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California court orders Phillips 66 to pay $820mn for trade secrets theft

Phillips 66 has been ordered to pay $820mn to Propel Fuels for using trade secrets to accelerate its activities in renewable fuels.

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The American company Phillips 66 has been ordered by a California court to pay $820mn (USD) to Propel Fuels, a specialist in low-emission fuels, for the theft of trade secrets that contributed to the development of its renewable fuels business. The judgment, handed down in Alameda County, includes $604.9mn in compensatory damages and $195mn in punitive damages, based on the conclusions of a jury that had already found Phillips 66 liable in October.

Privileged access during an acquisition attempt

The dispute began with Phillips 66’s attempt to acquire Propel Fuels in 2017. During the due diligence process, Phillips 66 gained access to sensitive information, including financial data and commercial strategies, meant to assess the potential acquisition of the Sacramento-based company. After this phase, Phillips 66 withdrew from the deal in 2018 and launched its own renewable fuels business in California from 2019, according to evidence presented at trial.

The judges determined that Phillips 66 abused its bargaining position to access and exploit trade secrets for its own benefit. A court document states that the company’s conduct was described as “reprehensible” from a strictly business perspective. Propel Fuels, which filed suit in 2022, accused Phillips 66 of illegally using confidential information shared during the preliminary discussions.

Consequences for the renewable fuels industry

The ruling covers the full economic losses suffered by Propel Fuels, along with financial penalties intended to deter future similar practices in the renewable fuels sector. A spokesperson for Phillips 66 confirmed receipt of the court decision, noting that the company is currently reviewing its legal options.

The law firm Kobre & Kim, representing Propel Fuels, stated that this decision reflects several years of litigation. Attorney Michael Ng emphasised the importance of data confidentiality for innovative players in the alternative fuels market. Phillips 66, headquartered in Houston, is one of the leading refiners operating in the United States.

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