US Supreme Court to hear Exxon Valdez punitive damages appeal

Nick Snow
Washington Editor

WASHINGTON, DC, Oct. 30 -- The US Supreme Court agreed Oct. 29 to hear an appeal of the $2.5 billion punitive damages award stemming from the 1989 grounding of the tanker Exxon Valdez and subsequent crude oil spill in Alaska's Prince William Sound.

The court did not set a date for arguments in the case, Exxon Shipping Co. vs. Baker, but appears likely to hear the case next spring.

The spill of more than 261,900 bbl of crude into the sound led to a jury's record $5 billion punitive damages award, which the federal ninth circuit appeals court cut in half. ExxonMobil Corp. appealed that decision to the Supreme Court on Aug. 20.

An Oct. 29 update on the website of the Faegre & Benson law firm, which represents more than 30,000 plaintiffs in the case, said that the high court's review will be limited to maritime law issues. The court declined a claim the verdict was excessive under the US Constitution's due process clause, and refused to hear a cross-appeal seeking to reinstate the $5 billion damages award, the law firm said.

ExxonMobil welcomed the Supreme Court's announcement. "This case has never been about compensating people for actual damages. Rather it is about whether further punishment is warranted in a case where a company voluntarily compensated most plaintiffs within a year of the spill, and has spent over $3.5 billion, including compensatory payments, cleanup payments, settlements and fines. We do not believe any punitive damages are warranted in this case," it said in a statement on Oct. 29.

Alaska Gov. Sarah Palin called the high court's decision to hear the appeal "a kick in Alaskans' collective gut." The fishing industry and coastal communities of Prince William Sound still have not recovered, she continued in a statement issued in Juneau on Oct. 29. "It seems to be a case of justice delayed is justice denied. I believe this has gone on too long," Palin said.

ExxonMobil said a large number of trade associations filed briefs in support of its appeal, an indication of the business community's concern about the case. The maritime industry also is watching it closely, the company said.

"It is important that the Supreme Court hear this case to provide guidance to the lower courts on the application of punitive damages. It is also important for the Supreme Court to uphold long-standing maritime law that provides that ship-owners are not liable for punitive damages based upon conduct by the ship-master who disregarded the owner's rules and policies," ExxonMobil said.

Contact Nick Snow at nicks@pennwell.com.

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