Supreme Court slashes judgment in Exxon Valdez disaster
Originally published Wednesday, June 25, 2008 at 6:35 a.m.
Updated Wednesday, June 25, 2008 at 11:46 a.m.
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Capt. Joe Hazelwood reports the Exxon Valdez is hard aground and leaking oil
WASHINGTON -- The Supreme Court on Wednesday slashed the $2.5 billion punitive damages award in the 1989 Exxon Valdez disaster to $500 million.
The court ruled that victims of the worst oil spill in U.S. history may collect punitive damages from Exxon Mobil Corp., but not as much as a federal appeals court determined.
Justice David Souter wrote for the court that punitive damages may not exceed what the company already paid to compensate victims for economic losses, about $500 million compensation.
The Exxon Valdez case involves reckless action that was "profitless" for the company and that has already resulted in substantial recovery for substantial injury, Souter wrote.
A penalty should be "reasonably predictable" in its severity, he added.
Exxon asked the high court to reject the punitive damages judgment, saying it already has spent $3.4 billion in response to the accident that fouled 1,200 miles of Alaska coastline.
A jury decided Exxon should pay $5 billion in punitive damages. A federal appeals court cut that verdict in half in 1994.
The Supreme Court was divided on its decision, 5-3, with Justice Samuel Alito taking no part in the case because he owns Exxon stock.
Amar Sarwal, general litigation counsel for the U.S. Chamber of Commerce, said the ruling gives an "extraordinary amount of guidance" to courts beyond the Exxon Valdez case.
Souter wrote that the legal landscape is filled with examples of ratios and multipliers for punitive damages versus compensatory damages, saying most of them fall short of offering reasonable limitations in the Exxon Valdez case.
A state legislative judgment that 3 to 1 is a reasonable limit overall is not a judgment that 3 to 1 is a reasonable limit in this particular type of case, Souter wrote.
Osa Schultz of Cordova, Alaska, said she was "pretty disappointed" with the amount of the settlement, "but on the other hand I'm relieved they slapped Exxon in the face." She said a $15,000 award wouldn't even begin to cover the losses to her and her husband's gillnet fishing business.
Exxon has fought vigorously to reduce or erase the punitive damages verdict by a jury in Alaska for the accident that dumped 11 million gallons of oil into Prince William Sound. The environmental disaster led to the deaths of hundreds of thousands of seabirds and marine animals.
Nearly 33,000 plaintiffs are in line to share in the award, an average of about $15,000 a person. They would have collected an average of $75,000 each under the $2.5 billion judgment.
In dissent, Justice John Paul Stevens supported the $2.5 billion figure for punitive damages, saying Congress has chosen not to impose restrictions in such circumstances.
Justice Ruth Bader Ginsburg also dissented, saying the court was engaging in "lawmaking" by concluding that punitive damages may not exceed what the company already paid to compensate victims for economic losses.
"The new law made by the court should have been left to Congress," wrote Ginsburg. Justice Stephen Breyer made a similar point, opposing a rigid 1 to 1 ratio of punitive damages to victim compensation.
Writing for the majority, Souter said that traditionally, courts have accepted primary responsibility for reviewing punitive damages and "it is hard to see how the judiciary can wash its hands" of the problem by pointing to Congress for a solution.
The problem for the people, businesses and governments who waged the lengthy legal fight against Exxon is that the Supreme Court in recent years has become more receptive to limiting punitive damages awards. The Exxon Valdez case differs from the others in that it involves issues peculiar to laws governing accidents on the water.
Overall, Exxon has paid $3.4 billion in fines, penalties, cleanup costs, claims and other expenses resulting from the worst oil spill in U.S. history.
The commercial fishermen, Native Alaskans, landowners, businesses and local governments involved in the lawsuit have each received about $15,000 so far "for having their lives and livelihood destroyed and haven't received a dime of emotional-distress damages," their Supreme Court lawyer, Jeffrey Fisher, said when the court heard arguments in February.
First-quarter profits at Exxon Mobil Corp. were $10.9 billion. The company's 2007 profit was $40.6 billion.
Community Discussion
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How much have they spent just to reduce their catastrophic mistake? Totally disgraceful!
Atleast we know where the "high court" stands on any issue reguarding big oil company's. So, do we want to take them to court again in the future??
What a joke. The money they spent was to clean up their mess, not compensate the "victims". They probably spent more than $500MM in legal fees in the last 20 years.
Huh. For once, liberals now have an example of conservative judicial activism. The next time that conservatives complain about judicial activism, maybe the liberals will listen.
$500 Million- a drop in the bucket of their profits. They probably made that in interest since appealing the original decision.
