ExxonMobil Allapattah Fallout
Will take $200 million aftertax charge
Published in CSP Daily News
FAIRFAX, Va. -- In light of the U.S. Supreme Court's 5 to 4 decision Thursday to grant a lower federal court the right to hear the claims of several thousand Exxon station dealers who challenged a discount-for-cash program, Exxon Mobil Corp said Friday that it has determined to take an aftertax charge of $200 million, which will be reflected in the corporation's second-quarter results. This charge is in addition to an aftertax charge of $550 million that ExxonMobil took in third-quarter 2004, it said.
As reported in CSP Daily News, the Supreme Court, [image-nocss] in an opinion authored by Justice Anthony Kennedy, affirmed the 11th Circuit Court of Appeals' decision in the class action, Allapattah Services Inc. et al. v. Exxon. The court found that even those class members with claims ordinarily too small to be independently brought in the federal court may participate in the jury's verdict against Exxon.
The case involves current or former direct-served gas station dealers who owned or operated an Exxon station between March 1, 1983, and August 28, 1994, and had one or more sales agreements with Exxon.
At a February 2001 trial in Miami federal court, attorneys for the class proved to a jury that Exxon overcharged its station owners for the wholesale price of motor fuel for 11 years and then fraudulently concealed the overcharges. The 11th Circuit Court of Appeals later affirmed the verdict and orders of the trial court. Exxon appealed to the Supreme Court, which accepted review only on the limited question of whether the trial court had jurisdiction over individual class-member claims worth less than $50,000 at the time the case was filed in 1991.
With prejudgment interest, the verdict currently exceeds $1.3 billion. The Supreme Court's decision comes after the district court's order sanctioning Exxon for its attempts to frustrate the claims process established by the court to pay class members entitled to participate in the verdict, according to Stearns Weaver Miller Weissler Alhadeff & Sitterson, which represents the class.
Almost 11,000 claims were filed before the Dec. 1, 2005, claims deadline.