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Call it the Showdown in Prince William Sound. On Friday, Senior U.S. District Judge H. Russel Holland of the District of Alaska reinstated a near-record punitive damages award even though the 9th U.S. Circuit Court of Appeals ruled last year that the original $5 billion verdict was excessive. Holland’s award of $4 billion was a surprise to followers of the case, particularly Exxon Mobil Corp., which immediately vowed to appeal. The move could tack on several more years of litigation stemming from the infamous Exxon Valdez oil spill that happened more than 13 years ago. “This ruling flies in the face of the guidelines set by the appeals court when they sent this case back to Judge Holland,” Exxon Mobil General Counsel Charles Matthews said in a statement. “While the plantiffs’ counsel’s challenge to Judge Holland to send a message to the Ninth Circuit ‘that they are wrong’ is entertaining courtroom bravado, it requires us once again to appeal an order that is entirely inconsistent with the law already established by the Ninth Circuit, as well as principles set forth by the Supreme Court.” Spokesman Tom Cirigliano said Exxon Mobil was disappointed that Holland didn’t issue a “Solomon-like decision that could have brought closure to this case.” But plaintiffs’ lawyers representing thousands of Alaskans who make their living from Prince William Sound, the site of the 11-million gallon spill, praised Holland. “When we as a group of plaintiffs’ lawyers sit around and talk about what is going to transpire, no one has a crystal ball,” said Randall Scarlett of San Francisco’s Scarlett Law Group, when asked if he was surprised by the ruling. “I can tell you that we were pleased.” Last year, a unanimous three-judge panel ruled that the record award “must be reduced,” holding that it was inconsistent with intervening Supreme Court precedents about punitive damages such as BMW of North America v. Gore, 517 U.S. 559 and Cooper Industries Inc. v. Leatherman Tool Group Inc., 121 S. Ct. 1678. The 9th Circuit decision in In re: Exxon Valdez, 270 F.3d 1215, was authored by 9th Circuit Judge Andrew Kleinfeld, who sits in Alaska and once served on the district court bench with Holland. Kleinfeld — who did write that Holland did a “masterful job” with the litigation — held that the company’s conduct was not violent and did not cause any deaths. He also wrote that the award must be rationally proportional to the award of compensatory damages. But Holland and the 9th Circuit apparently disagree on what compensatory damages have been paid. Calling it “the most troubling aspect” of the 9th Circuit’s ruling, Holland challenged the higher court’s determination that prejudgment settlements cannot be counted toward the compensatory figure. “The briefing of the parties and the court’s independent research suggest that authority in support of the foregoing proposition is nonexistent, and what sparse authority does exist reaches a contrary conclusion,” Holland wrote. “This court does not understand how or why encouraging settlements should be a part of the due process analysis of a punitive damages award made in a case which went to trial. Moreover, this court thinks a contrary argument is more logical.” Holland also wrote that although the jury could not consider environmental damages, “the entire fabric of Prince William Sound and Lower Cook Inlet was torn apart.” That statement seemingly contradicts Kleinfeld’s statement that this was merely “a case about commercial fishing.” That unquantifiable harm, Holland wrote, could be used under the ratio test of BMW to “accommodate the unknowns by allowing a higher ratio to pass muster.” In its 2002 proxy statement to shareholders, Exxon Mobil hinted that the case could yet drag on: “The ultimate cost of the Exxon Valdez grounding is not possible to predict, and may not be resolved for a number of years.”

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