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ROCKFORD, Ill. -- In a continuing battle of written statements, Road Ranger, operator of 39 convenience stores headquartered here, cited additional events that reinforce its countersuit's claims of breach of contract and violations of the Petroleum Marketing Practices Act against refining and marketing company CITGO.
Among Road Ranger's claims, made in a Feb. 19 filing against the oil comapny, was an argument that the CITGO brand was damaged after Venezuela President Hugo Chavez engaged in vitriolic personal attacks against the United States and President Bush.
Last week, CITGO reponded to Road Ranger's claims, calling them "innaccurate" and "out of context," CSNews Online reported. CITGO also denied its parent company, Petroleos de Venezuela S.A. (PDVSA) and connection with Chavez hurt the value of its franchise marketers in the U.S.
Now, Road Ranger's founder and president, Dan Arnold, identified documentation of the impact Chavez' statements had -- and continues to have -- on the CITGO brand in the U.S. A request for response to the claims from CITGO was unreturned by presstime.
"There are no fewer than 13 CITGO boycott Web sites on the Internet, from www.chavezgohome.com to www.citgoboycott.org," said Arnold in a statement. He added that as recent as Feb. 12, 2008, Chavez' impact was felt when the Bolingbrook, Ill., Village Board prohibited CITGO gasoline from being sold at a new gas station it previously approved.
"That action by the board was a direct reaction to Chavez and his ongoing threats against our country," added Arnold. "It is ironic that CITGO is claiming that ties to Chavez have not hurt its brand just days after Bolingbrook took this action."
In addition, Arnold cited a separate incident where the board also banned a 7-Eleven store from opening because of its previous affiliation with CITGO.
"What is telling here is that 7-Eleven ended its association with CITGO in 2006, but the impression remains that the two companies are aligned and that impression led to Bolingbrook's action," said Arnold. "It is an example of the long-term backlash a company like 7-Eleven or Road Ranger faces because of the feelings of American citizens against CITGO."
Further, Arnold cited a revised franchise agreement between Sanford, N.C.-based conveneince store operator The Pantry Inc., and CITGO. The restated agreement, dated Dec. 18, 2006, listed CITGO consumer boycotts among "supply disruptions" that could affect the amount of gasoline The Pantry would be contracted to purchase, according to Arnold.
"This shows Road Ranger was certainly not the only franchisee concerned about consumer boycotts," Arnold said in a statement. "Consumer boycotts are listed right in the midst of disruptions such as acts of God, accidents and government actions."
Carmen Caruso, Road Ranger's corporate attorney, also countered other rebuttals made by CITGO last week, including the refiner's denial of Road Ranger's claim that it announced a force majeuer after the 2005 hurricanes in the U.S. Gulf Coast, which resulted in a shortage of supply to the convenience chain.
Calling the denial "nonsense," Caruso told CSNews Online that "there are absolutely no questions. CITGO announced force majeuer -- it's in their SEC filings and on the Internet."
Indeed, a Reuters report from Oct. 5, 2005 stated Citgo Petroleum Corp. declared force majeuer on jet fuel and diesel at its 425,000 barrel-per-day refinery in Lake Charles, La., after it was downed by Hurricane Rita. However, according to last week's CITGO statement, the company has never called a force majeuer on any branded gasoline customers.
Caruso told CSNews Online that while the company did not instate force majeuer on any specific franchise agreements, it did so on higher level contracts and "there is no question whatsoever that caused fuel supply interruptions at the retailer level."
The convenience chain argued that CITGO's actions threatened the existence of Road Ranger and caused damages currently estimated to be in excess of $30 million, according to Road Ranger.
"We stand by our claims that CITGO has displayed horrendous behavior and should be held accountable," Arnold concluded. "We are seeking the court's help in recovering the damages they brought my business."
"A franchise like Road Ranger, if it's independent, the reason it signs with major brand is a reliable supply, especially when the market is tight," said Caruso, citing the events after Hurricanes Katrina and Rita in 2005. "That's exactly when you want a reliable supply partner at a resonable price. They also want a brand consumers like and trust."
The court has set a jury trial on Sept. 4, 2008, in Madison, Wis., according to Road Ranger.