Wednesday, January 25, 2006

Eastwood Texaco sues OPEC

Eastwood Texaco, at the intersection of Montclair Road and Oporto Madrid Boulevard in Birmingham, Ala., south of I-20 near Irondale, is no ordinary gas station. Its owners took OPEC to court.

Carl and Debbie Prewitt sued the Organization of Petroleum Exporting Countries in April 2000, charging in federal court that OPEC indulges in illegal price-fixing. The name of the case: Prewitt Enterprises Inc. et al. v. OPEC.

Now, everyone agrees the international oil cartel does engage in price-fixing; OPEC happily admits that on its own website. Moreover, everyone agrees that OPEC price-fixing, if done in the United States, would be illegal under federal antitrust law. After all, Standard Oil, the behemoth founded by John D. Rockefeller, was dismantled by the federal government for just such infractions.

But does the United States have any jurisdiction over OPEC? Though the cartel’s actions have an incalculable impact on the American economy, OPEC is based not in the United States but in Austria -- so any price-fixing, like any other OPEC action, presumably takes place far from U.S. soil.

The Prewitts’ lawyer argued, with plenty of recent examples, that U.S. law enforcement extends all over the world, wherever criminals working against U.S. interests are to be found. In the 1990s, he pointed out, the U.S. Justice Department went after various international cartels, including a vitamin cartel, on behalf of wronged U.S. companies. Companies paid hundreds of millions of dollars in fines, and executives went to prison. The U.S. Justice Department ought to go after OPEC the same way, the Prewitts argued.

In rebuttal, OPEC argued that being served with court papers at its Austrian offices was illegal according to Austrian law. That’s true. Believe it or not, Austrian law specifically says no one can serve OPEC with papers without OPEC’s consent. Clearly, OPEC has good lobbyists in Vienna. But should Austrian law trump U.S. law in a U.S. courtroom?

The Prewitts enjoyed an early victory in April 2001, when U.S. District Judge Charles R. Weiner ordered OPEC to stop all price-fixing activities. That injunction quickly was thrown out, however, and the case began anew before another judge, who ultimately agreed with OPEC, ruling there was no possible way to serve OPEC with court papers. The Prewitts’ suit was thrown out in March 2003.

The Prewitts appealed twice but got nowhere, and the case ended in October 2004, when the U.S. Supreme Court dismissed it without comment.

There was very little news coverage of the case, but Timothy Noah’s “Chatterbox” column in Slate provided good, snarky commentary as the case dragged on, with links. Noah was on the Prewitts' side, but let's face it: What fun would OPEC's side be?


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