Private Empire: ExxonMobil and American Power (51 page)

Snyder found himself in a race with Angelos once again. His rival’s firm signed up as clients property owners around the Jacksonville station. Lawyers for the two competing firms prowled the same neighborhoods, seeking to recruit as many homeowners affected by the leak as possible. On Robcaste Road, Steve Tizard and two of his neighbors decided to interview the firms contending for their business. They met Angelos’s team and more than a dozen other firms. When it was Snyder’s turn, he arrived with his entire law firm, even as he declared he was not sure he wanted to take the case. It was “a show of force,” Tizard recalled. “I was getting sold every second. He was just so arrogant and nasty.” Eighty-nine families within the general vicinity of the station, including Tizard’s, eventually agreed to go with Snyder.
¹³

Exxon executives quickly removed the case from the Safety, Health, and Environment department and handed it over to the law department, putting it into the operations queue with the other MTBE cases the corporation faced. By now ExxonMobil’s in-house legal strategists had a playbook for such cases. In accidents like Jacksonville’s, the corporation had learned that there was usually no point fighting the basic question of legal responsibility; instead, the goal of its defense strategy was to avoid punitive damages. In the
Exxon Valdez
case, Lee Raymond had refused to bend by paying punitive damages, and his stubborn determination eventually made new and favorable law for corporations at the United States Supreme Court. (The Court held that formulas under which actual damages found at trial might be multiplied to determine punitive damages could be constitutional, as long as the multiplier was relatively low, such as one or two times the actual damages.) “The strategic call we made,” Lee Raymond recalled, “was that the punitive damage issue is moving our way. . . . So we are just going to hang in there. That was the strategy for twenty years. And we just called it right. And had good lawyers.” ExxonMobil was hardly going to depart from these principles while defending itself in local trials over spilled gasoline. As to actual or compensatory damages—payments to homeowners for the actual losses they incurred because of the Jacksonville Exxon’s leaking gasoline—Exxon’s representatives told residents that in principle the corporation was willing to pay for declining property values and proven medical claims, including documented emotional distress. With Stephen Snyder’s clients, however, settlement negotiations failed. Snyder’s firm felt ExxonMobil’s lawyers were trying to skim off the clients in his group with the strongest cases, and settle with those, while leaving Snyder with the weaker cases at trial. He urged his clients to hang together, and they did.

B
ecause the case involved MTBE claims, it was initially assigned to the federal court system, to be consolidated with all of the other MTBE cases accumulating around the country. Snyder wanted to try the case before a state jury, on his home court, where he knew the rhythms and rules best. State court juries tended to award punitive damages more readily than federal juries. It took some maneuvering, but Snyder eventually won a decision removing the case to the Maryland courts in exchange for his agreement to drop claims specifically related to the health effects of MTBE.

ExxonMobil honed its defense strategy as the trial date approached. Gasoline prices in the United States were rising, and oil companies were more unpopular than ever. The corporation could expect hostility from at least some jurors. Therefore, it would try to win sympathy from the jury by forthrightly admitting that it was at fault; it would apologize to the plaintiffs and the jurors; and it would invite the jury to determine what actual damages local homeowners deserved. At the same time, ExxonMobil’s lawyers would defend adamantly against the claim that it owed punitive damages. Before the Jacksonville trial opened, ExxonMobil paid $4 million to the Maryland Department of the Environment and accepted responsibility for the spill. The corporation spent, according to its representatives, another $38 million on cleanup efforts in the neighborhood around Jacksonville Exxon—it dug into the groundwater, installed test wells to monitor for the presence of benzene or MTBE, and used chemical and other treatments to clean and eliminate gasoline residues from the aquifer.

To win his billion dollars, or at least something close to it, Stephen Snyder would have to persuade the jury that the Jacksonville gasoline leak was more than just an accident. He would have to show that ExxonMobil had acted maliciously, fraudulently, or with gross negligence, a standard that might amount to a finding of “willful blindness.” He had to show that greed and corporate cover-ups lay behind the Jacksonville leak—and therefore, ExxonMobil should be punished or deterred with an award of heavy punitive damages, beyond the actual losses of the homeowners, in order to send a signal to the corporation’s executives and to other companies in the oil industry. Snyder figured that if he won about $150 million in actual damages, and if the jury was outraged enough by Exxon’s actions, he might win a multiplier for punitive damages that could push the total verdict toward $1 billion. If he did that well, he hoped to withstand appellate scrutiny or at least force Exxon into a high settlement.

