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Supreme Court Slashes Punitive Award in Exxon Valdez Oil Spill by 80%

Erika Bolstad

WASHINGTON - The Supreme Court on Wednesday dashed the hopes of more than 32,000 fishermen and Alaska Natives who've been waiting for nearly 20 years to hear whether Exxon Mobil Corp. must pay billions in punitive damages for its role in the 1989 Exxon Valdez oil spill.0625 04 1 2

In a victory for corporations seeking to limit big-dollar lawsuits, the court decided 5-3 to reduce the $2.5 billion punitive damages. The award was excessive, the justices wrote, and reduced it to $507.5 million. The original multibillion-dollar punitive damages had been awarded as punishment for the company's role in spilling 11 million gallons of oil into the pristine fishing waters of Alaska's Prince William Sound.

"The punitive damages award against Exxon was excessive as a matter of maritime common law," Justice David Souter wrote in the majority opinion. "In the circumstances of this case, the award should be limited to an amount equal to compensatory damages."

The 32,677 plaintiffs in the case have been waiting for their compensation since 1994, when a jury in Anchorage, Alaska, returned a $5 billion punitive-damages award against Exxon Mobil. 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 Feb. 27.

Business groups such as the American Petroleum Institute and the U.S. Chamber of Commerce had hoped that the Supreme Court would use the case as a way to curb large punitive damages against corporations.

Former Alaska governors, the current governor, the state's congressional delegation, supertanker captains, environmentalists, state lawmakers, Alaska Natives and experts in maritime law joined with the plaintiffs in asking that the Supreme Court uphold the $2.5 billion verdict.

The court in February had appeared sympathetic to Exxon's efforts to reduce the punitive damages award for its role in the spill, although at the time the justices didn't seem inclined to overturn the award. While they seemed to grapple with the size of the damages awarded, they also 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.

Michael Doyle contributed to this article.

© 2008 McClatchy Newspapers

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