Jose's Diner is an inconspicious little Mexican cafe just off the interstate highway in this small northern California town. For three years Jose Rodriguez has worked hard to build up his fledgling business, and this year it looked as if he had finally turned the corner.
But then came the announcement of another round of crude oil price raises by the Organization of Petroleum Exporting Countries and things started to go sour.
As the cost of gasoline soared and traffic dwindled on the interstate, Rodriguez said his business dropped off nearly 35 percent. He had to lay off several of his employes and started putting in 18- to 20-hour days. His regular trips to the produce market got so expensive that by his calculations he was spending almost two months of his cafe's annual earnings on gasoline.
So Jose Rodriguez decided to do what any good American would do.
When Rodriguez filed his suit last week, he joined a growing number of American states, cities and individual citizens who are going to court to strike back at OPEC's oil-pricing policies. Two antitrust court actions against OPEC are wending their way through federal court in California, and a third is expected to be filed this fall.
Three American cities -- Pueblo, Colo., New Haven, Conn., and Cleveland -- and a major U.S. labor union have joined in the complaints. Attorneys general from 17 states have filed legal briefs supporting the lawsuits.
The avalanche of legal action against OPEC has sparked concern in business circles over the impact the moves will have on our trade relations with OPEC members and caused considerable consternation in the Carter administration over how to deal with political fallout from the suits.
The anti-OPEC forces lost the first round of their campaign last week, when a U.S. District Court judge ruled against an antitrust action brought by the 200,000-member International Association of Machinists charging that OPEC price-fixing violated the Sherman Antitrust Act.
The machinists' suit alleged that OPEC was not a sovereign entity but a price-fixing commercial cartel subject to U.S. laws. They asked for a court injunction forcing the federal government to block any further OPEC price increases, and assessing damages against OPEC property in this country for past price rises.
After four days of testimony by a half-dozen expert witnesses, Judge Andrew Hauk dismissed the suit, claiming he lacked jurisdiction in the matter. Union attorney James Davis says, however, that he plans to appeal the ruling and adds that he has been retained by the city of Los Angeles to file a second anti-OPEC suit in the fall.
Even more significant is a suit filed in northern California by a San Francisco public advocacy law firm, Public Advocate, on behalf of a Mexican-American veterans association and eight individual plaintiffs, including Jose Rodriguez.
The Public Advocate suit alleges that OPEC is subject to federal antitrust laws and asks the court to appoint "special master" to conduct an investigation of the activities of the oil cartel and American oil companies.
The suit claims that oil price increases have caused "irreparable harm" to the 60 million "poor and near poor" in the United States and asks that up to $18 billion in damages be assessed against the estimated $50 billion in OPEC member assets invested in this country.
While the anti-OPEC suits initially were ridiculed in many circles, there is growing concern in the business community that they could ruin already strained business relations between the United States and OPEC nations. Worse is the possibility that a judge may grant an injunction or damages, touching off a retaliation by the oil cartel that could have devastating consequences for the U.S. economy.
"It is a major concern to us," says Stuart Peeler, general counsel for Santa Fe International Corp., a drilling and construction company based in southern California that has done business in 10 of the 13 OPEC nations.
Referring to a "doomsday situation" where a federal court rules against OPEC, Peeler says the oil cartel " would have to do several very traumatic things," ranging from renewing their oil embargo against the United States to withdrawing investments or even taking "retalitory tactics against American assets abroad."
"I'm not sure the American economy could survive," Peeler says. As a result Santa Fe filed a court brief in the machinists' suit defending OPEC and arguing against any court action.
"This is not a good time to antagonize OPEC," adds John Lichtblau, executive director of the Petroleum Industry Research Foundation, a New York economic research organization funded by the oil companies. "OPEC could retaliate with actions that would cost us a multiple of whatever assets of theirs we seize."
Also dangerous, Lichtblau feels, is the possibility that OPEC may react prematurely, simply because "the threat is there." He fears that at the very least the situation may make OPEC more wary of investing money in the United States, with serious consequences for the U.S. balance of payments.
"They've got us over a barrel," said one oil industry executive. "In fact, they've got us over a whole lot of barrels."
OPEC officials themselves have refrained from participating in or commenting on the court suits beyond denying that they fall under the jurisdiction of U.S. laws. In June, however, they devoted a significant part of their regular meeting in Geneva to a discussion of the suits, and one participant claims they were "very disturbed" by the legal actions pending against them.
Khalid Abdullah Tariq Al-Mansour, a San Francisco attorney who attended the June meeting in Geneva, says he has been reporting regularly to OPEC since then on the progress of the machinists' suit. Al-Mansour claims that while OPEC has not yet taken any action in the matter, its officials discussed both the possibility of a limited oil boycott against the United States and the withdrawal of investments in U.S. bank and Treasury securities.
Al-Mansour says the OPEC officials particularly were disturbed by the failure of the U.S. government to intervene and block the suit, which he claims was a "very, very big mistake and a terrible minus in U.S. relations with OPEC."
At one point, the Carter administration did consider intervening on behalf of OPEC. At a high-level meeting between officials of the Justice and State departments in June, the possibility of filing a pro-OPEC brief was discussed. The plan was discarded, however, in the wake of concerns by President Carter's domestic advisers over the political impact of any pro-OPEC move.
The lack of supportive action by the federal government and the concern over possible OPEC retaliation particularly miffs the plaintiffs in the antitrust suits.
"To be so frightened and concerned about a country like Saudi Arabia, with six million people and a 55,000-man army is really embarrassing for a great country like ours," charges attorney James Davis. "I've been to Saudi Arabia. There's nothing there. It's just ridiculous."