Snyder subpoenaed hundreds of thousands of pages of documents and e-mails from ExxonMobil’s retail gasoline and safety divisions. As he and his partners painstakingly read through them before trial, they found what they felt was a winnable fraud case that could produce a billion-dollar jury verdict. Snyder decided to turn the trial into a story about the alarm bell that hadn’t rung at the Jacksonville station after the gasoline leak began to flow on January 12.

The story involved a leak detector system called the EECO 3000. It was one of two different electronic alarm systems the corporation used at its stations nationwide—and of the two systems ExxonMobil employed to comply with federal regulations, it was the more problematic. Internal documents showed that the EECO 3000 was highly sensitive and prone to false alarms.

ExxonMobil had decided to replace the EECO 3000 before the Jacksonville leak occurred, but it had not moved quickly to do so. Exxon said the devices were safe, just harder than they should be to operate, and therefore the pace of replacement was just a routine business matter. The company that originally manufactured the system had been sold; in 2004, the successor company informed ExxonMobil that it would no longer support the leak detector with spare parts. Budgetary constraints and corporate planning timelines meant the EECO 3000 changeover was proceeding gradually.

Snyder concluded that the totality of evidence added up to fraud. His argument was that to enhance its gargantuan profits, ExxonMobil had avoided coming to terms with the EECO 3000’s fatal flaws; it had failed to act promptly to replace the system at stations near homes that relied upon groundwater wells; and the corporation had sought to hide evidence of the system’s troubles. It was perhaps not as obvious a jury-ready story of corporate neglect and greed as the case of the
Exxon Valdez
captain with a documented alcohol problem, but given the unpopularity of oil corporations and of ExxonMobil in particular, it might be good enough to bring home a fraud verdict from a Baltimore County jury.

“It was a lemon,” Snyder said of the EECO 3000. “They knew it. It is a dark secret. It was the skeleton in Exxon’s closet.”
¹⁴

O
n an autumn morning, Snyder and dozens of his clients filed into Courtroom 2 on the third floor of the Baltimore County Courthouse, a massive prisonlike concrete box in suburban Towson, Maryland. Judge Maurice W. Baldwin Jr., a senior visiting judge assigned to the case from nearby Harford County, entered the courtroom and settled on his raised bench. On the wall to his left hung oil portraits of robed judges. Wood paneling, plush carpeting, and upholstered blue vinyl chairs contributed to a heavy, sleep-inducing aesthetic. They all might as well get comfortable; Stephen Snyder intended to speak at length about the cause he had now shouldered.

“Members of the jury, this is a gas leak that should not have happened,” Snyder declared in his opening statement, pacing before the jury box. “It is a leak that took place because Exxon made a corporate decision to disregard the health and the welfare of the citizens. This is a company that decided that profits are much more important than safety.”

Snyder warned the jurors that the trial would take months, and he urged them to pay close attention to the details. “It is not a contest between the lawyers—who wears the flashiest suit or jewelry. I will win that contest.”

“Stipulate,” came the deadpan response from the ExxonMobil defense table.

There sat James F. Sanders, a trial lawyer from Nashville, Tennessee. Sanders had participated in ExxonMobil’s trial defense in the
Valdez
case more than a decade earlier. He was one of the trial attorneys ExxonMobil relied on in its most risky, sensitive jury cases. Sanders had tested over years the best ways to reach jurors who might be naturally skeptical about the motives of a giant oil corporation.

Among other things, as the Jacksonville Exxon trial unfolded, Sanders would avoid badgering witnesses or arguing vehemently with Stephen Snyder, no matter how provocative or outrageous Snyder’s behavior or accusations became. To build an emotional connection with jurors on behalf of an unpopular corporation, Sanders believed he had to come across as entirely reasonable, calm, humble, and interested only in a modicum of fairness on behalf of his client. His southern accent and soft voice reinforced his demeanor. Let Snyder bluster and thunder; Sanders would slip in behind him and speak calmly of common sense.

