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Energy firms question antitrust standing over California gas-price fixing claims

Attorneys for SK Energy Americas and Vitol argued not all plaintiffs in the class action lawsuit are entitled to compensation.

(CN) — A federal judge is leaning toward denying a motion made by attorneys for energy companies that their clients should be let off the hook for claims they conspired to fix the price of gas in California because they didn’t directly sell gas to all plaintiffs.

Defense attorneys for SK Energy Americas Inc. and Vitol Inc. met with U.S. Magistrate Judge Jacqueline Scott Corley on Thursday morning on the defense’s motion for judgment to whether all class action plaintiffs have antitrust standing to assert the Cartwright Act and their “unjust enrichment claims.” So far, the judge doesn’t seem to buy it.

“I’m just not comfortable doing it just on the allegations here,” said Judge Corley, who has yet to submit her official decision. The Cartwright Act is a California law that prohibits combinations of two or more persons’ capital, skill or acts to restrict trade or commerce.

The motion is one of several following a consumer class action complaint by Pacific Wine Distributers, Inc. in 2020, after former California Attorney General Xavier Becerra sued the competing energy companies for concocting a scheme to inflate gas prices between 2015 and late 2016. Judge Corley refused to dismiss a bulk of the class action against SK and Vitol in 2021.

The case dates to 2015 when an explosion at an oil refinery in Torrance, California, interfered with 10% of the state’s gasoline supply, causing prices to increase. The state claims Vitol and SK executed a series of trades, some of which they allegedly hid from the Oil Price Information Service, or OPIS, to profit from inflated gas prices. Estimates indicate it may have cost Californians as much as $150 million in 2015 alone.

Additionally, the state claimed the two companies used traders, who were friends and colleagues at Vitol, to collude in hiking gas prices by making certain transactions appear materially different to obscure the nature of the market’s supply and demand.

SK attorney John Playforth of Covington & Burling LLP argued the subsequent class action’s enrichment claims are unjust because they are “based on purchases of gasoline that neither SK nor Vitol ever transacted” and, thus, don’t satisfy the Cartwright Act’s requirement of proximate causation.

“The core requirement for proximate causation is directness,” argued Playforth, who cited previous cases where “umbrella” pricing claims were rejected for not satisfying this requirement. In most cases, according to the defense’s motion, “courts reject such claims because the fridge player’s independent pricing determinations break the causal chain, and any injury is therefore too direct and speculative.”

However, lead prosecuting attorney Samantha Stein of Hausfeld LLP argued that regardless of where plaintiffs purchased gas products, they were directly impacted by the defendant’s ability to manipulate gas prices through OPIS.

“The defendant’s anticompetitive conduct of raising and manipulating the OPIS market prices had direct impacts throughout the marketplace,” said Stein.

She added, “We’ve alleged that the defendant’s manipulation of the OPIS benchmark, which is well known to set gasoline prices in California, is having a direct impact on the ultimate retail prices that plaintiffs and members of the proposed class paid.”

Jeffrey Davidson, lead attorney for SK and Vitol, declined to provide comment on Thursdays hearing. Stein could not be immediately reached.

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