‘Hot fuel’ case will proceed

| Friday, February 22, 2008

The case against hot fuel will proceed and not be dismissed, a U.S. District Court judge has ordered.

Judge Kathryn Vratil of the U.S. District Court for the District of Kansas issued an order Thursday, Feb. 21, denying a motion by the defendants to dismiss the case.

The plaintiffs – groups of consumers from 26 states, the District of Columbia and Guam – accuse numerous oil companies and fuel retailers of violating consumer protection laws relating to the sale of motor fuels.

The consumers, including truck drivers, claim that retail fuel sold at temperatures above 60 degrees is a form of fraud because of thermal expansion.

During wholesale transactions and other sales “above the rack,” a gallon is defined by fuel companies as 231 cubic inches at 60 degrees. At retail, fuel is sold by volume without compensation for temperature changes.

Studies have shown the national average temperature of motor fuel is near 70 degrees and even higher in warmer states. All liquids expand or contract as temperatures change.

The plaintiffs contend fuel companies are profiting on “extra” gallons created by the expansion. There are also tax implications when fuel companies buy fuel compensated to the 60-degree wholesale standard but sell it uncompensated for temperature at retail.

A U.S. House Committee on Oversight and Government Reform subcommittee study of 2006 data showed that hot fuel nationwide costs consumers an extra $2.3 billion per year.

A federal judicial panel consolidated more than two dozen lawsuits in June 2007 and called on Judge Vratil in Kansas to preside.

In her order, Vratil told attorneys from both sides to submit their plans for pre-trial discovery by March 3.

The order is good news for truckers and consumers involved in the case, says John Siebert, project leader with the Owner-Operator Independent Drivers Association Foundation. OOIDA is not a plaintiff in the case, but some individual owner-operators are.

“The judge’s ruling removed the first roadblock to continuing the case, Siebert told Land Line. “It also marked the beginning of the discovery phase of the proceedings in which attorneys on each side will ask the other side for documentation and information.”

Siebert said the discovery phase could reveal previously internal documents from big oil about their sales methods and directives.

The judge’s court order shows how serious the consumer complaints are and how there is no magic bullet to make the lawsuits go away, Seibert added.

“They wanted the judge to say ‘a gallon is 231 cubic inches, period, and we can all go home,’ ” Seibert said.

“That was an arrogant thing to do because they had such a concise and well-reasoned complaint before them and the judge didn’t buy any of their arguments for dismissing the 12 claims outlined in that unified complaint.”

Judy Dugan, research director for Oilwatchdog.org, a branch of the Foundation for Taxpayer and Consumer Rights based in Santa Monica, CA, issued a media release following the judge’s order.

“Today’s legal victory raises the pressure on regulators and lawmakers to fix the hot fuel rip-off. It is even more important to motorists with crude oil over $100 a barrel and gasoline prices rising to match,” Dugan said.

Click here to read the judge’s order on the motion to dismiss.

– By David Tanner, staff writer
david_tanner@landlinemag.com

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