Jurors Hit Exxon Mobil With $11.9-Billion Verdict

Alabama’s financially strapped government won an $11.9-billion verdict against Exxon Mobil Corp. on Friday in a suit that accused the oil giant of cheating the state out of natural gas royalties.

The state circuit court verdict included $11.8 billion in punitive damages, a record for Alabama and more than the state’s attorneys had sought. The jury had to find Exxon Mobil committed fraud to return the multibillion-dollar verdict.

“We felt Exxon thought they were going to get away with this,” said jury foreman Joe King, a teacher. “We wanted to send a message that they were not, and that this corporation can’t get away with doing wrong.”

Exxon Mobil spokesman Bob Davis said the verdict was excessive and would be appealed. “We did not engage in fraud -- pure and simple,” he said.

If the damages are upheld on appeal, the money will go into state coffers, which have been struggling in recent years. Gov. Bob Riley said it would be years before the appeals were finished, and any money the state realized wouldn’t have any effect on the state’s current layoffs and 18% budget cuts for many agencies.

Company attorneys are optimistic that their appeal will be successful because the punitive damages are more than 180 times greater than the compensatory damages.

“The punitive award in this case defies common sense,” company attorney Sam Franklin said.

The governor predicted the verdict wouldn’t affect the state’s efforts to recruit big-name companies. “This is unique to one specific case with one specific company. I don’t think it should have any spillover,” Riley said.

The state sued Irving, Texas-based Exxon Mobil in 1999, contending that the oil 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, including $6,000 for a “family picnic” at a Mississippi casino.

Exxon Mobil’s attorneys argued that the company owed the state nothing because it had followed its leases with the state and reported all production to the state.

The trial was conducted while Alabama was canceling the purchases of textbooks, reducing social services and sending layoff notices to about 800 state employees.

Despite no mention of it, juror L.A. Wallace said Exxon’s size and the state’s problems had been a factor in the decision to award more than the state’s attorneys had sought against Exxon Mobil.

“A billion dollars to them is chump change,” said Wallace, who works at a plastics factory.

After four weeks of testimony, the jury deliberated for two days before returning the verdict of $11.8 billion in punitive damages and $63.6 million in compensatory damages. With interest added by the court, the compensatory damages will grow to $102 million, attorneys said.