Lawyers representing over 8,000 royalty owners argue their case
in Roane Circuit Court Friday. Pictured (L-R) are Marvin Masters,
Scott Segal (standing), Mike Carey, George Scott and Robert Douglas.
(Photo by David Hedges-Spencer Newspapers)
Jury awards $400 million verdict
By David Hedges, Publisher
The Times Record-Roane County Reporter
You could call it the shot heard 'round the world, at least in the world of oil and gas.
After hearing three weeks of testimony, it took less than four hours before a jury in Roane County Circuit Court returned with one of the largest verdicts in the state's history.
The six-member jury awarded plaintiffs in a class action lawsuit involving gas royalty payments more than $404 million.
The award includes compensation of more than $134 million for unpaid or underpaid royalties and another $270 million in punitive damages.
The suit titled Garrison Tawney et al vs. Columbia Natural Resources LLC, NiSource Inc., Columbia Energy Group and Chesapeake Appalachia LLC was filed in 2003 and is believed to be the first class action suit ever filed in the county.
Tawney, a retired teacher from Looneyville, began questioning the amount of royalty payments he was receiving from gas wells drilled on his property. The suit grew to include more than 8,000 plaintiffs around the state.
Tawney died in 2004, a year after the suit was filed, at the age of 90. But his daughter said he would have been proud of the outcome.
Anne Tawney Goff, who lives in Hurricane, sat through the three-week trial and said jurors were not "dazzled with brilliance or baffled by bull----."
In closing arguments, Saturday morning, Charleston attorney Marvin Masters told jurors that CNR and the related companies committed fraud by deducting expenses from royalty payments.
"This was a conscious decision to skim money from every royalty owner in West Virginia," Masters said.
He compared the company's actions to those of his dog, Willie, whom he said eats his cat's food when he thinks no one is looking.
Defense attorney Tim Miller said CNR only began charging a share of gathering and processing costs to royalty owners after the federal government deregulated the gas industry. He said the expenses were legitimate.
"There was not any scheme as they would like you to believe," Miller said.
Circuit Judge Tom Evans had already ruled against CNR in pretrial questions involving two of the claims, for the deduction of gathering and processing fees and underreported volume from line loss. The state supreme court upheld those rulings. That meant the jury only had to determine the amount of damages.
There were four other damage claims the jury had to decide, which involved advance sales of gas, royalties owed for natural gas liquids and questions about the reported volume of gas between the well and the meter on both 1/8 interest royalty wells and flat rate wells.
The jury ended up siding with the plaintiffs on all but one of those questions.
The plaintiffs' attorneys said the damages in all the questions presented to the jury amounted to $104 million which, including interest, pushed the total to more than $158 million.
Miller said the actual damages, before interest, were closer to $24 million.
He called the claims "grossly exaggerated and inflated.
"They are trying to pump up the damage claim by throwing in the kitchen sink," Miller said in his closing.
The biggest damage award involved advance or "forward sales" in which CNR sold gas on a five-year contract and received some $400 million in advance ...
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