Tuesday, September 22, 2009

Costco sued over fuel temperatures: Lawyers get paid, customers don't

I just got a notice from Costco regarding this class action lawsuit. Ridiculous! For those who don't want to read the whole thing, here's the main idea:

You buy gas by the gallon. Try filling up a gallon jug with hot water, and putting it in the fridge for a while. When you take it out, open it up, and you'll find there's room to put just a bit more water in. Why is this? Because cold water takes up less space than hot water. So if you go to the gas station and fill your gallon gasoline jug in the middle of winter, and then take the jug home and heat it up, you'll end up having more than a gallon inside! Likewise, if you go there in the middle of the summer and then take it home and cool it down, you'll have less than a gallon in there.

So these lawyers decided they should sue Costco, on behalf of anyone who bought fuel there on a warm day, because if you buy a gallon of gas at 80 degrees, you won't get as much gas as if you'd bought a gallon of gas at 60 degrees. Obviously, this is a frivolous lawsuit, but Costco has decided that they would spend more money fighting it than settling.

Here are the terms of the settlement:
  • Costco will pay the lawyers up to ten million dollars for suing them.
  • Costco will pay to tell all their gas customers that the lawyers are suing Costco on the behalf of their customers.
  • Costco will pay to update their pumps with fancy detectors so that if you buy a gallon on a hot day, then you'll actually buy a little more than a gallon.
  • (Costco customers don't get any money out of the settlement)
People shop at Costco because Costco has lower prices than just about anywhere else. What do you think Costco will do to make up for the cost of this lawsuit? Cut corporate bonuses? I don't think so. They'll charge more at the pump. So we customers are hiring lawyers to sue Costco to raise prices so they can pay the lawyers. Does this sound right to you?

Fortunately, there is something we can do about it. Look at the very bottom of section 5:
If more than 2,500 people opt out of this settlement, Costco has the right to cancel the settlement.
If you're not in the mood to reward these self-serving lawyers for their troubles, take a moment to exclude yourself:
To exclude yourself from the Settlement Class, you must send a letter by mail saying that you wish to do so. The request must state: “I request that I be excluded from the Settlement in In re Motor Fuel Temperature Sales Practices Litigation, MDL Docket No. 1840.” You must also include: (1) your full name and current address; (2) your signature and (3) proof of gasoline purchase from Costco after January 1, 2001. You must postmark your exclusion request to the address below no later than February 23, 2010:

Settlement Administrator
P.O. Box 12985
Birmingham, AL 35202-2985
I imagine that a printed bank statement with your Costco fuel purchase circled will suffice for a proof of purchase. Godspeed.
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