State Supreme Court Ruling May Put Freeze on Legislative Projects

posted on:
November 9, 2007

author:
Leesha Faulkner

category:
Fraud

The state Legislature may not have as much money to open up programs they wanted after the Alabama Court threw out nearly all of a record verdict against Exxon Mobile.

The court voted 8- 1 Thursday to toss out all punitive damages or an amount designed to punish outrageous conduct, which constituted most of the $3.6 billion verdict.

The court awarded the state $5 1.9 million in compensatory damages or money to reimburse actual costs.

The state conservation department had sued Exxon Mobil in 1999, arguing that the company had underpaid royalties to Alabama from natural gas wells the company had drilled in state-owned waters off Alabama.

The decision came as a surprise and disappointment to many. State Rep. Yusuf Salaam, D-Selma, said generally the decision might create some problems because of the progressive plans the Legislature had intended to do next session, but those things were dependent on access to the billions of dollars.

State Sen. Hank Sanders, D-Selma, couldn’t be reached Thursday for comment.

The state had contended the judgment should stand. The state argued that Exxon Mobile deliberately held back royalty payments to the state from offshore wells because company executive knew Alabama officials didn’t have much experience in dealing w gas.

The two entities went to court in 2003 and a Montgomery jury decided in favor of the state. It awarded a verdict of $102.8 million in compensatory damages and $11.8 billion in punitive damages, but a Montgomery judge cut the punitive damage award to $3.5 million. That move made the entire judgment $3.6 billion.

Attorneys for Exxon Mobile had argued that the state had disagreed with how to read the company’s contract, including that it could deduct before it paid royalties.

"It affirms what we’ve said all along that this was never a fraud case," Exxon Mobi1 attorney Dave Boyd said.

Jere Beasley, one of the state’s attorneys, said the state will likely ask the court to reconsider.

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