Environmental Valuation & Cost-Benefit News

Link: http://www.washingtonpost.com/wp-dyn/content/article/2008/06/25/AR2008062500663.html?nav=rss_politics

...The Supreme Court slashed the punitive damages imposed against Exxon Mobil from $2.5 billion to $500 million.

The justices ruled 5 to 3 to limit Exxon Mobil's punishment to the same amount of money a lower court awarded to compensate for actual economic losses: $507.5 million....

"Given the need to protect against the possibility (and the disruptive cost to the legal system) of awards that are unpredictable and unnecessary, either for deterrence or for measured retribution, we consider that a 1:1 ratio . . . is a fair upper limit in such maritime cases," Justice David H. Souter wrote for the majority.

Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Anthony M. Kennedy joined Souter in the majority. Justices John Paul Stevens, Ruth Bader Ginsburg and Stephen G. Breyer dissented. Justice Samuel A. Alito Jr., who owns Exxon Mobil stock, recused himself from the case.

A jury had originally awarded $5 billion to the nearly 33,000 fishermen, Native Alaskans and landowners brought together in the class-action lawsuit against Exxon Mobil, and the U.S. Court of Appeals for the 9th Circuit reduced the amount to $2.5 billion.
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Stevens said that, given the facts of the case, the damages should have been upheld.
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Exxon Mobil, through its Washington attorney Walter E. Dellinger, argued that it had been punished enough. The company said it has paid $3.4 billion in cleanup costs and other penalties for the oil spill, which polluted 1,200 miles of Alaskan coastline.
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Alaska politicians denounced the decision....

Sen. Patrick J. Leahy (D-Vt.), chairman of the Judiciary Committee, said the court "has given Exxon Mobil a $2 billion windfall."

The legal battle has gone on for so long that attorneys for the plaintiffs estimate that at least 20 percent of them are now dead. While the punitive damages will be disbursed on the basis of individual loss, Stanford law professor Jeffrey L. Fisher, who argued the case before the court, said yesterday's action will reduce the average award from $75,000 to about $15,000.

At the time of the jury's original award, $5 billion represented about one year of Exxon Mobil profits. In 2007, the company posted earnings of $40.6 billion.

Souter wrote that the case placed the Supreme Court, which has in recent years has struggled with how to review punitive-damage cases from state courts, in a different role. Because this case involved federal maritime law, the court could assess the reasonableness of the award, rather than just looking at constitutional questions about whether it violated due process.

[Business groups argued that the decision had broad applicability, while trial lawyers associations claimed it was limited to maritime law.]

By Robert Barnes
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The Washington Post www.WashingtonPost.com
June 26, 2008; page A1