The U.S. Supreme Court announced Monday that it will review a decision upholding a $2.5 billion punitive damages award against Exxon Corp. and its shipping subsidiary that arose from the 1989 Valdez oil spill.
That incident, which occurred March 24, 1989 on Bligh Reef in Prince William Sound, Alaska, caused the leak of about 11 million gallons of crude oil. About 1,500 miles of Alaskan coastline was damaged and populations of aquatic life, sea birds, and other wildlife species declined precipitously. According to a New York Times report on the case today,
"Hundreds of bald eagles and otters, scores of killer whales and thousands of birds of other species perished, as did untold numbers of salmon, herring, clams, mussels and other forms of aquatic life.
"The spill caused personal tragedy and hardship as well as environmental damage. The livelihoods of Alaska fishermen were threatened, and a decade after the disaster the shoreline was still not back to its pre-spill condition."
The tanker's captain, Joseph Hazelwood, was reported to be resting in his cabin in an intoxicated condition when the accident occurred.
The case has a long history. A federal district court jury in Alaska found in 1994 that ExxonMobil and Captain Hazelwood were reckless and negligent in causing the spill and awarded $5 billion in punitive damages.
The U.S. Court of Appeals for the Ninth Circuit later reduced that punitive damage award to $2.5 billion on the grounds that ExxonMobil's conduct was not so reckless as to justify the jury's award. The district court's award represented about five times the amount of economic damage suffered by the approximately 32,000 plaintiffs in the case as a resut of the Exxon Valdez incident.
The Supreme Court did not agree to hear Exxon's argument that the U.S. Constitution's due process clause was violated by the punitive damage award. Instead, the Court will decide whether federal maritime law, a body of law made by judges, permits federal juries to grant punitive damages at all.
The Court will not be considering whether damage to the physical environment and biological integrity of Prince William Sound justifies punitive damages. The question of the compensation Exxon must pay for those consequences of the spill was resolved in a settlement of a separate lawsuit. See Baker v. Hazelwood (In re the Exxon Valdez), 270 F.3d 1215 (9th Cir. 2001).
Only eight of the Court's nine justices will hear the case. Justice Samuel Alito recused himself because he owns shares of Exxon Corp. stock.
Exxon says it has paid $2.2 billion in cleanup expenses, $1 billion to settle claims made by the federal government and the state of Alaska, and $300 million to compensate thousands of Alaskan people and businesses affected by the oil spill.
A link to Exxon Corporation's petition for certiorari is here. The response to that petition is here. Exxon's reply in support of its request that the Court here the case is here.
