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BP Franchisees Sue Company, Claiming Undercutting

LOS ANGELES -- A California judge yesterday ruled to allow the entire lawsuit filed against BP West Coast Products LLC by more than 900 BP and Arco franchisees, as well as the owners of ampm mini-marts, to continue.

The operators are accusing BP West Coast of undercutting them by selling cheaper generic gasoline to rival gas stations, along with making other claims against the company.

James F. Speyer, one of BP West Coast's lawyers, asked Los Angeles County Superior Court Judge Elihu M. Berle to dismiss the plaintiffs' claims of breach of contract and breach of the implied covenant of good faith and fair dealing. However, Berle denied Speyer's request for summary judgment on technical grounds. "I don't really think the motion for summary adjudication meets those issues head on," the judge said, as Law360 reported. "I think there are procedural problems with the motion."

The plaintiffs are represented by Lee, Tran & Liang APLC. Attorney James Lee told CSNews Online that the plaintiffs could "very well" request $200 million or more in damages.

"We essentially filed for three types of claims," Lee explained. "One is fuel pricing irregularities in which we contend that BP is not making the wholesale price competitive. No. 2 is [BP] is essentially engaged in some form of price manipulation with vendors in that they accept a fee for the right to place certain products in Arco stations. And the third aspect of the case is the point-of-sale (POS) system that BP installed a few years ago called Retalix.”

In the complaint, the plaintiffs argue that the Retalix POS system was not ready to be rolled out and that it had significant bugs to the point where many station owners lost sales transactions, were unable to track inventory and most importantly, "the system just shuts down and people can't sell gas and items in the convenience store for up to several hours at a time."

Sam Hariz, president the Service Station Franchise Association and operator of 25 California Arco stations, is a main plaintiff in the lawsuit, which was first filed in 2011. He told CSNews Online that BP West Coast's alleged practices had damaging effects on his business because his gas prices were constantly higher than competitors.

In addition, regarding the technology component of the lawsuit, "Retalix was fully aware its POS was not functioning," Hariz said. "They had six years to work on the problems. They still went ahead and forced us to install it."

Considering that the judge chose not to dismiss any part of the class-action lawsuit, Lee said his firm will enter a "discovery" phase whereby the plaintiffs can ask BP many questions about its business practices. Lee acknowledged the discovery process could take three to six months to complete.

An e-mail sent by CSNews Online to Retalix for comment was not returned as of press time. Retalix was purchased by NCR Corp. last year. Therefore, if the technology company were assessed damages, NCR would likely be responsible to pay out any claims.

BP West Coast is represented by Speyer and John D. Lombardo of Arnold & Porter LLP. Retalix is represented by Richard H. Zelichov and Bruce Vanyo of Katten Muchin Rosenman LLP.

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