Exxon Corp. cheated 10,000 station owners out of
$500 million over a 12-year period by inflating wholesale fuel
prices, a federal jury ruled Tuesday in awarding that amount.
The judge may decide later to add interest from the pricing
program that ran from 1983 to 1994 and was supposed to tie fuel
prices to retail prices on credit card purchases.
If interest is added, it would raise the verdict's value to $1
billion, said Eugene Stearns, attorney for station operators.
Exxon attorney Larry Stewart promised an appeal, saying, "We
continue to believe that we provided the offset and gave dealers a
very fair price and that ultimately on appeal Exxon's business
practices will be vindicated."
The heart of the case was Exxon's creation of a
discount-for-cash program, which charged cash customers a cheaper
per-gallon price for gasoline but added 3 cents per gallon to the
station owners' price.
In return, Exxon now Exxon Mobil Corp. promised to cut
wholesale prices to make up for the credit card charge. Station
operators claimed the offset was paid for only six months, and
Exxon manipulated wholesale prices to erase it for the rest of the
program without the owners realizing it.
The overcharge ranged from 1.03 cents to 1.4 cents per gallon;
over 40 billion gallons, it totaled $500 million, the owners
The nine-member jury awarded station operators in 35 states
everything they sought.
Even with interest, Stearns said Exxon, by retaining and
investing the money, "will be about $2 billion better off having
kept the money."
For all of 2000, the Irving, Texas-based Exxon Mobil, the
world's largest publicly traded oil company, earned $17.72 billion
on revenue of $232.7 billion.
If Exxon appeals as promised, the owners plan to appeal a
decision by U.S. District Judge Alan Gold eliminating the
possibility of punitive damages. Nonetheless, they were pleased
"I'm ecstatic," said Bill McGillicuddy of Arlington, Va., one
of the named plaintiffs in the class-action lawsuit and an operator
of four Exxon stations.
"Of course I am very thrilled," said Alan Popick of Coral
Springs, an Exxon dealer before the company pulled out of Florida
in 1993. "The jury saw what the truth really was and was able to
Gold gave attorneys two months to file papers outlining a system
for paying individual station owners based on credit card charges
they paid Exxon.
The jury reached its verdict on a complex 15-page form to end
the six-week trial after deliberations spread over four days.
Exxon Mobil has been on the losing side in a number of other
recent court cases.
In October, the U.S. Supreme Court refused to free the energy
giant from having to pay $5 billion in damages for the 1989 Exxon
Valdez oil spill in Alaska, the nation's worst ever.
Exxon Mobil also lost a $3.5 billion verdict in December over
royalties Exxon was accused of failing to pay the state of Alabama
for offshore natural gas wells.
Shares of Exxon Mobil were down 6 cents to $83.96 in trading on
the New York Stock Exchange.