James, Exxon made RECORD profits last year, in the BILLIONS. I don't think they're hurting for cash.
This "prevailing wisdom" is based on an 1818 maritime law when piracy and merchantmarine were still closely linked..
..Since when does Geo.Bu$hit sit on the SCOTUS?
[I'm sure he called his appointees on this one]
10% Hazelwood - 90% Alyeska Smuggling NGL's
For 30years BigOil has been smuggling too much condensates mixed with the crude thru TAPS..
the gassy-runny-soupy mess is from too much "ENRICHMENT"
http://www.dec.state.ak.us/SPAR/images/g...
"ENRICHMENT"
"ENRICHMENT"
"ENRICHMENT"
"ENRICHMENT"
"ENRICHMENT"
"ENRICHMENT"
"ENRICHMENT"
.......................get the picture?
"ENRICHMENT"
We originally designed TAPS to run at 150F because NS-crude is a hi-viscosity product.
Does anybody know what a "Coiled Tanker" is??
..it's a tanker that uses steam heat coils to heat the solidified crude from 40F to 100F.
If TAPS and the Tankers were properly loaded from the source according to original system design...
...the crude would not have made 10% of the mess that happened in Prince William Sound.
The crude-oil at 40F in those tankers should be the consistency of frozen molasses, and should actually plug the hole in the bottom of the ship to prevent it from sinking if it hits the rocks.
Alaska should fly the Big-Dipper upside down under the Jolly-Roger pirate flag..
..because it is surely run by pirates.
The NGL's should be stripped out of TAPS in Fairbanks and Valdez to be used in Alaska for hi-pay jobs making plastics to build HDPE-pipe for managing all of Alaska's natural gas resources and water-resources properly.
http://www.marketwatch.com/news/story/ga...
Alaska should quit exporting oil and just export gas.
All of Alaska's hydrocarbons can efficiently turned to gas.
http://www.globalresourcecorp.com/
...another dark day in the tarpit of america, permanently stuck on stupid in the Dark Ages.
James - Stop living in the past, it is gone and will not return. I agree that Exxon got out of this with chump change. If they try and tell us what a good company they are and friend of the state, they should be kicked in the you know what. We should look ahead and know what will now happen if they screw up again. We now know the courts will give em a pat on the back and probably a beer after work and tell them not to worry. Just wondering how many shares some people own in Exxon that post on this artcle? I know I have non, but just wondering? Thank god for the PFD and Gov. Palin, the only two good things we have going in the state at the moment, just maybe we will make it thru this winter with the help of both!!!!!
James,
Is it accurate to assume you work in the oil industry?
If the court system will not enforce its own orders, what good is it? If someone with a lot of money can enrich the lawyers instead of paying its victims, what good is it? If our federal judges gets ignored, what good are they? If Exxon thinks they can do this to us, do we really need them?
"'The new law made by the court should have been left to Congress,' wrote Ginsburg. Justice Stephen Breyer made a similar point, opposing a rigid 1 to 1 ratio of punitive damages to victim compensation." I'm sorry...this came from Ruth Bader Ginsberg? Really? Did she read the Constitution, finally? Will she and the others focus on interpreting current law and leave lawMAKING to Congress? Ahhhh....to dream....
Incredible.
But not surprised.
Big money is in politics.
Two thumbs down.
After 20 years, what bunch of baloney.
We love our Appeals system.
"A jury decided Exxon should pay $5 billion in punitive damages. A federal appeals court cut that verdict in half in 1994."
"A jury decided that the company should pay $5 billion in punitive damages. A federal appeals court cut that verdict in half."
Why are both of these sentences in the article? They could be easily combined. I saw the same thing in a different article this week as well.
So the penalty of $500 million was for something done almost 20 years ago... Hmmm, if that amount had been determined 20 years ago, what would it be worth in todays dollars? $500 million in 1989, today that would be worth......? At least they should have to pay that value in todays dollars. Thinking in reverse, what is the 'real' penalty they are paying today? What was todays $500 million worth back in 1989? They are not even paying anywhere near the $500 million I would think. So each plaintiff will get $15K. What would that be worth today if they got that $15K 20 years ago and had invested it in big oil? They should each get at least that amount.
The courts are the ones making a mockery of the system.
Why even have a jury if the courts can just set aside their decision and do what they want to do. The courts are the ones making a mockery of the system. Do they think judges can't be bought? That they are flawless decision makers?
they make me sick
I don't see the Alaska federal judges as being buyable. However, once it was out of their hands it became obvious the fix was in. They might as well have just stayed home and not wasted their time trying to hold Exxon accountable. What a sorry commentary on the whole DOJ system.
