Dispute Over Interest Arises in Exxon Case

Lawyers for the class of fishermen and other individuals affected by the Exxon Valdez oil spill have asked the Court to make clear that they remain entitled to interest on the punitive damage award that now stands at roughly $500 million following the Court’s decision in Exxon v. Baker (07-219).

The filing, submitted on Tuesday, requests that the Justices declare either that the Supreme Court rule governing interest and damages does not apply, or alternatively that plaintiffs are entitled to nearly 6 percent interest on the award running from the date when an Alaska district court originally entered the judgment. Even after the Court sharply cut the punitive award in late June, interest on the reduced amount currently stands at some $490 million, according to plaintiffs’ attorneys.

In the final week of the term, a divided Court found a 1:1 ratio to be the “fair upper limit” for punitive damage awards in maritime cases. The 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 thus further reduced to no more than $507.5 million, the amount of compensatory damages originally awarded at trial. According to Tuesday’s filing, however, Justice Souter’s opinion for the majority does not address whether the plaintiffs are entitled to interest on the punitive award.

The filing states that “if past is prologue, there is a real risk that Exxon would exploit any lack of clarity concerning interest to prolong this litigation still further. Specifically, Exxon could take any silence from this Court on the matter a license to commence a new round of argument on remand that respondents have no right to interest on the punitive award. Such an argument would place the Ninth Circuit in the awkward position of interpreting and applying one of this Court’s rules, which could trigger a further request for review by this Court.”

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.” The rule also states that “[i]nterest in cases arising in a court of the United States is allowed at the interest rate authorized by law.”

According to Tuesday’s filing, the applicable interest rate under federal law is 5.9 percent compounded annually. Applied from the date of the original judgment — September 24, 1996 — the amount of interest on the reduced punitive award currently stands at $488 million, according to David Oesting, an Anchorage-based lawyer representing the plaintiffs.

The filing states that Exxon failed in the courts below to appeal either the rate of interest or the date from which it should run.  The attorneys assert they “sought assurance from Exxon that, in the event of silence from this Court regarding the matter of interest, it would not make such an argument regarding interest. Exxon refused to give respondents such an assurance.”

Citing a 1948 case — Briggs v. Pennsylvania R.R Co. — the plaintiffs’ lawyers state that Rule 42.1 applies only in cases where Court “directs that plaintiffs be awarded money to which they had not previously established a legal entitlement.” Alternatively, if the Court concludes Rule 42.1 does apply, the filing asks the Court to note in its judgment that the plaintiffs are entitled to interest on the punitive damage award under the terms set by the district court.

Noting that nearly two decades had passed since the case was filed, the plaintiffs’ attorneys “emphasize[d] the importance of this Court taking some action with respect to its judgment.”