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Judge OKs
settlement between
state, gas firms

BHP Hawaii and Tesoro
agree to pay $15 million
in the suit

By Rob Perez
Star-Bulletin

A federal judge today approved a $15 million settlement between the state and two of the seven oil companies it has sued for allegedly conspiring to keep Hawaii gas prices artificially high.

The settlement means the state can now set its sights on the remaining defendants in its $2 billion antitrust lawsuit, filed in late 1998 on behalf of Hawaii consumers.

And as a key part of the settlement with BHP Hawaii Inc. and Tesoro Petroleum Corp., the two companies have agreed to assist the state in its evidence-gathering process as the case progresses to its February 2001 trial start.

Samuel Issacharoff, a Columbia University law school professor, told senior U.S. District Judge Samuel King this morning that the proposed settlement was fair to Hawaii consumers and will enable the state to go after the companies that command nearly 90 percent of the market.

"This is a very good settlement by all indications," he said.

Issacharoff also said the settlement will help finance prosecution of the case, which is expected to cost millions and last for several years. "The (settlement) helps refuel the war chest," said Issacharoff, who appeared at this morning's hearing as an expert witness for the state.

Spencer Hosie, the San Francisco lawyer who is spearheading the state's case, noted that no one filed any objections to the settlement, which was first announced in November.

Six people, including someone jailed in Florida, filed documents with the court asking that they not be part of the settlement. They are now free to pursue any potential claims against the oil companies on their own.

The state plans to use about $1.2 million of the settlement proceeds to reimburse litigation costs the state and private lawyers helping the government have incurred so far in the case.

Hosie's law firm, Hosie Frost Large & McArthur, also would get about 22 percent of the net proceeds for attorney fees. Issacharoff said that level is below the more typical amounts of 25 percent to more than 30 percent for complex litigation like this one. Another $3 million will be set aside to help cover the costs of pursuing the case against the remaining defendants.

What money is left would be placed in an interest-bearing account and probably held until the lawsuit is resolved. Eventually, that and any other money the state might recover in the case could be distributed to consumers in a fashion not yet determined.

Tesoro, which runs one of Hawaii's two refineries, acquired BHP Hawaii in May 1998 and has about 11 percent of the retail gasoline market, according to the state. As a result of the settlement, both companies will be dismissed from the lawsuit.