Fish processors entitled to punitive damages

by The Associated Press

Ten Alaska seafood processing companies are entitled to $12.4 million of a $5 billion punitive damages award as compensation following the Exxon Valdez disaster, a federal appeals court ruled in October.

The 9th U.S. Circuit Court of Appeals overturned a federal judge’s decision excluding the region’s largest seafood processors from the punitive damages a jury awarded in the aftermath of the 1989 Prince William Sound oil spill.

Still, the payments are not expected soon. The $5 billion punitive damages award also is on appeal to the circuit court.

The processors are Icicle Seafoods Inc.; Seven Seas Corp.; Ocean Beauty Seafoods Inc.; Ocean Beauty Alaska Inc.; Wards Cove Packing Co.; Alaska Boat Co.; North Pacific Processors; Trident Seafoods Corp.; North Coast Seafood Processors Inc. and Aleutian Dragon Fisheries.

The 10 processors sued Exxon Corp. as part of a huge class-action suit including dozens of other plaintiffs. Exxon settled with the 10 processors out of court in 1991 for $64 million. As part of the deal, the processors agreed to give back any damages awarded in what is known as a “cede back” agreement. The processors remained plaintiffs in the case despite the out-of-court settlement.

Because of the cede back agreement, the original plan to allocate the $5 billion in punitive damages in the national class-action lawsuit did not include the affected processors.

Subsequently, in a new 1996 settlement, Exxon agreed to pay the 10 processors $12.4 million from the $5 billion punitive damages pot.

But U.S. District Court Judge H. Russel Holland said the processors were not entitled to the punitive damages because the original cede back agreement was kept confidential from the jury. The jury might have reached a higher damages number had it known, Holland said.

The appeals panel, however, said that juries do not need to be told of cede back agreements. The three-judge court said such agreements help settle cases and that a jury might render higher damages to offset the cede back agreement.