Ala. court throws out $3.5 billion judgment against Exxon Mobil

MONTGOMERY, Ala. -- The state Supreme Court reversed a $3.5 billion judgment against Exxon Mobil on Friday, ruling in a gas royalty dispute that a confidential legal opinion should never have been admitted as evidence.

The ruling sent the case back for possible retrial, which must not include the confidential document written for the energy giant. It did not address the size of the judgment, which Exxon argued in its appeal was excessive and unwarranted.

The dispute stemmed from oil and gas leases Exxon, now Exxon Mobil, signed with Alabama in the 1980s. The contracts let the company drill wells in Mobile Bay in return for paying the state a share of the profits.

State officials and the company soon argued over how much Alabama was due, and both sued.

Exxon Mobil lawyer David Boyd said Friday's ruling showed that the trial had been unfair.

"We're pleased we'll have the opportunity to have the issues decided in a fair proceeding," he said.

Gov. Don Siegelman said he believes a second jury will also conclude that the company committed fraud.

The justices said the trial judge wrongly let jurors see an internal legal memo that outlined the position that Exxon attorneys believed the state would take.