Editorial: Remember the Exxon Valdez

On June 25, 2008, the U.S. Supreme Court reduced from $2.5 billion to $500 million the punitive damages related to the Exxon Valdez oil–spill disaster in 1989. On that date the vessel spilled 11 million gallons of crude oil into Alaska ’s Prince William Sound. It fouled 1,200 miles of coastline. The history of the Exxon Valdez disaster remains relatively fresh in our memories…first because the incident took place less than a mere 20 years ago and ongoing lawsuits have served to keep us glued to the news to see what ’s next. The infamous supertanker is not yet relegated to the mounds of old news mined only by historians and mariners with a yen for studying the past.

There are numerous legitimate reasons for remembering the Exxon Valdez incident. It is the worst oil spill in the history of the United States. The court ’s decision to reduce the punitive damages by 80 percent was hailed by businessmen and decried by environmentalists and Alaskans. Let ’s review the court actions related to the case.

A jury ruled in 1994 that Exxon should pay $5 billion in damages. A federal appeals court reduced that amount by half in 2006. At the time, Exxon requested that the court throw out the punitive damages, because the company had already paid $3.4 billion to pay clean-up costs and damages to Native Alaskans, landowners, and commercial fishermen. In the June 25 5–3 decision, the Supreme Court ruled that Exxon Valdez spill victims could collect punitive damages from the company amounting to $15,000 for every person who filed a claim against the company. Records show that Exxon Mobil has already paid $507 million to compensate victims.

Justice David Souter, who wrote for the court, was clearly interested in establishing reasonable limitations to punitive damage awards in future maritime cases. Maritime law has traditionally limited punitive damages (WJ, June 30). This point, upon which plaintiff attorneys disagree, is another reason for us to remember the Exxon Valdez.

Extenuating circumstances in the case fired the ambitions of victims and their attorneys. It was claimed that the spill resulted from “ reckless action. ” Nevertheless, no one on the supertanker set out to cause an oil spill; it was an accident. Since it was an accident, it should be treated as one. Some wanted to make an example of the defendants, as if to warn other companies with a “ You ’d better be careful” preachment.

The Supreme Court, we believe, did what courts are supposed to do…that is, they considered what impact unreasonable punitive damages can (and surely will) have on the rest of the country, not just the immediate case at point. Trial lawyers have a field day when precedents support their demands for larger settlements. But if the Exxon Valdez case had ended up with near–unlimited punitive damages, the case could itself have been used as a precedent in future cases, not necessarily marine–related. While the $500 million ruled by the court to be sufficient damages only represented about four days’ worth of Exxon Mobil Corporation profits last quarter, huge damage awards could put many companies out of business.

If we allow businesses to be shut down as a result of unlimited punitive damages, a lot of innocent workers will be hurt and our economy will suffer. We think the court made the right decision.

The Waterways Journal encourages letters to the editor.
Have something on your mind?
Send letters to: jshoulberg@waterwaysjournal.net.
(Please indicate whether or not your letter is intended for publication.)