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$11.8 billion in punitive damages?

Posted By Barry Ritholtz On November 14, 2003 @ 1:35 pm In Finance | Comments Disabled

The Associated Press [1] is reporting that an Alabama state jury ordered Exxon Mobil to pay $11.9 billion — $63.6 million in compensatory damages and $11.8 billion in punitive damages — to end a suit over disputed natural-gas.

The jury awarded $63.6 million in compensatory damages and $11.8 billion in punitive damages. The award was more than the $9.3 billion that the state’s attorneys had asked the jury to return after a four-week trial.

The stock is down 22 cents.

Why isn’t the stock getting killed? Isn’t this a textbook example of why we need tort reform/jury reform/dissolution of the litigation system?

No.

The stock isn’t reacting cause everyone knows that the award will be modified. That punitive damage award will not stand. Either the trial judge or the appelate court will strike it or lower it dramatically.

Juries make mistakes all the time. That’s part of the system. You always hear about the outrageous awards cause it makes good copy. You rarely see the award modifications, buried on page 27, when the 11.8 Billion is reduced to 50 million.


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[1] Associated Press: http://online.wsj.com/article/0,,SB10688327688058700,00.html

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