(Click here for previous CSP Daily News coverage of the potential class-action suit.)
Lead plaintiff Green Desert Oil Group claims that BP sold plaintiffs ARCO-brand gas stations "on the notion that ARCO has been and would continue to be known for its low-priced gasoline strategy as compared with other national brands, mainly due to an early 1980s decision to emphasize cost cuts for cash-only policy at its fuel pumps."
The class, led by 15 plaintiffs nationwide, says it has found that BP does not deliver fuel on an "automatic" basis, despite having the ability to. The class claims BP manipulates "gas pricing by deliberately delivering gas before or after price increases or decreases that serve to increase the sales price charged to franchisees."
Franchisees say BP tells them by 1:00 p.m. of price changes, which become effective at 3:00 p.m. that day. They say that "if the price change increases, BP defendants will manipulate delivery schedules so most of the deliveries occur past 3:00 p.m.," but if the price decreases, defendants rush deliveries before 3:00 p.m.
Franchisees say that in 2009, they were forced to install a POS system made by co-defendant Retalix Ltd.
They claim the defendants knew during beta testing of the system that there were "several material defects in the design and architecture of the software which would cause substantial harm and damage to plaintiffs," but that BP required nationwide installation of the system anyway.
BP West Coast Product's President William Fry recognized in March that the Retalix system was only "75% effective," according to the report, but BP still refused "to implement the older system which was satisfactorily working and refused to consider other POS solutions used by other national service station brands," the class claims.
The Retalix system fails to charge some customers who use debit cards to pay for gasoline, but will charge other customers twice: for their gasoline and for the fuel bought by the customers who were not charged, the franchisees say.
The franchisees claim that BP has deducted 5.5% of their gross sales as an "advertising and promotion" fee, but actually dumped some of that money into its general fund.
They also claim that they are required to buy certain supplies from BP or specific third-party vendors, with "the prices paid for most of these items and supplies...far higher than what plaintiffs could pay in the open and fair market."
The class claims that BP intentionally diverts "placement fees" by labeling them "placement allowances," since the defendants are supposed to pay the franchisees placement fees. The allowances, however, "are assigned to BP defendants from franchisees for the stated purpose of advertising and promotion," the complaint states.
The franchisees seek class certification, damages, injunctive relief to remove the Retalix system, and punitive damages for breach of contract and negligence, said the report.
BP declined a CSP Daily News request for comment on the case for Monday's story, citing the "pending litigation." Retalix did not respond to a request for comment for Monday's story.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.