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Judge says ‘hot fuel’ lawsuit can proceed

A potential class-action lawsuit claiming U.S. oil companies have knowingly overcharged customers when gas station fuel temperatures rise passed its first hurdle Thursday.
/ Source: The Associated Press

A potential class-action lawsuit claiming U.S. oil companies have knowingly overcharged customers when gas station fuel temperatures rise passed its first hurdle Thursday.

U.S. District Judge Kathryn Vratil rejected a motion from the oil companies to dismiss the lawsuit, saying they had not proven the plaintiffs wouldn't prevail in court.

George Zelcs, an attorney for the plaintiffs, welcomed the ruling, which now allows both sides to begin collecting more information on the way to trial.

"The oil industry represented to Judge Vratil that their motion to dismiss was a silver bullet" to the plaintiff's claims, Zelcs said. "Obviously, their aim was not true."

Defense attorney Martin Loring downplayed the decision, noting Vratil was required to apply a low standard to the plaintiff's claims.

"We believe that when we have the opportunity to present our side of the case, the case will be dismissed," he said. "Every state requires us to sell gas the way we sell it and there's nothing wrong or deceptive about that."

The Judicial Panel on Multidistrict Litigation last year decided to centralize in U.S. District Court in Kansas City, Kan., dozens of lawsuits filed by consumers in 26 states, Washington, D.C., and Guam, rather than try them in separate courts.

The lawsuits center around the oil industry's century-old practice of pricing gasoline on a standard of 60 degrees. As temperatures rise during warmer months, the gasoline expands, meaning customers get less energy per gallon.

Plaintiffs claim gasoline sold in the states where lawsuits have been filed is an average of 10 degrees warmer than the industry standard.

Congressional members have estimated the changes in temperature have cost consumers $1.5 billion a year, and they considered forcing oil companies to install pumps that adjust for temperature changes.

In fact, the industry uses temperature-adjusting technology at every step of fuel sales except retail, although many companies do use temperature-adjusted pumps in Canada, where the temperature of fuel falls below the industry standard, meaning consumers get more for their money.

Gas retailers have resisted attempts to require temperature adjustment equipment at all of their U.S. locations, claiming that installing the new pumps would be too expensive and more research is needed to see if consumers actually lose a significant amount of money.

The plaintiffs also claim gas retailers are generating extra profits by collecting fuel taxes on each retail gallon they sell but remitting taxes to the government based on the number of wholesale gallons they sell, which are adjusted for temperature.

In their motion to dismiss the lawsuits, the oil companies and gas retailers said they can't be sued for following the law.

They noted that state regulations and industry standards define a gallon of gasoline by volume, not in terms of its energy output. As long as the customer receives 231 cubic inches of fuel, they said, the customer is getting what they paid for.

In her ruling, however, Vratil said that argument doesn't disprove that plaintiffs are being shortchanged and deceived when they go to the pump. She also said the defendants didn't provide evidence that they are barred from adjusting the price of a gallon of gas to factor in the difference in temperature.

"Defendants have not shown as a matter of law that state regulation in any of the 28 jurisdictions precludes plaintiffs' claims," she wrote.