Supreme Court Weighs Exxon Valdez Damages
Nina Totenberg interviewed Jeffrey Fisher, who is asking the Supreme Court to uphold punitive damages against Exxon for the 1989 oil spill in Prince William Sound, Alaska. Totenberg reports:
Nineteen years ago, the supertanker Exxon Valdez, loaded with millions of gallons of crude oil, ran aground in Alaskan waters, resulting in the most notorious oil spill in modern times. After a five-month trial and two appeals, Exxon was ordered to pay $2.5 billion in punitive damages.
On Wednesday, the Supreme Court hears Exxon Mobil Corp.'s claim that it should pay no punitive damages at all.
The accident occurred March 24, 1989, when the ship, traveling in the dead of night, struck Bligh Reef in Prince William Sound, Alaska. Capt. Joseph Hazelwood, who had abandoned the bridge during the treacherous crossing, first reported the accident to the Coast Guard. His sleepy voice is recorded for posterity, as he tells the Coast Guard the Valdez has "fetched up hard aground," and is "leaking some oil."
The oil spill in fact turned out to be the largest on record in North America: 11 million gallons of crude oil, spread across 600 linear miles — larger than the distance between Washington, D.C., and Atlanta.
Stanford law professor Jeffrey Fisher, representing the Alaskan plaintiffs, counters that punitive damages have been available for hundreds of years in maritime law, "basically under the same circumstances they are available in tort law, when a defendant acts egregiously or in callous disregard for the rights of others."
"The entire Phase Three of trial was all about Exxon's corporate knowledge of Hazelwood's drinking."
Indeed, Fisher says, Hazelwood dropped out of the post-rehabilitation program that he had been forced to enroll in; Exxon management knew that Hazelwood had subsequently had his license to drive a car revoked because of a drunken-driving charge; 15 witnesses testified at trial about his drinking, often with Exxon personnel; and Exxon supervisors were informed of his drinking, including by report to the president of Exxon Shipping.
Fisher counters that the very irrationality of Exxon's actions is what justifies punitive damages. "An alcoholic culture pervaded the company," he says. "Officials didn't want to blow the whistle on a friend. This is precisely what makes Exxon's conduct so egregious." The company deserves this kind of punishment, he adds, precisely because it "showed utter disregard for the environment and for tens of thousands of Alaskans that depended on the bounty of Prince William Sound."
Fisher argues that the punitive damages are just barely enough to punish and deter, since the $2.5 billion represents only three weeks of Exxon's current net profits. Exxon, on the other hand, says the award amounts to more money than all the punitive damage awards ever upheld by the federal courts combined.