On June 24, 2005, The U.S. Supreme Court handed a victory to 11,000 small gas station owners in the longstanding class action battle against ExxonMobil Corp. |
The high court ruled 5-4 that the station owners in Florida and 34 other states were properly included in a single class action in U.S. District Court in Miami. The high court rejected the oil giant's request for a new trial. As a result, Irving, Texas-based ExxonMobil will have to pay out more than $1.3 billion in damages.
Exxon argued that the case shouldn't have included station owners who were seeking less than $50,000, which at the time was the threshold for certain types of stand-alone federal suits.
The ruling hardly puts an end to the complex case, which started in 1991. Now, the Miami-based law firm that filed the case most likely will spend years working to see that the nearly 11,000 claims are paid. It is expected that ExxonMobil will fight every single claim and will make it as difficult and expensive as they can.
The case centered on Exxon's August 1982 discount-for-cash program, which promised station owners a price cut for gas to offset a new credit card fee the oil company was charging them. The station owners alleged that Exxon, which later merged with Mobil, eliminated the price discount seven months later, yet for years continued to tell stations that it was providing the discount.
After a 2001 federal court trial in Miami, jurors found that Exxon had secretly overcharged its dealers for gas for more than 12 years, and held the company liable for fraud and breach of contract. The jury found that Exxon failed to reduce its prices by about 1.3 cent per gallon as promised.
Based on the 40 million gallons of gas sold during the 12-year program, the jury awarded $500 million to the station owners. With interest, the damages are expected to top $1.3 billion.
ExxonMobil appealed the verdict unsuccessfully. In May, the case was back before the trial judge U.S. District Judge Alan Gold, and he clearly was frustrated with the oil company. He ruled that ExxonMobil "knowingly and recklessly" filed frivolous litigation and acted in bad faith to delay paying the gas station owners.
"Sanctions are warranted because of [ExxonMobil's] scheme to deliberately misuse the judicial process to chill the class dealers' legitimate claims," Gold said.
ExxonMobil denied those charges. Thursday’s Supreme Court ruling can be viewed as "anti-climactic" because the ruling only dealt with the limited question of whether the trial court had jurisdiction over individual class member claims worth less than $50,000.
Before the Supreme Court ruling, Gold already had set up a claims process by which station owners could file claims, and had appointed former U.S. District Judge Thomas Scott as special master to administer the claims. The class representatives already have been paid.