PROPEL FUELS WINS $604 MILLION FOR TRADE SECRET THEFT BY PHILLIPS 66
SAN FRANCISCO, CA. — Propel
Fuels, Inc. has won its lawsuit against Phillips 66 Company, winning $604.9 million for trade secret misappropriation by the major oil company.
In the Superior Court lawsuit, originally filed in 2022, Seattle-based Propel claimed that Phillips 66 obtained Propel's trade secrets during the due diligence process for a proposed acquisition only to walk away from the deal.
The jury found in Propel's favor, agreeing that Phillips 66's California renewable fuels business was developed from Propel's trade secrets in violation of California's Uniform Trade Secrets Act. They awarded Propel "unjust enrichment damages" totaling $604.9 million.
The jury also found Phillips 66's misappropriation was willful and malicious, meaning the Court may now triple the total damages award.
Phillips 66 had submitted an all-cash acquisition bid to acquire Propel in December 2017 and began what it described as confirmatory due diligence.
"What started as standard due diligence," stated Propel Fuels CEO Rob Elam, "transformed into a year-long extraction of trade secrets."
In the due diligence process, Propel claims that Phillips 66 demanded detailed information about all aspects of Propel's business as well as strategic insights from Propel's management, the lawsuit says.
Propel alleged that Phillips 66 demanded Propel use their proprietary location algorithms to choose the top 250 locations for new Phillips 66 / 76-branded low-carbon fueling sites across California. According to the complaint, those sites were later built by Phillips 66 without Propel, designed to serve Propel customers.
The lawsuit also claimed in order to acquire this confidential information, Phillips 66 repeatedly assured Propel's senior management of its intention to close the deal and that it would not enter the California renewables market without Propel.
After Phillips terminated the acquisition, three days later Phillips 66 notified California regulators that it intended to apply for permits to distribute and sell the same kind of low-carbon fuels as Propel Fuels. Soon after, the major oil company also began selling renewable diesel and E85 fuel at its California retail 76 stations.
"Before its discussions with Phillips 66, Propel had worked for more than 13 years to create the market for these fuels, which are important alternatives that improve air quality and help fight climate change," said Elam. "We were pioneers who helped create the market, and what Phillips 66 stole was the result of hard work by entrepreneurs who took the kind of risks that are the foundation for our entire modern economy."
He added, "Propel Fuels is pleased that after viewing all of the evidence, the jury held Phillips 66 accountable for stealing our trade secrets."
"Propel did what many innovators cannot do—it stood up to a much larger adversary and persevered through a long process to vindicate its rights," said Michael Ng of Kobre & Kim, lead counsel for Propel.
"We are grateful to the jury, who spent more than a month examining detailed evidence supporting this verdict and their finding that Phillips 66's misappropriation was willful and malicious, and the highly experienced presiding judge, who devoted considerable time and effort to the arguments of both sides," Ng concluded.
PHILLIPS 66 TO CLOSE
SOUTHERN CALIFORNIA REFINERIES
HOUSTON, TX. — Phillips 66 has announced plans to close their refinery complex in Wilmington, CA, by the end of 2025, shuttering an operation that has been part of Southern California fuel supply for over a century.
The refinery produces 139 million barrels per day of refined products with a capacity of 165 million barrels per day. and accounts for 8% of California's refining capacity, so the closure of the refinery has been called a "material shift in the market and supply/demand balances" in the West.
"We understand this decision has an impact on our employees, contractors and the broader community," said Mark Lashier, chairman and CEO of Phillips 66, announcing the closure. "We will work to help and support them through this transition."
Approximately 600 employees and 300 contractors currently work in the Los Angeles-area refinery.
The Phillips 66 complex consists of two major refining facilities on 650 acres in Wilmington and Carson, CA. The Wilmington refining facility was built by Union Oil of California in 1919; the Carson facility was built by Union Oil in 1923. The two refineries have been through a series of ownership changes over the last century, most recently in 2001 when Phillips Petroleum Co. purchased them for $6.9 billion from Tosco Corp.
"With the long-term sustainability of our Los Angeles Refinery uncertain and affected by market dynamics, we are working with leading land development firms to evaluate the future use of our unique and strategically located properties near the Port of Los Angeles," said Lashier. "These sites offer an opportunity to create a transformational project that can support the environment, generate economic development, create jobs and improve the region's critical infrastructure."
Phillips 66 has retained real estate developers Catullus Development Corp. and Deca Companies to look at potential commercial uses for the property.
The announcement to close the refinery came two days after California Governor Newsom signed a law, ABX2-1, which allows regulators more freedom to fine and prosecute oil and gas companies, claiming the purpose of the law was to "rein in soaring gas prices" caused by maintenance and low supply. In a posting on X, Newsom wrote, "California just passed a bill cracking down on a scheme oil companies use to jack up gas prices before the election. Don't fall for their dirty lies."
