BP/Arco franchisees sue over payment system flaws

Dozens of U.S. fuelling station franchisees are suing a unit of BP Plc and others for $200m, alleging breach of contract related to problems with a payment system they were required to buy.

The plaintiffs say a sales and inventory software program from Retalix Ltd, which they had to buy from BP West Coast Products LLC at more than $30,000 per location, regularly overcharged customers and crashed periodically.

The case will add yet another U.S. legal battle to the many the British company already faces as a result of last year's drilling disaster in the Gulf of Mexico.

"In its business dealings with BP franchisees, BP operates as the proverbial '800 pound gorilla,' squashing its own franchisees in the naked pursuit of its own profits," said the complaint, filed in Los Angeles Superior Court on Wednesday by more than 60 operators of BP and Arco filling stations.

There are about 1,300 Arco stations in the western US, and BP added the brand to its portfolio in 2000 when it bought California-based Atlantic Richfield for $27bn.

Another co-defendant in the case is privately held PayPoint Electronic Payment Systems, which the franchisees, who are all located on the U.S. West Coast, were also required to use.

The proposed $200m in damages includes compensation for lost sales, government fines for issuing incorrect receipts and the cost of hiring staff to compensate for the problems with Retalix software, according to the class-action lawsuit.

Retalix Chief Financial Officer Hugo Goldman said his company had not yet been served with the complaint.

"We believe this class action is without any merits and we will defend this vigorously," Goldman said in an email to Reuters, adding that Retalix had "successful" and "long-term" implementations with BP in Australia, New Zealand, Russia, Britain and in the United States east of the Rocky Mountains.

BP did not respond immediately to a request for comment.

The case is No. BC460880 in Los Angeles Superior Court.

(Published by Reuters - May 4, 2011)