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Exxon Should Pay Its Penance
It wants to wriggle out of punitive damages, but those are the ones that make a difference.
The Supreme Court heard arguments this week in a case with big implications for victims of reckless corporations. At issue is whether Exxon can be made to pay punitive damages to the fishermen whose livelihoods were ruined by the 1989 Exxon Valdez oil spill. Exxon says it already has paid fines to the government under federal maritime and environmental laws and shouldn't have to pay punitive damages, too.
That may be good for Exxon's bottom line, but it's miserable public policy. Punitive damages help deter the kind of bad behavior of which Exxon is plainly guilty. The court should make the company pay up.
On the night of March 24, 1989, the oil tanker Exxon Valdez hit a reef and ran aground in Prince William Sound, Alaska. Out poured 11 million gallons of crude oil, causing one of the largest and most-damaging oil spills in history. Experts say the accident killed more birds and marine mammals than any other U.S. oil spill before or since, and the harm continues to this day, not just to fish and wildlife but also to fishermen and others who made a living from the waters of the sound.
Investigation revealed that the captain of the ship was a relapsed alcoholic who was drinking at sea. More damning, Exxon knew about his drinking but did nothing. Rather than firing him or suspending him while he got sober, rather than demoting him or finding him a desk job, Exxon left him in command, letting him pilot a massive tanker and its dangerous cargo through the sensitive waters of Prince William Sound. On the night of the accident, the captain reportedly put away five double vodkas, then left the bridge, leaving a junior officer to conduct the high-stakes navigation.
The government rightly pursued Exxon for violating the Clean Water Act, forcing it to pay $3.4 billion in cleanup costs. But the environment wasn't the only victim. Thousands of people lost their livelihoods that night, and they, too, deserve restitution. So they sued, and won big: $500 million in damages for their actual losses, and $5 billion in punitive damages to both punish Exxon and discourage future bad behavior. Granted, $5 billion might seem like an awful lot of discouragement, but Exxon is the biggest company in the world, with 2007 profits of $39.5 billion.
On appeal, Exxon got the punitive damage award reduced to $2.5 billion, but now it's asking the Supreme Court to throw that out as well, based on its argument that because it has already paid fines under maritime law and the Clean Water Act, it shouldn't have to pay punitive damages. The Ninth Circuit Court of Appeals rejected that argument because neither law precludes punitive awards. If Congress had wanted the Clean Water Act or maritime law to preempt awards of this sort, it would have said so.
Not only will a hefty punitive damage award help deter future bad behavior by Exxon, it should give pause to anyone else in the industry who might be tempted to cut corners on safety or ignore grave hazards.
Juries rarely award punitive damages and, when they do, courts conduct exacting reviews to ensure that the awards are based on the facts and the law, not on passion or prejudice. Among other things, punitive damages should be proportionate to the harm caused. In this case, they are. In arguments before the Supreme Court, the lawyer for the fishermen pointed out that because so many people were harmed, the $500 million in damages for actual losses amounted to about $15,000 per person. After nearly 20 years, that's not much for having one's livelihood destroyed.
Presumably the $2.5 billion will make a difference to the people of Prince William Sound. But more than that, it's enough money to help persuade Exxon and others to take greater care in guarding against reckless behavior with potentially catastrophic consequences. That's why the court should let the punitive damages stand.
Alexandra Klass, a professor at the University of Minnesota Law School, and Sandra Zellmer, a professor at the University of Nebraska College of Law, are member scholars at the Center for Progressive Reform (www.progressivereform.org).
© 2008 Star Tribune
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14 Comments so far
Show AllThe U.S. Supreme Court needs to prove they are not just another extension of our corporate friendly Republic with this decision. Exxon has been given gift after gift by this administration--from secret meetings with Cheney to the invasion of Iraq it's as if government policy has been written to benefit the oil & gas industry. It must stop and the Supreme Court needs to stand firm on punitive damages. If it doesn't and Exxon wins their appeal our democracy is dead. When corporations can harm working people and the environment without being held accountable, plain and simple, we are living under a fascist regime.
The Valdez horror is yet another example why a boycott of Exxon products is in order considering their history of illegitimate corporate enterprise. They have become a threat to society and global stability rather than an asset. They are not only attacking the environment, but innocent people as well.
