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Exxon Valdez Ruling Cuts Payment to Oregon Fishermen

June 27, 2008

By Michael Milstein, The Oregonian, Portland, Ore.

Jun. 26–Gary Soderstrom had just got off the Columbia River after a long night of fishing Wednesday morning when he heard that the Supreme Court had slashed the money coming to him.

Soderstrom, who lives in Clatskanie, was among the thousands of fishermen who once were to share $5 billion in damages Exxon Mobil was told to pay for devastation caused by the 1989 Exxon Valdez oil spill in Alaska.

But Wednesday, the U.S. Supreme Court reduced the damages tenfold to about $500 million, and with it the cut for about 32,000 fishermen and others affected by the spill — including about 1,300 in Oregon.

“It’s a big slap in the face,” said Soderstrom, who was a deckhand on a fishing boat when the Exxon Valdez tanker plowed into a reef in Alaska’s Prince William Sound, spilling 11 million gallons of crude oil. “It just tells us what we already know: Corporations run America.”

A divided Supreme Court ruled that under maritime law, punitive damages, which are designed to punish wrongdoing, should not exceed compensatory damages, which Exxon paid to plaintiffs to cover their losses. The court said punitive damages must be “reasonably predictable in their severity.”

Exxon paid about $507 million in compensation, so justices cut the punitive damages to roughly that amount. It means plaintiffs will get an average of about $15,000 each, although the amount each receives will depend on how they were affected, Soderstrom said.

An Alaska jury originally awarded $5 billion in damages, although a California appeals court later reduced that to $2.5 billion.

The ship spilled its oil after the captain, who witnesses said had downed five double vodkas, left the bridge. The oil slimed hundreds of miles of coastline and killed hundreds of thousands of seabirds and bald eagles, at least 1,000 sea otters and devastated some of the nation’s richest fisheries. Oil still lingers in beach sediments.

In a dissenting opinion, Justice John Paul Stevens said the original $5 billion award should have been upheld.

“In light of Exxon’s decision to permit a lapsed alcoholic to command a supertanker carrying tens of millions of gallons of crude oil through the treacherous waters of Prince William Sound, thereby endangering all of the individuals who depended upon the sound for their livelihoods, the jury could reasonably have given expression to its ‘moral condemnation’ of Exxon’s conduct in the form of this award,” he wrote.

Exxon said it has already paid more than $3.4 billion in compensatory damages, settlements, fines and cleanup costs. Company Chairman and Chief Executive Rex W. Tillerson said the spill “was a tragic accident and one which the corporation deeply regrets.”

“We know this has been a very difficult time for everyone involved,” he said in a statement. “We have worked hard over many years to address the impacts of the spill and to prevent such accidents from happening in our company again.”

Justice Samuel A. Alito Jr. removed himself from the case because he owns stock in Exxon.

Exxon had argued it should not have to pay punitive damages for the captain’s actions. However, the judges split on that point and left in place a lower court decision that concluded Exxon can be held responsible.

Thousands of plaintiffs in the case have waited years for the Supreme Court to finally weigh in, only to be disappointed Wednesday.

Eldon Korpela of Astoria fished in Alaska for 41 summers and remembers whales jumping in Prince William Sound before the spill. Afterward, he could see a bathtub ring of oil on rocks.

“It’ll be there forever,” he said Wednesday. He said the ruling was a letdown, and he felt especially sorry for the lawyers who pursued the case on his and others’ behalf for so many years.

Soderstrom said he wasn’t especially surprised at the court’s actions. Although he did not fish where the oil spill occurred, he was affected primarily because the price of salmon plummeted after the spill because “people were scared of buying salmon.”

He said Wednesday that news of the Supreme Court ruling quickly turned him into an opponent of a liquefied natural gas terminal proposed near the mouth of the Columbia River. He had previously been on the fence, he said.

“I’m going to be completely against it now,” he said. “There’s no liability. Who’s there to help you if something goes wrong? There’s no protection for the little guy now.”

A question lingering over Wednesday’s ruling was whether other courts will apply the same punitive damage limits beyond maritime cases. Business groups have argued for such limits, and the president of the U.S. Chamber of Commerce said the ruling would help rein in what he called “excessive punitive damages.”

The New York Times and The Associated Press contributed to this story.

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