Court to rule on Exxon Valdez verdict
Last updated 1:50 p.m.
The Supreme Court agreed on Monday to rule on the legality of the $2.5 billion punitive damages award against Exxon Mobil Corp. and its shipping subsidiary for the massive oil spill in Alaska’s Prince William Sound in 1989 — an incident that has sparked a 13-year courtroom battle over money damages. The Court limited its review to issues involving maritime law, declining to hear a claim that the verdict was excessive under the Constitution’s Due Process Clause. The Court also refused to hear a cross-appeal, seeking to reinstate an earlier $5 billion damages award.
Click on the following links to read the petition for certiorari, brief in opposition, and petitioner’s reply, as well as amicus briefs (all supporting the petitioner) from the American Waterways Operators, International Association of Independent Tanker Owners, American Petroleum Institute, Chamber of Commerce, American Institute of Marine Underwriters, Keystone Shipping, American Commercial Lines, Washington Legal Foundation, International Association of Drilling Contractors, Transportation Institute, International Chamber of Shipping, Maritime Law Association, and a group of professors.
In a second grant, the Court said it would decide whether the Federal False Claims Act applies only to claims of misspent funds when those claims are presented to a federal government agency, or whether it also covers claims submitted to a federal contractor if the claim ultimately will be paid with federal money. The case is Allison Engine v. U.S. ex rel. Sanders (07-214). Click on the following links to read the petition for certiorari and brief in opposition, as well as an amicus brief from the Chamber of Commerce. This is an appeal by a group of four defense subcontractors who supplied generators to power a class of Navy guided missile destroyers — the Arleigh Burke Class. The lower courts are split on the question at stake.
That and the Exxon case were the only ones granted.
In agreeing to hear the Exxon appeal, the Court indicated it would decide whether the company should be freed of any punitive damages award on the theory that it was based solely upon judge-made maritime law in contradiction of decades of legal history — an issue that the appeal says has divided the lower courts. Also included in the grant will be the difference between the Clean Air Act, in which Congress specified penalties for maritime conduct but did not include punitive damages, and the ruling in this case awarding punitive damages based on federal maritime law. Further, the case raises the issue of whether, if maritime law does govern, this specific award is too high because it is said to be “larger than the total of all punitive damages awards affirmed by all federal appellate courts in our history.” That was the third of three questions Exxon had raised in its petition, but the appeal also included in that question a test of whether a verdict of that size was unconstitutional; it is that latter point that the Court did not agree to hear. The appeal is Exxon Shipping Co., et al., v. Baker, et al. (07-219).
The case does raise the prospect that the Court could split 4-4, thus upholding the verdict, because Justice Samuel A. Alito, Jr., is recused from the case, according to the Court’s grant order. Alito’s past financial disclosure statements have indicated he owns a sizeable amount of Exxon Mobil stock, according to Bloomberg News.
The second case growing out of the 1989 accident, a plea by individuals who had sued Exxon and its shipping unit, had sought reinstatement of a full $5 billion damages award, originally assessed by a District judge and upheld by the Ninth Circuit Court, but later cut in half by the Circuit Court. That cross-appeal was Baker, et al., v. Exxon Mobile Corp., et al. (07-276). Justice Alito also did not take part in the unexplained order denying review.
Exxon Mobil, in a news release discussing the Court’s action, said that it had already spent more than $3.5 billion in “compensatory payments, cleanup payments, settlements and fines.” Thus, it said, the case “has never been about compensating people for actual damages.” The ship’s captain at the time of the incident, Joseph Hazelwood, was later convicted of negligently spilling the oil, but was found not guilty of operating the ship while drunk. Exxon Mobil claims that he violated company policy in leaving the bridge of the Exxon Valdez before she went aground on Bligh Reef, spilling 11 million gallons (about 258,000 barrels) of oil.
The case before the Justices does not involve any claims for the environmental damage; that was resolved in earlier actions by the federal and Alaska state governments. Exxon Mobil also has paid off other private interests with $300 million in settlement payments. The Ninth Circuit’s decision to cut in half the $5 billion verdict was based, in part, upon that Court’s conclusion that it bore only a 5 to 1 ratio of the $500 million in estimated economic harms. The spilling of the oil was found not to have been intentional. The award of punitive damages was made in a case involving a class of 32,677 commercial fishermen, private landowners and Native Americans.
Because the case was proceeding in federal court, the normal basis for punitive damages — state tort law — did not apply. Thus, the claim for damages was based upon the assertion of a maritime tort under federal law that is fashioned largely by court decisions, rather than by federal statute.
