Jury Orders Chevron to Pay $100,000,000

(Thibodaux, Lafourche Parish, Louisiana) A jury in Louisiana District Court ordered ChevronTexaco to pay the state about $100 million, including attorney fees. The state argued that Chevron intentionally cheated Louisiana taxpayers on oil royalties from state land leased by the company from 1987 to 1999. Louisiana lawyers contended that Chevron sold the oil at a price higher than the base calculated for the royalties and, therefore, the state lost money. In their defense, Chevron stated that Louisiana oil was mixed with higher grade oil which commanded a higher price, however, the state was fairly paid per contractual agreement which satisfies their obligation.

The state calculated the amount of purposeful underpayment by Chevron to be $13.5 million over the thirteen years and the jury agreed. During the period, Chevron paid the state $250 million in royalties so the percentage of purported underpayment equates to 5.4 percent of the total royalties paid.

Just looking at the numbers, it would seem difficult to classify the underpayment as an egregious theft. The Louisiana jury, however, determined otherwise and assessed $54.9 million in damages and tacked on $20 million for attorney's fees.

Last year, Chevron had profits in excess of $7 billion and, as such, may decide not to appeal the $100 million judgment against them. I hope they do, in a different venue. This case was stacked against Chevron from the beginning. Louisiana is known for having a creative and maverick judicial system which some have alleged is a real profit maker. Lafourche Parish is smack in the middle of one of the largest oil-producing areas of the country. Everyone in the jury pool is connected directly or indirectly to the oil industry, and probably has a host of personal grudges against big oil companies in general. Combine all that with the fact that Chevron represents the epitome of big oil with deep pockets and the result is that any accounting error is the basis for a multi-million dollar lawsuit.

In this case, it's a $100 million lawsuit for a 5.4 percent difference in calculations. And, I'll never understand why the lawyers are entitled to $20 million.