The Associated Press

MONTGOMERY, Ala. (AP) -- A judge begins hearing arguments Thursday on whether to throw out or reduce the largest verdict returned by an American jury during 2003 — the $11.9 billion judgment the state government won against Exxon Mobil.

Montgomery County Circuit Judge Tracy McCooey has set aside two days to hear arguments.

McCooey presided over a trial in November that ended when a jury found Exxon Mobil had cheated the state out of royalties due from natural gas wells drilled in state-owned waters along the Alabama coast. The jury returned a verdict of $63.6 million in compensatory damages and $11.8 billion in punitive damages.

The National Law Journal ranked it No. 1 in its annual list of the top 100 verdicts in America. The Alabama verdict was so large that it exceeded the sum of the other 99 verdicts, $7.6 billion.

Exxon Mobil maintains several errors occurred in the trial and that verdict dramatically exceeds what the law allows.

"We have answers to each and every one of Exxon's contentions," state attorney David Wirtes said.

Exxon Mobil maintains the state demonstrated racial bias by using every one of its jury strikes to remove whites from the jury pool. "Each side got 27 strikes and they went 27 for 27," company attorney Chris King said.

The state's attorneys argue that race was not a factor and that the oil company has waited too long to raise arguments about the selection of the jury. They also point out that the oil company's strikes went largely against blacks, with 17 blacks and 10 whites struck from the jury pool.

The jury that decided the case had six whites and six blacks, which is equal to the racial makeup of Montgomery.

The trial occurred in the capital city as the state government was struggling with financial problems and cutting the budgets of most agencies by 18 percent. Exxon Mobil maintains the grim financial environment led to the jury returning a verdict that was $2.5 billion higher than the state's attorneys requested in their closing arguments.

"As citizens of Alabama who would benefit from any award to the state, the jurors had an unavoidable bias and prejudice in favor of returning the largest possible punitive damages award," Exxon Mobil's attorneys argued in court papers.

The state's attorneys say that if Exxon Mobil's argument is upheld, then Alabama citizens could never hear a case where the state government stands to benefit financially.

Exxon Mobil also argues that the case stems from a disagreement over how to interpret the company's lease with the state and that no punitive damages are allowed in such cases.

"Our strongest argument is that this is a good old-fashioned contract dispute," King said.

The state's attorneys argue that two juries have heard the case and both decided that the state was a victim of fraud and that it deserved large punitive damages.

In the first trial in 2000, a Montgomery jury awarded the state $3.5 billion. The Alabama Supreme Court overturned the verdict in 2002 because the jury was incorrectly allowed to see an internal legal document from the oil company.

The 2000 verdict was the third largest in the United States that year.