The continued illegal occupation of Iraq is for the purpose of allowing corporations like Exxon Mobil to "privatize" (meaning steal) Iraq's oil. This has become state sponsored murder funded by public debt to sustain private profit. In short the illegal and unconstitutional invasion and occupation of Iraq is a corporate inspired war crime.
Keep in mind there are plans to occupy Iraq for 100 years. McCain is not the only one promoting this deranged scheme.
To date the five year occupation has cost taxpayers $3 Trillion+. Over the next century that plan will cost the taxpayer $60 trillion plus interest. With the estimated reserves of Iraq worth about $10 Trillion, the plan is more or less an insane and criminal corporate subsidy.
Yet, better than a boycott, we should simply nationalize the energy industries and run them like lawful public utilities for the greater good.
Do we really need the overhead of CEO's who are paid $400 million in salary while promoting global warming ? Do we need campaign donations and lobbyists from Big Oil corrupting Congress. Do we need people in the Whitehouse with investments in the oil industry as well as the military complex ?
Oil industry influence has contributed to the creation of a fascist imperial government in violation of the Constitution and all essential principles of our democratic republic.
You know, I'm no fan of V.V. Putin, but he did manage to take Yukos Oil away from the thief who stole it from the people of Russia by making it pay its bills to the tax man. Forget paying for the clean up -- nationalize Exxon as a matter of national energy security.
Punitive damages are just that, to punish those responsible for the damages so that it is less likely to happen again. Even on an economic basis, the oil companies are more likely to pay for double hull tankers and safety protocols if they know that they will be fined much more for damages. This long court delaying tactic is just a sign to other oil companies that they can get away with it if they put their money into lawyers and legal battles instead of reducing the chance of damage in the first place.
F#%ck Exxon Mobile
Somewhere, somewhere, this case, the courts, maybe even the law has gotten way off course. The fines were punitive damage. We are now talking making the plaintiffs whole. That is not punitive. Exxon is simply being asked to pay for damages. Of course that would probably require a trillion dollars or more.
"There will be Blood"
is that a subliminal message or what?
Code for- Iran next.
C'mon folks use your heads. What is more economically rational--to spend a few million on high-priced reptilllian lawyers to tie up and delay any final payment or just fork over the 5.5 billion dollars?
In a just world these sorry and miserable weasels would be assessed triple damages for dealing in bad faith and end up being forced to pay $16.5 bilion instead. That kind of money is probably about three months walking around dough for their Washington lobbyists anyway.
Keep in mind that it wasn't all about a drunk captain--Exxon violated many safety protocols that contributed either to the accident or to an inability to quickly contain the resulting spill. See Greg Palast in The best government money can buy. Also current article http://www.gregpalast.com/exxon-suxx-mccain-duxx/#more-1968
and others. Exxon deserves to pay the punitive damages.
If Exxon was a sole proprietorship, it would have already passed into the pages of history and jail time would have been served by its' executives. It is well past time for a 28th Amendment where corporations do not have 14th Amendment protections.
In order to stop the control oil companies have on this country would be to nationalize all of them, and force cities to build mass transit and force the car companies to stick to small gas sipping vehicles. Then all those billions would go to us the tax payer rather than a billionaire, greedy, corporate criminal.
I read some of the descriptions of the comments some of the Supreme court justices made in "mulling" over this case. I have to say John Roberts didn't surprise me any, no sir. His main concern was, "What can companies do to protect themselves against these type of lawsuits?" Even the prosectuing attorney saying, "Uh, hire competent people?" failed to provoke a smile from Roberts. He is as bloodless and corporate as I feared. GWB sure picked a winner.
Exxon should be forced to pay the punitive damages. It will then pass the expense on to California commuters who will bend further under the cost of petro-commuting, already ten to thirty times the cost of subway-commuting. They will subsequently have fewer children and the petro-slavery gene will eventually go the way of the dodo-bird and all the surviving species will rejoice.
This report is pathetic! How did these two manage to get their Ph.D's, by hooks or crooks?
The real story of the Exxon-Valdez isn't about an allegedly drunk Capt. Joe Hazelwood, but about the Alyeska Owners Committee, 46% owner BP, falsified docs to government (9 years before the smashup on Prince William Sound), missing or inferior equipment, "phantom" personnel, classified memos, coverups, a disinformation campaign, CIA involvement, attempted bribes, collusion, blackmail, et al.