In re California Gasoline Spot Market Antitrust Litigation

Background

Plaintiffs brought a putative class action against SK Energy Americas, Inc., Vitol Inc., and two individual defendants. They alleged that the defendants formed horizontal agreements to restrain competition and manipulate the spot market for gasoline and gasoline blending components formulated for use in California. The claims included state antitrust and unjust-enrichment claims.

The California Attorney General separately filed an action in San Francisco Superior Court asserting Cartwright Act and unfair-competition claims. The federal court later consolidated 23 related federal actions for trial purposes and appointed Hausfeld and Girard Sharp as co-lead interim class counsel. After extensive discovery, depositions, expert work, motion practice, and class-certification proceedings, the parties reached a settlement in principle and sought preliminary approval.

Proposed Settlement

The proposed settlement establishes a non-reversionary gross settlement fund of $13.9 million in an escrow account maintained by Huntington National Bank. The fund may be reduced by notice and administration costs, litigation costs, and service awards approved by the court. Plaintiffs stated that they would seek attorneys’ fees from the net settlement fund and later agreed to seek 30 percent of the net fund rather than 30 percent of the gross fund.

The settlement class consists of:

- Natural persons who were not California residents when they made the purchase; and - Entities, wherever located, that bought gasoline from a retailer for their own use and not for resale in California between February 18, 2015, and May 31, 2017.

The class excludes the California Attorney General in the separate action, defendants and specified people and entities connected with them, settlement counsel and their partners and employees, the court and associated staff, and people who timely and validly exclude themselves.

The allocation plan creates separate pools for businesses and non-California natural persons. It allocates 85 percent of the settlement fund to businesses and 15 percent to non-California natural persons, subject to the plan’s limitations. Purchases in Southern California receive twice the weighting of purchases in Northern California. Unclaimed funds generally will be redistributed to eligible claimants who cashed their checks and would receive at least $15 from the redistribution; class counsel may seek approval of a cy pres recipient if redistribution would be uneconomical.

A class member who does not timely opt out will release claims related to the alleged conduct and to gasoline purchases or use in California during the specified period. The proposed notice plan includes email, postcards, digital advertising, publication, a settlement website, a monitored email address, and a toll-free telephone number. Class members may submit claims, request exclusion, or object before the deadline set by the order.

Court’s Analysis

Under Federal Rule of Civil Procedure 23, a class action may proceed only if requirements such as sufficient numbers, common legal or factual questions, typical claims, adequate representation, predominance of common questions, and superiority of the class procedure are met. The court found those requirements satisfied for settlement purposes. It relied on the estimated number of businesses, the shared theory of price manipulation and overcharges, common questions concerning the defendants’ conduct and market effects, the absence of an apparent conflict, and the efficiency of resolving the claims together.

For a class settlement, the court must determine at the preliminary stage whether the proposal appears fair, adequate, and reasonable and whether the notice plan is adequate. The court found that the settlement followed serious, informed, non-collusive negotiations supported by extensive investigation and multiple mediation sessions. It found no apparent preferential treatment, concluded that the $13.9 million amount fell within the possible approval range given the asserted damages and litigation risks, and found no obvious deficiencies.

The court also found the proposed notices complied with Rule 23. The revised long-form notice explained the allegations, class definition, settlement amount, allocation plan, possible recovery, claims process, exclusion procedure, objection procedure, attorneys’ fee review, and attendance options for the final fairness hearing.

The court did not finally decide the amount of attorneys’ fees, litigation expenses, or service awards. It required plaintiffs to submit a fee motion with declarations, detailed billing records, information about any common-benefit fee request, and support for claimed expenses. Class members must have an opportunity to object to the fee request.

Ruling

Judge Jacqueyne Scott Corley granted preliminary approval of the class action settlement. The court provisionally certified the settlement class for settlement purposes only; conditionally appointed Dena C. Sharp and Christopher L. Lebsock as settlement class counsel; appointed Huntington National Bank as escrow agent; appointed Verita Global, LLC as settlement administrator; approved the notice plan and related deadlines; and ordered filings concerning the notices and claim form. The court stated that the order disposed of Docket No. 601. The order did not constitute final approval of the settlement or finally resolve the underlying antitrust and unjust-enrichment claims.