Forbes: Krauss on Hot Fuel Settlement

In a new contribution to his Forbes column, Professor Michael Krauss discusses the approval of a class action settlement in suits against fuel retailers over the practice of selling gas without reference to temperature changes.

Professor Michael Krauss
Professor Michael Krauss


In 2007, the Judicial Panel on Multidistrict Litigation transferred to the District of Kansas numerous class actions that plaintiffs’ lawyers had filed against American gasoline retailers over the practice of volumetric motor-fuel sales. The suits had invoked supposed violations of state consumer-protection laws, the common law doctrine of unjust enrichment and various contract-law claims, and sought both damages and injunctive relief (a forced conversion to ATC [automatic temperature compensation]). . . .   

And so plaintiffs negotiated 29 settlements from 2009 through 2014, affecting over 100 million purported class members. None of the settlements pay any of the supposedly injured class members anything. Some settlements required ATC conversion where and when this would be permitted by law; others required cash payments to state weights-and-measures agencies for the purpose of offsetting the costs of inspection and oversight if and when retailers do eventually begin installing ATC and, in some cases, payments to branded gas stations to offset their cost of ATC installation. Class counsel petitioned for 30% of these payments, as well as about $18 million in fees from defendants that convert to ATC. Many defendants executed “clear sailing” agreements whereby they promise not to contest attorneys’ claimed fees. In eventually approving the settlements, the district court (Senior Judge Kathleen H. Vratil) steered parties toward adopting ATC. The judge refused to provide preliminary approval for counter-proposals such as Valero’s suggestion to resolve complaints about volumetric sales by disclosing ambient tank temperatures to consumers to facilitate shopping. Judge Vratil recognized that direct payments to consumers of gasoline, the purported class members, were not feasible in part because any damages suffered were infinitesimal.

Possibly The Worst Class Action Settlement Ever Approved, Forbes, February 18, 2016. By Michael I. Krauss.

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