Friday's Internet Edition, July 04, 2008.

IN REMEMBRANCE A ceremony took place Friday at Heritage Park to rededicate the county’s World War I memorial fountain. Veteran Herb Wheeler and his wife, Jannie listened as fountain contributor John Raese spoke about the project. JIM COOPER/SPENCER NEWSPAPERS

The court’s unanimous decision announced late Thursday was met with an announcement by the defendants that they plan to appeal to the U.S. Supreme Court.

The trial in the case known as Garrison Tawney vs. Columbia Natural Resources lasted three weeks in January 2007 before a six-member jury returned a verdict against Columbia’s successor, Chesapeake Energy, and a related company, NiSource.

The verdict was for $134.3 million, plus another $270 million in punitive damages, for a total of more than $404 million. It was the third largest jury verdict in the nation in 2007.

There are approximately 10,400 plaintiffs in the class-action lawsuit that alleged Columbia failed to adequately compensate royalty owners and disclose deductions taken from royalty payments.

Tawney, a retired teacher and royalty owner from Looneyville, first shared his concerns about the royalty payments with retired circuit Judge George Scott, one of a small army of attorneys who would eventually take the case to court. Tawney died in 2005 at the age of 90, before the case made it to trial.

“It’s a sad note Garrison Tawney did not live to see the end of it and appreciate the magnitude of what he commenced,” Scott said. “It tuned out Mr. Tawney’s determination to do something would result in tremendous benefit to thousands of people for years to come.”

In addition to the benefit to the thousands of Columbia royalty owners around the state, Scott said the case has changed the way gas companies will compensate royalty owners in the future.

“I think things have already changed, big-time, because of this verdict,” Scott said. “Major companies are evaluating their business practices and the way they are treating their royalty owners.

“I think this verdict has already changed the way companies do business,” he said. “It has already accomplished some permanent reform.”

NiSource officials issued a statement Friday indicating they intend to appeal. The company said a petition would be filed with the U.S. Supreme Court in 90-120 days and company officials expect the court to decide whether to hear the appeal in early 2009.

NiSource President and CEO Robert C. Skaggs Jr. said the company was surprised and disappointed with the state Supreme Court ruling.

“The court’s decision to not even address the substance of an appeal in a case of this significance, particularly in light of the $270 million in punitive damages awarded at the trial court level, is unprecedented and contrary to the most basic principles of fairness,” Skaggs said.

“We firmly believe in the merits of our position and will continue to vigorously pursue our arguments before the U.S. Supreme Court,” he added.

Scott said the verdict, which is accumulating interest at a rate of 9.75 percent per year, now stands at more than $450 million.

He said the defendants’ hopes of convincing the U.S. Supreme Court to hear their appeal is a long shot.

“The Supreme Court of the United States looks for issues of national significance involving instances of misapplication or misconstruction of the U.S Constitution,” Scott said. “This case just simply does not present any such questions. It’s hard to believe even the most ardent advocate of the defendants’ position could believe that the Supreme Court will show any interest whatsoever in this case.”

Last week’s ruling by the state Supreme Court came on a 5-0 decision by Justices Joseph Albright, Elliott “Spike” Maynard and Larry Starcher, who were joined by Cabell County Circuit Judge Dan O’Hanlon and Raleigh County Judge Harry L. Kirkpatrick III.

The circuit judges replaced two justices who recused themselves. Justice Robin Davis is married to Scott Segal, one of the attorneys representing the royalty owners, while Justice Brent Benjamin’s former law firm had represented the defendants.

If the verdict stands, Scott said Roane Circuit Judge Tom Evans, who presided over the case, would likely appoint a special master to allocate the judgment among royalty owners on a prorated basis. He said Evans would also set the attorney fees.

If the attorneys were awarded one-third of the $404 million, and the remainder was divided equally, each royalty owner would receive nearly $26,000 before any interest is added.

Instead of equal amounts, Scott said the payments would likely be awarded on a prorated basis, depending on the amount of royalty involved with each well.

“But I wouldn’t want to speculate on any of it,” Scott said.