Environmental Valuation & Cost-Benefit News

The Exxon Valdez oil spill, which caused a 3,000-square-mile oil slick and still affects Alaska’s fisheries after nearly 19 years, was a “tragedy,” Exxon’s lawyer told the Supreme Court on Wednesday.

But the company has been punished enough by $3.4 billion in criminal fines, cleanup costs and compensation payments, the lawyer added, arguing that the $2.5 billion in punitive damages approved by a federal appeals court served no additional “public purpose.”

Exxon’s appeal of the biggest punitive damage award ever upheld in federal court led to a lively Supreme Court argument in which everything was open to dispute, from the significance of a 200-year-old case about robbery on the high seas to the world of modern maritime commerce in which a 1,000-foot tanker like the Exxon Valdez is considered a separate “business unit” in the organization chart of its corporate owner.

With Justice Samuel A. Alito Jr. not participating, a result of his ownership of Exxon Mobil stock, the possibility of a 4-to-4 tie was clearly present. A tie would affirm the appeals court’s judgment in favor of a class of 32,000 fishermen and business owners, who stand to receive about $75,000 apiece from the $2.5 billion award. It was abundantly clear to everyone in the crowded courtroom that if the plaintiffs could just hold on to four votes, they would win the case.
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One of Exxon’s arguments on appeal is that the Supreme Court’s precedents foreclose awarding punitive damages against a ship’s owner for the misdeeds of the captain.
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Chief Justice John G. Roberts Jr. also appeared sympathetic to Exxon. “I don’t see what more a corporation can do” to protect itself from employees who violate explicit company policy, like a no-drinking rule, he told Mr. Fisher.
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When the justices agreed in October to hear Exxon’s appeal, they limited their review to questions of maritime law and excluded a more general question about the constitutionality of the punitive damage award. Consequently, the eventual decision is not likely to affect punitive damages in nonmaritime cases.

By Linda Greenhouse
The New York Times www.NYTimes.com
Published: February 28, 2008
http://www.nytimes.com/2008/02/28/washington/28scotus.html?_r=2&th&emc=th&oref=slogin&oref=slogin