ExxonMobil’s alleged greed lay at the heart of Snyder’s accusations, but he had to calibrate his charge. “No one is saying in this case that Exxon intentionally allowed 26,000 gallons to go into the ground,” he explained to the jury. “Exxon
did
knowingly allow unreliable and defective equipment that they knew was a lemon—they knew for seven years and they did nothing about it because they didn’t care about residents and the environment. All they cared about was profits.”
¹⁵

M
r. Snyder’s time with you was quite a performance,” Sanders replied when his turn arrived. “And I will tell you from the very beginning that it is not my intention to try to match the performance. Indeed, I’m not going to perform at all. I’m not going to try to match the jewelry or his suits. . . .

“The most important thing that I have to say to you is the first thing that I’m going to say to you: And that is, we are sorry. We are sorry for the leak. We are sorry that the leak went on for over 30 days without being discovered. We are sorry at the magnitude of this leak and the spill into the community. . . . We apologize. We apologize to the Plaintiffs in this room. We apologize to the Plaintiffs not in the room. We apologize to you. We apologize to the community. We apologize to the State of Maryland. . . .

“Now, we do not—do not—accept liability under some of these theories you heard about” from Snyder, he went on. “We do not accept liability for fraud, we do not accept liability for any intentional misconduct, and we do not accept liability for anything that says we did anything intentionally or with malice. We don’t accept that. But we do accept liability to pay for the harm that you find was actually caused to the people who were actually harmed.”
¹⁶

The fraud charge centered on the EECO 3000 leak detector would be the “battleground,” as Snyder put it later, of what became a five-month trial. Day after day, Snyder presented ExxonMobil internal documents and cross-examined corporate witnesses in an effort to prove that ExxonMobil managers and executives knew the EECO 3000 was dangerously unreliable because it gave off so many false alarms, and that ExxonMobil accepted this flawed leak detector because it did not want to spend the money necessary to replace all of them at once—not even in Consequence I areas such as north Baltimore County, where a gasoline leak could infect household wells.

“You would agree, sir, that you all at Exxon had the economic wherewithal to replace the [alarm system] in one day if you wanted to do it across the country? You had the money to do it?” Snyder asked John Greco, an ExxonMobil manager in charge of gas station construction around the United States.

“I can’t speak to that, no.”

“Is it not a fact, sir,” Snyder demanded, “that this was the system that continuously alarmed, 99 percent of the time, for reasons other than a leak, and it just wasn’t trusted by you all at Exxon?”

“I would disagree with that statement.”

“And is it not a fact, sir, that you all at Exxon knew, you knew that the leak detector had alarmed [at Jacksonville]—you knew it at Exxon, and you all ignored it?”

“That’s incorrect.”

E
xxon’s defense turned on its assertion that however many false alarms the EECO 3000 might emit, the detector still found leaks accurately. It had done so in Jacksonville on the January morning in question, James Sanders told the courtroom. The contractor fixing the station’s submersible pump on January 12 had unknowingly drilled a hole in one of the gas lines; the alarm had sounded as it was supposed to do; and a second contractor had arrived to resolve the leak issue.

This second contractor thought he had fixed a false alarm problem by replacing a motor in the leak detector system, but in fact, he had missed the real trouble, the gasoline leak, and then, compounding his error, in resetting the alarm he had inadvertently calibrated the EECO 3000 improperly, so that it would no longer sound as gasoline spilled into the ground in the days to come. That might not have mattered so much if Andrea Loiero had conducted her daily inventory checks properly and noticed the missing and leaking gasoline within a day or two, but she, too, had failed. Like many industrial accidents involving complex systems and human beings, the Jacksonville spill had arisen from small errors compounding one upon the other, ExxonMobil argued. But there was no fraud: The leak detector had sounded its alarm; it was the human beings involved who failed to diagnose the alarm correctly. Therefore, there was no gross corporate negligence involved.