Exxon Judgment Struck Down

Four years after a circuit court ruled that ExxonMobil owed the state $3.6 billion for underpayment and fraud in a contract dispute over natural gas pumped from Mobile Bay, the state Supreme Court struck down the judgment yesterday:

The court ruled 8-1 that the state’s lawyers did not prove that ExxonMobil committed fraud, so the state wasn’t entitled to $3.5 billion in punitive damages. Punitive damages generally cannot be awarded in a contract dispute under state law without a finding of fraud.

The court also unanimously reduced the lower court’s award to the state in the contract dispute, ruling that ExxonMobil owed the state $51.9 million plus interest.

There had long been a sense that the Exxon money would solve (or, more accurately, postpone) a lot of Alabama’s General Fund woes. Every year the chronically underfunded General Fund is patched together with gum and baling wire, and the outlook is still grim. The state’s Medicaid system, already “one of the more limited programs in the nation in terms of services offered to recipients,” is looking at a shortfall of hundreds of millions of dollars, we heard yesterday. Prisons, state troopers, judicial system, on and on, are underfunded, and the legislature is not addressing the issue in any meaningful way.

Anyone close to the legislature knows that legislators have cast longing glances toward the anticipated Exxon money.

State Rep. Yusuf Salaam, D-Selma, said generally the decision might create some problems because of the progressive plans the Legislature had intended to do next session, but those things were dependent on access to the billions of dollars.

Now? Wailing, gnashing of teeth, and empty coffers.