Robert Barman sued two oil companies in 1997, alleging he'd been cut out of a deal to buy four gas stations and shut out of the Portland market as a wholesale gasoline distributor. 

After a nearly four-year court fight, a federal magistrate judge earlier this month approved a jury's verdict that the Lake Oswego businessman had been harmed to the tune of $7.1 million by Union Oil Co. of California. 

But in a region where shrinking competition has helped keep pump prices among the nation's highest, some lawmakers and industry insiders say he wasn't the only one hurt when his deal with Unocal died on the vine. 

"There is no doubt whatsoever that this has cost consumers millions of dollars in Portland and the three-county area," said Tim Hamilton, who heads a Washington state gasoline dealers association. 

What also makes Barman's lawsuit more than an everyday breach-of-contract case is that it highlights oil industry practices under investigation by the Federal Trade Commission for the past two years. 

"The Barman case is exactly the type of case that we gave to the FTC in 1999," said U.S. Sen. Ron Wyden, D-Ore., who learned of Barman's lawsuit from gasoline dealers while gathering the information that triggered the investigation. 

"We gave the Federal Trade Commission a series of cases that, like the Barman case, demonstrate that anti-competitive practices in Oregon gasoline markets are rampant and are decreasing competition and increasing gas prices to Oregonians at the pump," Wyden said. 

The FTC investigation is continuing, he said. 

Attorneys for Unocal and Tosco Corp., the other defendant in the Barman lawsuit, refused to discuss the case. 

"We were disappointed with the verdict, and we will be filing a motion for a new trial shortly," said Michael D. Williams, who represented Unocal. 

Barman also refused to comment. 

Court records show he has operated Oregon gas stations for 15 years and in 1996 struck a deal with Unocal to purchase his leased stations in Portland, Beaverton, Hillsboro and Canby. 

The $1.3 million deal also would have made him a wholesale distributor, or jobber, allowing him to buy Unocal gas at a discount to sell at his stations and to other dealers in the Portland area. 

By purchasing at the discounted "rack price," Barman would not only have made more money for his business but, according to his lawsuit, infused new competition into the market and eased retail prices. 

The spread varies between rack price and the price charged dealers, but according to testimony by Tony Armstrong, a former Unocal official who went to work for Tosco, it is "5, 6, 7 cents a gallon in many cases." 

By passing along discounts to other dealers, Barman also could have driven down pump prices, perhaps by 3 or 4 cents a gallon, Hamilton estimated. 

Before the deal closed, however, Unocal sold its Union 76 brand to Tosco, a Connecticut refiner and retailer that owned the BP brand in the Northwest and has since acquired Circle K convenience stores. 

Both Unocal and Tosco denied having a binding agreement with Barman and refused to complete the deal. 

Barman sued, sparking nearly four years of litigation that included allegations of breach of contract, fraud, conspiracy and unfair competition. 

Among other things, he alleged that Tosco had jacked up pump prices. 

"Tosco artificially inflated the cost of gasoline in the community by refusing to provide gasoline to Barman at the jobber price," the lawsuit alleged. 

Tosco officials denied the allegations and said their refusal to grant Barman a jobbership was nothing more than a sound business decision. 

Robert Lavinia, Tosco's marketing president, testified in a deposition that making Barman a jobber would have introduced a new "class of trade" and caused "confusion" in the Portland market. 

"And we believe that is suboptimal," he said. 


Zone pricing alleged 
Wyden and Hamilton contend that Barman and other potential jobbers are victims of a practice known as redlining -- as in drawing an imaginary line around a geographic area to keep out new competition. 

"One of the central issues in this case was redlining, making an area off-limits to independent wholesalers, the jobbers who push competitive juices into Oregon," Wyden said. 

The FTC also has been investigating allegations of discriminatory zone pricing, in which stations in the same area -- sometimes within blocks of one another -- are charged different prices for the same grades and brands of gas. 

Wyden has charged that oil companies have used zone pricing to drive out independent dealers and replace them with company-operated stations in an effort to keep prices high artificially. 

"It is a way to suck the competition out of a modest-sized Oregon community and have a real sweetheart arrangement where you can set the prices where you want them to be," he said. 

In the past decade, more than 600 retail stations have vanished from Oregon amid a flurry of oil company mergers. Two more linkups are in the works, with Chevron in the process of buying Texaco, and Phillips Petroleum planning to acquire Tosco. 

In a letter to Wyden in September, the FTC said its investigation of West Coast gasoline prices had found evidence of redlining and zone pricing that raised serious concerns but were not necessarily antitrust violations. 

The Oregonian raised new concerns about anti-competitive behavior in January when it reported that FTC experts last year concluded that BP Amoco systematically jacked up West Coast oil prices by exporting Alaska crude to Asia for less than it could have gotten from U.S. refiners. 

One FTC expert estimated that BP's alleged artificial "shorting" of West Coast oil supplies resulted in higher pump prices of 1 to 3 cents a gallon. 

Hamilton, the Washington dealers' representative, said the alleged manipulation of crude oil prices amounts to "peanuts" compared with what happens with gasoline. 

"With redlining and zone pricing, it is just wide open," he said. 


Legislators join fight 
Two state lawmakers also have jumped into the gas-pricing fray. 

Sens. Ryan Deckert, D-Beaverton, and Randy Miller, R-West Linn, have co-sponsored bills to limit the percentage of company-owned stations in Oregon and to prohibit refiners from charging franchisees more than company stations for the same products. 

"We are questioning, in a pretty serious way, the zone pricing," Miller said. "I think the oil companies need to come forward with a real clear explanation of how they define a zone and how is that zone supported." 

Miller said dealers who have been harmed by the practice are afraid to come forward. 

"They are pretty intimidated," he said. "They are at an extraordinary disadvantage when it comes to dealing with the oil companies. They know that their livelihood may depend on their good behavior." 

By the time Barman's case reached a jury in December, much of his lawsuit had been resolved or dismissed through pretrial rulings and stipulated agreements between the parties. 

However, U.S. Magistrate Judge Donald C. Ashmanskas ruled that Barman had a valid contract and was entitled to damages. The only question was how much. 

Most jurors viewed the case as "big oil companies trying to crush the little guy," said forewoman Laura Perrett, who did not see it that way. She said the others wanted to give Barman much more than the $1 million she considered appropriate. 

"I was the lone juror who did not want to give a big award to Barman," she said. 

Perrett did not believe Barman had a valid deal with Unocal. Nor did she believe Tosco shut him out of the jobber market for anti-competitive reasons. 

"Tosco said, 'No, this doesn't fit our business strategy, so we are not going to complete this agreement,' " she said. "It seemed clear and forthright to me." 

Near the end of the trial, Ashmanskas ruled that Tosco was not liable for damages, so the jury's $7.1 million judgment is against Unocal only. The judge approved the verdict March 2. 

Juror Wilbert Schiewe said he and other jurors wanted to award Barman about $10 million, much more than Schiewe expected when the three-week trial began late last year in U.S. District Court in Portland. 

"When the trial started, I think we all thought Barman was a greedy person who wanted something for nothing," Schiewe said. 

"But as the story unfolded, it told a whole different story. It pretty basically told the story of how the oil companies are manipulating the market," he added. "I think they are definitely putting it to us."