Some of America's largest energy companies have defeated an attempt to use a lawsuit citing federal antitrust laws to potentially break up their businesses and generate a potentially huge payout, after a federal appeals court said they lack the constitutional authority to address the lawsuit's core claims accusing the oil companies of leaning on former President Trump to broker a deal with Russia and Saudi Arabia to boost the price of oil in 2020.
On Sept. 16, a three-judge panel of the U.S. Ninth Circuit Court of Appeals ruled in favor of the oil companies and trade associations in the legal action brought ostensibly on behalf of American gas and oil consumers.
"At bottom, Plaintiffs ask the Judicial Branch to second-guess the foreign policy decisions of the Executive Branch. That would violate well-established limits on our judicial review," the judges said.
"Deciding the merits of Plaintiffs’ claims would also require us to evaluate the decisions of two foreign countries - Russia and Saudi Arabia. We cannot adjudicate the political decisions of foreign states."
The decision appears to put an end to a lawsuit filed in 2023 in Oakland federal district court.
The lawsuit was filed by a collection of plaintiffs' lawyers, including attorneys from the Alioto Law Firm, of San Francisco; the Law Offices of Lawrence G. Papale, of St. Helena; Bonsignore Trial Lawyers, of Medford, Massachusetts; Law office of Theresa D. Moore, of San Francisco; The Veen Firm, of San Francisco; and Nedeau Law, of San Francisco.
The lawsuit was filed on behalf of a collection of named plaintiffs, identified as consumers of gasoline and oil, including: Rosemary D’Augusta, of Burlingame; Brenda Davis, of Dallas; Pamela Faust, Cincinnati, Ohio; Carolyn Fjord, Sacramento; Donald C. Freeland, of Cincinnati; Donald Frye, of Colorado Springs, Colorado; Gabriel Garavanian, of Boston; Valarie Jolly, of Dallas; Michael Malaney, Grand Rapids, Michigan; Lenard Marazzo, of Reno, Nevada; Lisa McCarthy, of Naples, Florida; Timothy Nieboer, of Kalamazoo, Michigan; Deborah Pulfer, of Sidney, Ohio; Bill Rubinsohn, of Philadelphia; Sondra Russell, of Waco, Texas; June Stansbury, of Reno; Clyde Duane Stensrud, of Seattle; Gary Talewsky, of Boston; Pamela Ward, of Holmes Beach, Florida; Christine M Whalen, of New Orleans; Mary Katherine Arcell, of New Orleans; Jose Brito, of Reno; Jan-Marie Brown, of Reno; and Jocelyn Gardner, of Colorado Springs.
The lawsuit took aim at a deal that reportedly was brokered by then President Donald Trump through his son-in-law and envoy Jared Kushner to end an oil price war between Russia and OPEC, led by Saudi Arabia, which had flooded the global oil market with supply and driven the price of oil to near historic lows.
The price war corresponded with the onset of the Covid pandemic and the severe economic and societal restrictions imposed in many nations and in much of the U.S., thanks to executive actions by governors, and particularly Democratic governors in some of the largest U.S. states, such as New York, California, Pennsylvania and Illinois.
Those lockdown-style policies greatly exacerbated the societal and economic effects of the pandemic and helped to crater demand for oil and gasoline, which further boosted the available supply and contributed to the steep drop in the price of oil.
The lawsuit asserted that, in response to the price crash, large oil companies, including ExxonMobil, ChevronTexaco, Phillips 66 and others, allegedly colluded to pressure Trump to send Kushner to negotiate an end to the price war between Russia and the Saudis.
According to court documents, that deal resulted in an agreement among the countries and oil companies to cut oil production and limit future oil exploration.
The lawsuit asserts this led to the price of oil surging from less than $20 a barrel to $100, with corresponding increases in the prices of motor fuels, allegedly harming American consumers in the process.
The lawsuit claimed this alleged collusion and political pressure violated U.S. antitrust laws.
In court, judges did not engage with the merits of the legal claims.
Rather, an Oakland federal judge dismissed the lawsuit, saying the plaintiffs were asking the courts to improperly intrude on policy decisions left by the U.S. Constitution to the President and the executive branch.
On appeal, the Ninth Circuit judges said the lower court answered the legal questions correctly.
The judges hinted that the plaintiffs may yet be able to bring claims against the private companies for their alleged roles in the alleged collusion.
But judges said the plaintiffs presented no evidence of "an illegal agreement" or "an antitrust conspiracy," only insufficient "bare and conclusory allegations," accusing the oil companies of agreeing "to take any surplus oil off the market, cut their production, and substantially reduce their investment in exploration and production."
And the judges further agreed the lower court judge did not misstep in refusing to allow them the opportunity to amend their complaint to address their shortcomings and try again.
"Plaintiffs allege that the CEO of Hess Corporation lobbied Mr. Kushner to ask President Trump to resolve ongoing issues with the global oil market. At that point, President Trump allegedly instructed Mr. Kushner to 'call the Saudis and the Russians and work with them to make a deal.' Plaintiffs believe that these efforts succeeded," the judges wrote.
"Even if these negotiations succeeded, however, it would not change our disposition. These allegations continue to present non-justiciable issues over the Executive Branch’s political actions and acts by foreign states."
Plaintiffs were represented by attorneys Joseph M. Alioto Sr. and Tatiana V. Wallace, of the Alioto firm; Robert J. Bonsignore, of Bonsignore & Brewer; Theresa D. Moore; Christopher A. Nedeau, of the Nedeau Law Firm; and Lawrence G. Papale.
The oil companies were represented by attorneys Ginger D. Anders, Helen E. White, Kyle W. Mach and Glenn D. Pomerantz, of Munger Tolles & Olson, of Washington, D.C., San Francisco and Los Angeles; Emily J. Henn, E. Kate Patchen and Kyle W. Chow, of Covington & Burling LLP, of Palo Alto, San Francisco and New York; Joshua D. Lichtman, of Fulbright & Jaworski LLP, Los Angeles; Katherine G. Connolly, of Norton Rose Fulbright LLP, of San Francisco; Dawn Sestito, Stephen McIntyre and Mark R. Oppenheimer, of O’Melveny & Myers, of Los Angeles; Robert A. Sacks, Diane L. McGimsey, Rose Garber and Robert M.W. Smith, of Sullivan & Cromwell, of Los Angeles; Stephen Silva, Daniel E. Laytin, Tabitha J. DePaulo, and Max Samels, of Kirkland & Ellis, of San Francisco and Chicago; Kyle A. Casazza and Christopher E. Ondeck, of Proskauer Rose, of Los Angeles and Washington, D.C.; Kevin B. Frankel, of McGuire Woods, of San Francisco; Ariel D. House, of Baker Botts, of Austin, Texas; Isa H. Moya, Danielle C. Morello, and Joseph A. Ostoyich, of Clifford Chance US LLP, of Washington, D.C.