Appeals Court Reinstates Lawsuit Against Oil Firms

Lawsuits accusing six major oil companies of conspiring to pay unfairly low prices to the city of Long Beach for oil pumped from the city’s tidelands were reinstated Monday by a federal appeals court in San Francisco.

The 9th Circuit Court of Appeals ruled that the state of California and the city of Long Beach had offered sufficient evidence of a price-fixing conspiracy between 1971 and 1977 among the Chevron, Unocal, Mobil, Shell, Exxon and Texaco oil companies and that the lawsuits should go to trial. The original suit asked damages of $293 million.

‘Truckloads of Evidence’

The court also returned to state courts a companion suit covering the years 1980 to 1985. That suit seeks damages of $550 million. Attorneys for the city of Long Beach said under antitrust provisions, damages could be tripled if the city and state win.

“And I’ll lay every buck I have on it that we will,” Deputy Long Beach City. Atty. James McCabe said Monday, adding that he was “elated” by the appeals court’s decision.

“I think the facts are supported by truckloads of evidence,” McCabe said. “It could result in the recovery of a billion or more.”

Royce Schultz, a private attorney representing the city, said the state would receive about 95% of the proceeds from any damage awards, with the city getting somewhat less than 5%.

The suits had been dismissed by U.S. District Judge William P. Gray of Los Angeles, who held in June, 1985, that there was inadequate evidence of a conspiracy and that federal controls would have limited the oil prices regardless of the oil companies’ actions.

The three-member appeals court of Judges Mary M. Schroeder, Jerome Farris and Cecil F. Poole disagreed Monday in opinions written by Farris and Schroeder.

The appeals court rejected contentions by the oil companies that they arrived at the same price offers independently.

Suit Filed Five Years Ago

And the court said that while the federal controls might have limited the damages, they would not shield the companies from liability because a price-fixing conspiracy could have affected the level of the government’s price ceilings.

In the original federal suit filed five years ago in Los Angeles, the city of Long Beach and the state accused the companies of working together to depress the price of crude oil pumped from the city’s 14,200 acres of tidelands between 1971 and 1977 in violation of antitrust laws.

The suit said the companies were attempting to monopolize and control the production, distribution, purchase and sale of crude oil on the West Coast. The Atlantic Richfield Co., which earlier had agreed to pay damages of $22.5 million for its alleged part in the purported conspiracy, was not named as a defendant.

Six months after Gray dismissed this suit, the city and state filed a second Superior Court lawsuit containing many of the same claims, covering the years 1980 to 1985. That suit was later transferred to federal court on a motion of the oil companies. Gray later dismissed a major portion of that suit.