Oil Cos. Escape Price Fixing Suit

District Judge Jinsook Ohta issued an order finding that the class actions brought by gas station operator Persian Gulf failed to meet the evidence requirement to warrant a jury’s time and consideration. He ruled that while the eight California oil refineries did act pursuant to “oligopolistic self-interest,” it is only illegal to act pursuant to a conspiracy. 

As described in the opinion, California is a gas island, since state law requires a special blend of gasoline and does not have pipelines connecting it to other major markets. It also has a highly concentrated market with only eight companies (Chevron, Phillips 66, BP, Tesoro, Valero, Shell,  Exxon, and Alon) controlling the entirety of the market. 

Thus two individual customers and one locally-owned gas station, Persian Gulf, filed separate class action suits alleging that these eight companies illegally conspired to inflate gas prices. The individual customers’ suits were merged into one, and a later judgment ordered the individual suit and the suit brought by Persian Gulf to coordinate since the allegations were nearly identical. 

Through lengthy legal proceedings and copious objections, the defendants sought a summary judgment. Judge Ohta granted this motion, and in his order he examined the ten core arguments of the plaintiffs. In summary, the plaintiffs provided clear evidence of parallelism, but could not provide plausible evidence of active collusion.

In short, Judge Ohta ruled in line with Brooke Group Ltd. v. Brown & Williamson Tobacco Corp stating that “while it is illegal to act pursuant to a conspiracy, it is not illegal to act pursuant to oligopolistic self-interest, even when those actions drive supracompetitive prices.” He further states that “while such oligopolistic maneuvering may be an undesirable market for consumers, such a market is not prohibited by antitrust law.”

The cases were brought in the Southern District of California.