MIAMI -- Federal District Court Judge Alan Gold has granted preliminary approval of the settlement of a long-running dispute between Exxon Mobil Corp. (then just Exxon Corp.) and a class of its gas station dealers under which Exxon will pay $1.075 billion and end its opposition to dealer claims in the claims process established by the Court.
The lawsuitAllapattah Services Inc. v. Exxon Corp. (case No. 91-0986 Civ-Gold; U.S. Supreme Court case No. 04-70)filed in 1991, arose out of Exxon's Discount for Cash program in effect between March 1, 1983, and [image-nocss] Aug. 28, 1994, in which Exxon had promised its dealers a discount in the wholesale price of motor fuel.
According to law firm Stearns Weaver Miller Weissler Alhadeff & Sitterson, Miami, which represented the dealers at trial and on appeal, after a lengthy trial in February 2001, a jury found that Exxon had breached its obligation to provide the discount and had fraudulently concealed the breach. Exxon appealed the verdict all the way to the U.S. Supreme Court, which denied Exxon's last appeal in June 2005. The settlement was achieved as a court-appointed Special Master was in the process of assessing damages against Exxon on individual dealer claims.
Nearly 11,000 class members will be mailed a notice scheduling a hearing date on April 5, 2006, for the court's consideration of final approval of the settlement. The $1.075 billion payment represents payment in full of all compensatory damages and prejudgment interest through Oct. 31, 2005, on all valid claims filed by Dec. 19, 2005. After the settlement payment is made to a court-appointed financial institution, the claims process before the Special Master will continue without Exxon's further involvement, which is anticipated to accelerate the approval and payment of individual dealer claims.
This is an extraordinary achievement for the dealers, said attorney Eugene Stearns of Stearns Weaver Miller. After 14 years of litigation, Exxon has exhausted its appeals and has finally realized that its continued opposition in the claims process is fruitless. This will allow acceleration of the process to put the money in the hands of the dealers. While many class actions result in little real benefit to class members, in this case we have basically achieved near one hundred percent recovery of every dealer's damages, and because of our efforts to locate everyone, almost all the dealers entitled to payment will share in the recovery.
ExxonMobil spokesperson Prem Nair told CSP Daily News, In December 2005, counsel for the plaintiffs' class and ExxonMobil reached a tentative agreement to recommend settlement of all outstanding monetary issues in the Allapattah case for $1.075 billion before tax. The proposed settlement requires notice to the class, opportunity for objection (by the class) and has to be approved by the district court. The settlement was a business judgment. ExxonMobil has always contested liability in this lawsuit, but our appeals have been denied, so this settlement is payment of a legal obligation. The settlement takes into account numerous factors that could not be accurately estimated, e.g., transaction costs for two to five years of claims, the possibility that claimants or their counsel might prevail on claims that were evaluated as less than probable and the value of putting the case behind us.
She added, The settlement is essentially equal to the charge against earnings that we took in 2004/2005. There is no additional financial impact. ExxonMobil had previously taken aftertax charges totaling $750 million, which were reflected against our third-quarter 2004 and second-quarter 2005 earnings.
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.