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W. Va. justices decline to hear NiSource's $404 million appeal

By Chris Rizo | May 23, 2008

CHARLESTON, W.Va. (Legal Newsline)- The West Virginia Supreme Court has ruled NiSource Inc. must pay a $404 million verdict awarded in a class-action lawsuit brought in 2007 against the gas and electric on behalf of about 8,000 property owners.

The original lawsuit, filed in Roane County, accused Merrillville, Ind.-based NiSource of failing to make agreed upon royalty payments to property owners who had leased gas rights from the utility.

The company sought to bring the case before the high court because of issues it raised, including what it called procedural errors at trial and class certification.

In a statement, the energy giant said it will now seek a continued stay of the judgment in the case pending an appeal to the U.S. Supreme Court.

"The Court's decision to not even address the substance of an appeal in a case of this significance, particularly in light of the $270 million in punitive damages awarded at the trial court level, is unprecedented and contrary to the most basic principles of fairness," said NiSource President and CEO Robert C. Skaggs, Jr.

In the original case, the plaintiffs argued that Columbia Natural Resources LLC, a former subsidiary of NiSource, underpaid royalties by deducting a portion of post-production costs and not paying market value for the gas produced.

Plaintiffs sought the alleged royalty underpayment and punitive damages.

The trial jury awarded the plaintiffs $134.3 million in compensatory damages and $270 million in punitive damages.

Named as defendants in the case were Columbia Natural Resources, NiSource, Columbia Energy Group and Chesapeake Appalachia LLC.

From Legal Newsline: Reach reporter Chris Rizo by e-mail at chrisrizo@legalnewsline.com.

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