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WASHINGTON � Does the Exxon Valdez maritime punitive damages challenge contain the seeds of a potentially broader punitive damages ruling? That some see potential is reflected in the amicus briefs filed by the usual suspects in punitive damages cases: pro-business organizations, such as the U.S. Chamber of Commerce, are seeking greater limits on punitive damages generally. On the other side, pro-plaintiff groups such as the trial lawyers’ American Association for Justice and Public Justice are usually opposing such limits. The first key issue during arguments on Feb. 27 was: At what level in the corporate structure must a person be in order for the corporation to be held liable for punitive damages for that person’s actions? Exxon Shipping Co. v. Baker, No. 07-219. In this case, Exxon was found liable for the acts of the Valdez’s captain, whose negligence led to the 1989 oil spill. The justices appeared to be “shying away from a maritime-only solution,” said Charles Cole, chair of the appellate and Supreme Court practice at Washington’s Steptoe & Johnson LLP. “That does open the possibility of a ruling with broader application.” Exxon’s counsel, Walter Dellinger, a partner in the Washington office of O’Melveny & Myers, argued that a long line of maritime cases rejects vicarious punitive liability. He also argued that the 9th U.S. Circuit Court of Appeals erred in relying on the Restatement (Second) of Torts, which finds vicarious liability for acts by managerial agents. The tanker captain, according to Dellinger, was not a managerial agent. Justices unmoved The maritime tradition argument did not appear to persuade many justices, except perhaps Justice Antonin Scalia, noted Cole and others. Justice John Paul Stevens, for example, questioned the fairness of having different liability rules for essentially the same conduct by the same level of corporate employee depending on whether he or she was on land or on water. But the court did spend considerable time probing Dellinger and his opponent, Stanford Law School Professor Jeffrey Fisher, on who is a managerial agent. “Where do you draw the line between the CEO and the cabin boy?” asked Chief Justice John G. Roberts Jr. “What does the restatement mean when it says ‘managerial agent’?” asked Cole. “I think the court is going deeper and asking, ‘Managing what?’ ” How it resolves that question, he and others agreed, could have an impact beyond the maritime punitive damages arena. A second issue of broader potential impact is whether the $2.5 billion punitive award in this case is within the limits allowed by maritime law, according to Evan Tager, partner in the Washington office of Chicago’s Mayer Brown. Justice Anthony M. Kennedy and others asked whether there were factors other than those the court has identified in its constitutional due process analysis of excessive punitive awards that should be applied to punitive awards under maritime law. Tager said that whatever the court says about excessiveness under maritime law could have spillover effects in cases involving state-law excessiveness, excessiveness under federal statutes and constitutional excessiveness. Justice David H. Souter noted the court’s trouble articulating “determinant” standards � such as an absolute ratio of punitives to compensatory damages � for judging constitutionally excessive punitive awards. The court, he said, can’t put itself in the place of state legislatures. But the court is not so limited when sitting as a common law court to determine maritime law, he said. Why not then, he asked, pick a “number” and say, for example, the limit on punitive damages is no more than two times compensatory damages? “It would be much better for them to recognize each case is different than to impose a single ratio, a one-size-fits-all,” said Tager, whose firm has been in the forefront of litigation to limit punitive awards. But it would be a “good outcome” if the court were to say that in maritime cases, 2-to-1 is the limit, no matter what, he said, and then courts could determine whether an award between zero and 2-to-1 is nonetheless excessive. “This gives them an opportunity to say a little more about the ratio of punitive to compensatory damages than they have in their due process cases,” said Cole. The case’s outcome is unpredictable, agreed Cole, Tager and others. In nonmaritime punitive damages cases, the most conservative justices � Scalia and Clarence Thomas � often join the most liberal ones because they are concerned about intervening in a state law arena. But the Exxon case “reverses all of the [justices'] chairs,” said Cole, because the justices are sitting in review, not of state court actions, but of federal courts in an area in which federal courts traditionally have made much law � admiralty. “That frees up Scalia and Thomas and may have an impact on other justices, the ones who look at the case in the context of a modern business arrangement and ask, ‘Why should the maritime context be different?’ ” said Cole.

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