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STATE MAY WAIT YEARS FOR ANY MONEY

Dec 21, 2000

The Associated Press

The state and its attorneys may wait years to see any money from a jury's record $3.5 billion verdict against Exxon Mobil for underpaying natural gas royalties.

Exxon Mobil spokesman Tom Cirigliano said the company will "take all legal steps to challenge the verdict."

Bob Macrory, an attorney with the state Conservation Department and the author of Alabama's leases with Exxon, said the case is sure to be appealed all the way to the U.S. Supreme Court.

That has been the route with some other big jury verdicts from Alabama. The Supreme Court has used two Alabama cases to set guidelines for determining whether jury awards are excessive.

The state and Exxon Mobil sued each other over the payment of royalties from 13 natural gas wells that Exxon drilled in the state's coastal waters. A Montgomery jury found Tuesday that the oil company had fraudulently underpaid the state and levied $87.7 million in compensatory damages and $3.42 billion punitive damages.

That broke the state's record for the largest punitive damage verdict returned by a jury, which was $581 million in Hale County. That judgment, resulting from a suit over the purchase of a satellite dish, was reduced by the trial court judge to $30 million and was later settled out of court for a smaller amount that the two sides declined to disclosed.

John McMillan, who was the state conservation commissioner in 1981 when Exxon signed the leases to drill along the coast, said the Exxon verdict could also be reduced or settled for a smaller amount. But no matter what happens, the state shouldn't expect anything for years, he said.

Skip Tucker, director of Alabama Voters Against Lawsuit Abuse, said he had hoped the days of Alabama being known as "tort hell" were over when the Legislature put limits on punitive damage verdicts last year. But those limits didn't apply to the Exxon case because it was filed before the law was passed.

"It might be cold in Alabama, but 'tort hell' is not yet frozen over," Tucker said Wednesday.

The $3.5 billion verdict, if paid to the state, would be nearly as big as the state's $4billion education budget for this year and about two-thirds as big as the $5 billion judgement against Exxon for the Valdez oil spill in Alaska.

For Alabama's suit against Exxon Mobil, the governor and attorney general agreed to hire the Mobile law firm of Cunningham, Bounds, Crowder, Yance and Brown. They were guaranteed 14 percent of anything they recovered and nothing if they lost.

The $3.5 million verdict, if it stands up on appeal, would provide then $490 million.

John Crowder and Robert Cunningham said their firm normally takes at least one-third of the judgment in any case it takes on a contingency fee, but agreed to a smaller fee for the state.

Testimony in the case showed lawyers in the firm had devoted many months to preparing for court and paid financial and oil industry consultants at least $230,000 to help them. If they had lost, that would have been money out of their pockets.

The current record for legal fees in a lawsuit in Alabama is $47.5 million for a class-action suit against Masonite Corp. over siding made by the company. The Cunningham Bounds law firm shard in that fee.

Members of the law firm contributed to Siegelman's 1998 campaign for Siegelman's state lottery plan, which Alabama voted rejected in October 1999.

Siegelman's press secretary, Carrie Kurlander, said the governor chose the firm because of their respect within the legal community and because they had the resources to pursue the suit. She said the firm's record speaks for itself.

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