Exxon wins reversal of gas-leak punitive damages award

Exxon Mobil Corp. (XOM) won the reversal of more than $1 billion in punitive damages over a 2006 gasoline leak that Maryland residents claimed fouled their drinking water.

A Maryland appeals court yesterday reversed the punitive damages and returned the case to a new trial in Baltimore County Circuit court in Towson, Maryland, for a new trial. Irving, Texas-based Exxon Mobil had argued that the award, handed down in 2011 to 160 homeowners and businesses as part of a $1.5 billion jury verdict, was excessive.

The $1.5 billion verdict in the environmental case was the second-largest in the U.S. in 2011, according to data compiled by Bloomberg.

Jurors issued the verdict in favor of residents of the Baltimore County community of Jacksonville for losses tied to a 37-day gasoline leak from a local station’s tank farm. The spill sent more than 26,000 gallons of fuel into the area’s groundwater, according to court filings. The rural community doesn’t have a public water system and relies on wells for drinking water.

Jurors, who awarded $495 million in compensatory damages along with the more than $1 billion in punitive damages, found the company liable for fraud as part of their verdicts. The appeals court also reversed the fraud finding, and returned it to the lower court as part of a new trial.

H. Russell Smouse, a lawyer representing the plaintiffs in the case, didn’t immediately return a call yesterday after regular business hours seeking comment on the decision.

“The evidence showed that we acted appropriately after the accident and the court has agreed,” Charles Engelmann, an Exxon spokesman, said in an e-mail. “We have apologized to the Jacksonville community and we remain ready to compensate those who were truly damaged by this unfortunate accident. We will continue the cleanup.”