Jury rules for franchisees in Shell trial

A federal jury awarded more than $3 million to eight Massachusetts gas station operators after finding Shell Oil Co. used unfair tactics that were effectively intended to drive them out of business.

The Boston Globe
December 9, 2004

Jury rules for franchisees in Shell trial
8 station operators in Mass. awarded $3.3m in damages
Kimberly Blanton, Globe Staff

A federal jury awarded more than $3 million to eight Massachusetts gas station operators after finding Shell Oil Co. used unfair tactics that were effectively intended to drive them out of business.

The decision, reached yesterday afternoon in US District Court in Boston, was a victory for the Shell franchise operators, who filed a lawsuit four years ago against Shell and affiliates of the Royal Dutch/Shell Group, arguing the companies raised wholesale prices for gasoline and rents on its station properties to levels that hampered their ability to compete for motorists' business.

The suit said it was part of the company's plan to convert independent franchises into company-owned stores.

Nine jurors voted unanimously in favor of the gas-station operators, said their attorney, Gary Greenberg of Greenberg Traurig in Boston.

''Our clients feel vindicated. Unfortunately, some of them lost their businesses and have suffered greatly over the last several years," he said.

''A couple of these people worked for years, or took $100 or $200 a week in salary to survive as a neighborhood gas station" under their agreements with Shell.

The case was also important to the world's third-largest oil company, which has agreements with thousands of franchises nationwide.

Shell attorney Paul Sanson could not be reached at his Connecticut law office.

The jury awarded $3.3 million in compensatory damages; that total does not include interest, attorney's fees, or possible punitive or other damages that may be awarded by the judge, Greenberg said.

Station franchisees argued in court that the company's actions reduced the number of independent Shell gas stations in Massachusetts to fewer than 100 in early 2003, from 177 five years earlier.

The dealers took issue with the wholesale prices at which Shell sold its gasoline to them for resale to drivers.

Dealers said the high prices would either squeeze their profits or force them to raise prices to levels that could be undercut by other stations.

The jury voted yes to the question of whether Shell ''in bad faith" set wholesale gasoline prices ''that were not commercially reasonable," court documents said.

Lease agreements between franchisees and Shell, which owns the properties upon which the gas pumps sit, were also at issue in the trial which started in mid-November.

Shell in 1999 and 2000 phased out rental subsidies, a decision the jury said was a breach of its lease agreements with station operators. Jurors decided that the elimination of the subsidies amounts to a ''termination of the franchises" under federal marketing laws.

Kimberly Blanton can be reached at moc.ebolg|notnalb#moc.ebolg|notnalb.

© Copyright 2004 Globe Newspaper Company.


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