Judge Approves Settlements in "Hot Fuels" Litigation

A federal judge approved 28 settlements totaling $24.5 million in so-called “hot fuel” lawsuits. These lawsuits stem from plaintiff fuel buyers’ claims that retailers and refiners violated consumer protection laws by not disclosing or adjusting for the fact that fuel expands in warmer temperatures, thereby making a gallon of gasoline or diesel contain less energy content in warmer months.

Under the terms of the settlement, six refiner defendants will put $21.2 million into a settlement fund and $500,000 in a class notice fund to notify potential plaintiffs of their ability to receive payments under the settlements. Certain retailer defendants, including E-Z Mart, Love’s, and Thorntons, also agreed to pay money into a settlement fund and class notice fund.  Other retailers, including Sam’s Club and Valreo, agreed to install automatic temperature compensation (ATC) technology at retail pumps in certain states.  The installations are scheduled to take place over a three-to-five year phase-in period.

Certain retailer defendants, including Pilot Flying J, Wawa, and 7-Eleven filed objections to the settlement agreements, alleging the agreements create a “judicially-approved subsidy” that their political rivals can use to influence government decision-making.  Specifically, the retailers argued that the settlement effectively creates a “de facto slush fund” that would financially reward state governments for changing their laws to require ATC at retail fuel pumps.

There is no law requiring the installation of ATC devices, nor is there any law that retailers disclose the temperature or energy content of fuel.

Ordinarily, a non-settling party cannot object to a class-action settlement because it is not “injured” and thus has no legally protected interest in the settlement.  However, the retailers that are objecting to these settlements assert that they will in fact be “injured” because the settlements will substantially alter the regulatory environment in which they operate – a permissive system of ATC implementation, combined with incentives for states to mandate ATC, will effectively force all retailers to adopt ATC, they argue. The costs associated with installing ATC pumps would harm these defendants financially. 

For two years, NATSO was involved in a debate over whether retailers should be required to install ATC. NATSO won that debate in July 2009, when the National Conference on Weights and Measures (NCWM) rejected measures to require or allow ATC for retail fuel dispensers. At the time, the NCWM cited consensus against ATC as well as economic cost factors, lack of consumer benefit and absence of uniformity in the marketplace as reasons for its decision. 

 

 

 
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David Fialkov

David Fialkov is the Vice President of Government Relations, as well as the Legislative and Regulatory Counsel, at NATSO. In this capacity, Mr. Fialkov direct's NATSO's legislative, regulatory, and legal strategy on a range of issues, including transportation, energy and fuels, labor, data security, and taxes. Mr. Fialkov also oversees NATSO's political engagement program, including individualized legal and political counsel to member companies. Prior to joining NATSO, Mr. Fialkov was the senior associate in the Government Affairs and Public Policy practice at the law firm of Steptoe and Johnson in Washington, D.C. At Steptoe, Mr. Fialkov advised clients on legislative, regulatory, and political issues, as well as legal concerns. His primary clients included trade associations representing the motor fuel wholesale and retail industries, including the National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America. Mr. Fialkov's focus was not only on the motor fuels business, but also the litany of other issues that retailers confront, including labor matters, foodservice issues, healthcare and employment issues, tax matters and data security. Prior to joining Steptoe, Mr. Fialkov graduated with honors from George Washington University Law School. He received his B.S. Summa cum laude with highest honors from Clark University in Worcester, MA. He lives in Washington, D.C. with his wife Allison and daughter Lilah. More
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