Stertz v. Gulf Oil Corp.

783 F.2d 1064, 1986 U.S. App. LEXIS 24458
CourtTemporary Emergency Court of Appeals
DecidedJanuary 29, 1986
DocketNo. 2-49
StatusPublished
Cited by9 cases

This text of 783 F.2d 1064 (Stertz v. Gulf Oil Corp.) is published on Counsel Stack Legal Research, covering Temporary Emergency Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stertz v. Gulf Oil Corp., 783 F.2d 1064, 1986 U.S. App. LEXIS 24458 (tecoa 1986).

Opinion

LACEY, Judge.

The long and convoluted history of this case1 began in April 1977 when the Department of Energy (DOE) alleged that Gulf Oil Corporation (Gulf) had overstated its interaffiliate landed crude oil costs by approximately $79 million (later reduced to $73 million) during the period October 1973 to May 1975. Gulf opposed the proposed disallowance on factual and legal grounds.

The resultant dispute was apparently resolved by settlement in the form of what was labeled a Consent Order, executed on July 26, 1978, by Gulfs chairman, Mr. McAffee, and Paul Bloom, Esq., of the DOE’s Office of Special Counsel for Compliance (OSC).

The Consent Order provides, in relevant part:

7. Gulf without admitting any noncompliance with, or violation of, any rule or regulation of the DOE, desires to resolve, pursuant to 10 C.F.R. § 205.199J, the dispute arising between itself and the OSC as a result of the matters described herein with minimal disruption to its business operations and without more formal compliance action by OSC. OSC, by means of this Consent Order, desires to conclude the pending compliance proceeding. Gulf and DOE recognize that the time periods involved and the determination of proper costs allowable make it most difficult to determine whether any person sustained an overcharge in the purchase of covered products from Gulf; and, therefore, Gulf and OSC have mutually determined to conclude these matters and agree to the terms and conditions specified herein. ******
8. Gulf agrees that within 15 days of notice that the Consent Order has been made final, it will tender to the United States, upon demand, a certified check in the amount of $42,240,000.00. The payment of this amount shall be in lieu of any other remedial action including a re-determination of increased costs of crude oil and resulting overrecoveries of costs, attributable to disallowed landed costs. Gulf and OSC agree that such payment to the United States represents the most effective method of achieving payment to those who may have been overcharged by Gulf.
9. Gulf further agrees to assist in the evaluation of any claims filed by persons asserting a right to any portion of the payment. Such evaluation will be made prior to the disposition of the funds to the Treasury of the United States. DOE agrees that it will accept and discharge the full administrative DOE responsibility for establishing and administering a program for evaluating such claims and making restitution to such persons having validated claims. ******
13. This Consent Order shall be a final order of the DOE having the same force and effect as an Order of Disallowance issued pursuant to 10 C.F.R. § 205.199E. In consideration of OSC’s agreement to the terms of this Consent Order, and in accordance with § 205.199J, Gulf hereby expressly waives its right to appeal or obtain judicial review of this Order.
14. This Consent Order shall become effective upon publication of notice to that effect in the Federal Register. Prior to its effective date, the OSC will publish notice in the Federal Register pursuant to 10 C.F.R. § 205.199J(c) that it has entered into this Consent Order and will [1066]*1066provide not less than 30 days for members of the public to submit written comments with respect to it. After expiration of the comment period and prior to the effective date of this Consent Order, the OSC reserves the right to withdraw its consent to this Order for any reason.

R. at 94-97.

Thus, by its terms, the Consent Order would become effective only after publication, public comment, and notice in the Federal Register that it was effective. Until that time, the government could withdraw its consent for any reason. Only after final publication would Gulf be required to pay the $42.24 million.

Fifteen days after the Consent Order was first published in the Federal Register and public comment invited, the plaintiffs brought this private action against Gulf pursuant to § 210 of the Economic Stabilization Act of 1970,12 U.S.C. § 1904 (note).2 They sought to represent the class of purchasers who had been overcharged by Gulf. The Secretary of the Department of Energy was also named as a defendant on the theory that he was a “stakeholder” of the $42.24 million on behalf of the plaintiff class. R. at 1-23.

Shortly after the commencement of this action, the Office of Hearings and Appeals (OHA) of DOE published proposed procedures for distributing the $42.24 million. R. at 99-105. Gulf objected to these proposed procedures, arguing primarily that they violated the Consent Order in that they subjected Gulf to “double liability” by providing for payment from the $42.24 million to indirect purchasers who had no standing to sue Gulf while failing to provide for payment to § 210 judgment creditors. DOE, however, took the position that the Consent Order was not designed to cover § 210 liability and moved to dismiss or stay the within action on the grounds of primary jurisdiction until the $42.24 million was disbursed, thereby guaranteeing that the fund would not cover such judgments. It also moved for judgment on the pleadings.

On March 5, 1979, Gulf sought a temporary restraining order restraining the DOE from taking any step toward making the Consent Order effective and moved for leave to amend its answer to assert cross claims against the DOE. Gulf’s position, as expressed in its proposed cross claims, was that it would stand by the Consent Order if DOE agreed with Gulf’s understanding of it (First Cross Claim, R. at 192-99), but that otherwise Gulf would seek to have the Consent Order declared null and void (Second, Third, and Fourth Alternative Cross Claims, R. at 199-200). The restraint was granted (with DOE waiving security under Fed.R.Civ.P. 65). R. 1589-95.

Thereafter, notwithstanding that the temporary restraining order was still in effect by agreement between the parties, on March 19, 1979, the OHA published another set of proposed refund procedures. R. at 280-85. Further discussions then led to an agreement on June 7, 1979, between Gulf and the OSC denominated “Supplemental Comments of the Special Counsel for Compliance and Gulf Oil Corporation on Proposed Decision and Order.” This document, which embodies certain recommendations for disbursement of the settlement fund, also provides, in relevant part, as follows:

The Office of Special Counsel and Gulf agree that the July 26, 1978, Consent Order was not intended to expose Gulf to double liability[,] i.e., to have any part of the $42.24 million paid to any persons or entities (including the United States) other than purchasers of Gulf’s products [1067]*1067who may have been overcharged so long as any overcharge claims[,] whether asserted by legal action or by administrative claim, of such persons against Gulf remained outstanding and unsatisfied.

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Cite This Page — Counsel Stack

Bluebook (online)
783 F.2d 1064, 1986 U.S. App. LEXIS 24458, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stertz-v-gulf-oil-corp-tecoa-1986.