WASHINGTON – Nearly two decades of legal battles over the Exxon Valdez oil spill came to an end yesterday when the Supreme Court slashed the punitive damages imposed against ExxonMobil from $2.5 billion to $500 million.
The justices ruled 5-3 to limit ExxonMobil's punishment to the same amount of money a lower court awarded to compensate for economic losses: $507.5 million. Lawyers on both sides parsed the decision to determine whether the court was sending a signal on how to resolve the contentious issue of punitive damages.
“Given the need to protect against the possibility (and the disruptive cost to the legal system) of awards that are unpredictable and unnecessary, either for deterrence or for measured retribution, we consider that a 1:1 ratio . . . is a fair upper limit in such maritime cases,” Justice David Souter wrote for the majority.
Although the decision dealt only with maritime liability, corporate leaders hailed it as a reasonable way to assess punitive damages, imposed to deter future action, on a company that didn't intentionally harm the environment. Political leaders and environmental groups denounced the decision as an easy out for one of the world's most profitable companies.
Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas and Anthony Kennedy joined Souter in the majority. Justices John Paul Stevens, Ruth Bader Ginsburg and Stephen Breyer dissented. Justice Samuel Alito, who owns ExxonMobil stock, recused himself from the case.
A jury had originally awarded $5 billion to the nearly 33,000 fishermen, Native Alaskans and landowners brought together in the class-action lawsuit against ExxonMobil, and the U.S. Court of Appeals for the 9th Circuit reduced the amount to $2.5 billion.
The Exxon Valdez oil tanker left the port of Valdez, Alaska, late on the evening of March 23, 1989, loaded with 53 million gallons of crude oil. Capt. Joseph Hazelwood, who had been drinking that night, was in charge when the nearly 1,000-foot vessel aground on a reef, and nearly 11 million gallons of oil flowed into Prince William Sound. It was the worst oil spill in North America.
Stevens said that, given the facts of the case, the damages should have been upheld.
ExxonMobil, through its Washington attorney Walter Dellinger, argued it had been punished enough. The company said it has paid $3.4 billion in cleanup costs and other penalties for the oil spill, which polluted 1,200 miles of Alaskan coastline.
Alaska politicians denounced the decision.
“Today's ruling adds insult to injury to the fishermen, communities and Alaska natives who have been waiting nearly 20 years for proper compensation following the worst environmental disaster in our nation's history,” Sens. Ted Stevens and Lisa Murkowski and Rep. Don Young, who are all Republicans, said in a joint statement.
