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Gwire Law Offices Wins $50 Million Dollar Punitive Damage Award Against Shell Oil Company.

On March 9, 2010, a Los Angeles Superior Court jury awarded $50 million in punitive damages to Gwire Law Office client Elias Atallah, capping a five year legal battle fought against the largest company in the world (Royal Dutch Shell) and three of the most formidable law firms in the country.  The $50 million in punitive damages, awarded for Shell Oil’s fraud against Mr. Atallah, came on top of a compensatory damage award of $1,650,000 awarded by a different jury in 2006.  Here’s the story…

This case was originally presented to us by Mr. Atallah as a legal malpractice case, but after review, we recommended that the malpractice claim (against the client’s attorney) be put on “hold”, and that he pursue a fraud claim against Equilon Enterprises, dba Shell Oil Products, US, a wholly owned subsidiary of Royal Dutch Shell Oil. The client agreed to the approach, and asked us if we would handle the fraud claim. We accepted.

The case was for fraud in connection with the sale of a gas station by Shell to our client, a former owner of a Texaco gas station. Texaco and Shell merged in the mid 90’s and all Texaco stations were acquired by Shell. We claimed that Shell had failed to disclose a Riverside County agency’s strong interest in getting our client’s station shut down because of its proximity to a water well that the agency was converting to potable use. The agency was concerned that an accidental spill from the station would contaminate its well. The agency was dealing with Shell exclusively regarding its demands for possible protective measures against contamination. Shell, acting through high level executives, failed to disclose these discussions to our client even in the midst of the negotiations for the station’s sale and an extended escrow. After the station was sold to our client, the County agency was successful in gaining court approval keeping the site from operating as a gas station.  We claimed that Shell should have disclosed all of the discussions it was having with the agency to our client.

The case went to trial in Los Angeles, (Shell was represented for that trial by Fulbright & Jaworski), and the jury awarded $1.65 million to our client in damages for the loss of the value of the station (the exact amount requested by us). The jury also made a finding for punitive damages, but during the separate punitive damages phase, the judge refused to allow certain financial evidence to be put before the jury and dismissed the punitive damage claim.

Shell appealed the jury’s award of the 1.65 million in compensatory damages and we appealed the trial court’s dismissal of the punitive damages claim.  Shell hired new counsel, the respected firm of Munger, Tolles, and in late 2008, the California Court of Appeals ruled in our favor on both matters, upholding our client’s damage award and sending the case back solely for determination (by a new jury and a new trial judge) as to the amount of punitive damages.

For the punitive damages trial, Shell brought in yet a new firm, the formidable firm of Quinn, Emanuel, who claim they win over 90% of their cases.  The re-trial of the punitive damage phase took place from Feb. 22, 2010 to March 9, 2010 when a jury of 9 women and 3 men returned a verdict of $50,000,000 (million) against the defendant.  During both trials, Shell had 3 and sometimes 4 lawyers on their side, plus a contingent of paralegals, assistants and company representatives, including in house counsel from Shell.  Mr. Gwire tried both cases entirely on his own, no associates, no paralegals, no assistants.  Actually, that’s not correct, Gwire was ably assisted by his client, Elias Atallah.

Following the trial, Shell obtained a reduction of the punitive damage award as was expected (and required) based on constitutionally mandated limits for punitive damages set by the U.S. Supreme Court.  Following the reduction the case was settled for a confidential amount when Gwire and Atallah appealed the amount of the reduction.