The Observer, July, 2008

Supreme Court slashes Exxon Valdez punitive damages

The long-awaited ruling in the case of the Exxon Valdez oil spill was handed down June 25 when the Supreme Court capped punitive damages at $507.5 million, bitterly disappointing thousands of commercial fishermen and other plaintiffs who had seen the award whittled down from $5 billion by a series of court rulings.

The citizens’ councils for Prince William Sound and Cook Inlet filed a friend of the court brief in January 2008 arguing to retain punitive damages as a deterrent to risky corporate behavior of the sort that led to the Exxon Valdez spill.

The final decision was divided, 5-3. Justice Samuel Alito did not take part in the case, because he owns Exxon stock.

The court’s reasoning was summed up by Justice David Souter, who said punitive damages should not exceed the $507.5 million the company has already paid in compensation to victims for economic losses.

Exxon claims it has already paid $3.4 billion in fines, penalties, cleanup costs, claims and other expenses resulting from the spill.

Nearly 33,000 plaintiffs will share the decreased award.

John Devens, executive director of the Prince William Sound citizens’ council, said $507.5 million is little more than a slap on the wrist for the oil giant, which earned profits at the rate $1,287 per second in 2007, a total of $40.6 billion for the year.

“We were relieved that punitive damages weren’t wiped out altogether, but we don’t believe that $500 million is much of a deterrent for a company the size of Exxon,” Devens said.

In 1989, the grounding of the Exxon Valdez on Bligh Reef dumped an estimated 11 million gallons of crude oil into Alaska’s Prince William Sound, oiling 1,300 miles of coastline and leading to the deaths of hundreds of thousands of marine animals and seabirds.

In 1994, a federal jury decided that Exxon should pay $5 billion in punitive damages. In 2006, a federal appeals court cut that verdict to $2.5 billion. Further appeals led to the June 25 Supreme Court ruling capping the damages at $507.5 million.

return to this edition