IF EXXON IS GUILTY, THE STERN VERDICT IS JUSTIFIED
Dec 25, 2000
from the Montgomery Advertiser
How's this for a hefty fine: $800 for every man, woman and child in Alabama? That's about what a Montgomery Count jury ordered Exxon Mobile Corp. to pay Alabama last week. It's unclear how much, if any, the state will get. Exxon scratched a line in the dirt and vowed to prove it didn't owe the $3.5 billion. Whatever happens, though, should we renew the claims that Alabama is "tort hell?" I say no. Exxon signed leases in 1981 and 1984 to draw natural gas from reserves in state-owned waters in the Gulf. Exxon would pay a percentage of gas produced and sold. The disagreement centers, in part, on whether Exxon can deduct certain costs from what it paid the state.
I heard both sides of the opening arguments that began the two-week trial. Exxon can afford good attorneys, and so can the state, especially with so much money on the table. The state's attorneys told the jury of eight women and four men how the giant oil company stole from Alabama, in part, because its executives thought state officials were too backward to catch on. Exxon's attorney told the jury the state was flat wrong about the leases and tht claims of fraud were pure fiction. Circuit Judge Tracy McCooey, who presided over the case, repeatedly advised the jury that the attorneys' presentations, complete with charts and overhead projectors, were not evidence. I left the courtroom after those opening arguments with no clue as to who was right. The evidence came late, and I didn't hear much of that. The jury did, though, and believed that Exxon stole from the state. The jury decided the price of the crime was $3.42 billion in punitive damages, the largest award in state history. It was six times larger than what a Hale Count jury awarded in a 1999 case that spurred the Legislature to pass caps on punitive damages. That Hale County case was a "tort hell" poster child. The size of the Hale County award was obscene because the case involved a family that was cheated when it bought two $1100 television satellite dishes. The jury's punitive award was $580 million. The judge reduced it to $301 million, and the case was then settled out of court. The Exxon award makes a lot more sense, if the company is guilty. The state claims Exxon underpaid the state by $87 million on royalties owed from 1993 to 1999. The gas wells are expected to continue to produce for at least 20 more years. The price of gas also could go up, driving the state's share of royalties even higher. It stands to reason then, that if the state is right, Exxon could cut Alabama $1 billion short b the time all the gas is gone. A billion-dollar crime, if there was one, deserves a hefty punishment, don't you think? But don't hold your breath waiting on your $800.
Mike Cason, the state government bureau chief for the