Exxon Settles Suit, Begins Exit : Energy: Southern California dealers involved in the accord with oil company take down their shingles.
After a bitter legal squabble, Exxon Corp. and more than 50 of its Southern California dealers have quietly settled a lawsuit over the oil company’s abandonment of the retail gasoline market in Los Angeles, Orange and Ventura counties.
Exxon confirmed Wednesday that it signed a settlement Oct. 31. Under the agreement, the Houston-based oil company stopped supplying fuel to the dealers Tuesday, and most dealers took down their signs the same day.
Details of the pact were not made public. But Joseph M. Alioto, the San Francisco attorney who represented the Exxon dealers, said it involved “quite substantial” financial payments to the dealers and a formula that makes it easier for them to buy their station sites from the company.
“It’s a very, very favorable situation for the dealers,” Alioto said.
Said Exxon spokesman Les Rogers: “Exxon believes the lawsuit was settled equitably.”
Some of the dealers themselves were not as happy about the agreement, which was first reported Wednesday by the Thousand Oaks News Chronicle.
“I’m not pleased,” said Mike Madani, who operated Exxon stations in Inglewood and Redondo Beach and served as chairman of the dealers steering committee in the lawsuit.
“Usually what happens in lawsuits, attorneys are the winners,” Madani said Wednesday. “Our backs were against the wall and we compromised a lot. And I know a lot of other dealers aren’t happy either.”
Madani is buying his stations; he has already hung out a new shingle as an independent dealer under the name Golden State Fuels.
David Delrahim, an Exxon dealer in Agoura Hills, said he is resigned to the agreement: “In any dispute you have to make a compromise and get on with your life.”
Delrahim added that Exxon was trying to make it “a little bit easier” for dealers to buy their stations by easing the liability burdens that he said have made lending institutions reluctant to finance such purchases.
Like many of the former Exxon dealers, he hopes to sign a supply contract with Ultramar Corp. “We really haven’t had a good response from the majors,” Delrahim said.
In May, 1992, Exxon told 156 dealers in the three counties that the company was withdrawing from the region, where it held 3.4% of the gasoline market share. The move is one of many similar efforts around the country by oil companies, which hope to boost efficiency by withdrawing from markets where they have a marginal presence.
The 50-odd dealers filed a lawsuit in U.S. District Court in Los Angeles initially to block the withdrawal and then to improve the terms they were being offered.
They contended that Exxon encouraged dealers to invest an average of $350,000 in their stations, despite its intentions to withdraw from the market, then offered to sell the stations at inflated prices.
The suit alleged violations of the federal Petroleum Marketing Practices Act and federal antitrust laws. It remains active against a number of other defendants, including the country’s major gasoline retailers.
Other Exxon dealers continue to pursue separate lawsuits against the oil company.
“We are continuing to seek settlement with the remaining dealers,” Exxon spokesman Rogers said Wednesday. “Until this litigation is resolved, Exxon cannot fully withdraw.”