For the umpteenth time.

Exxon Mobil Corp. is set to argue in front of the Alabama Supreme Court on Tuesday that a $3.6 billion fraud judgment against the company is unconstitutional and should be overturned.

Alabama sued Exxon in 1999 claiming the company fraudulently underpaid millions of dollars in royalties from natural gas wells off the state’s coastline.

Two juries agreed the company illegally reduced the their [sic] payments to the state by claiming inappropriate expenses as deductions from their royalties. The juries awarded the state compensatory damages as well as billions of dollars in punitive damages.

…

In the second trial of the case, a jury handed down $11.8 billion of punitive damages — the largest award handed down by a jury in 2003. It was later reduced to $3.5 billion by a circuit court judge.

If the court does not overturn the charges, the company is asking that it reduce the punitive damages against Exxon.

The Reuters writer, Michael Erman, couldn’t resist dedicating a paragraph to Exxon’s latest profit numbers, as though that has any bearing on this case.

Last week, Exxon Mobil reported the largest ever annual profit in U.S. history — $39.5 billion in 2006. Its full year revenue was about $377.64 billion, larger than the economy of Switzerland, the seventeenth largest economy in the world in 2005.

Erman’s inclusion of Exxon’s profit data is akin to writing a technical paper about Einstein’s Theory of General Relativity and ham handedly including the statement, “By the way, Einstein married his cousin.”  It seems that Erman is interjecting accurate, but unrelated, information in an attempt to influence the reader.  The subtle implication is that Exxon is sitting on piles of money, they should just pay.

Based on what I know about the case, which is not much, and the fact that a jury found against Exxon they should in fact pay up.  But their profitability has nothing to do with their liability in this case.

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This entry was posted by Brian on Wednesday, February 7th, 2007 at 12:59 am and is filed under Alabama, Legal. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Please note the copyright policy.