BP has agreed to pay $7 million to settle a class-action lawsuit over bad gas that came from the Whiting Refinery last summer.
In August, the company recalled about 4.7 million gallons of contaminated gasoline that had been sold at more than 575 gas stations throughout the Midwest. Thousands of drivers who filled up with the tainted gas faced big repair bills for a variety of automotive maladies, including damaged engines and gunked-up fuel systems.
BP already paid out $16 million to resolve more than 16,800 consumer claims, and settled the case to avoid drawn-out litigation, the company said in a statement.
"Although we believe the vast majority of the claims have been resolved, BP this month filed in court a settlement agreement with attorneys representing consumers who are plaintiffs in a class-action suit related to the recall," the statement said. "Under the terms of the settlement agreement, BP has agreed to establish a claims process to reimburse eligible consumers for up to an additional $5 million in claims."
The company will pay a total of $7 million in damages, costs and fees, the Indianapolis-based law firm Cohen & Malad LLP announced Monday.
Cohen & Malad, fellow Indianapolis-based firm Price Waicukauski and Riley LLC, and Merrillville-based Theodoros & Rooth P.C filed the class-action lawsuit on behalf of four affected drivers in U.S. District Court in Hammond.
“Finally, through the court system, has BP agreed to fully and fairly compensate consumers who bought their adulterated product," said Irwin Levin, of Cohen & Malad. "It’s been a long road but we’re pleased with the result."
BP blended the bad gas in Whiting, where higher-than-normal levels of polymeric residue, or large hydrocarbon molecules, passed through the refinery. The energy company said the gasoline, which was distributed in Indiana, Illinois, Ohio and Wisconsin, contained a tar-like gunk that caused a number of car troubles, including stalling, rough driving, shaking and difficulty starting.
Motorists had to spends hundreds of dollars to clean out their gas tanks and fuel lines, and replace fouled spark plugs. The company recalled the gas, and set up a claims center.
"BP is committed to providing consumers with quality fuel, and we guarantee every gallon of gasoline we sell," the company said in a statement. "That's why we took quick action in August of 2012 to recall several hundred thousand barrels of gasoline in Indiana, Wisconsin and Illinois and established a dedicated claims facility to receive and process consumer claims for reimbursement of fuel and repair costs related to the recall."
Affected BP customers still can seek reimbursement through the class-action lawsuit, so long as it's not for the same expenses that the company already compensated them for, Cohen & Malad attorney Ned Mulligan said.
The settlement covers broad categories, such as vehicle repairs, lost wages and bus fares or any other alternative transportation costs people had while their cars were in the shop.
Crown Point-based attorney Walter Alvarez filed a separate lawsuit last year after his newer-model car needed more than $550 in repairs because of the tainted gas. The company fully reimbursed him for the damage.
"When the incident first occurred, I along with everyone else got the runaround from BP," Alvarez said. "Once I filed the lawsuit, I received their immediate attention and — one day prior to the trial date — a representative of BP called me and the matter was amicably resolved."
As part of the latest class-action settlement, BP will have a third-party administrator place newspaper ads and web postings to notify individuals who might be eligible to participate.