XOM ,,, Exxon Mobil Asks Court to Toss Judgment
Thursday May 12, 7:31 pm ET
By Phillip Rawls, Associated Press Writer
Exxon Mobil Asks Alabama Court to Overturn Record Judgment, Saying Fraud Claims Never Proven
MONTGOMERY, Ala. (AP) -- Exxon Mobil Corp. asked the Alabama Supreme Court on Thursday to throw out the largest verdict in state history, saying it was based on fraud claims that were never proven.
The company's appeal is an attempt to strike down a $3.5 billion punitive damage judgment set by a Montgomery judge after a jury ruled Exxon Mobil cheated the state out of royalties from natural gas wells drilled in state-owned waters along the Alabama coast.
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"The $3.5 billion punitive award is based on the state's unproven allegations of fraud," Exxon Mobil attorney Charles Matthews said.
In order to award punitive damages, the jury had to find that fraud occurred. Exxon Mobil's appeal argues that it had a contract dispute with the state over how to determine the amount of royalties and that punitive damages are not allowed "because there was no fraud."
Robert Cunningham, an attorney representing the state, said Exxon Mobil made the same argument to jurors, and they didn't buy it.
"It's the same old song and dance -- everybody is wrong but us," Cunningham said.
Cunningham and the state's other attorneys will file a reply to Exxon Mobil's appeal next month. Exxon Mobil is asking the court to hold oral arguments.
In November 2003, a Montgomery Circuit Court jury awarded the state $102.8 million in compensatory damages and $11.8 billion in punitive damages. The verdict was the largest returned by any American jury in 2003, but the trial judge, Tracy McCooey, cut the punitive damage award to $3.5 billion. She left the compensatory damages untouched. Even at $3.6 billion, the judgment was larger than any other issued in 2003.
The case was tried when state government was facing financial difficulties due to an economic slowdown.
"Alabama jurors, inherently self-interested, may not award Alabama (and themselves) huge punitive damage verdicts without violating both Alabama law and due process," the company's appeal said.
Exxon Mobil's appeal said that even though the judge cut the punitive damage verdict, it remains unconstitutionally excessive.
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