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."