Supreme Court Slashes Punitive Damages in Exxon Valdez Oil Spill Case
Yesterday, the U.S. Supreme Court handed down a controversial decision that lets ExxonMobil off the hook for billions of dollars in punitive damages related to the 1989 Exxon Valdez oil spill in Alaska’s Prince William Sound. In a 5-3 vote, the Supremes (minus Justice Samuel Alito, who sat this one out because he owns ExxonMobil stock) ruled that punitive damages (which punish companies for behavior that causes harm to others) should not exceed compensatory damages (which compensate victims for their economic losses). Although the ruling applies only to maritime cases, it is generally being seen as a win for all corporations seeking limits on unpredictable jury awards in high-profile lawsuits.
In 1994, ExxonMobil was ordered by an Alaska jury to pay $5 billion in punitive damages. In 2006, an appeals court reduced punitive damages for the Exxon Valdez oil spill to $2.5 billion, half the original amount. The new ruling by the U.S. Supreme Court cuts the punitive damages even more, to $507.5 million. The new figure represents about 12 hours of revenue for the giant oil company, which reported record profits of $40.6 billion in February 2008.
Since the Exxon Valdez hit the rocks in 1989, with a drunken skipper at the helm, Exxon has paid $3.4 billion in various fines, penalties, cleanup costs and other expenses. The $507.5 million will be divided among 32,677 commercial fishers, seafood processors, landowners, native Alaskans and small business owners. Many lost their livelihoods because of the Exxon Valdez oil spill, and all have waited two decades for the case to be resolved.
The Exxon Valdez oil spill was one of the worst environmental disasters in U.S. history. After running aground on Bligh Reef, the ship dumped 11 million gallons of oil into Prince William Sound, killing roughly half a million sea birds, 5,000 sea otters, two dozen orcas, and millions of salmon and herring eggs. Nearly 20 years later, damage from the Exxon Valdez spill is still evident.
Justices John Paul Stevens, Ruth Bader Ginsburg and Stephen Breyer disagreed with the Court’s majority opinion to reduce the punitive damages for ExxonMobil.
In a stinging dissent, Justice Breyer wrote: “The jury could reasonably have believed that Exxon knowingly allowed a relapsed alcoholic repeatedly to pilot a vessel filled with millions of gallons of oil through waters that provided the livelihood for the many plaintiffs in this case. Given that conduct, it was only a matter of time before a crash and spill like this occurred.”
Photo by David McNew/Getty Images
Read more:
- Supreme Court Overturns Exxon Valdez Ruling -- Associated Press
- Exxon Valdez: 'This is it; it's done' -- Anchorage Daily News
Comments
This is very sad. I haven’t read the decision, but it opens the door to reduce corporate punitive damages in a variety of situations. Punitive damages should not be limited by compensatory damages. Even if they were, the compensatory damages in this situation were immeasurable. How to do you compensate the world for the environmental damage and massive wildlife destruction by an oil spill of this magnitude?
I would challenge the author of the final statement in the article to present factual data to support his comment. Secondly, if that alcoholic skipper had robbed a bank, should Exxon be held responsible for his actions? Why should this “crime” be any different?
Punitive damages are a crime in the themselves serving no purpose but to fatten the bank accounts of unscrupulous lawyers, themeselves a cancer on society.
I would also challenge “D” to show any lasting environmental damage caused by that particular oil spill.
There is no great debate about lasting environmental effects from the Exxon Valdez oil spill, Guido. Many experts believed Prince William Sound would be back to normal by 1995, but it didn’t turn out that way. Scientists who study the area report that the rocks and soil around Prince William Sound is still laced with oil, which continues to release toxins, and one of the world’s great herring fisheries was essentially destroyed by the spill and still has never recovered.
Your bank robber analogy doesn’t really work, in my opinion, but let’s go with that anyway. If Exxon employed a known bank robber and alcoholic to routinely drive an armored car filled with its customers’ money, and the guy ended up blowing up the armored car, stealing the money, and doing serious damage to surrounding buildings and vehicles, then one could certainly argue that Exxon might have been negligent and therefore responsible.
On the other hand, I agree that punitive damages are often a problem, doing little to deter other companies from taking similar actions, and sometimes crippling the companies they are levied against while enriching trial lawyers and providing scant additional relief from the victims. And yet there are times when corporations need to be punished for blatantly negligent acts that do serious harm to people or property. Civil courts and punitive damages are the only way to accomplish that, because corporations are set up to shield the individuals who actually make those decisions and take those negligent actions.
As for the person who made the last statement in the article proving his claim, that person is U.S. Supreme Court Justice Stephen Breyer, and he’s offering a legal opinion about a case he knows well.
Bush, the PUTRID, is at it again.
In response to Environment: it’s well documented in the scientific lit. that those areas “cleaned up” by workers following the spill faired more poorly than those merely left alone. It’s a shame that birds, fish and sea mammals died as a direct resultof the spill, but Nature is equipt to handle such problems. We anthropomorphisize when we have those emotions.
Punitive damages don’t serve their purpose. Corps. just pass the expense on to consumers.
The statement by the judge that this was bound to happen is simply absurd. One never makes a mistake when looking thru the retrospectoscope.
So are you suggesting that oil spills are not a problem, because “nature is equipped to handle such problems,” and that massive kills of other species is OK because to think otherwise is just an emotional response to cuddly creatures?
Nature is equipped to handle a lot, but mankind is throwing some pretty wicked curves as the population grows and the demands on limited resources increases. If we don’t start taking a more active role and achieve sustainability, Nature’s way of handling the problem may be to eliminate us.
And, sure, hindsight is 20/20, but wouldn’t you agree that putting a non-recovering alcoholic in charge of an oil tanker is not a good decision? Not just in hindsight, but in foresight as well?
I agree that over-population is the biggest problem facing Mankind and places a huge burden on the environment. Loss of habitat is the environment’s biggest problem.
But let’s keep this oil spill in perspective:a natural disaster such as Mt. St. Helens, for instance, produces much bigger devastation.
My argument here is not about the oil spill, but about the legal system’s response to accidents of any type: nothing is ever attributed to chance; somebody must always be responsible and must pay. Justice plays no part here. Lawyers only motive is to augment their own prosperity.
PS/ perhaps you would like to join in the dialogue on the Forum here. We enjoy input from intelligent, thoughtful folks.