Marine industry targets oil companies in lawsuit

By Sarah Smith | April 08, 2008
Web exclusive posted April 14, 2008 at 12:36 p.m. CST

Ten of the nation's largest oil companies are being sued in California for allegedly selling an ethanol blended fuel that damages marine fuel tanks. The suit, filed April 7, seeks class action status on behalf of all California boat owners with damaged fiberglass tanks and all marine consumers who purchased ethanol blended fuel in California.

The suit claims that in 2004, oil companies stopped using methyl tert-butyl ether, a commonly used octane booster, when many states banned it as a suspected pollutant. The suit alleges that defendants substituted ethanol blended gasoline, which was advertised as "unleaded fuel." The plaintiffs claim that the ethanol in the fuel mix caused resin in fiberglass fuel tanks, used in about 10 percent of all boats, to deteriorate. Fiberglass is a series of threads bound together by the resin. Lead plaintiff Lawrence J. Turner, a Los Angeles boat owner, claims he spent $20,000 to replace the gas tank in his boat when the ethanol-blended fuel caused the tank to corrode. The suit says the dissolved resin entered the fuel system and caused engine damage. Another issue in the case is phase separation, when ethanol, which attracts water, sinks to the bottom of a gas tank and the fuel rises to the top. The lawsuit claims this toxic mixture at the bottom of the tank is particularly harmful to fiberglass tanks.

The suit advances claims of products liability, fraudulent concealment and violations of California's business code. "Our gripe - our cause of action - is that when a consumer pulls up to the pumps in a marina they have a reasonable expectation that what they put in their tanks isn't going to damage their boat," said lead plaintiffs attorney Brian S. Kabateck. "There was no disclosure, no warnings, no information disseminated by the oil companies. There was a failure to disclose upon the market as a whole."

But Kabateck also acknowledged that the case will hinge on when the oil companies discovered that ethanol had a propensity to cause damage, because from that moment forward they had a legal obligation to warn consumers.

"We have not yet been served so we're not in a position to comment," said Chevron Media Relations spokesman Lloyd Avram, echoing the comments of many of the named defendants. In addition to Chevron, the other oil companies named are Exxon, Valero Energy Corp., BP America, Shell Oil, Tesoro Corp., ConocoPhillips, Tower Energy Group, Petro-Diamond, Inc., Big West of California LLC. Several unnamed oil companies have simply been identified as "Does." The case has been filed on a "market theory" - in which, if the defendants are found liable, they would be responsible for damages based on their share of the California fuel market.

The defendants have 20 calendar days from the date of service to respond to the case, filed in U.S. District Court in Los Angeles. Kabateck, whose firm has filed class action lawsuits against major companies such as Apple Computers, Google, Ortho Evra and others, said it will take six to eight months to certify a class of plaintiffs in this case, to ensure they have similar claims.