By Jeff Balke
By Aaron Reiss
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Faced with that reality, dealers are hoping for relief through the court system. Some have prevailed, winning multimillion-dollar judgments. The recent spate of suits has ferreted out incriminating documents that savvy lawyers are sharing to gain leverage. But the companies have flexed their financial muscle in the courthouse as well, and without some significant legal victories soon, extinction will become a matter of when, not if. "We can't afford to give up the farm," says Will Woods, who directs a Southern California dealer trade group. "They've got so many guns, they can outlast you forever."
First thing every morning, Houston attorney Robert Steinberg arrives at his office and flips the switch on the toy known as Death Row Marv. Sitting in an electric chair with his limbs bound and electrodes fastened to his body, Marv gets the shock of his life. Across the victim's plastic chest, Steinberg has taped a new name: Shell. "I want to get back our pound of flesh for these dealers," he says. "It charges me up."
Steinberg, whose "Bulldog" T-shirt, leather motorcycle pants and fondness for obscenities speak for themselves, is one of an expanding army of lawyers filing state and federal lawsuits against Shell on behalf of dealers across the country. His firm is also going after Exxon in the Corpus Christi suit, and he's exploring other class-action opportunities. "The dealers have worked hard for years for these companies, and the thanks they get is, "You're gone, beat it,' " Steinberg says. "That's unacceptable."
It's not easy to sue a major oil company, no matter how obvious the transgression. With a seemingly unlimited legal budget, a Shell or an ExxonMobil can throw banks of lawyers and other resources at a case that the cash-strapped dealers can't possibly afford to match. Even when the lawyers work on contingency, as Steinberg does, time is on the companies' side: In a pair of years-old Exxon cases reviewed by the Houston Press, the list of motions alone ran more than 100 pages. "Their attitude is, "We're Exxon, you're nothing, fuck you,' " Steinberg says.
One of the favored company tactics is to withhold documents requested by the plaintiffs, especially if that material looks bad. Houston service station owner Shoukat Dhanani got into a legal scuffle with Shell after the company canceled his gas supply agreement in 1999, citing as justification a "significant change in marketing strategy" clause in the contract. Asked to produce any documents that outlined the significant change, Shell responded in a court filing that the request was "not relevant" and "proprietary."
Such obstruction has come back to haunt Shell more than once. A judge in an Indiana case became so incensed at Shell's consistent refusal to obey the rules that he ordered the company to pay the dealers' pretrial legal expenses totaling more than $1 million. The judge later allowed Steinberg's team to travel to Indianapolis and copy whatever it wanted from the case files. Included in the files is a damaging deposition by a former Shell marketing executive that could weigh heavily in several other cases; the testimony indicates that Shell artificially inflated its wholesale gas price to offset rent rebates.
When the companies do provide documents and offer testimony, they invariably request that the evidence be sealed, claiming that the release of proprietary information could damage their business. Judges usually grant the wish, and in the event a case settles before trial, the seal becomes permanent. Alabama attorney Gunther would love to share some of the documents he procured in a case against BP Amoco that recently settled, but he can't. "I've got smoking-gun kind of evidence," Gunther says, "but they put that ["confidential'] stamp on everything."
The seals are a two-fold boon to the oil companies: The public never learns the truth, and opposing lawyers are barred from information that could be crucial. If the evidence is to be used at all, it has to be discovered from scratch. "They want everybody to have to reinvent the wheel so the dealers know it will be more expensive," says North Carolina plaintiffs attorney Mark Lamantia.
Confronted with evidence that seems to back the dealers' claims of predatory practices, the companies often resort to legal technicalities as a shield. In an ongoing Florida case against Exxon, for example, the company was accused of failing to provide dealers a promised per-gallon rebate in its wholesale gas price over a 12-year period. "Exxon contends that whether or not it actually reduced its wholesale prices is irrelevant," the judge wrote in an order, "because its contracts with its dealers did not create a legal duty actually to do what it always claimed to have done."
Sometimes the disclaimers are more sweeping. In one of Steinberg's cases, Shell filed a motion that included a telling item. Under Texas law, the motion read, "Shell does not owe a duty of good faith and fair dealing to plaintiffs."
Unfortunately for the dealers, such motions often succeed, because the laws protecting dealers are limited at best and have few teeth. Congress passed the federal Petroleum Marketing Practices Act in 1978, but the law that went on the books was a watered-down version of the original bill. Subsequent efforts to strengthen it have been unsuccessful. Other federal and state laws protecting dealers have high hurdles that aren't easily surmounted, and oil companies that blast away at them often find sympathetic ears on the bench. "The playing field is about as level as the Himalayas," says Steinberg dryly.