The California gasoline conspiracy: procedural background

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This is an insight article whose content has not been written by the GCR editorial team, but which has been proofed and edited to run in accordance with the GCR style guide.

Case name and reference

Persian Gulf Inc v BP West Coast Products LLC, et al (3:2015cv01749)

Richard Bartlett, et al v BP West Coast Products LLC, et al (3:2018cv01374)
CourtUS District Court for the Southern District of California
Parties

Alon USA Energy

BP West Coast Products

Chevron USA

David Rinaldi

Equilon Enterprises

Exxon Mobil Corporation and ExxonMobil Refining & Supply Co

Joshua Ebright

Paul Lee

Persian Gulf

Phillips 66

Tesoro Refining & Marketing Company

Valero Marketing and Supply Company
Cause of action

Section 1 of the Sherman Act

The Cartwright Act

Section 16700 of the California Business and Professions Code

Section 17200 of the California Business and Professions Code

Federal courts have seen a record number of antitrust cases filed in recent years, including Persian Gulf Inc v BP West Coast Products LLC, et al, and Richard Bartlett, et al v BP West Coast Products LLC, et al. These cases illustrate how courts evaluate claims of alleged conspiracy in antitrust class actions. While the court ultimately granted summary judgment and dismissed the plaintiffs’ claims in both cases, they still demonstrate the importance of weighing economic evidence to assess the validity of antitrust claims. They also provide an insightful court perspective on the rigorous economic analysis required to demonstrate conspiracy in antitrust class actions.

In early 2012, California crude oil markets experienced a combination of rising production and falling demand, as well as increasing inventories and prices (Persian Gulf, Inc v BP West Coast Products LLC, et al, 15-ev-1749-JO-AGS, Complaint for Violations of California’s Cartwright Act and Unfair Competition Law, 8 July 2015, at page 1). In May and October 2012, the state experienced two additional gasoline price spikes, resulting in Californian consumers paying more than $4.00 per gallon – and in some areas more than $5.00 per gallon. Occurring while the rest of the country experienced a decline in gasoline prices, refiners blamed these spikes on decreased supply after refinery maintenance shutdowns in California and fires at both BP’s Cherry Point refinery in Washington State on 18 February 2012 and Chevron’s Richmond refinery on 6 August 2012. In February 2015, California retail gasoline prices spiked again, rising more than $1.25 per gallon and diverging considerably from the average US gasoline price.

On 7 July 2015, plaintiff Persian Gulf, the operator of a retail gas station, filed an antitrust lawsuit on behalf of all retail stations in California. Concurrently, individual consumers – Joshua Ebright, Paul Lee and David Rinaldi (consumer plaintiffs) – filed separate lawsuits on behalf of consumers who purchased gasoline in California. These lawsuits alleged that eight current and former gas refiners in California – Chevron USA (Chevron), Exxon Mobil Corporation and ExxonMobil Refining & Supply Co (Exxon), Phillips 66, BP West Coast Products (BP), Tesoro Refining & Marketing Company (Tesoro), Equilon Enterprises (doing business as Shell Oil Products US) (Shell), Valero Marketing and Supply Company (Valero) and Alon USA Energy (Alon) (collectively, defendants) – conspired to control supply and therefore the price of gasoline in California from 2012 to present, in violation of Section 1 the Sherman Act, the Cartwright Act and various other statutes.

On 25 July 2018, the court consolidated the consumer plaintiffs’ case into one action (Persian Gulf, Inc v BP West Coast Products, LLC, et al, and Richard Bartlett, et al v BP West Coast Products LLC, et al, Lead Case No 18-cv-1374-JO-AGS (consolidated with No 18-cv-1377-JO-AGS), order granting defendants’ motions for summary judgment, 30 September 2022). Shortly thereafter, given the nearly identical allegations proffered by Persian Gulf and the consumer plaintiffs, the court ordered coordination of the cases for discovery and motion briefing.

Following the discovery proceedings, Chevron, Shell, Valero and Phillips 66 collectively filed a joint motion for summary judgment and were later joined by BP and Exxon. Alon and Tesoro also filed separate motions for summary judgments. In addition, the defendants filed motions to exclude the testimonies of the plaintiffs’ experts.

Now that the key players have been identified and the case background has been established, the next article in this series will feature a deep dive into the plaintiffs’ antitrust allegations, which are best understood within the context of California’s supply chain and wholesale gasoline market.

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