Exxon Valdez Case Verdict Finally Heads to the U.S. Supreme Court

posted on:
October 19, 2007

author:
Staff

category:
Fraud

A significant percentage of Americans weren’t even born when the Exxon Valdez ran aground on a reef in the Prince William Sound nearly 20 years ago.

But the complex legal fallout from the ensuing environmental disaster and a record punitive damages award has just reached the U.S. Supreme Court.

Exxon Mobil Corp. recently filed a petition asking the High Court to review and overturn a $2.5 billion punitive award. If the justices agree to hear Exxon’s challenge to the punitive award, then they also should grant the petition by the class members who contend that the $2.5 billion award is not excessive and that due process allows reinstatement of the jury’s original award of $5 billion.

There is one different twist to this case. In the past 17 years, the Supreme Court has decided eight cases on punitive damages, reviewing awards made under state law.

Exxon, however, is asking the High Court to examine the $2.5 billion award – reduced from $5 billion by the U.S. Court of Appeals for the Ninth Circuit – under general maritime law. Regardless of what body of law applies to this case, it’s past time for the case to reach a final conclusion. It’s Mr. Beasley’s considered and well-founded opinion that Exxon’s bosses believe they are actually above the law and that the court system has no real authority over the politically powerful oil giant.

It’s been so long since all of this litigation started that many Americans don’t even know how it came about. For that reason, I will recap some of what has transpired thus far. At Exxon’s urging, the U.S. District Court for the District of Alaska certified a multi-class action consisting of a compensatory damage class and a mandatory punitive damages class of 32,677 commercial fisherman, related individuals and businesses, private landowners and native Alaskans.

After a three-phase trial that lasted 83 court days, involving the testimony of 155 witnesses and introduction of 1,109 exhibits, the jury’s September 1994 verdict assessed $5 billion in punitive damages against Exxon and $5,000 against the captain of the Valdez, who was an individual defendant. In an earlier phase, the jury awarded $287 million in compensatory damages. After 13 years of post-trial motions and appeals in which the punitive award was twice sent back to the district court to reconsider in light of intervening U.S. Supreme Court decisions on punitive damages, the 9th Circuit cut the jury award in half.

If the Supreme Court elects to take the case, I understand it will present some complicated maritime law. Lawyers representing the class were actually surprised by the maritime law focus of the appeal because it apparently received very little emphasis in the lower appellate court briefing. It may be that Exxon’s lawyers realize their due process arguments simply won’t work on this appeal. In any event, it will be most interesting to see what happens from this point forward.

 

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