W.Va. natural gas case settled for $380 mil

By John O'Brien | Dec 8, 2008

CHARLESTON, W.Va. (Legal Newsline) - One of West Virginia's three large 2007 verdicts has been settled before the U.S. Supreme Court could decide if it wanted to review it.

The case against NiSource and Chesapeake Energy originally resulted in a $404 million award for about 8,000 landowners who claimed they were cheated out of natural gas royalties. After the state Supreme Court denied the company's appeal, the companies asked the U.S. Supreme Court to review it.

Instead, the case was recently settled for $380 million, with lawyers taking in $128 million of it, according to The State Journal. NiSource said its share of the settlement is $339 million.

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.

The case was one of three in the state to rank in the national top seven in 2007. The others were a $381 million verdict against DuPont and a $220 million verdict against Massey Energy.

The state Supreme Court will hear the DuPont appeal next year, and the U.S. Supreme Court recently denied Massey's petition for appeal.

Citing the state Supreme Court's decision not to review the case, Oklahoma City-based Chesapeake Energy cancelled plans to build a $35 million regional headquarters in Charleston.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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