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JUDGE SAYS HER DECISION PROBABLY WON'T MATTER IN LONG RUN

Apr 19, 2001

By DAVE BRYAN

The Associated Press

MONTGOMERY, Ala- (AP) -- The state's lawyers say Exxon Mobil stood to make $1.8 billion in unpaid royalties and interest on natural gas wells over 30 years until auditors caught the company shortchanging Alabama.

Exxon lawyers at a Wednesday hearing before Montgomery County Circuit Court Judge Tracy McCooey disputed the state's projections and denied it committed fraud. Now McCooey must decide whether to reduce the record $3.5 billion awarded by a jury during a December trial.

"This verdict will have a negligible impact on Exxon," said Robert Cunningham, one of the state's lawyers who argued the award should stand. "Based on Exxon's revenue, this is equatable to a $500 fine on the average Alabama family."

Exxon lawyers argued the verdict against the oil company is more than 30 times larger than the next highest amount awarded for a fraud case and approved by the state Supreme Court on appeal -- $105 million.

But McCooey said a comparison to other fraud cases was irrelevant because the Exxon case was different from others.

"Who cares?" she said. "We have a unique animal, we've got to look at it on its face. ... If you've got a case that is similar to this, then it's relevant."

Exxon lawyer Joe McCorkle responded, saying: "Judge, all we want to do is show these comparisons, which we think are relevant."

McCooey presided over the December trial in which a Montgomery jury decided that Exxon Mobil had fraudulently underpaid the state on royalties for natural gas wells drilled in waters along the Alabama coast.

The jury returned the largest verdict in state history: $87.7 million in compensatory damages and $3.42 billion in punitive damages.

Wednesday was the second day of a two-day hearing to determine whether the punitive damages are excessive and should be reduced.

In a courtroom crowded with attorneys and their assistants, the judge said the case is going to be appealed to the Alabama Supreme Court, which will ultimately decide the appropriate amount.

Lawyers for both sides will submit a suggested ruling to McCooey, who is expected to then issue a ruling on the jury verdict by May 7.

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