Exxon Valdez oil spill suit is back in federal court

The Associated Press

The Exxon Valdez oil spill lawsuit was back in federal court with a judge reconsidering the $5.3 billion in punitive damages against the oil giant.

Nearly a decade has passed since a jury awarded the punitive damages against Exxon Mobil Corp. and nearly 15 years since the 11 million gallon tanker spill in Prince William Sound.

The plaintiffs, composed of commercial fishermen, Natives and others, still say they should get $5 billion in punitive damages to punish the oil giant. Exxon says it should pay $25 million.

U.S. District Court Judge Russel Holland has been ordered by the 9th U.S. Circuit Court of Appeals to reconsider the damages. The judge is to consider a U.S. Supreme Court decision earlier this year involving a Utah traffic accident and damages awarded in that case.

Holland said Dec. 3 he would try to have a decision by the end of January.

Holland already reduced the Exxon punitive damages award to $4 billion a year ago after a three-judge panel sent the original $5 billion verdict back, saying it was excessive.

Attorneys from both sides argued that the Supreme Court case, State Farm Mutual Automobile Insurance Co. v. Campbell, supported their damages claims.

In that case, the Supreme Court ruled 6-3 that a state court jury’s award of $145 million to punish the insurance company was grossly excessive when actual damages were $1 million. The high court held that the ratio of punitive to actual damages should not exceed single digits, or 9-to-1. It also said juries could not award giant sums to punish companies just because they’re rich, big or considered part of an unsavory industry.

Exxon attorney John Daum said that according to the strict standards laid out in the State Farm case, the injury to plaintiffs was only economic, Exxon did not put the safety of fishermen and other plaintiffs at risk, the tanker spill was an isolated incident and Exxon did not intentionally cause harm. That means an even lower ratio, say 1-to-1 or less, should apply to Exxon, he said. Later, Daum said that ratio would produce damages of about $25 million.

Exxon has already paid $3.2 billion on cleanup, settlements and other fees and penalties, Daum said.

But attorney Brian O’Neill argued for the plaintiffs that the key issue is conduct, and that Exxon’s was among the worst. The spill affected more than 32,000 people. Exxon knew that tanker Captain Joe Hazelwood had alcohol problems, but still allowed him to take charge of the Exxon Valdez, O’Neill said.

“To date, Exxon paid only what an innocent spiller would pay,” he said.

The highest punitive damages allowed by the State Farm decision should be applied to Exxon, O’Neill argued. He calculates the actual damages caused by the spill at more than $500 million, which equals roughly $5 billion when the 9-1 ratio is applied, he said after the hearing.

Fisherman David Martin attended the Dec. 3 hearing and said he wasn’t impressed.

“They’re delaying it as long as they can,” he said. “They’re still making money and fishermen are still at the low end of the totem pole.”