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High Court Could Lower $2.5 Billion Exxon Valdez Oil Spill Award

Publication Date: 
February 27, 2008
Source: 
CNN Money
Author: 
Mark H. Anderson for Dow Jones Newswires

Dow Jones reports:

The U.S. Supreme Court Wednesday was skeptical of Exxon Mobil Corp.'s (XOM) bid to overturn a $2.5 billion punitive damages award over the 1989 Valdez oil spill, but the justices indicated they may order the award be reduced.

At oral arguments the attorney for Exxon Mobil, Walter Dellinger, gained little traction for his arguments the award should be thrown out entirely. Instead, several justices indicated they were looking at applying a ratio of punitive damages to the compensatory damages fishermen harmed by the oil spill were awarded in the case.

Both Justices Anthony Kennedy and David Souter focused on provisions in criminal law that allow punitive damages that are double actual damages and suggested that figure could be applied to the maritime laws at issue in the Exxon Valdez lawsuit.

"This gives us a very valuable construction," Justice Kennedy said immediately after Justice Souter suggested the court needed a number.

...

A large portion of the arguments focused on whether Joseph Hazelwood, the Valdez ship captain, met requirements as a high-ranking corporate official who could expose Exxon to punitive damages. Dellinger argued that Hazelwood did not have sufficient authority, but several justices did not appear persuaded.

...

Jeffrey Fisher, the Stanford, Calif., attorney for the plaintiffs, argued that Capt. Hazelwood's violation of policy by leaving the ship's bridge before the accident was "perfectly appropriate to expose a company to punitive damages." He added that all the other fines and payments made by Exxon hasn't been enough to deter the company from acting in a manner that could create another oil spill. " They have taken no action inside the company to express that they have been deterred," Fisher told the court.

...

The case is Exxon Shipping Co. and Exxon Mobil Corp. v. Baker, 07-219. A decision will be released by July.