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Justices Slash Damages for Exxon Oil Spill
Sen. Patrick J. Leahy (D-Vt.), chairman of the Judiciary Committee, said the court "has given Exxon Mobil a $2 billion windfall."
The legal battle has gone on for so long that attorneys for the plaintiffs estimate that at least 20 percent of them are now dead. While the punitive damages will be disbursed on the basis of individual loss, Stanford law professor Jeffrey L. Fisher, who argued the case before the court, said yesterday's action will reduce the average award from $75,000 to about $15,000.
At the time of the jury's original award, $5 billion represented about one year of Exxon Mobil profits. In 2007, the company posted earnings of $40.6 billion.
Souter wrote that the case placed the Supreme Court, which has in recent years has struggled with how to review punitive-damage cases from state courts, in a different role. Because this case involved federal maritime law, the court could assess the reasonableness of the award, rather than just looking at constitutional questions about whether it violated due process.
Souter acknowledged that "some will murmur that this smacks too much of policy," and he was right. Ginsburg said that the "new law made by the court should have been left to Congress."
Stevens complained that in deciding on the precise 1:1 ratio, the majority had developed a "bright-line" rule beyond what any state court had ever imposed.
The court in a previous case had suggested that a ratio of punitive damages to compensatory damages somewhere in the single digits might serve as a constitutional guideline in all but the most exceptional cases, and Souter reaffirmed that in a footnote yesterday.
Robin Conrad, executive vice president of the National Chamber Litigation Center, said: "The decision could have an effect far beyond federal maritime law. Limiting punitive damages to no more than the amount of a compensatory award will go a long way in cabining unpredictable punitive damages."
Amar Sarwal, the chamber's general litigation counsel, agreed that Souter's 42-page opinion could serve as a "persuasive precedent" in guiding state courts.
But Kathleen Flynn Peterson, president of the American Association for Justice (formerly known as the Association of Trial Lawyers of America), emphasized that the case involved only maritime law.
"Those in the business community who claim this decision stands for a generalized punitive damage limit are wrong," she said.
Dellinger had argued that maritime law also prevented Exxon Mobil from being punished for Hazelwood's actions. But Souter said the justices split equally on that question, meaning that the lower court decisions on that issue stood.
Staff writer William Branigin contributed to this report.