Montgomery, Ala. A jury returned a $3.5 billion verdict Tuesday against Exxon Mobil Corp., finding that the oil company defrauded Alabama on royalties from natural gas wells in state waters.
A circuit court jury's verdict awarded Alabama $87.7 million in compensatory damages and $3.42 billion in punitive damages. It was six times the state's previous record of $581 million in a civil-damages case.
The jury arrived at the punitive damages by tripling Exxon Mobil's annual production from 13 natural gas wells along the Alabama coast.
Exxon Mobil spokesman Tom Cirigliano said the company would appeal the verdict, adding, "We have always endeavored to comply with the requirements of our leases."
State attorney Bob Cunningham told jurors that internal company documents showed the oil company labeled Alabama officials "inexperienced" in the natural gas business and deliberately decided to underpay the state.
After the verdict, jury foreman Shae Fillingim said those documents were the deciding factor, adding that the company "pretty much knew they were doing something wrong."
But Exxon Mobil's lawyers argued that the company had tried to follow the state's contradictory leases for natural gas wells in coastal waters.
Exxon and state officials have been arguing about the royalties since 1995. Alabama consultants put the disputed royalties and unpaid interest at $87.7 million.