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Judge Orders Rewrite of Hot Fuel Settlements

October 21, 2012

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A judge has rejected many of the proposed settlement deals in the "hot fuel" class-action lawsuit, sending fuel refiners and retailers back to the drawing board.


The term "hot fuel" refers to the expansion of gasoline or diesel fuel in the warmer months. Critics charge that when the fuel expands, it delivers less energy per gallon to the consumer, but the consumer is still charged the same price per gallon.

In 2006, the Kansas City Star wrote a series of stories about the issue, estimating that hot fuel cost consumers $2.3 billion dollars a year. After the Star's reports, class-action lawsuits sprouted up against dozens of companies, including oil giants and fuel-station chains.

Preliminary settlements were reached earlier this year by a number of defendants, but the judge must approve them.

Ten retail companies offered settlements earlier this year, the majority of which involve a gradual, voluntary move to install technology known as automatic temperature compensation, or ATC, on fuel pumps, according to the Owner Operator Independent Drivers Association, which has been actively involved in this issue. ATC would adjust the price the consumer pays to account for the temperature of the fuel.

In general, according to published reports, the refiners agreed to pay $21.2 million into a special settlement fund. Two thirds of what was left after attorney's fees was to be used to help retailers pay for automatic temperature compensation at retail or putting decals on dispensers that explain the effect of temperature on energy content.

The other third was to go to state weights and measures departments to help defray the costs of overseeing ATC.

However, Judge Katherine H. Vratil said the plans by Shell, BP, ExxonMobil, Citgo, Sinclair, ConocoPhillips and Valero do not fully address the needs of the class-action plaintiffs, saying she could not see how dispenser decals would benefit class members, reports scpnet.com, a news site for the convenience store industry.

Also in question: Why the settlements limited payment to retailers to no more than 25% of the funds in each of the first two years after the deals were effective.

Vratil is presiding over the consolidated case consisting of lawsuits filed in 26 states dating back to 2006.

In September, one of the hot fuel cases went to trial. Two Kansas businessmen, including a FedEx trucker, came up short in trying to convince a jury that three retailers - QuikTrip, 7-Eleven and Kum & Go - knowingly intended to harm consumers by selling hot fuel.

Related Stories:

4/20/2012 Three More Companies Settle in 'Hot Fuel' Suits

4/9/2012 Three Major Oil Companies Settle in "Hot Fuel" Lawsuit

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