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Shell Pennzoil brand attacked in US court action

By John Donovan

Pennzoil-Quaker State Company (PQS) is seeking $1 million in damages from a Pennsylvanian resident, Keith R. Smith, for alleged trademark infringement, counterfeiting, dilution, unfair competition, false advertising and unjust enrichment.

The draconian legal proceedings brought against Smith are in his capacity as the owner of Lube Pro, a single bay quick oil change facility located in Butler County Pennsylvania. Pennzoil products are available through authorized oil-change outlets throughout the USA.

Pennzoil claims in its complaint filed in October 1995 (Civil Action No. 04-5244 (JLL) that strict quality control procedures are in place to ensure that customers receive high-quality, authentic PENNZOIL Products.

Pennzoil is an oil company founded in Oil City, Pennsylvania. In 1998, the company merged with onetime rival Quaker State, to form Pennzoil-Quaker State. In 2002, the Royal Dutch/Shell Group purchased Pennzoil-Quaker State to form SOPUS–Shell Oil Products US. Both Pennzoil and Quaker State are now marketed together as a result.

PQS claim Smith is misrepresenting his products and services as featuring Pennzoil, when in fact he is not an authorized stockist and an analysis of oil provided by Smith confirms that he is not using genuine Pennzoil.

In the first sentence of paragraph 34 of the Complaint, PDS alleges that

Defendants activities complained of herein have been malicious, fraudulent, deliberate, willful, intentional, and in bad faith, with full knowledge and conscious disregard of PQS’s rights.

Although Shell is not a plaintiff, it has been heavily involved in the case as is evident from an article published by National Oil & Lube News magazine in April 2007.

Contending that PQS has not provided evidence to support the allegations against Smith, his lawyer, James P. Ross of John T. Haller, Jr. & Associates, P.C. filed on August 10, 2007, a motion for summary judgment.

In a legal statement in support of the motion, Kimberly L. Muller, Senior Trademark Counsel for Shell is quoted from the National Oil & Lube News article as follows:

“Shell wants Mr. Smith to stop using Pennzoil signs and wants to be reimbursed for his actions as the Court deems appropriate. Shell must protect authorized installers against unfair competition by operators who…display Pennzoil signage to draw in customers but substitute a less expensive, less effective brand of oil.”

(According to the motion for summary judgment, Shell’s demands were part of Pennzoil’s continuing attempts to have the Defendant sign up as an exclusive Pennzoil dealer…)

The motion for summary judgment goes on to say: –

It is noted that Shell has produced no evidence that Mr. Smith, at any time, “[drew] in customers” or palmed off or “substitute[d] a less expensive, less effective brand of oil”. From paragraph number 20 of the Complaint and the photos attached thereto, Shell had investigators at the Defendant’s facility in a car who paid for an oil change and took photos. Shell has provided nothing from those investigators or relating to any investigation and as a result of that omission, Defendant submits that the investigators found no palming off or bait and switch tactics. It is also noted that Shell has offered no evidence that Mr. Smith used a “brand of oil” which was “less effective” than Pennzoil, unless Ms. Muller is alleging that Shell’s Rotella oil as used by Mr. Smith is a “less effective oil”.

In the same article Keith Smith said that “he was in disbelief that Shell would file this type of lawsuit against a small-time operator.”

He was probably unaware that Shell has a track record of bullying small companies (and franchise operators): –


2. (Wexco case)

(Shell also has a track record of using undercover investigators:

Smith’s lawyers turned the tables on Shell’s accusations of false advertising by its assertion in the motion for summary judgment, that Shell/Pennzoil is perpetrating a fraud on consumers in Pennsylvania.

It states on pages 35 and 36:

Pennzoil-Quaker State is a Delaware Corporation which is owned by a Texas Corporation which is owned by an International Corporation and no products of Pennzoil-Quaker State come from the geographical area of Pennsylvania and Pennzoil uses “Pennsylvania” in its name, “Quaker State” in its name, the Pittsburgh Steeler black and gold as its color scheme and the Liberty Bell in its logo as a false designation of geographical source and/or for the purpose of palming its foreign oil off to citizens of Pennsylvania as Pennsylvania Oil and/or as “Pennsylvania grade oil” and/or as “100% PURE PENNSYLVANIA” and/or “Supreme Pennsylvania Quality”. (See Exhibits 54 and 55 as discussed above at 9d. Tin Signs and also see the case law cited by the Plaintiff at page 11 of this Brief).

