At the High Court, Damage Control

By Dana Milbank
Thursday, February 28, 2008

Chief Justice John Roberts was pained.

Exxon Mobil, the giant oil corporation appearing before the Supreme Court yesterday, had earned a profit of nearly $40 billion in 2006, the largest ever reported by a U.S. company -- but that's not what bothered Roberts. What bothered the chief justice was that Exxon was being ordered to pay $2.5 billion -- roughly three weeks' worth of profits -- for destroying a long swath of the Alaska coastline in the largest oil spill in American history.

"So what can a corporation do to protect itself against punitive-damages awards such as this?" Roberts asked in court.

The lawyer arguing for the Alaska fishermen affected by the spill, Jeffrey Fisher, had an idea. "Well," he said, "it can hire fit and competent people."

The rare sound of laughter rippled through the august chamber. The chief justice did not look amused.

Perhaps, though, his consternation was misplaced. Everybody knows the wheels of justice turn slowly, but in the case of the 1989 Exxon Valdez spill, things have dragged on so long that Lady Justice's blindness could reasonably be attributed to cataracts.

Nineteen years after the Valdez ran aground in Prince William Sound and spilled 11 million gallons of oil, the 32,000 plaintiffs -- mostly fishermen, cannery workers and Native Alaskans -- have received no punitive damages from Exxon.

A jury awarded them $5 billion in punitive damages -- a record level, for a record disaster -- and an appeals court cut that in half. Now, the Supreme Court seems inclined to deal another insult to the victims (as many as a fifth of whom have already died) by cutting the award further.

Arguing for the Alaskans, Fisher, a tall and lanky Stanford professor with unruly gray hair, pointed out to the justices that the spill "destroyed an entire regional economy." Yet Exxon fired only one person, Capt. Joseph Hazelwood, who even the oil company admitted was drunk at the time of the accident, while executives received bonuses and pay raises. "What you have today are 32,000 plaintiffs standing before this court, each of whom have received only $15,000 for having their lives and livelihood destroyed and haven't received a dime of emotional-distress damages," Fisher argued.

Several justices, however, seemed more concerned about the emotional distress of the Exxon executives. "I assume the test is the person has to be high enough that it justifies holding the entire corporation" responsible," Antonin Scalia said, "and I doubt whether a captain is high enough."

Justice Anthony Kennedy, wagging his finger at Fisher as he challenged the lawyer's argument, charged that "the corporation's responsibility or complicity or culpability is simply not relevant under your theory of the case."

Roberts seemed the most agitated as he argued that Exxon wasn't responsible for the captain's unauthorized drunkenness. "I don't see what more a corporation can do," he said. "What more can the corporation do other than say 'Here is our policies' and try to implement them?"

Fisher tried to deflect some of the more barbed questions -- "I don't want to act like a dog chasing his tail here, Justice Kennedy . . . I'm not going to fight you on that" -- but it was clear that the court's main motive in hearing this case was to cut the jury award. When Fisher said he thought the justices had agreed to hear the case because of an unsettled aspect of maritime law, Scalia cut him off.

"That," the justice said, "and $3.5 billion."

One thing working in the Valdez victims' favor: Justice Samuel Alito, an Exxon shareholder, recused himself from the case. Also in the plaintiffs' favor: No justice, with the possible exception of Scalia and the ceiling-staring Clarence Thomas, liked Exxon's assertion that no punitive damage is legitimate.

Ruth Ginsburg pointed to the evidence that "Exxon knew that this captain had a severe alcohol problem, and yet, they let him stay on voyage after voyage and did nothing about it."

Even Roberts seemed skeptical when he asked Exxon's lawyer, former solicitor general Walter Dellinger: "So you have to have a shareholder driving the boat before you can assess liability?"

Dellinger licked his lips frequently and drank generously from his water glass. "Exxon gained nothing by what went wrong and paid dearly for it," he pleaded to the justices.

It seemed likely Exxon would have to pay more for it -- though not terribly much. The court's dealmakers, Kennedy and David Souter, floated the idea that punitive damages could be double the amount of compensatory damages -- about $800 million, instead of the $2.5 billion ordered by the appellate court. Souter wondered aloud whether "we've simply got to come up with a number."

The notion of the justices pulling a number out of thin air seemed a bit too neat for an oil spill that spoiled 1,200 miles of Alaska's coastline. But then the argument had less to do with the dead marine animals and ruined fishermen than with an obscure maritime law case from 1818 called The Amiable Nancy-- or, as Scalia put it, the " Amiable Whatever It Is."

As the justices probed the intricacies of the laws of the sea, Ginsburg discussed Rule 50. Kennedy invoked Instruction 30, Instruction 33 and Instruction 36. Spectators showed evidence of drowsiness. Reporters yawned -- at least until they were jolted awake by an alarming prospect raised by Ginsburg, who spoke about "a new trial" and the "next time around."

A new trial? After 19 years of legal fighting? Out on the plaza after the argument, Brian O'Neill, one of the Alaska victims' lawyers, conceded that, whatever the Supreme Court's ruling, Exxon had already won. "I guess the lesson you learn," he said, "is that if you're big and powerful enough, you can bring the system to a halt."

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