An Alabama circuit judge began hearing arguments Thursday on whether to uphold a record multi-billion-dollar verdict won by the state last year against ExxonMobil Corp. The decision in the case, over disputed natural gas royalties, is expected by March 22.

Montgomery County Circuit Judge Tracy McCooey listened to ExxonMobil attorneys on Thursday argue that jurors who ruled against the company last November were biased by the state’s budget problems. Last November, a jury decided that the oil major had defrauded the state on royalties from natural gas wells drilled in state-owned waters along the Alabama coast (see Daily GPI, Nov. 17, 2003).

The jury, which deliberated after a four-week trial, awarded the state $63.6 million in compensatory damages and $11.9 billion in punitive damages. The award was more than $9.3 billion than Alabama’s attorneys had asked for. Alabama originally sued Exxon in 1999, charging the company with violating lease provisions for natural gas wells in state waters along the coast (see Daily GPI, April 26, 2002; Dec. 20, 2000).

Exxon’s attorneys argued that jurors were biased by Alabama’s budget problems during last year’s trial, and they presented McCooey with 500 news stories about the state government’s financial crisis that were published during that time. However, McCooey said she thought that it made no difference to the jury. McCooey said company attorneys never asked potential jurors about the state’s budget problems when the jury was selected for the trial. The trial occurred at the time that Alabama voters had rejected a $1.2 billion tax increase in September 2003 and the state legislature had cut many agencies’ appropriations by 18%.

However, McCooey said that she and the Alabama Supreme Court “understand that budget problems in the state have absolutely zero to do with punitive damages in this case.” If she rules against Exxon, the case is expected to be appealed to the state’s high court.

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