This section contains the nature of the case and procedural background.

Seamans (P) entered into a contract to buy gasoline from Standard (D), and the city of Eureka entered into a 40-year lease with P for selling that gasoline to incoming vessels at a new and redeveloped harbor. Due to government controls imposed by actions of OPEC, D could not supply the gasoline because of federal regulations limiting the allocation of petroleum products to existing customers. P obtained an exception from the government agency that imposed the regulations against D. D still refused to perform with the excuse that there was no binding contract. P sued for breach of contract, fraud, breach of the implied covenant of good faith and fair dealing, and interference with P's contractual relationship with the city. The jury returned a verdict for P of almost $4 million in compensatory and about $22 million in punitive. The trial judge ordered remittitur to $7 million on the punitive and both parties appealed.

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