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Jury Awards $2.6M to Hess Station Owners

June 17, 2003

A jury has awarded $2.6 million to current and former owners of Hess gas stations in New Jersey who sued Amerada Hess Corp. for selling gasoline to franchisees at wholesale prices that were unsustainably high over a dozen years.

``The prices that we got from the company did not allow me to make enough of a margin to cover my expenses and to make a profit,″ explained 54-year-old Alban Wilson of New York, one of three plaintiffs in the case.

The unanimous verdict, handed down Friday in New Jersey Superior Court in Newark, still needs to be approved by the trial judge. That process could take several weeks as attorneys for the plaintiffs seek interest payments of at least $1 million on top of the amount awarded by the jury.

A lawyer representing Amerada Hess said Tuesday that he will seek dismissal of the case.

``We believe that the plaintiffs failed to prove their allegations and that the great weight of the evidence was contrary to the jury verdict,″ said Roger B. Kaplan an attorney at Wilentz, Goldman & Spitzer, which represented Amerada Hess.

The argument by the plaintiffs in the New Jersey case was that Amerada Hess knowingly charged exorbitant wholesale prices between 1990 and 2002 as part of a strategy to squeeze out franchisees in favor of company-owned retail stations. The Uniform Commercial Code, a state law, essentially says suppliers must set prices in good faith.

``This is not an isolated case,″ said Peter Gunst, general counsel for the Service Station Dealers of America, a Bowie, Md.-based industry group.

In February 2001, a federal grand jury in Miami awarded $500 million to roughly 10,000 Exxon franchisees who sued the oil giant for unfair pricing. The Irving, Texas-based company appealed the decision, but last Wednesday an appeals court affirmed the grand jury’s verdict. Final damages have yet to be decided, Gunst said.

In a separate case, a group of Texas retailers was awarded $8 million, and Shell Oil is in the midst of a legal battle with franchisees in 17 states.

In the New Jersey case, the plaintiffs said the wholesale price Amerada Hess charged its franchisees was typically 9 cents per gallon cheaper than competitors’ retail prices and that left little room to cover his costs and turn a profit.

``We were caught in a vise,″ said Wilson.

A spokesman for New York-based Hess was not immediately available for comment.

The case has been bouncing around New Jersey courts for nearly nine years, since Wilson claimed unsustainable losses compelled him to sell the station in 1995.

Early attempts by Wilson and the other plaintiffs _ Charles Meyer and Richard Loeber _ were unsuccessful. The Supreme Court of New Jersey, however, provided the plaintiffs’ attorneys with a second chance in June 2001, when judges ruled unanimously that Amerada Hess ought to provide the plaintiffs’ attorneys with documents they had previously been denied.

Edward J. Nolan, one of two attorneys representing the plaintiffs, said testimony by two former Hess executives and outside experts also played an important role.

``It was a slugfest and we ended up on top,″ said Nolan.

Of course, Wilson said he expects the company to appeal the ruling.

``They can drag it out,″ he said, ``but what I have won is a moral victory.″

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