Supreme Court Expected to Issue Exxon Valdez Verdict this Month
The court generally issues its decisions on Mondays, and the Exxon case is due out before the Supreme Court term ends June 23. The lawsuit, a dispute over $2.5 billion in punitive damages, is the final legal case remaining from the March 1989 spill of 11 million gallons of crude oil in Alaska's Prince William Sound.
The Supreme Court gives no hint of its decisions until they're released.
"They always leave their toughest ones until last, that's what everybody always says," said Anchorage attorney David Oesting, part of the legal team representing the fishermen, Alaska natives and others who are plaintiffs in the lawsuit against the oil giant.
The waiting has been difficult for many of the plaintiffs, said Andrew Wills, a former herring fisherman who now runs an inn and bookstore in Homer. After so many years, they're simply tired of the endless conjecture.
"We've been talking about it for 19 years," Wills said. "We've been let down so many times. We've had this carrot dangled, then this knife in the gut. Nobody wants to be disappointed again."
The 32,677 plaintiffs in the case have been waiting for their compensation since 1994, when a jury in Anchorage returned a $5 billion punitive-damages award against Exxon Mobil Corp. for its role in the spill. The company has been appealing the verdict since then. In 2006, the 9th U.S. Circuit Court of Appeals cut the award to $2.5 billion. Exxon appealed that decision to the Supreme Court, which heard oral arguments in the case on Feb. 27.
A spokesman for Exxon said that the company is awaiting the verdict like everyone else. He would not speculate on how Exxon would handle a multibillion-dollar award if it loses.
"We made our case and we're awaiting the court's decision," said company spokesman Tony Cudmore. "We believe that punitive damages aren't warranted, given the work we did to clean up the spill, the fact we spent $3.5 billion on payments and cleanups and settlements and fines. We made our case and we'll await the decision."
Lawyers for the plaintiffs have been spending their time since the oral arguments by finalizing a distribution plan for the billions that Exxon might be forced to pay if the plaintiffs prevail.
"If we in fact recover some money, I'll be in a position to distribute it much sooner rather than later," Oesting said.
If the case turns in their favor, plaintiffs in the case could see checks within 180 to 200 days, Oesting said. Lawyers have worked out a payout formula that assigns each plaintiff a share. They're waiting to see how much money the court will award if it chooses to uphold the punitive damages. Then, they'll divide the award by the shares allotted to the plaintiffs and begin issuing checks and bank drafts.
If Exxon is ordered to pay the plaintiffs, it's not expected to be hard for the company, the world's most profitable publicly traded corporation, to come up with the money.
At the time of the initial award in 1994, the judgment was equal to about a year's net income, Oesting said. Now, it's equal to about 3.5 weeks of Exxon's net income, he said.
Oesting has an affidavit from Exxon's top financial officer saying that the verdict is "not a material event for Exxon" and that the company could easily pay the award.
Few people are willing to speculate on the outcome. Business groups such as the American Petroleum Institute and the U.S. Chamber of Commerce have been hoping that the Supreme Court would use the Exxon Valdez case as a way to curb what they believe are large punitive damages against corporations.
"That's the $2.5 billion question, at this point," said Robin Conrad, executive vice president of the National Chamber Litigation Center. "What's the court going to say and what's it going to mean for Exxon Mobil in particular or the business community in general?"
Former Alaska governors, the current governor, the congressional delegation, supertanker captains, environmentalists, state lawmakers, Alaska Natives and experts in maritime law all joined with the 32,677 plaintiffs in asking that the Supreme Court uphold the $2.5 billion verdict.
However, the court in February appeared sympathetic to Exxon's efforts to reduce a $2.5 billion punitive damages award for the company's role in the oil spill, although the justices didn't seem inclined to overturn the award. While they seemed to grapple with the size of the damages awarded, they seemed to indicate that they thought Exxon failed to make a winning argument that it wasn't subject to punitive damages under maritime law.
Exxon based its appeal on an 1818 court decision that holds that ship owners aren't liable for punitive damages for the actions of their agents at sea unless they're complicit in their behavior.
McClatchy Newspapers 2008