At numbered paragraph 6 of the Complaint, Pennzoil has used this Court and this lawsuit to further its palming off and false designation of geographic source.

Other than sophisms, hyperbole and unfounded conclusions of fact by Plaintiffs Attorneys, which is not evidence, Pennzoil has not established that Mr. Smith confused any customers or suppliers at any time or that Mr. Smith palmed off anything to anyone at anytime or that Mr. Smith on any occasion used a “bait-and-switch” operation.

It would appear from the variety of serious charges made against Smith that SOPUS/Pennzoil goes to great lengths to protect the Pennzoil brand name and to stop oil other than Pennzoil being sold under the Pennzoil brand name. The truth is more bizarre.

I recently revealed how the management of SOPUS has for a number of years turned a blind eye to a lube chain in Illinois blending Shell’s Pennzoil oil brand with a cheaper product and selling it to consumers as Pennzoil. This is a form of brand counterfeiting similar to what Smith is accused of by Shell.

Apart from the consumer fraud aspect, Shell management also failed to protect Shell employees from threats of violence by the proprietor of the lube chain. He and Shell Oil Company both have reasons to keep a lid on the scandal.

Consumer fraud involving Pennzoil and Shell Oil Products:

The lawyers acting for Keith Smith are likely to view this as a case of blatant double standards. A chain wide fraud has been allowed to continue throughout the period that Shell has persecuted on apparently false charges, a single individual operating a single lube bay. There is irrefutable evidence (including Shell internal communications) of the chain wide fraud. The same applies to the serious threats of violence made against Shell employees. In contrast, according to the motion for summary judgment, PQS has produced no evidence to support its charges against Smith.Â

The Illinois lube chain consumer fraud involving Pennzoil is not the only illegal activity connected with Shell.

Jiffy Lube, a subsidiary of Pennzoil (and indirectly Shell Oil Company) is mentioned in the PQS vs. Smith legal papers, but not as a party to the action. In December 2004, an Oklahoma judge approved a class action settlement between Jiffy Lube International and millions of U.S. plaintiffs. The agreement settled nine lawsuits from several states over environmental surcharges Jiffy Lube imposed on its oil change customers.

Under the terms of the settlement, Jiffy Lube provided more than seven million customers with a coupon good for $5 off an oil change. Jiffy Lube had added surcharges to drivers oil-change bills for five years on the pretext of being an environmental surcharge. Scott R. Shepherd, a Pennsylvania attorney who sued Jiffy Lube was quoted as saying:

“It was just a straight rip-off for $1.25 every time someone came in”.

That was not the end of Jiffy Lube problems. In 2006, an NBC TV channel in Los Angeles’s carried out an undercover investigation, exposing wrongdoing at Jiffy Lube locations. According to the report “NBC4 caught them red-handed, charging for repairs that were never done. NBC4’s investigation has been watched by millions of people on TV and the Internet”.

The biggest fraud involving Shell was the hydrocarbon reserves scandal which resulted in Shell being fined $150 million by financial regulatory authorities, including the US Securities & Exchange Commission. Shell has already settled several related class actions and has set aside $500 million to settle the remaining class action.

Keith Smith could be forgiven for wondering why the mighty Royal Dutch Shell Group, with so many controversies to deal with, is so maliciously intent on destroying a small businessman trying to earn an honest living. If Shell is keen to make an example, it might be better to start with a real crook in Illinois, rather than an innocent man in Pennsylvania.

The high command of Shell has been given advance sight of this article. This is the comment supplied: –

“As always, you should never assume that failure to deny your assertions is an admission on Shell’s part, nor should you represent this to be so on this occasion, or ever”.

The relevant correspondence with Royal Dutch Shell can be viewed via this link:

The email was sent to Richard Wiseman, General Counsel of Shell International and copied to Jeroen van der Veer, CEO of Royal Dutch Shell Plc; Jorma Ollila, Chairman of the company; Michiel Brandjes, Company Secretary and General Counsel Corporate; David Pirret, Vice President of Shell Lubricants; John Hofmeister, President of Shell Oil Company and Michael Wilson, a lawyer at Shell Oil Products.







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