Justice Ruth Bader Ginsburg also dissented, saying the court was engaging in "lawmaking" Ironic to hear a liberal complain about the court making law!
James, I agree with you this time all the way till the last few sentences about going back to the good old days. I had pegged you as a government employee not big oil.
Huge punitive damage awards are the causes insurance rates and medical costs to be so high. I say compensate people for their losses and if there are punitive awards they should be treated like a fine.
I think it's pretty obvious who owns America, and it's not us.
The senators in Alaska also are a part of this problem, and they have no problem looking the other way and saying let's develop somewhere else so we can make more money. The hell with the locals, let's rape the land for more money for the good oil people who want to keep taking resources with no consequences. We have reaped what we have sown, so live with it and keep voting in high paid officials owned by big oil. It will never change. Thanks
James says, "We are pretty lucky to have Exxon around and all of the narrow minded pin heads should keep that in mind. The accident was just that, and it was because of human error ... not because of EXXON or big oil."
Not true...the drunken ship captain is a convenient scapegoat.
Exxon was required to have containment tugs escort the ship out Valdez arm. Exxon kept telling the feds that the tugs were operational. When the ship ran aground, the tugs were locked up in port.
The ship also was supposed to have a sonar installed that would have given fair warning to the captain to avoid the reef...Exxon told the feds that the sonar was operational....it wasn't.
In fact, the drunken ship captain wasn't even driving the boat when it hit the reef. Certainly the drunken ship captain bears some responsibility but so does Exxon. If they had been following their own protocal, the disaster could have been avoided.
They should pay at least 2.5 billion for lying.
What a Joke!
That is about what an entry level deckhand could make in one season before the oil hit the water. You had captains with $200,000 dollar boats and $200,000 fishing permits sell their boat and permits for pennies on the dollar. How does 15g's help them at all? How does it help the deck hands from losing season after season? It doesn't.
This is just sick.
---------------------------
I really hope Exxon doesn't start trying to make an appearance around these parts now that the trial is over. I wish we could ban them from the state.
This is hardly the first example of outrageous rulings by supposed 'conservative (activist) judges.' The bulk of the currenbt SCOTUS are Republican appointees.
Anyone remember the emminent domain case from the east coast, that legitimized the concept of 'public use' as including anyone seizing, through local government, your property, in order to build something bigger and better, ultimately concluding that greater tax revenues = 'public use'? Even Stalin likely applauded THAT ruling...
How about the notion that the federal commerce clause applies to nearly ALL items now?? Clarence Thomas correctly saw through that totalitarian pabalum.
How about the (conjured) immunity of government officials acting in 'good faith,' and the related rulings that insulated the government from accountability when they terrorize, kill, or otherwise infringe upon the inalienable rights of the citizenry; their supposed employers?
Government firstly looks after its -own- ass-etts. It secondly looks after its own monied interests; often the larger contributors, who coincidentally provide much of that capital the various national committees enjoy.
No surprises in this ruling. Just like there were no surprises in the fact that Scalia's dissent in the recent habeas ruling, pertaining to detaineees, quoted blatantly false data.
The fact that they regard themselves as conservatives, by no means makes them conservative. They are most definitely not. 'Pro-federal tyrants' comes closer to the reality of what they've become.
James,
Think of the fishermen. Yes hard working fishermen who had there industry destroyed. Don't feed me the Exxon is a good company puke. They trashed peoples lively hoods and the industry has never recovered in some areas. So sit back, relax and enjoy being part of Big Oil. The rest of Alaska are tired of being dumped on! Yes we understand Big oil brings in money to Alaska. This does not mean that we don't have the guts to stand up for what is right!
They dumped in our yard, ruined peoples lives and got away with it. Now they need to get there filthy rich rears out of Alaska. Thank you Tom Irwin for not giving them a 432nd chance on Point Thompson. Remember the Fishermen!
State of Alaska should bar them from doing business in Alaska until the pay up.
Is it a little more clear now? You are inticed to vote based on some so-called social conservative basis but it's only a front for a business agenda that has mo morals, no conscience, and no patriotism. Don't be fooled, Exxon is controlled by the ultra rich for the ultra rich as are the banks and the stock and futures exchanges. The business of the Supreme Court is business not the Constitution.
Tomorrow they will come out with their decision on the gun law in DC. This should be interesting.
James,
It appears you either are employed by Exxon or you have stock in them. Your opinion is disgracful to the Alaskan people. Don't get me wrong, I am all for one having their own opinions but what you said was totally full of lies. Hey James, I hope the Alaskan people can somehow KICK Exxon out of the state! Perhaps your shares can go to those who deserve it -- the victims in this whole mess!
