Exxon argues against $3.6 billion judgment

MOBILE, Ala. - Exxon Mobil Corp. argued before the Alabama Supreme Court Tuesday that a $3.6 billion judgment awarded against it should be wiped away because it is not guilty of defrauding the state.

Exxon attempted to explain to the justices that the controversy is merely a misunderstanding between the company and the state over their contract.

Alabama says Exxon intentionally did not pay 11 months worth of royalty payments to the state from offshore wells because it knew the state was inexperienced in the industry.

According to a report by the Associated Press, Exxon attorney Chris King told the Court, "Of course, this case is notorious. It's notorious because it involved an outrageous award of punitive damages."

The report also says King argued that the state's own records show it was aware of the disagreement concerning royalty payments and that punitive damages were not justified because there was no fraud.

Also, it says King told the Court that if it allows the verdict and award to stand then it is like the state is confiscating a $3 billion investment Exxon has made in the state's oil and natural gas industry.

King also said Alabama planned on auditing the payments from the beginning because its own documents showed the royalty payments were not accurate, according to the report.

Attorney Charles Cooper, who represented the state, argued that Exxon's 2006 net income should be taken into consideration when determining if the award was fair. Exxon reported a record $39.5 billion.