LV gas retailers cheer Exxon verdict

Thursday, Feb. 22, 2001 | 11:15 a.m.

Word that a federal jury in Miami this week ordered Exxon to pay $500 million to 10,000 station owners in 35 states and the District of Columbia who were long overcharged for gasoline was met with praise and relief by Las Vegas petroleum retail officials.

"It's about time they (oil companies) got caught doing this -- they've been doing it for years," said John Arfuso, owner of the Texaco station at 101 N. Jones Blvd. The station used to be an Exxon and was part of the suit against Exxon.

"Even with what they (Exxon) will have to pay, they made out like bandits because they have made a killing on the interest they have earned from the money the last 13-18 years. They are way ahead of the game."

Exxon, which merged with Mobil two years ago to form Exxon-Mobil -- the the largest publicly traded oil company -- last year earned $17.72 billion on revenue of $232.7 billion.

U.S. District Judge Alan Gold could, at his discretion, add interest, which would raise the verdict to $1 billion in the case where the jury took four days to reach a decision following a six-week trial. It was the second trial on the issue. The first in 1999 ended with jurors deadlocked.

Attorneys for Exxon, which also is appealing a $5 billion judgment over the 1989 Exxon Valdez oil spill in Alaska, say they plan to appeal this verdict that found the company overcharged its retailers for gasoline for 12 years.

The dealers contend that the company broke a promise to reduce wholesale gasoline prices as compensation for instituting in 1982 a 3 percent credit card service charge for customers.

At the time of the incident, there were 13 Exxon dealers in Southern Nevada. In 1988, Exxon and Texaco did a station swap and Exxon left the local market. Exxon has since returned to Las Vegas, but none of the current stations are part of the lawsuit.

Among the local ex-Exxon dealers who are part of the suit, Arfuso and Frank Shearer lease Texaco stations, Rick Pearlman owns a Texaco station and Steve Stiver owns a private brand station. Former local Exxon station owner Jim Uster works locally in another field. The whereabouts of the other Exxon dealers of the 1980s to early '90s were not immediately known.

Each dealer stands to collect on average about $50,000 from the judgment. The figure is based on the dealers not receiving 1-1.4 cents per gallon as promised as part of an incentive to get customers to pay cash rather than use a credit card for gasoline.

The station owners alleged that the $500 million award they sought and got was based on the failure to provide the discount on 40 billion gallons of gasoline.

Arfuso reckons he will do a little better than average when the checks are finally cut, should the dealers prevail on appeal.

"I was pumping about 1.6 million gallons a year for five years -- even at the low end one cent, that's about $16,000 a year," Arfuso said.

Jack Greco, longtime president of the Nevada Gasoline Retailers Association, said the verdict should not affect consumers at the pumps, especially in Southern Nevada.

"This wasn't a case of consumers being overcharged, though one could argue that the retailers could have offered slightly lower prices if they had received the gasoline (from Exxon) at the reduced price they had been promised," Greco said.

"The effect on pump prices should be minimal or none. But what should concern the public is that this incident is only about 5 percent of what major oil companies have (improperly) taken from consumers and retailers since the early 1970s. This is just a drop in the bucket."

At trial, station operators claimed Exxon manipulated wholesale prices to wipe out the dealers' gasoline discount after six months of the cash incentive program without the owners realizing it. The dealers discovered inconsistencies in 1990 and filed the suit the next year.

Exxon attorney Larry Stewart told the Associated Press after the verdict: "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."

Judge Gold had ruled to eliminate the awarding of punitive damages. Attorneys for the station owners say they could file an appeal on that issue should Exxon go ahead with its appeal of the verdict.