October 28, 2008

NiSource and Chesapeake Energy Settle Case with $270 Million Punitive Damages Award

We previously blogged about a $404 million judgment in West Virginia against two energy companies, NiSource and Chesapeake Energy. The judgment, which included a $270 million punitive damages award, was based on the defendants' failure to make royalty payments to property owners who had leased natural gas rights to the defendants.

Today, the Northwest Indiana and Illinois Times is reporting that NiSource has agreed to settle the case for $338.8 million. Co-defendant Chesapeake Energy is chipping in another $41.2 million.

The West Virginia Supreme Court's refusal to even consider this case raised questions about the constitutionality of West Virginia's post-verdict review of punitive damages, and NiSource filed a petition for certiorari with the U.S. Supreme Court. Those issues will have to wait for another day.