Today in my law class, Tom Edwards a Alabama Supreme Court nominee, told our class about a case that made it all the way to the Alabama Supreme Court twice with the same verdict. I am talking about the case that started in 1999 and concluded in November 1, 2007 with a ruling by the Alabama Supreme Court siding with Exxon over the state.
It starts in Mobile Bay where oil rigs outside of the bay are drilling for oil. The rigs as you can guess are owned and operated by Exxon. Whenever Exxon sells gas from that came from these rigs, they are supposed to pay the state of Alabama in royalties. Some how or another they fail behind in their payments to the state. The accounting firm working for Exxon found the error and sent a memo asking Exxon officials what they wanted to do and the CEO of Exxon, according to Edwards, wrote back saying to do nothing and signed it with his initials. Exxon owed the state $50 million in backed royalties.
The state after finding out about the backed royalties filed a lawsuit. The first trial was in 1999 were the state obtained the memo with the CEO’s hand written directions and his initials. The jury of course found Exxon guilty and wanted to award the state with the $50 million in backed royalties while adding on $3 billion in punitive damages. The verdict was thrown out by the Alabama Supreme Court, “ruling that internal company documents shown to the jury were privileged and thus inadmissible (according to bloomberg.com).” The documents in question was the company memo. According to Edwards they named the papers, “privileged”, because of the lawyer confidentially laws. One problem with that is that Exxon did not go through a lawyer to write the memo. The memos were between the accounting firm and the CEO.
Non the less, Exxon was retried in 2003 and without the smoking gun the State would have a hard time convicting Exxon of wrong doings…or so you would think. The State still had enough evidence that the new jury wanted to give $63.8 million in backed royalties and awarded the State $12 billion! The judge lowered this back down to $3 billion since that was what was first decided.
You probably know what happened next don’t you? The Alabama Supreme Court (decided 8:1) threw out the $3 billion punitive damages and only awarded the State the original $50 that Exxon owed.”It’s a dangerous precedent for a state to be able to charge someone with fraud if you don’t agree with its interpretation of a contract,” Exxon General Counsel Charles Matthews said in the statement (bloomberg.com). It is dangerous to let billion dollar corporations do what they want to and cheat people out of contracts. To hold them accountable to their actions.
Edwards believes that the Court did this because Exxon cut them checks to help them get elected. They were worth the investment I would say. They helped Exxon save $3.01 billion. In Alabama, candidates do not have to list who gives them money or how much they gave. Edwards is running for a seat on the Alabama Supreme Court and has promised that he will not take such donations. I will hold him to that. His political opponents have already excepted such donations. If you have the money, the State of Alabama is for sell.
My friend Sam Neely brought up to me today when we were talking about the subject, that the PACT Program has recently ran out of money and has needed a bail-out. Proposals from the Alabama Legislature was of course to raise taxes. That $3 billion could have went a long way. Who am I kidding? It would have lined the pockets of people sworn to look out for the citizens they represent.