Phillips 66 Hit With $800 Million Penalty in Biofuel Trade Secrets Case

By Nicole Jao

NEW YORK, July 31 (Reuters) – U.S. refiner Phillips 66 PSX.N was ordered to pay biofuel maker Propel Fuels $800 million in damages for stealing trade secrets to build up its renewable-fuel capabilities, according to a California state court document.

A state court in Alameda, California, on Wednesday ordered Phillips 66 to pay $195 million in punitive damages, in addition to $604.9 million in compensation the refiner was ordered to pay following a separate verdict.

“In summary, the court finds that Phillips 66’s misconduct was ‘reprehensible’ from a business perspective. The evidence at trial reflects that Phillips 66 took advantage of Propel Fuels by abusing its bargaining power during due diligence,” the court order said.

In October, a jury in the California court decided that Houston- based Phillips 66 stole trade secrets under the guise of gathering information for a potential acquisition and then used that information to create a competing business.

“We received the order and continue to evaluate all our legal options,” a Phillips 66 spokesperson said on Thursday.

Sacramento-based Propel Fuels specializes in low-emissions gasoline and diesel fuel. According to the legal document, Phillips 66 approached Propel Fuels in 2017 about acquiring the company to enhance its renewable fuel business in California. Phillips 66 abruptly withdrew from the deal in 2018 and began selling its own renewable fuel in 2019.

Propel Fuels sued the refiner in 2022, accusing Phillips of unlawfully using trade secrets, including financial data and business strategies, that the biofuel company had shared during their talks.

“This is the result of years of perseverance by our client,” said Michael Ng, lawyer at Kobre & Kim and co-counsel for Propel Fuels. “It was really important to them that they stand up, not just for themselves, but for innovators generally.”

(Reporting by Nicole Jao in New York; Editing by David Gregorio)