MOBILE LAW FIRM USED MOCK TRIAL, RECORDS SEARCHES TO BEAT EXXON
Staff Reporter - Mobile Register
The story of the Cunningham, Bounds, Yance, Crowder & Brown firm's battle against Exxon Mobil Corp. in part rests with the moment a firm employee first put hands on the "Broome letter," a document that appeared to show the oil giant knew it was shorting Alabama on royalties.
But it goes back almost 20 years farther than that.
Exxon, which would later merge with Mobil, wanted to develop drilling off Alabama's coast. Ultimately, the state signed more than a dozen lease agreements with the company. By 1993, the state began receiving royalties.
A few years later, a state audit appeared to show discrepancies between what the state was owed and what the company was paying. The dispute grew, then lingered.
Then, in January 1999, shortly after Gov. Don Siegelman was sworn into office, he asked Cunningham Bounds partner John Crowder to look into the lease dispute and report back "some sense of the problems" involved.
The more carefully Crowder looked, he said, the more he realized "something was wrong, and it got bigger and bigger and bigger."
It soon became clear, he said, that for years Exxon routinely, and apparently purposely, shorted the state by many millions of dollars in royalties.
Siegelman chose Cunningham Bounds to prosecute a case against Exxon, with the state agreeing to pay the Mobile firm 14 percent of anything it could collect from the company in a jury trial.
The firm then went to work.
Partners Crowder, Robert Cunningham Jr. and Richard Dorman would serve as lead attorneys. In keeping with the way the firm operated, every other partner's experience and intellect would be available to them upon demand.
Describing Cunningham Bounds' approach to a case, partner Greg Breedlove once said that long before a trial begins, the firm searches for "gems, needles in a haystack" in the form of documents and other material that could give it the winning edge.
The tedious and often mind-numbing search for such materials in the Exxon case began during the legal process of discovery, when lawyers on both sides of a case take testimony and request materials that could help their respective cases.
Crowder said Exxon lawyers often fought the release of documents, but a judge generally granted access.
At other times and in light of the monumental task ahead for its adversaries, Crowder said, Exxon would open warehouse-like storage facilities and invite the firm to have at it.
Crowder said some firms may not have the will, money or manpower to follow through on such a request. His firm is willing "to go to Timbuktu, if necessary," he said, and take along a small army, if that's what it takes.
"Timbuktu" turned out to be New Orleans and Houston, among other cities, where firm personnel spent countless hours going through documents and interviewing prospective witnesses.
Two months before the trial was to begin last December in Montgomery, Crowder said, the firm still was seeking out, then sifting through what Cunningham described as the tail end of "a zillion documents."
It was not until October that Exxon handed over what would become known as the "Broome letter," Cunningham said, and that was only after the court ordered the company to do so. "When they resist," Cunningham said, "that's when you have to fight."
Written by an Exxon lawyer in 1993, the Broome letter spelled out for company executives that Alabama's suggestion it was owed higher royalties "would have a substantial chance of success in litigation."
The Exxon lawyer advised executives that even if the company eventually was ordered to pay up, it would only have to pay what it owed, plus 12 percent interest, plus the cost of litigation. He did not, however, address the possibility of punitive damages.
Another Exxon document referred to the company's advantage regarding "inexperienced regulatory staff and processes" in Alabama.
The fight for documents proved to be well worth it.
The jury hearing the case would, on Dec. 19, award Alabama a record judgment of $3.5 billion in damages and penalties. The bulk of that money -- $3.42 billion -- was meant to punish the company for knowingly deceiving the state.
The internal Exxon documents were convincing to jury foreman Shae Fillingim of Montgomery, who said those warnings made the company look guilty. "There were nine documents on Exxon paper," he said.
Despite the documents, Exxon Mobil has contended that there is no evidence of fraud, only a difference of opinion over how legal language should be read. The company has appealed the case.
Montgomery County Circuit Judge Tracey McCooey's courtroom wasn't the only place Cunningham Bounds has tried the Exxon case.
Before trial, the firm hired an Atlanta company noted for putting together sophisticated mock trials, complete with juries. Crowder represented the state in the mock trials; Cunningham represented Exxon.
Cunningham was unrelenting in his new role, Crowder said, showing no mercy and "trashing me and trashing the state" as the lawyers honed their skills in preparation for the real thing.
On closed-circuit television monitors, they watched the mock jurors deliberate, Crowder said, and learned what impressed them and what did not.
In his arguments during the practice run, Crowder quoted a Biblical passage from Galatians in the New Testament, figuring it would go over big. It didn't. The mock jurors apparently resented the evocation of the Bible in the context of the law.
He quickly dropped the idea. (Later, when Exxon lawyers quoted another Biblical passage during the actual trial, Crowder said, the real jurors appeared to react the same way.)
There were more than legal issues to consider when preparing for the trial.
Crowder said he and his partners spent hours just practicing how to use their electronic display equipment. The firm could afford no fumbling with equipment, no hesitancy, no dead moments in court.
Paralegals trained themselves to be able to put a finger on any document at a moment's notice while in court, Crowder said. And when the time came, they "could tell you any page in any box."
The division of labor called for Crowder to present the opening argument, Cunningham the close. Dorman would handle many of the witnesses called by the state.
Crowder said that over the months leading up to the trial, he spent well more than 100 hours just preparing his opening statement.
Crowder later said Dorman, through his examination of witnesses, performed "the lion's share of proving" Exxon at fault. Dorman quickly denied it.
On the day of the trial, Crowder said, he felt "like a horse snorting to get out of the chute." Dorman had a different reaction, describing himself as "generally just about to throw up."
The leases at question in the trial called for royalties to be paid to Alabama from the moment the oil and gas products left the deposits, Crowder said. Yet, before figuring in the state's portion, Exxon deducted such things as the cost of New Orleans office space, cell phones, beepers, travel, computers, salaries, the diesel fuel used by the boats tending the company's Gulf platforms and many other deductions.
Crowder said he and his partners presented this and other evidence to the jury, expecting Exxon's lawyers to counter. They didn't.
"We begged them to respond, we challenged them to refute the evidence," Crowder said. "'What is your answer to these ... documents?' Their response was that there was no response. They just ignored it, as if it didn't exist."
The Exxon case was "the pinnacle of all we have ever done," Cunningham said. "And the best thing is that we knew the state's position was right."
Sherman Joyce, president of the Washington D.C.-based American Tort Reform Association, said he doesn't quite see it that way. In his opinion, Joyce said, Cunningham Bounds turned a complex issue of leases and royalties into something it wasn't.
"It was a contract dispute, there was nothing cutting edge about it," said Joyce, whose group, funded by companies including Exxon, wants to limit high jury awards.
Joyce also questioned Siegelman's choice of the firm to represent the state, citing the firm's political contributions to the governor.
Crowder said the verdict speaks for itself: "Who should (Siegelman) have hired? Who has the better track record? There is no question that he is a friend our ours; we have supported him and the Democratic Party since he first ran for office."
The Exxon case wasn't about contracts, Crowder said, "but fraud, and that involves stealing. There was so much at risk. They had stolen $87 million and had their hands wrapped around another billion-plus. When you try to steal billions, it takes billions to deter it."