Supreme Court Hears Arguments in Exxon Valdez Lawsuit
WASHINGTON _ Exxon Mobil Corp. made its final appeal Wednesday to the Supreme Court to throw out a $2.5 billion verdict against the oil giant for its role in the 1989 spill of 11 million gallons of crude oil into Alaska’s Prince William Sound.
In a 90-minute hearing on the Exxon Valdez case, the company argued that maritime law has little precedent for levying punitive damages against a company for the actions of its agents at sea. The case is unusual in that Exxon based its appeal on maritime law, specifically an 1818 case that holds that ship owners aren’t liable for their agents at sea unless they’re complicit in their behavior.
The justices spent much of their time on that central issue. They repeatedly asked whether the Exxon Valdez’s captain, Joseph Hazelwood, was considered an important enough executive in the company that it should be punished for what he did at sea.
Ultimately, corporations act through individuals, Chief Justice John G. Roberts said.
“I would suspect just instinctively that the captain driving these supertankers is a lot closer to the CEO than the cabin boy,” he said.
Later, however, Roberts asked what corporations could do to avoid punitive damages. It seems that there’s little they can do if they have established policies but top executives flout them, he said.
“It can hire fit, competent people,” said Jeffrey Fisher, the attorney who argued the case for the more than 30,000 fishermen and Alaska natives who first sued in 1989. Exxon knew for three years that Hazelwood was an alcoholic and failed to act appropriately, Fisher told the court, and the original trial was about the company’s role in the spill.
Prosecutors alleged that Hazelwood was drunk when the ship ran aground on March 24, 1989, but he denied the charge and was acquitted in criminal court.
If Exxon is successful, the court will overturn the $2.5 billion damage award by the 9th U.S. Circuit Court of Appeals, which many consider the largest punitive verdict ever against a U.S. corporation. If the plaintiffs prevail, $2.5 billion plus interest will flow into Alaska’s economy.
“We think it’s not too much to ask that some recompense and punishment be paid for the human toll of the spill and not simply the environmental impact,” Fisher said.
Exxon has been appealing the verdict since 1994, when a jury in Anchorage returned a $5 billion punitive-damages award against the company. In 2006, the 9th U.S. Circuit Court of Appeals cut the award to $2.5 billion. Exxon, which already has paid $3.5 billion in fines, compensation and settlements, appealed that decision to the Supreme Court. The court agreed last year to hear the case.
The company’s lawyer, Walter Dellinger, argued that Exxon has been punished enough by state and federal environmental regulators, and that the money the company already has paid is deterrent enough.
“This was not an intentional act, it was not malicious, nor was there any possibility of concealment,” Dellinger said. “The amount was enough to deter anybody or anything.”
The court also is considering whether punitive damages should be allowed when Exxon already has been punished under provisions of the federal Clean Water Act. The justices also must determine whether the verdict’s size is allowable under the limits of maritime law.
Several of the justices seemed to be grappling with the size of the penalty and whether there’s a framework under the Clean Water Act for establishing levels of punitive damages.
Eight of the nine justices heard the case. Justice Samuel Alito, who owns Exxon Mobil stock, recused himself from the case.
A decision is expected before the court’s term ends in June. Many court observers expect the case to result in a 4-4 tie, which would benefit the plaintiffs in the case and uphold the $2.5 billion verdict.
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(c) 2008, McClatchy-Tribune Information Services.
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