Court Allows Suit Against Oil Companies

The Supreme Court today refused to kill a lawsuit in which California and the city of Long Beach are seeking at least $280 million from six major oil companies accused of price fixing.

The court, without comment, let stand a ruling that there is enough evidence against the companies to warrant a trial.

The state and city charged the companies in 1975 with conspiring to depress the price of crude oil the firms purchase from the Wilmington oil field, an area stretching 11 miles southeast from the Wilmington District of Los Angeles through Long Beach Harbor. The area includes offshore, state-owned land.

The city owns the oil rights in the area.

Named as defendants in the suit are Chevron, Exxon, Mobil Oil, Shell Oil, Texaco and Union Oil of California. A seventh company, Atlantic Richfield, was also sued but reached a settlement in 1984.

If the state and city win at trial, the $280-million figure could be tripled under antitrust law.

U.S. District Judge William P. Gray had thrown out the suit against the six companies. But it was reinstated last April by the U.S. 9th Circuit Court of Appeals.

Gray had ruled that federal price controls, rather than the alleged conspiracy, determined crude oil price levels for a period from April, 1972, to October, 1976.

The judge also said federal oil import rules barred the state and city from recovering any damages from the companies for the remaining period of the alleged conspiracy. Moreover, Gray said, there was insufficient evidence to prove a conspiracy.

But the appeals court said there are factual issues that should be decided by a jury.

“If Long Beach can persuade a fact-finder that the price of crude oil would have been set at a different level but for the allegedly illegal agreement, it is entitled to damages,” the appeals court said.

The oil companies said the evidence of collusion is only circumstantial and is too flimsy to warrant a trial.