Looks like were are all part of a class action against OPEC>>
(And yes, INSP has been on a roll!!)
Gas station owner sues OPEC
Against long odds, Alabaman seeks to have the oil cartel declared illegal
By Geoff Dougherty
Tribune staff reporter
November 5, 2003
BIRMINGHAM, Ala. -- Carl Prewitt's Texaco station, down the street from the Sun Source Tanning Salon and kitty-corner to Brett's Pawn Shop, seems an unlikely spot for an international legal imbroglio.
But for the past three years, Prewitt has been waging war against the Organization of the Petroleum Exporting Countries, seeking to have the cartel declared an illegal price-fixing venture.
Because Prewitt's lawsuit is a class action filed on behalf of everyone in the United States who has purchased petroleum products in the past five years, it offers the prospect of revenge for something that annoys nearly every motorist: high fuel prices.
Prewitt may appear to be the Don Quixote of the gas pumps, but his cause has attracted some well-known legal talent, including David Boies, the star of the Microsoft antitrust trial. Experts say Prewitt is the underdog in this legal fight, although a victory is not inconceivable. If he wins, OPEC could be forced to stop fixing production levels.
That would have a huge impact. One judge found that OPEC costs American consumers $80million to $120 million a day in inflated gasoline prices.
The case also illustrates the remarkably populist nature of the court system, in which the owner of a single gas station can send Saudi Arabia, Nigeria and Kuwait diving for cover behind their lawyers.
Prewitt decided to take on OPEC after watching the cost of a gallon of fuel spiral upward in 1999, when the organization curtailed production.
"I believe that if something is right, it's right, and if it's wrong, it's wrong," he said. "I'm not furiously mad at OPEC. But I'd like to see things work right."
Prewitt's friend, Glenn Houser, owner of another Birmingham Texaco station, is more direct. "They're gouging us," he said.
OPEC argues that the countries it represents have the right to do as they please with their oil supplies, free from interference from U.S. courts, and from Texaco station owners in Alabama.
Joined station in '70s
Prewitt, 51, started at the gas station in the mid-1970s while working toward a degree in criminal justice. Eventually he bought the station.
He has been there ever since, fixing cars and chatting up customers. His wife and son-in-law work at his side. The station makes a cents-on-the-gallon profit on gasoline.
"You don't make money off this," he said. "And when prices go up, it hurts business."
Customers start looking for the cheapest station. To stay competitive, he cuts his margin even further.
It's those situations, Prewitt said, that are at the core of the lawsuit against OPEC.
Prewitt said suing a multinational organization was daunting.
"It feels odd," he said. "It's a large undertaking, I guess you could say. I felt it was for the right cause."
OPEC comprises 11 oil-rich countries, including Saudi Arabia, Iran and Iraq. Together the members supply 40 percent of the world's oil output, and they possess more than three-quarters of the world's proven crude oil reserves. The group meets twice a year to decide how much oil its members will produce and market.
Some question how much impact OPEC's activities have on U.S. fuel prices.
Oil plants in the 1970s were configured in a way that made it difficult to switch among oils from different countries, said Dennis O'Brien, director of the Institute for Energy Economics and Policy at the University of Oklahoma. That meant refiners often were locked into buying from a particular source. But because of technological improvements, they now can buy from any country with an attractive price, he said.
Shipping procedures also have improved. And OPEC's influence is further reduced by member countries that fudge on the production caps.
"It's pretty hard for anyone to really set prices," O'Brien said.
OPEC's activities would be illegal if conducted by U.S. companies. Federal antitrust laws prohibit collusion to fix prices or production of commodities.
"What they are doing is very clearly a violation," said Spencer Waller, an antitrust scholar at Loyola University Chicago.
OPEC, however, is not a U.S. corporation. And therein lies the explanation for the winding legal path the case has followed.
Cartel ignores lawsuit
After Prewitt filed the lawsuit, the court clerk sent a copy to OPEC's office in Austria by international certified mail. OPEC officials reviewed the suit, and the organization's secretary general decided to "ignore the whole thing," according to court documents.
"I'm not sure how deliberate that was," said Sam C. Pointer Jr., a Birmingham lawyer who represents OPEC. He suspects the delay was caused by "somebody in Austria scratching his head and saying, `We've got this funny paper here coming from somebody named Prewitt in Alabama.'"
In any event, OPEC did not file a response. After nearly a year, a federal judge ordered the organization to appear in court. OPEC did not show, and the judge decided to proceed.
He reviewed statements from expert witnesses and heard arguments from Prewitt's lawyers. In March 2001, the judge ruled OPEC an illegal cartel and ordered the organization to stop fixing production levels.
At that point, the case took on the trappings of an international incident.
Venezuela's oil minister, Alvaro Silva, criticized the decision as "absolutely foolish." Lawyers for some OPEC member countries, including Nigeria, Saudi Arabia and Kuwait, filed briefs opposing Prewitt.
OPEC asked the court to reverse its ruling, saying the group never had been formally served with the lawsuit and hence could not be considered a defendant.
The cartel acknowledged receiving and signing for a copy of the lawsuit delivered to its headquarters in Vienna. But OPEC argued that Austrian law precludes the organization being served with court papers unless it consents to receive them.
Another federal judge ruled that OPEC had not been appropriately notified of the suit and refused to establish procedures allowing Prewitt to serve OPEC with papers that would meet court scrutiny.
Prewitt's lawyers filed an appeal, which is scheduled for a hearing Wednesday in Atlanta.
International implications
If lawsuits were only about the law, Waller said, the case would be a strong one.
But he believes Prewitt faces an uphill battle because most judges are hesitant to intervene in matters that could have a major impact on foreign policy. The U.S. government has not been involved in the case.
"Your average judge doesn't want to reach the merits of this kind of dispute because they realize how explosive it is," Waller said.
Even if the lawsuit succeeds, and a judge orders OPEC to stop colluding on production levels, he said, the organization probably would not obey the order.
That would lead to fines for contempt of court and to questions about how to force OPEC to pay the fines.
At that point, Waller said, "You are in uncharted territory."
Pointer declined to speculate on whether OPEC would comply with an adverse judgment but said the organization would be likely to appeal if it lost.
"I think it's pretty clear that they would fight to the bitter end to ensure they wouldn't be subject to an American court telling independent countries what to do with their natural resources," Pointer said.
Regardless of the outcome, the case has brought attention to Prewitt. The New Yorker's financial columnist proclaimed him a free-market hero.
"I don't think he's grandstanding," said Houser, Prewitt's colleague in the gas business. "We have no control. We sell gas to John Q, and we get blamed for these prices."
Yet despite his anger at OPEC, Houser never thought of suing.
"I just didn't see how you could sue OPEC," he said. "But I guess you can sue anyone."
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