Among other actions taken Monday, the Court, in an unusual order, with seven of the nine Justices not taking part, summarily upheld a D.C. Circuit Court ruling that those Justices had immunity to a civil damages claim of $75,000 by a Washington, D.C., attorney who has challenged the Court for an earlier refusal to hear his case. Since those seven members of the Court were directly sued, they were recused; under federal law, when the Court does not have a quorum (six Justices minimum), the effect is to affirm the lower court ruling. The attorney, Montgomery Blair Sibley, had sued the Justices after they had denied review of a case involving a domestic relations and child custody dispute. In Monday’s order, no Justice made any comment on the merits of the Circuit Court ruling being affirmed. The case was Sibley v. Breyer, et al. (07-6522).
Among the cases on which review was denied Monday were these:
** The constitutionality of a state business profits tax that treats dividends paid to U.S. companies by foreign subsidiaries differently, based upon whether those foreign units do business within the state. The case was General Electric v. Commissioner, New Hampshire Department of Revenue Administration (06-1210). The U.S. Solicitor General, asked by the Court for the government’s views on the case, urged a denial.
** A test of whether a worker suing for discrimination in the workplace must show that every non-discriminatory reason the management gave for its action was merely a pretext for bias. The appeal sought a ruling that it should be sufficient if a worker is able to discount one such reason as a pretext. Crawford v. Fairburn, GA (07-233).
** A claim that it violates the Fifth Amendment privilege against self-incrimination if prosecutors use a suspect’s silence before being given Miranda warnings, as evidence of guilt. Salinas v. U.S. (07-36).
** An appeal seeking to reinstate a lawsuit by private individuals in the U.S. and Canada seeking to recover one of Vincent van Gogh’s late paintings, ultimately acquired by Hollywood actress Elizabeth Taylor. The descendants of a German woman who acquired the painting in 1907 claimed that the work was looted by the Nazis. The Ninth Circuit rejected the lawsuit, which had been based on Holocaust property-recovery law, on the theory that the law did not create the remedy of private lawsuits. The case was Orkin, et al., v. Taylor (07-216).
I for one can not believe that the court decided to hear this case. It is another example of huge companies like exxon using it’s money and power to push around the people that buy it’s products. Exxon ruined the fisheries in alaska, I know because i was a fisherman in alaska at the time of the spill. This just makes me sick to read. A company like exxon can do anything they want without any recourse is just sickening. It seems to me that the Supreme court that said for years they would not hear this case are just trying to make a name for themself of thier good friends at exxon get away with one of the worst enviromental crimes and in history. If exxon gets away scott free from the supreme court then they will have gotten away with enviromental damage and personal damage that makes them the worst offender to ever walk the face of the earth. The only good thing that can happen to exxon is to see its company fold and go bankrupt for good. maybe then the world will be a better place with criminals like them gone for good.
Comment by Bryce Cardin — October 29, 2007 @ 12:18 pm
Further more, how can the court agree to only hear exxon’s claim that they don’t think they should pay any punitive damgage, yet not hear the plantiffs claim to have our original punitive damage figure heard. Seems to me that the supreme court has already decided to give exxon anything they want and let them off with a mere hand slapping rather then give them what they need, true punishment for being the worst offender of the enviroment and alaskans. Things like this makes me wonder if there is some form of profit or kickbacks in it for the supreme court. Just have to love how they say one thing for years and then take a 180 when it comes time for them to stand up and do whats right for the people. Exxon is just a greedy money hungry company that wants to do anything they want whenever they want, no matter how many people they hurt of lives they destroy.
Comment by Bryce Cardin — October 29, 2007 @ 12:24 pm
Exxon’s claim that it is not liable for punitive damages is based on federal maritime law and general federal common law. Past decisions imposing limits on punitive damages have been based on substantive due process grounds; Justices Scalia, Thomas, and Scalia have repeatedly opposed any recognition of such due process limitations. It will be interesting to see whether those three are more amenable to recognizing limitations based on the alternative grounds being pressed by Exxon Mobil. One can assume that they don’t have any federalism-based opposition to such limitations. Perhaps Justice Ginsburg will have Seventh Amendment-based concerns (given that the punitive damages were awarded by a jury). Full disclosure — I authored an amicus brief in support of the cert. petition.
Comment by RichardSamp — October 29, 2007 @ 5:49 pm
Is it possible that our justice system is not corrupt? I want to think so but when I look at this case without bias, I get a gut wrenching, nagging suspicion that to believe in something as wholesome as a group of judges, men and women that care about nothing but “doing the right thing” would be about the same as wanting to believe that our senators and congressmen aren’t beholdin to some special interest group. Ya, sure. I’m such a sap. Is it too much to believe that just because you are the biggest company in the world, you don’t run that world. Ya, right. I’m such a idiot. I want to beleive that money can’t always buy power. Ya, OK. What ya been smokin? This is a simple case of a drunk running a supertanker and after 18 years of legal mumbo jumbo they just might get away with it. Where is the MADD group on this one? If these “wise individuals” don’t get this one right, God help us all.
