Wednesday, January 25, 2012

Klein v. Chevron (Cal. Ct. App. - Jan. 25, 2012)

So that's why I'm getting poor gas mileage!

I like this opinion.  I like the class action.  It's about something I didn't know.  And it matters.

You see, my friends, gasoline is a liquid.  A fact of which we're all aware.  Here's something we also know:  Liquids expand as the temperature gets higher.  So when you buy gasoline when the temperature is higher, you get less of it.

You still get a gallon.  But a gallon isn't necessarily equivalent to a gallon, as weird as that might seem.  At higher temperatures, a gallon of gasoline actually contains less fuel than a gallon at lower temperatures, as the liquid has expanded.  For example, a gallon of gasoline at 75 degrees may contain around one percent less fuel than a gallon of gasoline at 60 degrees.

Here's another fact of which you're likely aware:  California tends to be warmer than other states.  Put these common facts all together, and you discover something new.  We're getting less fuel per gallon than people in other states.  When we fill up our engines, we get an equal number of gallons, but effectively less gasoline.

Okay, you might say.  That may all be true.  But that's just an inalienable fact.  It doesn't make for a good -- or proper -- class action.  It's like another case I read about several months ago, in which plaintiffs filed a class action claiming that buyers of premium gasoline don't get all the gasoline for which they paid when the service station uses a single dispensing nozzle because there's some leftover regular gasoline in the nozzle.  True, but irrelevant.  We're not going to let you file a class action over it.  It's just the nature of the beast.

I admit that there was part of me that had the same reaction here.  Lots of damages -- hundreds of millions, perhaps -- but nothing totally deceptive about it.  It's just the nature of the beast.

But then I read two facts that changed my opinion.  First, we can compensate for this problem.  Easily.  And gas stations already do so in Canada.  Where it's cold.  And where implementing that technology benefits them.  You see, when it's cold, gas stations give out more fuel in a gallon, because the liquid is denser.  So stations add a device to their pump that compensates for that.  Effectively taking the temperature when the gasoline is pumped and delivering less fuel when it's colder because a gallon in such settings gives more fuel.  If companies do this when it benefits them, it seems slimy not to do so when it does not.  Unfair, even.

Second, temperatures is not just a hypothetical.  Companies pay taxes on gasoline.  But they only pay taxes on gasoline at 60 degrees.  In other words, there's a standard amount of fuel at a certain temperature, and the gasoline companies pay taxes on only this amount.  But gasoline in California is dispensed at an average temperature of 70 degrees.  Do the companies pay more taxes on their California sales because they're pumping less fuel at 70 degrees?  No.  They knowingly pay the lower taxes on 60 degree fuel.  But pump out 70 degree fuel.  And collect taxes -- big taxes -- from consumers at the higher 70 degree rate.  And pocket the excess.  Again, we're talking big money:  around one percent of the taxes on gasoline, which are huge.  This, too, seems wrong.  Perhaps even fraudulent.

There are more details in the opinion, alongside difficult judicial abstention and other issues.  But I gotta tell you that not only do I think the Court of Appeal gets this one right, but this is exactly the type of case where I'm glad we have class actions.  Is any individual consumer going to sue for $50?  No.  When put together, are we talking about massive amounts of money?  Yep.  And is there a potential problem here, as well as a potential solution?  Definitely.

There are lots of times when I think that class action lawyers have filed claims that are silly and/or designed solely to extort a quick settlement.  This is not one of them.  I'm sure the lawyers plan on getting paid.  But I'm happy to pay 'em if they do the right thing here.  Because this one may actually have merit.