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Mercury News: Defiant gas dealer battling Big Oil Goliath in protest

MISSION COSTING HIM HIS HOME, LIVELIHOOD

By Ken McLaughlin

Like many Californians these days, Mehdi Shahbazi rails against Big Oil cartels, price gouging and the pain consumers feel at the pump.

But Shahbazi is different: He’s a gasoline dealer on a personal mission.

Shahbazi is also going broke because of a long-running battle with Shell Oil. He just lost his $1 million Carmel condo. The pumps at his beloved gas station in Marina have been fenced off. The beer cooler in his mini-mart is empty because he can’t pay suppliers. He’s living in his minivan.

To some, Shahbazi is on a quixotic campaign of self-destruction. To others, the Iranian immigrant is a David-like character taking on the Goliath of Big Oil in a battle he believes is crucial for middle-class Americans facing record gas prices.

Eight months ago, with customers still reeling from post-Hurricane Katrina gas prices, Shahbazi set up a 4-by-4-foot wooden sign at his Marina Shell station. The sign read: “Consumers’ pain is Big Oil’s unearned profit! To oppose it see cashier.”

Inside the mini-mart, people were handed a flier accusing oil companies of trying to drive franchisee retailers like himself out of business by selling gas for less at company-owned stations. The companies’ long-term goal is to control the market and raise prices even higher, according to Shahbazi, who came to the United States in 1966 and has sold gas for 37 years.

Shahbazi’s solution: Find out which stations are company-owned and “stop buying from those stations.”

The personal ramifications of his protest have been enormous, as Shahbazi digs in for the fight of his life.

“I’m homeless, and Shell knows I’m losing at least $600 a day, so they think I will give up,” said Shahbazi, 63. “But I won’t give up. I will die here if I have to.”

Warning letter

Shell began moving against Shahbazi in early November, after he erected a second anti-Big Oil sign. In a registered letter, Shell’s distributor, Peninsula Petroleum of Redwood City, told him to either take down the signs or have his gasoline supplies cut off. Shahbazi ignored the letter because he felt that it was a matter of free speech.

But in Shell Oil’s view, Shahbazi violated his franchise agreement to promote its product. Shell terminated his lease and he’s now “illegally occupying” the Shell-owned property, said Colin West, a San Francisco attorney representing the oil company.

West said “the First Amendment doesn’t apply here” because Shahbazi essentially bargained away rights to free expression in a written contract.

If you’re a McDonald’s franchisee, for instance, “you can’t write `Big Macs stink’ on the board,” West said.

What happened at Marina Shell in November depends on whose version of events you believe.

Early in the month, Shahbazi says, a Shell contractor called to say it was time for an “environmental upgrade” — new fuel dispensers and containers to prevent gasoline from seeping into the soil. Shahbazi says the work began on Nov. 7, the same day he got the letter from the distributor.

The contractor, Shahbazi said, told him the work would be completed in three to five days. So when the work still wasn’t finished after Thanksgiving, “I finally said, `What is going on?’ Then he finally told me that Shell didn’t want him to take down the fence.’ ”

Shahbazi says he felt hoodwinked.

But West, the Shell attorney, said the upgrades “had absolutely nothing to do” with the dispute over the signs. There was simply no need to take down the fence because, as of Thanksgiving Day, Shahbazi no longer had the right to sell gas, West said.

Shahbazi owns about $200,000 worth of equipment in his car wash and mini-mart, in addition to a franchise right. But Shell owns the pumps, the tanks and the land.

In December, Shell filed suit in U.S. District Court in San Jose alleging that Shahbazi disparaged the company by putting up the signs. Shell is seeking an injunction aimed at getting Shahbazi to leave the property.

Shahbazi has counter-sued, claiming he didn’t defame Shell because his flier was referring to all oil companies.

The gasoline dealer’s relationship with Shell hasn’t always been so rancorous.

In the late ’80s, his Marina station, which he bought in 1982, was selling more than 10,000 gallons of gas a day. He was the best-performing Shell dealer in a district stretching from King City to Santa Rosa — and has the wooden plaques to prove it.

By the early ’90s, however, Shahbazi became furious at Shell for instituting “zone pricing” — a controversial industry practice that results in franchise stations paying different prices for the same gas, depending on what marketing zone they’re in.

In 2000, he filed suit in Monterey County Superior Court, trying to stop the practice. But a judge threw out the suit in January 2005 on the eve of a jury trial.

Shahbazi’s persistence — which some call stubbornness — has come at a price.

Lost condo

Earlier this year, his Carmel condo was auctioned off. His 13-year-old son and wife, Valerie, went to live with her mother in Southern California two weeks ago.

His 21-year-old son decided to stay — and lives in his Chevy Blazer. Shahbazi lives in his Mazda van.

Jerry Anderson, who recently stopped by Marina Shell for a cup of coffee, said he and other longtime customers admire Shahbazi and have tried to keep his business limping along by buying snacks and drinks from the mini-mart.

“He’s basically a pretty mellow guy, but he’s always been a man of his convictions,” said Anderson, 46, who owns a Marina auto body shop.

Shahbazi shrugs off the notion that the personal price is too high.

“If we don’t start taking a stand against oil monopolies and gouging, a lot of poor and middle-class people are going to start losing their homes as prices on everything go higher because of rising gasoline costs,” he said.

Even Shell feels sorry for him — to a point.

“I personally have a certain amount of sympathy for Mr. Shahbazi, but for some reason he has decided he’s going to take all these actions that put us in an impossible position,” said West, the Shell attorney. “What do you do with a dealer who’s maligning the brand?”

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Contact Ken McLaughlin at kmclaughlin@mercury news.com or (831) 423-3115.

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