State Supreme Court lets Exxon Off Hook Once Again

posted on:
November 8, 2007



The Alabama Supreme Court, by tossing nearly 99 percent of a $3.6 billion verdict against ExxonMobil, the world's largest publicly traded oil company, has refused to play Santa to state taxpayers. 

The court's eight Republican justices rejected the state's claim that ExxonMobil committed fraud against Alabama after two separate juries found it cheated state taxpayers out of millions in royalty payments. The lone member of the court to dissent was Democratic Chief Justice Sue Bell Cobb, who wrote: "Not only does the majority approve of the appropriation of our state's resources by deceit, it undermines any individual or institution that would pursue honest business practices."

A Montgomery jury in 2003 returned a verdict of $102.8 million in actual damages and fined the company $11.8 billion in punitive damages, an amount later reduced by the trial judge to $3.5 billion. In its decision last week the court allowed only $51.9 million in actual damages to stand. The justices had also nullified an earlier jury verdict of $3.5 billion in 1999, sending it back for a new trial on a technicality.

ExxonMobil's third quarter profit for 2007 totaled $9.41 billion. The company's Alabama lawyer, David Boyd, said that the verdict "affirms what we have said all along…that this was never a fraud case."

Jere Beasley, one of the state's attorneys, called the verdict "a sad day for Alabama," and said the state will probably ask the court to reconsider its decision. Most observers believe such a reconsideration by the court to be highly unlikely.

My quick calculation shows that had the trial court's verdict, which totaled about a third of the state's annual budgets, been upheld the per capita gain for the state would have been about $783. With the reduction by the court, that amount was reduced to $11.

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