Posted on 11/15/2003 2:50:21 AM PST by Cincinatus' Wife
MONTGOMERY, Ala. - Alabama's financially strapped government won an $11.9-billion verdict against Exxon Mobil Corp. on Friday in a suit that accused the oil giant of cheating the state out of natural gas royalties.
The circuit court verdict included $11.8-billion in punitive damages, a record for Alabama and more than the state's attorneys had sought. The jury had to find Exxon Mobil committed fraud to return the multibillion-dollar verdict.
"We felt Exxon thought they were going to get away with this," said jury foreman Joe King, a teacher. "We wanted to send a message that they were not, and that this corporation can't get away with doing wrong."
Exxon Mobil spokesman Bob Davis said the verdict was excessive and the company would appeal. "We did not engage in fraud, pure and simple," he said.
If the damages are upheld on appeal, the money would go into state coffers, which have been struggling in recent years. Gov. Bob Riley said it will be years before the appeals are completed, and any money the state realizes won't effect on the state's current layoffs and 18 percent budget cuts for many agencies.
Company attorneys said they are are optimistic their appeal will be successful because the punitive damages are more than 180 times greater than the compensatory damages.
"The punitive award in this case defies common sense," company attorney Sam Franklin said.
The governor predicted the verdict won't affect the state's efforts to recruit more big-name companies such as Mercedes-Benz, Honda and Hyundai. "This is unique to one specific case with one specific company. I don't think it should have any spillover," Riley said.
The state sued Exxon Mobil in 1999, contending the company violated its leases for natural gas wells in state-owned waters along the Alabama coast. The state accused the company of cheating Alabama out of millions of dollars by deducting too much in expenses for operating the wells, including $6,000 for a "family picnic" at a Mississippi casino.
Exxon Mobil's attorneys argued that the company owed the state nothing because it had followed its leases with the state and reported all production.
The trial was conducted while the state has been canceling textbook purchases, cutting social services and sending layoff notices to about 800 workers. Some of the court workers who dealt with the jury will lose their jobs Nov. 26, but the judge prohibited everyone involved in the case from mentioning the state's financial troubles or Exxon Mobil's financial condition.
Despite no mention of it, juror L.A. Wallace said Exxon's size and the state's problems were a factor in the decision.
"A billion dollars to them is chump change," said Wallace, who works at a plastics factory.
While the Exxon Mobil verdict set a record for Alabama, it pales next to the $145-billion verdict against tobacco companies in Florida. But it is larger than the $5-billion verdict against Exxon for the Valdez oil spill in Alaska in 1989, a case that is still on appeal.
The Alabama case was first tried in 2000, when a Montgomery jury awarded the state $3.5-billion - setting the record until Friday. The decision was overturned by the Alabama Supreme Court, which said the jury was wrongly allowed to see one of the oil company's internal legal memos. That prompted the new trial, which began Oct. 20.
After four weeks of testimony, the jury deliberated for two days before returning the verdict of $11.8-billion in punitive damages and $63.6-million in compensatory damages. With interest added by the court, the compensatory damages will grow to $102-million, attorneys said.
"The jury brought the largest corporation in the world to its knees for the second time. They felt we didn't ask for enough," Robert Cunningham, an attorney for the state, said after the verdict.
In closing arguments Wednesday, Cunningham said the state government had been shorted $63.6-million in royalties and that the loss could have climbed to as much as $930-million over the 30-year life of the natural gas field in Mobile Bay.
He asked the jury to return a verdict of up to 10 times the potential loss, or $9.3-billion.
***New reforms limit venue shopping. Venue abuse -- or "judge and jury shopping," as it is commonly called -- has been a consistent problem in Alabama in the recent past. In an effort to get their lawsuits into counties where juries are likely to give large awards, plaintiff trial lawyers have gone to great lengths to file cases in a handful of rural Alabama counties. Tactics include plaintiffs moving to a favorable county in order to file a lawsuit there; filing a lawsuit against a defendant in a county where it does business, even though the plaintiff does not live in that county and the injury did not occur in that county; and, filing a lawsuit on behalf of a number of plaintiffs, with only one or two from the favorable county and the vast majority of plaintiffs from other Alabama counties. *** Source
Of what?? Not economics, that's for sure.
"A billion dollars to them is chump change," said Wallace, who works at a plastics factory.
In other words, we don't think Exxon did anything wrong, or if they did, it wasn't a big deal. But hey, they have billions, and our state is hurting, so its time for them to pony up.
This is an outright robbery IMO by the state of Alabama. What's the difference in mindset from a "poor" kid going into the rich neighbors house and stealing. After all, he doens't have much, times are tough, and well, the big fat rich neighbor, its "chump change to him".
Ala is a favorite for tort forum shopping.
Say you want to sue a big pharma co--you find a local pharmacy that has sold the product and join that local business in the suit. Then you can file wherever you want. This has had the further good result of driving local pharacies out of the business of prescribing, or driving up costs. The local pharmacists find themselves paying defense costs (all defendants lose all the time).
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