Tuesday, January 8, 2002

No reason to
move oil case,
state says

Companies say an objective jury
cannot be found in Hawaii

By Tim Ruel

Hawaii jurors would not be biased in deciding the state's $2 billion antitrust lawsuit against the major oil companies because local residents don't stand to benefit directly from potential damages, the state said in a recent court filing.

In addition, the suit is of a major public interest and there is no good reason to hold the trial outside the islands, the state said.

Four of five oil companies involved in the federal suit are seeking to move the case away from Hawaii. They say it would be impossible to find a local jury that does not have a significant financial interest in the outcome because the state sued on behalf of residents. One defendant, Tosco Corp., was absent from the motion to move the trial outside Hawaii.

The state is taking issue with the companies' position that Hawaii consumers stand to benefit directly from potential damages.

Most likely, any damages from the suit would not go to residents, but to the state highway fund, indirectly defraying the cost of road maintenance for taxpayers, the state said in a Dec. 28 filing with U.S. District Court.

The state highway fund received $177 million in revenue between June 1999 and June 2000, with $70 million coming from the 16-cent state fuel tax and $17 million from the federal government. During the same period, the state spent $70.3 million on highways and services and $11.6 million on administration of the fund, as well as $38.1 million to service debt. The state also transferred roughly $11 million from the highway fund to its general fund, according to the Highways Division.

It would be difficult to divide any damages from the suit between individual consumers, the state said. For one thing, most residents have probably not kept complete records of their gas purchases between 1987 and 1998, the period when the companies are alleged to have fixed their prices.

Hawaii consumers were named as beneficiaries when two defendants paid $15 million to settle the case out of court, but local residents have yet to see any money. BHP Hawaii Inc. and Tesoro Petroleum Corp. settled the suit in January 2000.

Even if local residents were entitled to a direct share of damages, the court could easily find a unbiased jury here, the state said in its Dec. 28 filing; that's the whole point of the jury selection process. The state's lawsuit only covers gasoline sales made through 1998, so anyone who moved here afterward would make an acceptable juror, the state said.

In any event, it makes little sense for a state government to sue on behalf of its residents outside its own jurisdiction, the state said. The Attorney General's Office sued seven of Hawaii's major oil companies in October 1998, alleging the firms conspired to keep gas prices artificially high. Still fighting the suit are Tosco, Chevron Corp., Shell Oil Co., Texaco Inc. and Unocal Corp.

The state and the oil companies are scheduled to make summary judgment arguments before senior U.S. District Judge Samuel King starting Jan. 16.

A hearing on the motion to move the case outside Hawaii will be held after the summary judgment arguments are wrapped up, most likely on Jan 17. The defendants will also argue against the tripling of potential damages, as well as other matters.

A date for the trial has not yet been set. King is still considering other motions for summary judgment, which were argued during November hearings. The defendants are seeking to dismiss counts against them without a trial, saying the state does not have enough evidence. The state says it has plenty of evidence, though much of it is indirect.

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