WATCHING GOVERNMENT: High-stakes appeal

Feb. 11, 2008
The US Supreme Court moved one step closer to addressing a $2.5 billion question this term when it placed Exxon Shipping Co. vs. Baker on its docket on Feb. 1 and scheduled arguments for Feb. 27.

The US Supreme Court moved one step closer to addressing a $2.5 billion question this term when it placed Exxon Shipping Co. vs. Baker on its docket on Feb. 1 and scheduled arguments for Feb. 27.

The case stems from the Mar. 24, 1989, grounding of the tanker Exxon Valdez in Prince William Sound, which discharged more than 11 million gal of oil into Alaskan coastal waters.

More than 250 lawsuits by area fishermen, processors, Alaska Natives, landowners, businesses, and others were consolidated into a single action. A jury awarded plaintiffs $297 million of compensatory damages and $5 billion of punitive damages following a 4-month trial in 1994.

ExxonMobil Corp. appealed the punitive damages award, which the Ninth US Circuit Court of Appeals cut to $2.5 billion on Dec. 22, 2006. The company’s attorneys appealed to the Supreme Court, which agreed on Oct. 29, 2007, to hear the petition.

‘Further punishment’

In a statement at the time, ExxonMobil expressed deep regret for the spill and said all compensatory claims were resolved. “The punitive damages case has never been about compensating people for actual damages. Rather it is about whether further punishment of ExxonMobil is warranted. The company does not believe any punitive damages are warranted in this case,” the company said.

Alaskan government officials disagree. In a brief filed with the Supreme Court on Jan. 29, the state asserted that maritime law permits a court to hold what then was Exxon Corp. responsible for ship captain Joseph J. Hazelwood’s conduct. It also argued that the federal Clean Water Act (CWA) does not keep injured parties from obtaining punitive damages. Alaska’s congressional delegation also filed a brief. So did the state’s legislature, which was joined by four former governors. The high court also received briefs from 26 other groups and individuals including the International Association of Tanker Owners, American Petroleum Institute, American Institute of Marine Underwriters, and Maryland and 33 other states.

Three main questions

In its docket placement notice, the Supreme Court said ExxonMobil indicated that the company’s lawyers asked three primary questions: First, may punitive damages be imposed under maritime law against a ship’s owner for conduct of a ship’s master at sea without a finding that the owner directed, countenanced, or participated such conduct?

Second, when Congress specified criminal and civil penalties for maritime conduct in a controlling statute (the CWA, in this case) but did not provide for punitive damages, may a judge add such penalties?

Third, is the $2.5 billion punitive damages award within limits of federal maritime law or, if maritime law could permit such an award, constitutional due process? The Supreme Court granted a writ of certiorari to all but the second part of the third question. The arguments before the court on Feb. 27 should be interesting. The court’s decision later this year promises to be very significant.

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