Exxon damages slashed


The U.S. Supreme Court on Wednesday gutted punitive damages awarded to victims of the Exxon Valdez spill, devastating West Coast fishermen.

There were fears that after so many years in court the oil behemoth would see its penalty reduced. But the decision ending the legal saga — slashing the award from $2.5 billion to $500 million — triggered emotional shock waves.

Nobody thought “it would be as bad as this,” said Bob Glenovich, a commercial herring fisherman from Bellingham.

“Everybody’s just stunned,” said Glenovich, 66, who was fishing in Alaska when the Valdez ran aground in 1989. The supertanker struck a reef and spilled 11 million gallons of crude oil into Prince William Sound — the worst oil spill in U.S. history.

Fishermen, Alaska natives, fish processors, and land and business owners — all parties to civil lawsuits against ExxonMobil Corp. — watched the case bounce up and down through the courts. They stood by as the jury’s initial $5 billion award in 1994 was cut in half 12 years later by a federal appeals court.

Wednesday’s Supreme Court decision gives them closure, but little satisfaction.

“It’s almost like people who have lost loved ones, and they’ve never found the body,” said Glenovich of himself and the other plaintiffs.

Adding to their ire: The greatly reduced damages now leveled against ExxonMobil Corp. equal about four days’ worth of the company’s profits last quarter — $10.9 billion.

Justice David Souter, writing for the majority, held that punitive damages should not exceed what the company already paid to compensate victims for economic losses, which was $507.5 million. That comes to about $15,000 on average for each person filing a claim. More than 2,000 of the 33,000 claimants are from the Puget Sound region.

The high court decision was hailed by the business community and could have broader implications for limiting how much courts can order businesses to pay in punitive damages, even in instances of egregious misconduct.

The Exxon Valdez case involves reckless action that was “profitless” for the company and that has already resulted in substantial recovery for substantial injury, Souter wrote. A penalty should be “reasonably predictable” in its severity, he added.

In February, ExxonMobil asked the Supreme Court to toss out the punitive damages award, saying the company had already spent $3.4 billion to clean up the spill and compensate victims.

“The Valdez oil spill was a tragic accident and one which the corporation deeply regrets,” Rex Tillerson, ExxonMobil’s chairman and chief executive officer, said in a statement released Wednesday.

“We know this has been a very difficult time for everyone involved,” he said. “We have worked hard over many years to address the impacts of the spill and to prevent such accidents from happening in our company again.”

The sticky, heavy crude oil fouling Prince William Sound killed hundreds of thousands of seabirds, otters, fish and other marine life. Even after the cleanup, the region has not recovered fully. Herring stocks are still so low that they can’t be fished.

“If you dig a hole (on a beach up there) you can find oil,” said John Devens, executive director of the Prince William Sound Regional Citizens’ Advisory Council, which works to prevent spills. “Sometimes you can turn a rock over and find oil. It’s remarkable after 20 years.”

William Murray of Seattle was working on a tender — a ship that transferred salmon and herring from fishermen to the canneries — when the accident happened.

“It was really hard,” said Murray, a plaintiff in the civil case. After the spill, he was contracted to bring food and supplies to the cleanup crews. He saw the devastation firsthand and since then has tracked the legal challenges brought against ExxonMobil.

“I’m over the anger,” said Murray, now 46 and a King County employee. “I’m just kind of let down. It doesn’t seem like justice was served. Maybe for the corporations, but for the people affected, it doesn’t seem like it was a just decision.”

Dave Franklin, another anguished fisherman, said, “It shows how far out of touch the Supreme Court is with everyday people.”

Franklin, 53, is captain of the Seattle-based Haida Warrior, whose crew was preparing Wednesday to depart next week for the Alaskan coast.

“My claim will be less than the losses I suffered,” he said, referring to years of lost fishing and lower prices for his catch because of the spill. “They’ve done a major disservice to the fishermen. … They should be ashamed of themselves.”

The Supreme Court was divided 5-3 in its decision. Justice Samuel Alito recused himself from the case because he owns ExxonMobil stock.

Some legal experts were troubled by the message sent by court.

“The Supreme Court’s ruling means that no corporate polluter of our maritime waterways, no matter how large and wealthy, will ever have to pay punitive damages in an amount greater than the compensatory damages they have caused,” said Karen Koehler, president of the Washington State Trial Lawyers Association.

Looking at the economic damages is not a fair way to assess the actual harm to people and the environment, said Bill Rodgers, an expert in environmental law at the University of Washington Law School.

Exxon “will walk away from the spill in Alaska without adequately paying for their damages,” he said. “This is a travesty.”

In her dissent, Justice Ruth Bader Ginsburg said the court was engaging in “lawmaking” by concluding that punitive damages may not exceed what the company already paid to compensate victims for economic losses.

“The new law made by the court should have been left to Congress,” she wrote.

Justice Stephen Breyer made a similar point, opposing a rigid 1-to-1 ratio of punitive damages to victim compensation. Justice John Paul Stevens also dissented.

On the question of whether Exxon is liable for punitive damages at all, the court split 4-4, which leaves in place the appeals court opinion saying the company is liable. Had Alito participated, he could have been the deciding vote on the question, potentially leaving the victims with no punitive damages.

While Exxon’s Tillerson said the company has improved its safety practices since the massive spill, others aren’t convinced. The company’s tankers, some of which have been rebuilt, are on average 26 years old, said Fred Felleman of Northwest Consultant for Friends of the Earth, an environmental group.

“Exxon is choosing to sail these ships that are long in the tooth into the sunset. As they get older, they get more and more vulnerable,” Felleman said. “They have not learned their lesson.”


A 1994 award to plaintiffs harmed by the 1989 Exxon Valdez spill has been reduced twice.

SEPT. 16, 1994


DEC. 22, 2006





  • On March 24, 1989, the tanker Exxon Valdez, skippered by Capt. Joe Hazelwood, ran aground on Bligh Reef, spilling more than 11 million gallons of crude oil into Prince William Sound. It remains the biggest oil spill in U.S. history.
  • Hazelwood was convicted of negligent discharge of oil but acquitted of operating the vessel while drunk. Exxon pleaded guilty to environmental crimes and paid $125 million in criminal fines plus $900 million to settle civil lawsuits filed by the government. Exxon also settled a civil suit filed by Alaska natives for $20 million.
  • Alaska- and Seattle-based fishermen, landowners and others harmed by the spill filed lawsuits against Exxon. In 1994, a jury awarded the plaintiffs $287 million in actual damages and $5 billion in punitive damages. Twelve years later, the 9th U.S. Circuit Court of Appeals cut the punitive damages award in half.
  • The U.S. Supreme Court on Wednesday further slashed punitive damages — to a maximum of $507.5 million.

    This story includes information from P-I reporter Noel Lyn Smith and The Associated Press. P-I reporter Lisa Stiffler can be reached at 206-448-8042 or lisastiffler@seattlepi.com. Read her blog on the environment at datelineearth.com.

    © 1998-2008 Seattle Post-Intelligencer

  • ~ by fredfelleman on June 26, 2008.

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