Justices Assess Financial Damages in Exxon Valdez Case
Thursday, February 28, 2008
The Supreme Court yesterday pondered one of those questions that seem designed for brilliant legal minds: How much money would be an adequate punishment for a company responsible for one of the nation's most horrific environmental disasters, the Exxon Valdez oil spill off the coast of Alaska?
A jury in the state said $5 billion. An appeals court said $2.5 billion. And Exxon's answer yesterday was nothing at all, because the company has already paid plenty for the tragedy in Prince William Sound nearly 20 years ago.
Justices explored just about every possible alternative through intense questioning during an hour and a half of arguments before a packed courtroom. By the end, it seemed that several held the view that the company could be found liable for punitive damages, but perhaps not for as much money as even the appeals court had found.
There were several unusual aspects to yesterday's arguments in a case that has bounced through the legal system for 14 years.
Justice Samuel A. Alito Jr. is recused because of his Exxon stockholdings, so even a 4 to 4 tie on the court would affirm the lower court's decisions that punitive damages are owed to nearly 33,000 fishermen, native Alaskans, businessmen and others consolidated into the single suit against Exxon.
And, as Justice David H. Souter noted, the court for a decade has struggled with determining whether punitive damages awarded by state courts were excessive. Now, he suggested, it is the Supreme Court's turn to "come up with a number."
Exxon has acknowledged that the captain of the Exxon Valdez, Joseph Hazelwood, was drunk at the time of the March 24, 1989, accident, and the corporation has paid about $3.4 billion in fines, compensation and cleanup costs.
But in his opening arguments, Exxon's attorney before the court, Walter E. Dellinger, said punitive damages -- awarded to punish the company and deter future wrongdoing -- are unnecessary and improper under "maritime law rule that has been settled for 200 years."
But he did not get far, coming under fire immediately from Justice Ruth Bader Ginsburg.
"It's rather, I think, an exaggeration to call it a long line of settled decisions in maritime law," Ginsburg said, adding that the 1818 decision in The Amiable Nancy that Dellinger relied upon did not touch on punitive damages.
Ginsburg was no more impressed with Dellinger's alternative argument, that it was wrong for the jury to conclude that because Hazelwood was reckless, so was Exxon and, thus, it is liable for punitive damages.
Perhaps the jury was reacting to testimony that Exxon knew Hazelwood was a lapsed alcoholic but allowed him on "voyage after voyage," Ginsburg said. "The jury could have found: Never mind the captain. Exxon, itself, is a grave wrongdoer because it allowed the tanker to be operated by a captain who was certainly not fit."