ExxonMobil confirms Valdez punitive damages

Exxon Mobil Corp. confirmed a decision by the Anchorage federal court that reduced punitive damages awarded in the 1989 Exxon Valdez accident from $5 billion to $4 billion. The Ninth Circuit Court of Appeals last year declared the $5 billion punitive damages award excessive and sent the case back to the Anchorage District Court with orders to reduce the award to an amount consistent with constitutional limits.
ExxonMobil said the Valdez oil spill was a tragic accident that the company deeply regrets. It added that the company took immediate responsibility for the spill, cleaned it up, and voluntarily compensated those who claimed direct damages.
ExxonMobil paid $300 million to more than 11,000 Alaskans and businesses affected by the Valdez spill. In addition, the company paid $2.2 billion on the cleanup of Prince William Sound, staying with the cleanup from 1989 to 1992, when the State of Alaska and the US Coast Guard declared the cleanup complete. ExxonMobil also has paid $1 billion in settlements with the state and federal governments. That money is being used for environmental studies and conservation programs for Prince William Sound.
The Ninth Circuit Court of Appeals found that none of the aggravating factors identified by the Supreme Court as justifying a large punitive damages award were present in the Valdez case. Those factors include violence, intentional spilling of oil, and trickery to hide or facilitate the spill. In fact, the trial court noted in its ruling, "immediately after the spill Exxon stepped forward with both its people and its pocketbook and did what had to be done under difficult circumstances."
"This ruling flies in the face of the guidelines set by the appeals court when they sent this case back to Judge Holland," said Charles Matthews ExxonMobil vice president and general counsel. "While the plaintiffs' counsel's challenge to Judge Holland to send a message to the Ninth Circuit 'that they are wrong' is entertaining courtroom bravado, it requires us once again to appeal an order that is entirely inconsistent with the law already established by the Ninth Circuit, as well as principles set forth by the Supreme Court," said Matthews.
Closely following the Ninth Circuit Court's analysis of the guidelines set by the US Supreme Court, ExxonMobil argued that punitive damages should be consistent with the amount of the fine imposed by the government for the Valdez spill, which was $25 million, and, in no event, exceed twice the compensatory damages awarded to private plaintiffs as a result of the spill, which was $40 million. The company said that an award of $40 million would be "only slightly less than the largest punitive damages award ever approved by any federal appellate court anywhere."
The largest punitive damages award approved on appeal by any federal court is $58.5 million in United International, followed by Rhone-Poulenc at $50 million. Both were for intentional fraud.
12/9/02