A group of former customers of a Worcester home heating fuel company have won a major legal victory after a judge ruled their lawsuit against the company can go forward as a class action.
A handful of former customers first filed the suit in 2019, saying Peterson Oil and an affiliate, Cleghorn Oil, misrepresented the contents of the fuel oil sold to them.
The ruling last month by Superior Court Judge William J. Ritter opens the lawsuit to thousands of possible new claims against Peterson Oil from current and former customers, potentially adding strength in numbers to the existing lawsuit.
The lawyers in the suit against Peterson estimate 15,000 former and current customers, mostly in central Massachusetts, may have been affected.
The former customers say in the suit that Peterson promised them ordinary heating oil, often referred to as “#2 oil,” but instead sold them oil mixed with a high percentage of biodiesel, a type of fuel derived from plants and animals as a clean-energy alternative to regular fuel.
The high amount of biodiesel used in the mixture damaged some customers’ heating systems and caused some systems to shut down, says the suit, filed in Worcester Superior Court.
In addition, the fuel they received contained less energy content than ordinary heating oil, forcing them to buy more of it to generate the same amount of heat ordinary home heating oil would provide, the suit says.
At the time the former customers signed up to purchase Peterson’s fuel, “none of [them] were informed that Peterson Oil’s fuel was blending high quantities of biodiesel into their fuel,” the suit says.
The fuel sold to them “was incompatible with their heating equipment and less efficient than industry-standard heating oil,” the suit says.
Peterson was able to purchase biodiesel “much cheaper than ordinary heating oil,” and earned lucrative state tax credits based on how much biodiesel it provided to customers, according to a recent filing on behalf of the former customers.
In an interview, Louis A. Ciavarra, one of the lawyers for Peterson, denied the suit’s claims, saying the company never “hid the fact there’s biodiesel in the fuel.”
“The vast, vast majority of Peterson Oil’s customers are completely happy customers,” he said.
He said the company will appeal the judge’s ruling allowing the suit to move forward as a class action.
In court filings, Peterson’s lawyers say the company in 2012 began adding “some amount of biodiesel” to the oil it delivered, and that “the exact percentage varied depending on market availability and the requests and requirements” of its customers.
Use of biodiesel is supported by many heating oil industry groups, as well as climate change activists and government entities. However, the suit against Peterson focuses on the percentage of biodiesel in the oil delivered to the former customers, saying it ranged as high as 80 percent at a time when 5 percent was the industry standard.
Michael Ferrante, president of Massachusetts Energy Marketers Association, a trade group representing oil fuel dealers, said the suit is being closely followed by many in the industry.
“This matter has cast a shadow over decades of work by the heating oil industry to offer clean, safe and reliable advanced biofuels that meet strict regulatory standards and have been proven to reduce carbon emissions in homes and businesses,” he said in a statement.
On its website, the oil dealers trade group says research shows that no modifications to home heating systems are required to use fuel with up to 20 percent of biodiesel.
A recent court filing on behalf of the former customers says the average amount of biodiesel in Peterson Oil’s fuel was 38 percent between 2015 and 2021, based on filings the company made with state regulators examined by the lawyers suing the company.
“The percentage never dropped below 10 percent and exceeded 20 percent in all but 9 out of 76 months” in those years, the suit says. “In more than half those months, Peterson Oil blended over 50 percent biodiesel; in one-third of the months the blend was 70 percent, going as high as 80 percent.”
One of the former customers in the suit against Peterson Oil, Sheena Marandino of Ashburnham, said her furnace stopped working after the company made a delivery in late 2018. An independent heating contractor called by Marandino told her he could find nothing wrong with the furnace, but the oil looked like “sludge,” the suit says.
When a Peterson technician later arrived, he told Marandino the oil contained “bio fuel — likely a high percent” of it, the suit says.
“Prior to this conversation, Peterson had never disclosed to Marandino that [she was] receiving biodiesel, let alone a high concentration,” the suit says.
Another former customer, Nancy Carrigan of Uxbridge, said she had a similar experience. An independent heating contractor she called after her furnace conked out “took a sample of the oil and [said it] was corrupted and the source of her boiler problems,” the suit says.
The sample was “a deep brown color,” the suit says. The contractor went to his truck “and brought Carrigan a sample of what home heating oil should look like — this sample was lighter and had a pink tint to it,” the suit says.
In allowing the class action, Ritter wrote that the damages to individual customers of Peterson Oil “were at most several thousand dollars,” and that few of them “would find it worthwhile to litigate such relatively small claims,” unless as part of a class action.
The type of claims in the Peterson case “are ideal for class treatment,” Ritter wrote.
In 2021, Peterson agreed to pay $450,000 to resolve allegations it violated contracts to deliver heating fuel to the state that contained no more than 5 percent biodiesel, according to a press release from the office of the attorney general, which negotiated the settlement.
“During the course of its contracts with the state, Peterson at times delivered fuel that contained 40 percent or more biodiesel by volume, more than eight times its limit allowed under the contract,” the press release says.
“Several of the state entities that purchased heating oil from the company under the contracts experienced performance issues with their heating systems because of the high biodiesel content,” the press release says.