The Observer, September, 2008

Corporations held to different standards than citizens

Following recent events such as the Supreme Court’s ruling on the Exxon Valdez oil spill and Alaska’s decision to vote down the clean water initiative, the council has become increasingly interested in the idea of corporate responsibility.

In an effort to extract Alaska’s precious resources, big businesses are rapidly descending on our state, not only with hopes of building a gas pipeline, but through mining operations all across the state and offshore drilling in locations spanning from the Aleutians to the Chukchi Sea.

While it is generally in the interests of big businesses to avoid damage to Alaska and its people, accidents do happen. In the case of the 1989 Exxon Valdez oil spill, many Alaskans were left with their lives in ruins, while Exxon pulled through the ordeal relatively unscathed.

This brings up an issue of growing importance: the rights of individuals versus the rights of big corporations. As with most things, the disappointing ruling in the Exxon Valdez case boils down to politics.

As a result of President Bush’s appointments to the Supreme Court, the interests of big business have taken precedence over the interests of individual citizens. Even the United States Senate is starting to take notice.

In the case of Exxon, Senate Judiciary Committee Chairman Patrick Leahy said the Supreme Court’s decision to cut the amount of damages awarded was out of line.

In opening statements for a hearing titled “Courting Big Business: The Supreme Court’s Recent Decisions on Corporate Misconduct and Laws Regulating Corporations,” Leahy said the Supreme Court is demonstrating an increasing willingness to overturn juries.

“Nothing is more fundamental to the American justice system than our trust in the wisdom and judgment of ordinary Americans who serve on juries,” Leahy said. “If Congress had wanted to cap the punitive damages for disasters that impact thousands of Americans, of course we could have done so, but we didn’t.”

The lawsuit centered on the dispute over an Anchorage jury’s decision that Exxon should pay $5 billion in punitive damages. The figure was later reduced to $2.5 billion by the 9th Circuit Court of Appeals. A third appeal was brought to the U.S. Supreme Court.

In the Supreme Court’s majority opinion, Associate Justice David Souter wrote that the punitive damages award should be equal to the compensatory damages and lowered the punitive damages again to $500 million.

By doing so the Supreme Court set a precedent of capping punitive damages against big business, effectively crippling their function as a deterrent against risky corporate behavior. This is directly at odds with how courts punish individual citizens. Despite not being persons, corporations are recognized by the law to have some of the same rights and responsibilities as actual people.

However, individuals who break the law receive mandatory lengthy sentences and, in some states, even the death penalty. This is not only to punish criminal behavior, but to deter it as well.

The Supreme Court’s Exxon ruling seems to suggest that corporations do not merit the types of harsh punishments individuals receive and completely fails to address the issue of deterring corporate irresponsibility.

Exxon’s punishment of $500 million was less than 2 percent of its 2007 earnings of $40 billion. For the sake of comparison, the average American with an income of $50,000, could have dumped 11 million gallons of crude oil into Prince William Sound and gotten away with paying $1,000 in punitive damages.

This surely is a double standard in punishment, considering that individuals found guilty of crimes can spend large portions of their lives in prison.

Alaska is a state built on the hard work of its people and the production and distribution of its natural resources. Resource production will undoubtedly be a part of our great state well into the future. But as we move forward, Alaskans must hold big businesses accountable for their actions and remember that big businesses work for us, not the other way around.

• John Devens is executive director of the Prince William Sound Regional Citizens’ Advisory Coucil.

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