[seadog] XOM confirmed guilty
- From: "Tom Blanchard" <tomblanchard@xxxxxxxxxxxxxxxx>
- To: "SEADOG" <seadog@xxxxxxxxxxxxx>
- Date: Thu, 12 Jun 2003 20:58:28 -0400
Court upholds verdict against Exxon
Decision could cost company more than $1.2 billion
By Lisa Sanders, CBS.MarketWatch.com
Last Update: 5:56 PM ET June 12, 2003
From CBS news
DALLAS (CBS.MW) -- A federal appeals court in Miami upheld a verdict against
the former Exxon Corp. that could cost the company, now ExxonMobil, more
than $1.2 billion.
The 11th U.S. Circuit Court of Appeals found Thursday in favor of service
station dealers, who proved in a February 2001 trial that Exxon overcharged
its dealers for wholesale motor fuel and then "fraudulently concealed the
overcharge."
Patrick Henretty, a spokesman for Irving, Texas-based ExxonMobil's refining
and marketing operations in Virginia, said "we are very disappointed with
the appeals court decision today. Exxon operated in good faith and met its
obligations in the best interests of the dealers and customers."
He added that ExxonMobil is considering further appeal.
Gene Stearns, one of the attorneys representing station dealers both at
trial and on appeal, said, "While we are pleased with the outcome, it is
impossible after all these years to make up for the harm caused by Exxon to
thousands of Exxon families across the country."
If all eligible class members submit claims -- at approximately $100,000
each -- the judgments would exceed $1.2 billion. According to the attorneys'
statement, the class covers about 10,000 current or former dealers who
purchased fuel directly from Exxon and who owned or operated an Exxon
station between March 1, 1983, and Aug. 28, 1994, and had one or more sales
agreements with Exxon.
According to the suing dealers' Web site, the claim relates to a company
"discount for cash" program begun in August 1982.
"Under this program, Exxon began charging dealers a separate 3 percent fee
for processing credit transactions," the Web site states. "Exxon said,
however, that it would reduce the wholesale price of motor fuel by an amount
that, on average, would offset the fee. In the lawsuit, the dealers allege
that Exxon collected the fee, but failed to reduce the wholesale price of
motor fuel."
Henretty noted that the discount program was a "voluntary program to enable
Exxon dealers to be more competitive with retailers who sold on a cash-only
basis. The program allowed dealers to lower the cost of gasoline sold to
cash customers by removing credit-card costs and recovering those costs from
customers who chose to purchase gasoline with credit cards."
Shares of ExxonMobil closed flat at $38.20.
From Reuters
$1.2 Billion Verdict Vs Exxon Affirmed
Thursday June 12, 7:23 pm ET
LOS ANGELES (Reuters) - Exxon Mobil Corp. (NYSE:XOM - News) has been ordered
to pay $1.2 billion to its service station operators by a federal appeals
court that found the world's largest public oil company had fraudulently
overcharged them, lawyers said on Thursday.
The lawsuit alleged that Exxon, before its 1999 merger with Mobil, cheated
about 10,000 service station owners in 36 states out of promised discounts
between 1982 and 1994.
A jury in Miami ordered Irving, Texas-based Exxon in February 2001 to pay
$500 million in compensatory damages. With interest, the award at the time
was valued at around $1 billion.
The verdict was affirmed by the Eleventh Circuit Court of Appeals in Atlanta
on Wednesday.
Under the discount program, retail customers who bought gasoline with cash
were charged 4 cents a gallon less than those paying with credit cards.
In an effort to maximize dealer participation in the program, Exxon began
charging dealers a 3 percent processing fee on sales of gasoline to
consumers who paid by credit card. It promised to offset the charge by
reducing the wholesale price that each dealer paid for gasoline.
"Exxon kept its promise for approximately six months and reduced the
wholesale price by 1.7 cents a gallon. In March of 1983, however, it stopped
providing the offset without informing the dealers," the federal appeals
court said.
"After a careful review of the record, we believe the evidence presented at
trial was sufficient to support the jury's finding that Exxon fraudulently
concealed its breach of the dealer agreements," the filing stated.
Exxon Mobil did not immediately return calls seeking comment.
The class action suit was filed on behalf of current or former Exxon dealers
who operated a service station between March 1, 1983, and Aug. 28, 1994.
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