and measures agencies ensure ATC upgrades were done lawfully.
New Objections

But as U.S. District Court Judge Kathryn H. Vratil prepares to review the proposed settlements this June, two objections were filed this week on the terms, according to court documents obtained by CSP Daily News. One of the objections comes from more than a dozen of the industry’s largest petroleum-retail chains; another is led by Theodore Frank, founder of the Center for Class Action Fairness, according to Law.com.
According to the objection filing by the retail chains, one big problem with the settlements is the fact that consumers would get none of the payments. Nearly two-thirds of the settlement money going to fuel wholesalers and retailers.

Both objections also cite the payments going into a fund for weights and measures agencies as especially problematic. Because no states yet approve of ATC for motor-fuel retail sales, the objectors argue that the fund would influence regulators who might be opposed to ATC to change their positions in favor of legislation approving its use to receive the money.
The retailers’ objection filing describes it as “a de factoslush fund that will make payments to state governments if and when states change their laws in accordance with the named plaintiffs’, and plaintiffs’ counsels’, wishes,” and raised constitutional red flags.

Convenience retailers named in the objection include QuikTrip, 7-Eleven (which fought the litigation and won), Circle K, Kum & Go, Murphy Oil, Pilot Travel Centers, Flying J, RaceTrac, Sheetz, Speedway, The Pantry and Wawa. Frank with the Center for Class Action Fairness, a law firm and nonprofit that represents consumers in class-action lawsuits, described the settlement as “uncomfortably close to political bribery.” “It’s a zero-dollar settlement,” Frank told Law.com. “The lawyers are the only people getting paid, and the relief is to require lobbying for a means of selling gasoline that would make consumers worse off.”

A hearing is scheduled for Tuesday, June 9, when Judge Vratil will determine whether to give final approval to the settlements.

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