HEFTY PUNITIVE AWARD BRINGS MIXED FEELINGS
Dec 21, 2000
Birmingham Post Herald
State Rep. Perry Hooper Jr. is of two minds about Tuesday's verdict
that resulted in a record $3.5 billion award for Alabama against Exxon.
Hooper, R-Montgomery, sponsored legislation two years ago that limits
punitive damages against large companies.
"I think the courts are still going to have to take a look at the
amount and consider my legislation," Hooper said.
On the other hand, Hooper is also vice chairman of the House's general
fund budget committee.
"We could certainly use the revenue," he said.
A Montgomery jury sided with the state of Alabama in a case stemming from
allegations that Exxon over the years defrauded the state out of millions
of dollars in natural gas royalties. The jury awarded Alabama $87.7 million
in compensatory damages, but slapped Exxon with $3.42 billion in punitive
damages, the type of verdict that led to passage of Hooper's legislation
to prevent future "jackpot justice" cases, as opponents of the
large jury awards called them.
The cap on punitive damages now limits awards to $500,000 or three times
the compensatory damages, whichever is greater.
In the Exxon case, the cap on punitive damages took effect after Alabama
and Exxon sued each other in court in 1995 and does not apply to the billion-dollar
award, said Ted Hosp, Gov. Don Siegelman's legal adviser.
Attorneys for the state argued that Exxon intentionally cheated Alabama
out of revenues from royalties on natural gas wells that the company operates
in state waters along the coast.
Alabama has a history of large punitive damage awards. The previous record
in a civil damages case in Alabama was $581 million, awarded last year
by a Hale County jury to a family who claimed that a finance company cheated
them out of $1,200 in the purchase of a satellite dish.
Hooper is considered a strong proponent of business and a critic of large
punitive awards against companies. But he said Exxon needed more than
a slap on the wrist.
"Based on what I've heard and read, the verdict seems to be somewhat
appropriate," he said. "No one is going to condone the cheating
of the state. But the amount (of the jury's award) can be hashed out."
Lt. Gov. Steve Windom, a Republican who helped lead the charge for tort
reform, released a carefully worded statement after the verdict was announced.
"The state's suit against Exxon is the result of audits and litigation
that began in the mid-1990s," the statement read. "While the
monetary award in the Exxon case will obviously be subject to future court
appeals, this case sent a clear message — when you mistreat the
people of Alabama, you do so at your own risk."
Pro-business advocates have long worried that the tendency of Alabama
juries to award large punitive damages could hurt the state's ability
to recruit new companies.
"In Alabama we're so quick to hit everybody hard," said
Larry Vinson, executive director of the Alabama Civil Justice Reform Committee.
"It doesn't bode well for us to attract new business."