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By Robert Rapier on May 3, 2009 with no responses

The Lawyers Win on Hot Gas

I recently wrote an essay called A Lost Litigation Opportunity in which I discussed the root of the so-called ‘hot gas’ issue. I firmly believe that this is all about the big business of lawyers who sue people for a living. The California Energy Commission had ruled out temperature compensation equipment, saying that consumers would pay more because retailers would pass on the cost of the equipment.

I thought the issue would now fade away, but a recent story involving Costco suggests that the litigators – like those behind certain ‘consumer organizations’ who have pushed this issue so hard – are starting to profit:

Petroleum Marketers Respond to Costco’s Attempt To Settle ‘Fair Fuel’ Lawsuit

Here are the interesting bits:

“But it [settlement] saves Costco the costs of defending themselves in this class-action litigation,” Gilligan added, noting there are 120 other retailers and groups being sued.”

“Unfortunately, trial attorneys have become quite skilled at presenting companies with difficult decisions: either incur significant expense to erect a legal defense against outrageous claims or cut costs by reaching some sort of settlement. Neither are attractive options when the retailer has done nothing wrong, but the trial attorneys are good at setting this trap.”

One other point: Costco’s agreement including payment of the plaintiffs’ attorney fees.

That’s what this is all about. It won’t save consumers a dime. In fact, it will cost consumers, and it will cost retailers. But trial lawyers that back phony consumer organizations who them drum up controversies should do OK.