Alessandra Magnasco, governmental affairs and regulatory director for the California Fuels & Convenience Alliance, stated that the announcement of the refinery closure was "not much of a surprise, as we continually warned the Legislature and Administration about how ABX2-1 would negatively impact supply. This is exactly what happens when our leaders are more concerned with political theater than solving real problems."
"There is no mystery to our high gas prices—exploding overhead costs to run our stations, costly environmental regulations, and now, with even less supply in the market, every Californian will end up paying higher prices in this government-created energy crisis."
Magnasco continued, "We recognize the challenges faced by companies like Phillips 66, which are trying to operate in one of the most highly regulated energy environments in the world. These refinery closures are a direct result of policies that make it increasingly difficult to maintain and expand critical infrastructure. While we understand the need for sustainable progress, we urge policymakers to consider the immediate impacts on consumers, workers, and the stability of California's fuel supply."
Lashier noted, "Phillips 66 remains committed to serving California and will continue to take the necessary steps to meet our commercial and customer demands."
Phillips officials say they will "supply gasoline from sources inside and outside their refining network as well as renewable diesel and sustainable aviation fuels from its Rodeo Renewable Energy Complex in the San Francisco Bay area" to help make up the supply shortfall.
SC FUELS ACQUIRES NICKEY PETROLEUM
ORANGE, CA. — SC Fuels has acquired the assets of Nickey Petroleum Company, Inc., headquartered in Placentia, CA., The purchase price was not disclosed.
Included in the deal were Nickey's commercial fueling, lubricant and cardlock operations in Los Angeles and Orange Counties in Southern California.
"The acquisition of Nickey Petroleum aligns with our goal of being the leading distribution and service company in the Western United States," said Derek Bettencourt, senior director of cardlock fuel services at SC Fuels, Orange, CA. "Nickey has provided exceptional service and products for many years, and as we expand our presence in the market, we look forward to continuing to serve those customers and offer an expanded network to meet all their petroleum product needs."
The Nickey Petroleum cardlock facilities have been rebranded to the SC Fuels brand.
SC Fuels serves more than 11,000 customers annually and provides access to 50 cardlock fueling locations for drivers. The company was acquired by Pilot Travel Centers LLC (Pilot) in 2021; Pilot is a wholly owned subsidiary of Berkshire Hathaway.
EMA, NEBRASKA SUE CARB, CLAIMING CLEAN TRUCK PARTNERSHIP VIOLATES ANTITRUST
NORTH PLATTE, NE. — The State of Nebraska, the
Energy Marketers of America, and Renewable Fuels Nebraska have filed an antitrust lawsuit claiming collusion between the California Air Resources Board and all major domestic manufacturers of medium and heavy-duty vehicles.
The lawsuit alleges that the 2023 "Clean Truck Partnership" agreement between CARB and the OEMs is anti-competitive.
Under the terms of the Clean Truck Partnership, the OEMs agreed to meet
CARB's zero-emission mandates for medium and heavy-duty vehicles,
including exclusively selling ZEVs by 2036. The Clean Truck Partnership
also commits the OEMs to follow CARB's regulations in every state that
has or "will" adopt them in the future, regardless of any litigation challenging California's regulations or CARB's authority to implement them or even if they are ultimately found to be unlawful.
The lawsuit alleges because of the Clean Truck Partnership, the OEMs will reduce their output of internal combustion engine vehicles, thereby eliminating consumer choice and, in turn, drive up prices for those same vehicles in Nebraska and elsewhere to subsidize the "transition" to zero-emission vehicles in California.
The suit also claims that the OEMs' "broad promise" to follow CARB's regulations in other states that purportedly "will" adopt them, and to not oppose any such out-of-state proposals, reflects the OEMs' intention to reduce output and raise prices in states that have not and may never adopt such regulations, including Nebraska.
The plaintiffs argue that the Clean Truck Partnership ensures that each OEM electrifies its medium and heavy-duty vehicles "at the same pace and on the same timeline to guarantee that no member sustains any competitive disadvantage. This is done largely at the expense of states, such as Nebraska, which have no intention of following California's regulations, and at the expense of consumers who have no desire to purchase ZEVs but will have to pay higher prices for the ICE vehicles they want. The bottom line is that the CTP is anti-competitive."
"Unfortunately, the OEMs' and CARB's aggressive attempt to electrify the heavy-duty transportation sector will limit consumer choice, increase Americans' utility bills to subsidize a massive expansion of the electric grid for EV charging, and threaten the viability and jobs of small business energy marketers around the country," said EMA President Rob Underwood.
The antitrust lawsuit was filed in November in the District Court of Nebraska, Lincoln County and asks the court to nullify the Clean Truck Partnership agreement.
In 2024, electrified heavy-duty vehicles made up one tenth of one
percent of all heavy-duty vehicles in operation in the United States.
