A group of gas stations said in a 2008 lawsuit that Safeway's gas discount program was clearly offering fuel at below-cost, which was driving away loyal customers and costing hundreds of thousands of dollars in lost business.
That lawsuit is still ongoing, despite Safeway ending the 3-cent Club Card discount last year, and is scheduled to go to trial in Alameda County Superior Court Tuesday.
"Since at least 2007 and earlier the Safeway stations have been the low price leader in the survey area by wide margins over other stations," the original 2008 lawsuit against Safeway says. "Plaintiff has reason to believe that the Safeway stations are selling one or more of its grades of fuel at prices below its cost when compared to the fuel retail price with available discounts."
The lawsuit was filed by Dixon Gas Club, and 14 other stations, according to court documents. The closest Safeway gas station to Gilroy is in Morgan Hill at 100 Tennant Ave.
That station says longtime customers have said the reason they no longer buy gas from the smaller stations "is because the Safeway station's prices were and continue to be lower than plaintiff's prices with the Club Card discount."
The lawsuit alleges Safeway participated in unlawful business practices and sold its gas as a "loss leader" in order to promote the sales of other items, which is illegal.
The Dixon station says it has lost at least $250,000 because of customers migrating to Safeway. The lawsuit asks for damages to be paid by Safeway.
Do you go to Morgan Hill to get cheap Safeway gas? Do you think this is a legitimate law suit? Tell us in the comments!