Today SCOTUS reduced the punitive damages award in the Exxon Valdez Oil Spill lawsuit filed by over 33,000 individual plaintiffs. In order to make the trial easier to understand for the jury,Judge Holland divided the case into four phases. At the conclusion of the first phase, which ended in June, 1994, a Federal jury determined that Exxon and Mr. Hazlewood had acted recklessly. This decision cleared the way for the third phase in which the jury would award punitive damages. During the second phase, which ended in August, the jury began to side with Exxon's contention that skimpy supplies of herring and salmon could not be entirely attributed to Exxon, and awarded some 10,000 fishermen $286.8 million in compensatory damages, only a third of the amount they were seeking. While the jury was deliberating in the second phase, 3,500 Natives who claimed subsistence harvest losses settled with Exxon for $20 million.
Also, a handful of coastal communities settled their claims against Exxon for another $1 million. The third phase was to determine punitive damages for about 34,000 fishermen, some 4,000 native Alaskans, and several thousand more Alaska residents, land owners and others, who claimed that they had been harmed by the spill. On September 16, 1994, the Federal jury ordered the Exxon Corporation to pay $5 billion in punitive damages, the largest punitive award ever against a corporation. The jury also ordered the former captain of the Valdez, Joseph Hazelwood to pay $5,000 in punitive damages. Exxon said that the decision was too severe and that they would appeal the decision. The fourth phase was to determine with a new jury whether to award $300 million in damages to crab fishermen and other specialized groups who were not included in the earlier trial. This phase IV part of the trial was negotiated out of court in order to proceed with the punitive damage award by the jury.
Exxon appealed these cases to the 9th District Appeals Court. Exxon was unsuccessful in its appeals except for the directive to reduce the punitive damage award in light of several SCOTUS decision since the trial began. Each time it was remanded back to the District Judge for review. Each time this federal Judge reviewed the case, he concluded Exxon to be more and more reprehensible in its actions. The district Judge was mandated to reduce punitive damages by the Appeals Court directive and did so, from 5 billion to a final of 4.5 billion. Exxon again appealed to the 9 th District Appeals Court. After the lower court had reviewed the jury decision 3 times for due process and constitutional limits, the Appreals Court again reduced the damage award to 2.5 billion. Exxon filed an appeal to SCOTUS basing its position on whether a maritime corporation is responsible for the actions of a Captain even if managaement had some control over the Captain's actions or contributed to the cause of the accident; whether the Clean Water Act was the controlling federal Statute, instead of the federal Trans Alaska Authorization Pipeline Act which specifically superceded the Clean Water Act; and finally, if 2.5 billion was excessive under maritime common law.
Scotus decision today concluded without setting precedent that the Exxon was liable for punitive damages according to the 9th District Appeals decision with a tie court. Scotus unanimously agreed that the Clean Water Act did not preclude punitive damages from private plaintiffs, and then reduced the award to the compensatory loss of 507 million from 2.5 billion.
Based on a 5-3 vote, SCOTUS decided Exxon's punitive liability was only minor and thus due any punitive damages limited to a 1:1 ratio. Every lower court decision prior to SCOTUS had determined Exxon actions to be grossly reprehensible, from 3 District Court reviews, 2 9th District Appeals review, and amicus briefs filed by every previous governor of the State, except one. SCOTUS has just now set precedent and legislated from the bench, for any action of corporate mis management regarding punitive damages due for harm caused by reprehensible actions jin the maritime industry. That will include offshore drilling, shipping, cruise liners, or any other maritime action. This limitation on punitive damages limits corporate exposure to 1:1 of compensatory award without regard to any degree of culpability. This means cruise ships in Alaskan waters can intentionlly dump their black sewage in State waters and only be penalized economically for only the compensatory loss. If there is no private economic or injury loss, of if the private loss is minimal, so too will be the punitive damages for fouling our lifestyle and fishing harm.
I realize that businesses must be economically vialble, but to do business for economic gain with reprehensible conduct, or worse, only hurts the citizens, environment, and State of Alaska. This is another case whereby Federal oversight has irrepairably harmed Alaska and its people. I only hope other States citizens never have to go through this same scenario within their State. I, for one, will campaign for inclusion of legal remedies permitted to the private sector for any reprehensible actions by corporate management upon permit authorization to all companies doing business in this State that will include a punitive damage ratio of 10:1 on compensatory losses or 10:1 of any criminal penalties that could be assessed, whichever is greater. I will also campaign for all cases in Alaska State waters to be tried under Alaska State law and not under Federal maritime common law. This means all traffic within the 3 mile State territorial limit. It is really sad to see big money companies buy freedom from monetary losses for actions that were not only preventable, but with actions that any reasonable person would conclude was bound to happen for unethical corporate mismanagement.
This SCOTUS case will have disasterous consequences in other States, much like the reversal of eminent domain for public use. Just look at the one NY, where a baseball field is proposed that will generate higher taxes to NYC than residents pay now living there. SCOTUS has refused to hear this case, in light of its previous decision in Connecticut. It is time for revolution and enforce the will of the people and its juries.
