9th Circuit Orders Reduction of $5 Billion Punitives Award in Exxon Valdez Case

The 9th U.S. Circuit Court of Appeals Wednesday threw out as excessive the $5 billion punitive damages verdict against Exxon for the 1989 Exxon Valdez oil spill in Alaska and ordered a judge to determine a lesser amount. A jury in Anchorage, Alaska, had ordered the oil giant in 1994 to pay the sum to thousands of commercial fishermen, Alaska natives, property owners and others harmed by the nation's worst oil spill.

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A federal appeals court Wednesday threw out as excessive the $5 billion punitive damages verdict against Exxon for the 1989 Exxon Valdez oil spill in Alaska. The court ordered a judge to determine a lesser amount. A jury in Anchorage, Alaska, had ordered the oil giant in 1994 to pay the sum to thousands of commercial fishermen, Alaska natives, property owners and others harmed by the nation’s worst oil spill. Exxon, which has since merged with Mobil to form Exxon Mobil Corp., had argued the verdict was “completely unwarranted, unfair and is excessive by any legal or practical measure.” A three-judge panel of the 9th U.S. Circuit Court of Appeals said some damages were justified to punish the company but agreed that $5 billion — the biggest punitive damage award in history at the time — was too much. The amount was equal to a year’s worth of Exxon’s profits. The jury also awarded commercial fishermen $287 million to compensate them for economic losses suffered as a result of the spill. The appeals court left that part of the verdict intact. The decision confirmed the company’s belief that the $5 billion award was excessive, Exxon Mobil Chairman Lee Raymond said Wednesday. David Oesting, a lawyer for the fishermen, said he might ask the court to reconsider, or ask the U.S. Supreme Court to review the ruling. The plaintiffs noted that the spill, which polluted Alaska’s Prince William Sound with 11 million gallons of crude oil and smeared black goo across roughly 1,500 miles of coastline, had reduced their property values and damaged fishing and hunting grounds. R.J. Kopchak, 52, a fisherman in Cordova near the oil spill, said there are no herring left in the waters and minimal salmon. “We no longer can make a living commercial fishing,” said Kopchak, whose herring fishing operation is defunct. The jury found recklessness by Exxon and the captain of the Valdez, Joseph Hazelwood, who caused the tanker to run aground on a charted reef. That finding of malfeasance made Exxon liable for punitive damages. Exxon had argued it should not have to pay any punitive damages. The oil giant said it learned its lesson and spent more than $3 billion to clean up Prince William Sound and settle federal and state lawsuits. The plaintiffs had alleged that Hazelwood ran the ship aground while drunk and that Exxon knew he had a drinking problem. Hazelwood, however, was acquitted in 1990 of operating the tanker while drunk. The appeals court Wednesday said that for every dollar in compensatory damages, the jury awarded more than $17 in punitive damages — a ratio that would not get by the U.S. Supreme Court. The appeals court noted the high court in 1991 ruled that a 4-to-1 ratio was “close to the line” between a constitutionally acceptable and unacceptable jury verdict. Just two weeks ago, a different three-judge panel of the 9th Circuit upheld a $1 million punitive damage award to a man harassed on the job at a Washington state cardboard company because he was black. The award had a 28-to-1 ratio from the jury’s $36,612 compensatory damage award. Shares of Exxon Mobil closed down 16 cents to $39.08 Wednesday on the New York Stock Exchange. Copyright 2001 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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