Oil firms, state to settle lawsuit for $20 million
By Frank Cho
Advertiser Staff Writer
State and oil company lawyers yesterday agreed to finalize a $20 million settlement of the government's price-fixing lawsuit against the industry, marking the end of a three-year legal battle.
As part of yesterday's agreement, the oil companies will not be required to admit any wrongdoing or make any concessions to the state other than the financial payment, said Jeffrey Ono, an attorney representing the state.
Details of the deal come after two days of negotiations over disagreements about the language of the proposed settlement, which was initially announced in January.
Officials with the state and the oil companies have declined to specify what the disagreements over the settlement have involved.
"There were details that needed to be worked out, and that is what we were doing," Ono said.
The new agreement, which could be signed as early as Wednesday, will pay Ono's firm and Spencer Hosie, the San Francisco lawyer hired to try the case, about $4.4 million in contingency fees. Combined with earlier fees and payments, the attorneys and their firms will have collected nearly $12 million in fees and expenses over the past three years.
Attorneys for Chevron declined to comment yesterday, saying that to do so before Wednesday would be premature.
Excluding attorney fees and expenses — and including $15 million in a settlement with several oil companies earlier in the case — the state will net about $23 million.
The amount of the settlement, and its limited scope, has stirred some controversy. Dissatisfied state legislators are sponsoring a number of bills that would limit oil companies' profits or restrict how much oil companies can charge Hawai'i dealers for gasoline.
Gov. Ben Cayetano, who ordered the lawsuit filed against the oil companies in 1998, this week said he was disappointed that the state settled because he believes the state's evidence could have prevailed in a jury trial.
Cayetano said he expects the state to collect between $20 million and $25 million, after fees and expenses are paid, and said he would like to put it into the state's highway fund where it could be used to offset any future gasoline-tax increases.
The state's $2 billion lawsuit against Hawai'i oil companies alleged a conspiracy to fix prices and overcharge local gas stations and consumers. The suit said oil companies kept gasoline prices in Hawai'i artificially high through a complex scheme of "product exchange" agreements with one another while forcing competitors to pay higher rates for the same gasoline.
When the state filed the lawsuit in 1998, it accused divisions of Chevron, Shell, Texaco, Unocal and Tosco of fixing gas prices and allocating market share among themselves as early as 1987.
BHP Hawai'i and Tesoro, named in the original suit, were dismissed from the case as part of a $15 million settlement in November 1999.
Reach Frank Cho at 525-8088, or at fcho@honoluluadvertiser.com.
