Supreme Court Slashes Exxon Valdez Damages

Ruling Cuts $2.5B Award To $500M; Decision Affects More Than 30,000 Alaskans

(CBS/ AP)  The Supreme Court on Wednesday slashed the $2.5 billion punitive damages award in the 1989 Exxon Valdez disaster to $500 million.

The court ruled that victims of the worst oil spill in U.S. history may collect punitive damages from Exxon Mobil Corp., but not as much as a federal appeals court determined.

Justice David Souter wrote for the court that punitive damages may not exceed what the company already paid to compensate victims for economic losses, about $500 million compensation.

Souter said a penalty should be "reasonably predictable" in its severity.

"This is generally a pro-business Supreme Court and this ruling will help cement that reputation," says CBS News chief legal analyst Andrew Cohen. He adds that in addition to giving the oil giant a reprieve on the multi-billion dollar damage award, "it also creates precedent and a tough standard that other plaintiffs will have to overcome in future lawsuits of this magnitude."

Exxon asked the high court to reject the punitive damages judgment, saying it already has spent $3.4 billion in response to the accident that fouled 1,200 miles of Alaska coastline.

A jury decided Exxon should pay $5 billion in punitive damages. A federal appeals court cut that verdict in half in 1994.

The Supreme Court divided on its decision, 5-3, with Justice Samuel Alito taking no part in the case because he owns Exxon stock.

Exxon has fought vigorously to reduce or erase the punitive damages verdict by a jury in Alaska four years ago for the accident that dumped 11 million gallons of oil into Prince William Sound. The environmental disaster led to the deaths of hundreds of thousands of seabirds and marine animals.

Nearly 33,000 Alaskans are in line to share in the award, about $15,000 a person. They would have collected $75,000 each under the $2.5 billion judgment.

In dissent, Justice John Paul Stevens supported the $2.5 billion figure for punitive damages, saying Congress has chosen not to impose restrictions in such circumstances.

Justice Ruth Bader Ginsburg also dissented, saying 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," wrote Ginsburg. Justice Stephen Breyer made a similar point, opposing a rigid 1 to 1 ratio of punitive damages to victim compensation.

Writing for the majority, Souter said that traditionally, courts have accepted primary responsibility for reviewing punitive damages and "it is hard to see how the judiciary can wash its hands" of the problem by pointing to Congress for a solution.

A jury decided that the company should pay $5 billion in punitive damages. A federal appeals court cut that verdict in half.

The problem for the people, businesses and governments who waged the lengthy legal fight against Exxon is that the Supreme Court in recent years has become more receptive to limiting punitive damages awards. The Exxon Valdez case differs from the others in that it involves issues peculiar to laws governing accidents on the water.

Overall, Exxon has paid $3.4 billion in fines, penalties, cleanup costs, claims and other expenses resulting from the worst oil spill in U.S. history.

The commercial fishermen, Native Alaskans, landowners, businesses and local governments involved in the lawsuit have each received about $15,000 so far "for having their lives and livelihood destroyed and haven't received a dime of emotional-distress damages," their Supreme Court lawyer, Jeffrey Fisher, said when the court heard arguments in February.

[aldon61]

Our United States Supreme Cout.........the best justice that money can buy! God, this makes me sick!

[yongamerica]

This is a sick indication of injustice. How many years have the plaintiffs been trying to recover damage and losses from the biggest US oil spill ever? How much does an attorney make an hour?

The state and People of Alaska should not have had to endure this hardship, only to have attorneys tie this case up in court until the settlement cost less than the court fees.

Thank you for reminding me me why I stopped buying Exxon products. Too bad it isn''t that simple to put a corrupt big business involved in the largest international energy price inflation scandal.

[aliothlars]

there is no justice in law.... there never was. i''ve fished out of cordova alaska since i was thirteen, i''m now thirty one. the whole community has been waiting for this case to come through for them. exxon has destroyed many lives, many marriages and it has now destroyed most of the retirements for the fisherman of prince william sound. i''ll never forget the minuscule salmon runs in the nineties, not to mention the massive drop in price. however, i do have to say through all this, many fishermen voted republican during the elections scoffing at what the implications would be. i can only hope everyone has come to the consensus the death star is very much alive. but where are the jedi? much love goes out to the families, the fishing communities and all people affected. time to invest in bicycles.

[aliothlars]

there is no justice in law.... there never was. i''ve fished out of cordova alaska since i was thirteen, i''m now thirty one. the whole community has been waiting for this case to come through for them. exxon has destroyed many lives, many marriages and it has now destroyed most of the retirements for the fisherman of prince william sound. i''ll never forget the minuscule salmon runs in the nineties, not to mention the massive drop in price. however, i do have to say through all this, many fishermen voted republican during the elections scoffing at what the implications would be. i can only hope everyone has come to the consensus the death star is very much alive. but where are the jedi? much love goes out to the families, the fishing communities and all people affected. time to invest in bicycles.

[aliothlars]

there is no justice in law.... there never was. i''ve fished out of cordova alaska since i was thirteen, i''m now thirty one. the whole community has been waiting for this case to come through for them. exxon has destroyed many lives, many marriages and it has now destroyed most of the retirements for the fisherman of prince william sound. i''ll never forget the minuscule salmon runs in the nineties, not to mention the massive drop in price. however, i do have to say through all this, many fishermen voted republican during the elections scoffing at what the implications would be. i can only hope everyone has come to the consensus the death star is very much alive. but where are the jedi? much love goes out to the families, the fishing communities and all people affected. time to invest in bicycles.

[andor3]

now remember the supreme court is employed by Exxon and the other oil companies, just like the rest of the government. So the justices were just doing there job, helping repay all those investments in bribes.. errr... no, political contributions and lobbying.

[kesac4650]

They paid compensation of $3+ billion. And half a billion in punishment. Nearly $4 billion total. That is a lot of money. Lawyers will get 1/3 of that, and they are the ones doing the screaming about more, more, more.
And then we have these kids posting, and pretending this is some sort of affront to the system from the Supreme Court.

[ozarkbard]

ENOUGH!!!

Our votes don''t count!
Our opinions don''t count!
We don''t count!

And posting our frustrations on a news board isn''t going to solve anything. We as Americans have only one choice left...

Pick up a weapon, and stand your ground ... try to keep what little is left of YOUR America!

[gkc99]

It sure would be tragic if the Bushit "justices" drowned in the La Brea tar pits!

[mcv57]

The U.S. Supreme Court and the Bush Regime alliance is now evident. Corruption is in; and justice is for sale!