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JURORS DELIBERATE IN ALABAMA'S SUIT AGAINST EXXON MOBIL

Nov 13, 2003

By PHILLIP RAWLS
The Associated Press
11/13/03 3:08 PM

MONTGOMERY, Ala. (AP) -- A Montgomery jury deliberated Thursday in a lawsuit in which the state is seeking a record $9.3 billion judgment against Exxon Mobil in a dispute over natural gas royalties.

Jurors began deliberating after hearing four weeks of testimony.

The state sued Exxon Mobil in 1999, contending the company had violated its leases for natural gas wells in state-owned waters along the Alabama coast. The state accused the company of cheating Alabama out of millions of dollars by intentionally deducting too much in expenses for operating the wells.

Exxon Mobil's attorneys said the company has followed its leases with the state and owes Alabama nothing.

The case was first tried in 2000, when a Montgomery jury returned a record verdict of $3.5 billion -- six times the state's previous record. The verdict was overturned by the Alabama Supreme Court, which said the jury was wrongly allowed to see an internal oil company memo. That prompted a new trial that began Oct. 20.

In closing arguments Wednesday, state attorney Robert Cunningham said the state government had been shorted $63.6 million in royalties and that the loss could have climbed to as much as $930 million over the 30-year life of the natural gas field in Mobile Bay. He asked the jury to return a verdict of up to 10 times the potential loss, or $9.3 billion.

Exxon Mobil's attorneys said Alabama used a new kind of a lease for wells along the coast rather than the standard industry lease. The oil company argued that its payments to the state were in line with memos from the state Conservation Department that said the company could deduct the "reasonable direct cost of manufacture and transportation."

The state hired two of Alabama's top plaintiff law firms, Beasley Allen and Cunningham Bounds, to handle the case on a contingency fee: nothing if they lost and 14 percent of the judgment if they won.

The trial was conducted while the state has been going through a financial crisis that has resulted in about 800 state workers getting layoff notices. Some of the courthouse workers who dealt with the jury are due to lose their jobs Nov. 26, but the judge prohibited everyone involved in the case from mentioning the state's financial troubles during the trial.

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