Comment by David Wade — October 29, 2007 @ 7:29 pm
Richard,not being a lawyer myself,would you explain in language I can understand about what you think Thomas and Scalia might be thinking as to punitive damage as applied to maritime law.you wrote Scalia,Thomas,and Scalia would you clarify that for me,just trying to follow what you are getting at.
Comment by Chris Berns — October 29, 2007 @ 10:36 pm
This whole case has left me sick. I am a fisherman in Prince William Sound and witnessed first hand the devastation this spill caused.
My daughter was born that same year. She is going to college this year. It’s been a whole generation since this spill happened. The arrogance I witnessed from the oil companies during the spill was unmasked and unbelievable.
I have hope still that corporate greed and power will not run unchecked over comman humanity and decency.
As a side note the herring in Prince William sound have not rebounded from the spill. Despite what the Exxon funded studies state.
Comment by mark munro — October 29, 2007 @ 11:28 pm
The plaintiff’s brief made clear that Exxon was reckless by condoning Hazelwood’s employment on a supertanker capable of making a spill that would be unstoppable. The elements of a land based tort are certainly there.
Exxon the corporation acted with reckless disregard against damages to 35,000 fishermen and the NE Pacific eco system.
The 9th circuit allows torts against the owners of vessels for reckless acts of their captains.
The Supreme Court should vote to affirm the 9th’s decision on this issue. The policy of having sober captains in charge of navigation on all US waters will create a standard that any navigator on any ocean in the world will have to meet if they are to aspire to the role of navigation in US waters.
Who can be against safer navigation? Certainly not our Supreme Court?
Comment by alan stein — October 30, 2007 @ 2:42 am
It wasn’t the captains reckless action that the jury ruled on.The jury ruled against exxon with comprehensive instructions from judge Holland. The 9th agreed that the company knew for years that the captain had fallen off the wagon,thus the reprehinsibility on exxons part. Hopefully the court will bring these maritime laws into the modern era. It isn’t the 1800’s,where you couldn’t be as an owner expected to be in control of one of your vessels with no reliable communication,today as in 1989 there is state of the art radio and satellite communication, standard drug and alcohol
testing it is the age of communication.That aside 1989 wasn’t the dark ages, Hazelwood drank 5 double shots of vodka before piloting the ship away from the terminal,The company must not of been doing urine samples,the captain knew this or he would of waited to have a drink or the policy was weak and Hazelwood knew he could get away with drinking and driving as he entered the terminal and retook command of the vessel.Valdez is a small town keeping an eye on an employee isn’t that hard The shippers exxon rallied to support them as friends of the court may not like being brought into the 21st century by the supreme court.Mining interests love to work under 18th century law and lobby against entering into the modern era,as for the shippers maybe (let a sleeping dog lie) would have been a better tack.The chamber of commerce didn’t get any traction on this exxon case or on carbon black which is fine with me, why even be on a jury if you spend all that time weighing the facts, come to a decision and get overruled by a judge latter.Letting a drunk with impaired judgement operate your vessel you should be liable for punitive damage. Lets hope this will end up bringing the shipping industry into the 21st century, a renasaince not a falling into the dark ages.
Comment by Chris Berns — October 30, 2007 @ 10:50 am
Everyone points out what a big deal it is that the US Chamber of Commerce is with Exxon without looking at who the US Chamber of Commerce is.
The US Chamber of Commerce is headed by one Tom Donahue. For more information on Mr. Donohue please go to the following link.
http://www.citizen.org/documents/021805DonohueForPdf.pdf
They are hired guns, bought and paid for by big business. The link doesn’t tell us how much Exxon gives to the US Chamber of Commerce, but my hunch is their donations are substantial.
Exxon has a long history of hiring “experts” to make their cases for them. Whether arguing that global warming is a myth or that punitive damages against Exxon would destroy the shipping industry, these experts all have one thing in common: Their opinions are what Exxon wants them to be.
We fishermen, and former fisherman, are outgunned by Exxon. We don’t have the money or the manpower to have thirteen organizations file amicus briefs on our behalf.
Comment by Ned Isleib — October 30, 2007 @ 11:44 am
Legal experts can write their briefs and opine in a language that only other legal experts will understand. All this case boils down to, is another example of how in this country, if you have a big enough pocket book, you don’t have to held responsible for anything. And this example will be brought to you by the highest court in the land. If anyone, anywhere had any doubts about whether or not justice is for sale in this country, will likely have those doubts removed by the Supreme Court next year. I would love to be wrong about this, but I doubt I am.
Comment by Dustin Kendall — October 30, 2007 @ 2:23 pm