Judge Grants Final Approval to $24.5M Hot Fuel Settlement

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A Kansas federal judge has granted final approval to a $24.5 million class action settlement to resolve allegations that oil companies and fuel retailers overcharged for fuel that expanded when the temperatures went up.

U.S. District Judge Kathryn H. Vratil approved the deal despite several objections by 7-Eleven and other fuel retailers, which argued that the plaintiffs and BP PLC, Exxon Mobil Corp. and other oil companies are supporting “automatic temperature compensation” (ATC), by establishing a slush fund for state governments.

The plaintiffs asked Judge Vratil to approve the hot fuel class action settlement multidistrict litigation (MDL) in June in light of these objections.

The Kansas federal judge rejected the arguments by the objectors concerning the ATC funding, including the argument that the oil companies were being forced to pay de facto “political donations,” that it violates legislative authority of the states, and that there seems to be some sort of quid pro quo corruption.

“Class members had an opportunity to opt out of the settlements and retain the value of their claims against defendants. Thus, they have not been required to contribute money to state agencies,” the judge said. “Moreover, the settlement funds are not political in nature.”

There are a total of 28 class action settlements. Four have chosen to install the ATC equipment and the remaining 24 have opted to pay money into a fund. There have been only three objections and 104 opt-outs.

The plaintiffs said that Judge Vratil should approve the deal because “not a single federal or state official, which have been specifically informed about the details of the settlements, has voiced concerns or objections. That response speaks volumes about the fairness of the settlements.”

Of the bigger oil companies who have opted to pay money into the fund, they have each agreed to pay $5 million. Smaller retailers will pay just $21,000. That money will then go toward implementing, inspecting and regulating ATC.

The objectors, which included 7-Eleven, said that the discussions about ATC were really a political issue and that the hot oil class action settlements amounted to a violation of First Amendment rights.

“The settlements seek to create this campaign [for ATC] by providing a de facto slush fund that will make payments to state governments if and when states change their laws in accordance with the named plaintiffs’, and plaintiff’s counsels’, wishes,” the objectors wrote, adding that it helps those who agree with ATC, push their agenda.

The Kansas federal judge rejected those arguments, saying that no one was forced to implement regulation as a result of the settlements. In addition, Judge Vratil said that what matters is whether or not the class action settlements are fair.

The three Class Members who objected to the deal said that they think it impacts those who are in states with cold climates unfairly because they benefit from not having ATC implemented.

Theodore H. Frank, the attorney representing two of the individual objectors, and who objected himself called the class action settlements “absurd and should not be approved.”

The federal judge rejected Frank’s arguments that the attorneys’ fees were excessive and that there was no benefit to the class in the class action settlement.

Fourteen of the 18 hot fuel class action settlements were approved in October 2014.

The objecting plaintiffs are represented by Theodore H. Frank.

The objecting convenience stores are represented by Stephen R. McAllister of Thompson Ramsdell & Qualseth PA and Jonathan S. Massey of Massey & Gail LLP.

The defendants are represented by Arnold & Porter LLP, Wilentz Goldman & Spitzer PA, Woodward Hobson & Fulton LLP, Reed Smith LLP, Crowe & Dunlevy, Manatt Phelps & Phillips LLP, and Rouse Hendricks German May PC, among others.

The Hot Fuel Class Action Lawsuit MDL is In re: Motor Fuel Temperature Sales Practices Litigation, Case No. 2:07-md-01840, in the U.S. District Court for the District of Kansas.