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Associated Press: Judge Dismisses Gas Pricing Lawsuit

By GARY GENTILE 06.27.07

A federal judge dismissed a lawsuit filed by six gas station owners who claimed Shell Oil Co. charged them more for gas as a way to drive customers to nearby company-owned locations.

The lawsuit was thrown out on Tuesday, just moments before attorneys were set to deliver closing arguments after a monthlong trial in U.S. District Court in Santa Ana.

Judge James V. Selna dismissed the case after concluding that testimony provided by an expert witness did not meet legal minimum standards and could not be used by the jury to determine any possible losses suffered by the defendants.

The trial was closely watched in the industry because it challenged a common practice known as “zone pricing.”

Oil companies often charge different wholesale prices for gasoline depending on commuter patterns and other factors. The idea is that prices can be adjusted quickly within zones to stay competitive.

The franchise owners who sued Shell claimed the Houston-based company included the six gas stations in an unusually small zone that essentially isolated them and allowed the company to charge as much as 13 cents per gallon more for fuel.

The goal, the plaintiffs argued, was to persuade motorists to stop at nearby company-owned stations where prices were cheaper.

The company said it was pleased with the decision.

“The plaintiffs clearly failed to present evidence to support their allegations,” Shell spokeswoman Anne Peebles told the Los Angeles Times.

Thomas Bleau, an attorney for the Shell dealers, said his clients would appeal.

“We’re not saying zone pricing in and of itself should be outlawed,” he said Wednesday. “This case is about zone pricing abuse.”

Bleau said the judge improperly disallowed expert testimony that would have established his clients lost at total of about $300,000.

“He improperly waived the evidence and took the case away from the jury,” Bleau said.

A motion for a permanent injunction barring Shell from charging higher prices to the dealers was pending.

Peebles said the way Shell determines pricing is fundamentally fair and consistent with industry practice.

Shell is owned by Royal Dutch Shell (nyse: RDSA – news – people ).

Copyright 2007 Associated Press. All rights reserved.

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