$20 Million Verdict in Natural Gas Royalty Dispute Reversed
Birmingham, Alabama (May 11, 2004) — On April 30, 2004, the Alabama Supreme Court reversed a $20 million punitive damage verdict against Hunt Petroleum Corporation. The verdict followed a December 2001 trial in which the State of Alabama claimed that Hunt had committed fraud in connection with reporting and paying royalties to the State for natural gas produced in Mobile Bay. In reversing the verdict, the Alabama Supreme Court found that the State had failed to present substantial evidence “that it relied to its detriment on the monthly royalty reports submitted by Hunt.” As a result, the Supreme Court remanded the case for entry of judgment in Hunt’s favor on the fraud claim. Calling the decision an “abrupt reversal of fortune,” the National Law Journal noted that “[t]he development ends a winning streak during which the state accused four companies of cheating it out of gas-lease royalties.” One of the four companies referenced by the National Law Journal, LF&W client Exxon Mobil Corporation, is in the process of appealing a $3.6 billion verdict in a similar suit. “[T]he court’s rationale in [the Hunt case]” says the National Law Journal, “may foreshadow what it does when it next hears Exxon.” See “Oil Companies Get Turn to Win on Gas Royalties,” by David Hechler, National Law Journal (May 10, 2004).
Lightfoot, Franklin & White, along with the Mobile, Alabama firm of Helmsing, Leach, Herlong Newman & Rouse, represented Hunt in the jury trial and post-trial proceedings, and also handled the appeal. LF&W partner Chris King argued the case before the Alabama Supreme Court on March 2, 2004.