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Sizing Up the Exxon Valdez Punis Argument

Publication Date: 
February 27, 2008
Source: 
The Wall Street Journal Law Blog
Author: 
Ashby Jones

The Wall Street Journal Law Blog has an update to its report on the Exxon Valdez hearing:

The Supreme Court weighed into murky waters today during oral arguments in a case involving the 1989 Exxon Valdez oil spill. At issue: whether to uphold a $2.5 billion punitive-damages award levied against Exxon Mobil for the spill, which occurred in Alaska’s Prince William Sound and created one of the largest environmental accidents in U.S. history.

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According to the Dow Jones Newswires report, the justices seemed inclined to uphold at least part of the Exxon-Mobil award, which is five-times greater than the underlying actual damages. In other contexts, the Court has held that punitive damages do not violate due process so long as they bear a reasonable connection to the underlying harm suffered. Recent cases have loosely pegged the permissible ratio of punitives-to-compensatories at 9:1.