Published: May 15, 2008 01:40 pm            

Families win $66 million lawsuit

Oil case hits courtroom 13 years after initial filing

DUNCAN — A jury awarded over $66 million to be paid by Shell Oil Company to two families in a civil lawsuit in Stephens County District Court May 9.

Clark Brewster, lead trial attorney for the families, said that this verdict ranks as one of the largest dollar amount judgments in Oklahoma history.

“We were a little nervous because Stephens County is conservative and home to many oil interests, but we couldn’t be happier with the result,” Brewster said. “It shows that people here will not tolerate dishonest business practices.”

Defense attorneys did not respond to numerous phone calls by The Banner.

Kelly op de Weegh, who is the senior communications adviser for the On Shore North American Projects for Shell Exploration and Production division in Houston, said that Shell disagrees with the court decision.

“I can’t comment much on the case, but we feel we have solid grounds for an appeal,” she said. “We feel this was just an oversight.”

Shell Oil Company’s trial brief, filed on April 23, 2008, said that Shell mistakenly failed to pay the plaintiffs what they were due.

“We’ve tried to go back to the witnesses and ask them why it happened,” op de Weegh said. “But because of the length of time, it’s been difficult to come to any firm conclusion as to why there was an oversight.”

The jury awarded over $53.5 million in punitive damages to the plaintiffs and over $13.2 million in compensatory or actual damages for false representation, concealment, deceit and fraud.

William Gossett, who was the plaintiffs’ local counsel, said that the defense basically did not dispute the actual damages amount.

“They just disputed the punitive damages,” Gossett said.

Randy Calvert, attorney for the plaintiffs since the lawsuit originated in 1995, elaborated.

“The plaintiffs collectively owned a one-quarter net profits interest in the working interest of an oil and gas lease on 20 acres of land on County Line Road between Duncan and Ardmore,” Calvert said.

“A lease was signed in 1927, and Shell Oil Company began drilling on the land in 1948,” he said.

Every month, Shell was required to send the families a statement form showing the net profits from the lease, he said.

“Shell did that, but starting in 1973, the statements each month were incorrect because they failed to report revenue from a very good oil well on the land,” Calvert said.

He said that the financial documents were entered into the court proceedings.

“They established the income and expense of the well,” Calvert said.

“We were able to compare that with what the plaintiffs received.”

The money that was not paid also accrued interest, he said.

“The judge read the statute stating how much interest is due for money owed,” he said.

“Shell did not dispute the actual amount. They just disputed the case on statutory limitations that the plaintiffs waited too long to file suit against them.”

Calvert said that the plaintiffs argued that the time limit for filing a law-suit had not yet been reached.

“The statute for fraud says that it is two years from the date that they find out about the fraud,” he said.

“In 1995, a tipster notified them of the fraud and they filed suit in August of that year against both Shell and Maynard Oil Company.”

He said that Shell sold the lease on the land to Maynard in 1986 and acknowledged about not paying the owners from the new well.

The practice continued until 1995, “when a tipster blew their cover,” Calvert said.

Brewster said that the whistleblower was an independent worker who is now deceased.

“Maynard went ahead and settled the balance owed to the plaintiffs,” Brewster said. “Shell decided to litigate.”

The case then took 13 years to reach trial.

Op de Weegh said that she did not know why it took 13 years to litigate.

Calvert said it took 13 years because Shell did not take the case seriously enough.

“Shell did not pay the respect needed to this case and my clients,” Calvert said.

“They were slow to hand over documents, went through five different law firms and had many excuses. Before reaching trial, we went through three different judges, as well.”

During the final arguments in court Friday, Calvert said that Shell’s lawyers made the point that this case isn’t about a speeding ticket.

“When it was our turn to deliver our final arguments, we took the speeding ticket analogy further,” he said.

“The purpose of a speeding ticket is to help someone change behavior.

“The purpose of this lawsuit is to send a message to Shell Oil Company that dealing with people in a non-straightforward and unfair manner will not be tolerated,” Calvert said.

The plaintiffs requested the jury deliver a $52 million punitive damage verdict based on a speeding ticket formula.

“A $150 speeding ticket to someone making $20,000 a year before taxes is three-quarters of a percent of his entire income for the year,” Calvert said. “Last year, Shell made $7 billion after taxes. Three-quarters of a percent of that number is $52 million.”

The jury came back with punitive damages of a million dollars in excess of what was requested.

Calvert said that his clients were happy.

“To them it isn’t about the money, but vindication for the many who died without being paid what they were owed,” he said.

Brewster said that this verdict delivered a great sense of justice to his clients.

Shell has 30 days from the date of judgement to file an appeal to the ruling. The case will then move to the Oklahoma Supreme Court.

In a civil case, nine out of 12 jurors must be unanimous to deliver a verdict. All the jurors were unanimous for the actual damages amount.

Two jurors dissented from the punitive damages amount verdict.

        

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