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Exxon says plaintiffs not entitled to interest

Responding to a submission filed last week, lawyers for Exxon today asked the Court to declare that the recent decision in Exxon v. Baker (07-219) forbids the plaintiffs – a class of fisherman and other individuals affected by the Exxon Valdez oil spill – from collecting some $488 million in interest on top of the $507.5 million punitive damage award resulting from the Court’s opinion last month.

In its filing, Exxon agreed the issue should be resolved by the Supreme Court now rather than be subject to further litigation before the Ninth Circuit on remand.  But the oil giant argued that because the majority opinion failed to explicitly address whether the plaintiffs’ were entitled to interest, the Court’s own rules require that they can collect none.

Under Supreme Court Rule 42.1, “If a judgment is modified or reversed with a direction that a judgment for money be entered below, the mandate will contain instructions with respect to the allowance of interest.”  According to Exxon, the rule means that reviewing courts retain discretion to determine whether interest should be paid on a judgment and, if so, from what date. But Exxon argues that since even before the rule’s enactment, the “default rule” has held that “if a reviewing court fails to provide directions in its judgment or mandate for the payment of interest, no interest is allowable.”

The controversy, which threatens to interrupt the Justices’ summer recess, began two weeks after the Court ruled that punitive awards could not exceed a 1:1 ratio with compensatory damages in maritime cases.  As a result, a punitive award set at $5 billion by the jury, lessened to $4.5 billion by the trial judge, and cut to $2.5 billion by the Ninth Circuit, was further reduced to no more than $507.5 million, the amount of compensatory damages originally awarded at trial.

In contrast to compensatory damages, Exxon’s filing states, “no plaintiff has any type of personal or property right to be paid punitive damages; such damages are imposed purely in the public interest for the purposes of punishment and deterrence.” Exxon contends that because the Court found $507.5 million to be sufficient to discourage future oil spills, the deterrent effect will be the same regardless of whether the plaintiffs receive interest on the judgment.  As the filing puts it, “future spillers in Exxon’s position will know that their punishment will be in an amount up to the extent of damage they cause.” Also unlike compensatory awards, which are “facts” found by juries, punitive damages are questions of law to be determined by appellate courts, Exxon says.

The plaintiffs’ submission filed last week (and discussed here) said interest (at 5.9 percent) should run from the date of the original district court judgment –­ September 24, 1996 – since Exxon had failed to appeal the matter in the lower courts. Contesting that allegation, Exxon’s submission said it had appealed the matter before the Ninth Circuit. The oil giant further argued that because the Ninth Circuit did not award interest when it reduced the punitive award to $2.5 billion, the case came to the Court without any interest on the judgment.

Exxon says the Court should only include judgment from the date of its June 26 decision. Alternatively, the Justices should “say nothing about interest in the judgment, which would make plain…that interest cannot run back to the date of the original district court judgment.”