CEI Appeals Hot Fuels Settlement That Awards Millions to Lawyers, Zero to Class

A class action settlement involving gasoline fuel temperature could mean big fees and a lobbying slush fund for lawyers, with no benefit to consumers – if courts go along with it. This week, the Competitive Enterprise Institute’s Center for Class Action Fairness, which is appealing the settlement agreement, filed its opening brief in the U.S. Court of Appeals for the Tenth Circuit.

“The settlement pays consumers zero dollars while the lawyers seek over $24 million,” said Ted Frank, director of CEI’s Center for Class Action Fairness. “The only relief offered in the settlement is to pay lawyers to lobby for new regulations and laws for expensive fuel temperature equipment. That outcome compels people to subsidize political lobbying they may (and should) oppose because it would make them worse off. And the technology in question has already been rejected by state regulators because it would cost drivers more than any discrepancy in temperature.

“So, the only beneficiaries in the settlement are the lawyers and their counterproductive legislative agenda,” said Frank. “This regulation through litigation is an abuse of both the court system and the class-action system, and that’s why we have appealed the district court's approval of the settlement on multiple grounds.” 

The lawsuits began in 2007 when lawyers brought class actions against dozens of companies that operate retail gas stations, such as BP, Chevron, and Citgo, alleging consumer fraud over the way gasoline is measured. Gasoline, like most liquids, expands with rising temperatures, meaning there are fewer molecules in a gallon when the temperature is warmer (and more when temperature is colder). Those fewer molecules in warm temperatures cost drivers one cent per year on average, according to the California Energy Commission. But switching to an Automatic Temperature Compensation (ATC) system would prove not only costly but would offer no net benefit to the class as a whole.

>  View the opening brief in IN RE: MOTOR FUEL TEMPERATURE SALES PRACTICES LITIGATION 

>  View more about the case, IN RE: MOTOR FUEL TEMPERATURE SALES PRACTICES LITIGATION