Justices Ginsburg, Stevens and Breyer HAVE IT CORRECT. "The new law made by the court should have been left to Congress."
TO ALL SENATORS AND CONGRESSMEN OF THE UNITED STATES:
The United States Supreme Court in the majority opinion of the EXXON Valdez case has assumed the role of Congress in the creation of law. The United States Constitution clearly defines the separation of powers between the Executive, Legislative and Judicial branches of government. It is this check and balance in the role of American Democracy that insures our citizens the Rights and Responsibilities.
THEREFORE:
In all matters that relate to the exploration, development and delivery of oil and gas resources of the United States; Congress "should" incorporate the guidance to all parties of the "Rights" and "Responsibilities" as a matter of course in any present or future oil and gas Legislation and Acts of Congress.
AND; Congress in its collective wisdom "should" as a matter of course establish a ratio for ALL compensation for all Public and Private injury arising from an action in violation of law.
So for 20 years Exxon has kept 2.5 billion in an account until verdict. Probably an interest bearing account. So after 20 years what was total interest? 5 million? Either way they made money with the 5 million decision....Sad
Who is more greedy, Exxon or Alaskans? According to the Supreme Court, it's us. What's next?
Exxon: "Pour a Tanker on your Tiger!"
Exxon, like all big oil corporations, and, essentially like ALL big multi-national corporations, have become the enemies of the people, the enemies of democracy, and, when summed up, the true terrorists of the world.
When corporate profits become more important than the vote, more important than the law, and most off all, contrary to the welfare of the individuals who make up our country, it's time to seriously reevaluate our government and our way of life.
This verdict is a national disgrace!
no matter what the ruling it will probly be in court another 50 years to prevent payment yet again. Just keep it up maybe someday you might see that 15,000.00, but it will not help now with the rise in prices all across the board.
Hey, Big Mike . . . who is "Senator Harris?" Never heard of that person.
The big loosers here are the high priced law firms who would have raked in 30% - 50% of the punitive damages and already took a good chunk of the nearly $500,000,000.00 in actual damages already paid out.
All this because ONE MAN had a few too many Bud Lites when he should have taken a hard right instead. ONE MAN who left an unqualified man in charge of the ship so he could sleep off his high. Maybe the fishing folks should have sued Budweiser.
somehow dennis hopper ended up with the ship and that guy that was in the wolf movie kills him and there was a little girl and her mother who was sort of trashy, stinky maybe, and they find "dry-land" and live happily forever. i think it was on the news or something.
...and they called him "Saint Joe" or something like that :-) Love it, che! Maybe that ONE MAN should be happy we don't turn the maritime law back a couple hundred years--actually, the company would be liable -- was there not a qualified pilot on board? That saved the bacon of a number of ship captains in the not so distant past.... Grounding and cargo loss like that was a hanging offense. I just think it's ironic that Exxon is suing the state for $500 mil, and the judgement is for .... $500 mil. What--do they want Exxon and the state to exchange checks and leave it at that? :-)
You all have blood (Big Oil Money) on your hands. Y(our) State budget is ALL oil money; y(our) local municipalities have fund sharing from Oil Money; and of course y(our)-"Its my right, keep your hands off my money"- permanent fund dividend. I never hear you complain about that money, other than "it isn't enough and we should make Big Oil pay more because they have more money than us and we want to change that".
The second that you accepted any of that money, you all became Big Oil! Now you cuss them...
I have no idea how you all do not choke on your own hyprocracy.
http://newsminer.com/news/2008/jun/25/fu...
To illustrate my point...it is never enough money for you all...
NO MORE EXXON!!! NO MORE EXXON!!!
I would rather see the gas pipline go to Canada then to have Exxon get there sticky hands on it.
In nkow way am I fan of exxon. But by the same token, I am not a big fan of commercial fishermen, who spend thousands and thousands of $$$$$ lobbying our congress to pass laws to stop me from catching a fish to put in my frying pan.sameo---sameo.
I remember a bumper sticker from the 70's; EXXON, Sign of the Old Double Cross. Let's bring it back.
Well James if you did your research you will find out that Exxon did not step right up to the plate. It was the local fishermen that was trying to stop the oil from spreading before Exxon even bother starting to clean up their mess. The only reason they had to spend so much money for the clean up was because they were so damn slow.
Also Alaskans we do not need Exxon, their are plenty of other oil companies that want our oil. If Exxon wasn't here to get it there would have been someone else and someone else probably would not left us with such a big disaster.
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