ExxonMobil confirms Valdez punitive damages award
Posted: 29 January 2004
Exxon Mobil Corporation confirmed a decision by the federal court
in Anchorage that revised punitive damages awarded in the 1989 Exxon
Valdez accident from $4 billion to $4.5 billion plus interest.
"The Ninth Circuit Court of Appeals has twice vacated Judge
Holland's decisions in this matter. This is exactly why ExxonMobil
argued before the Ninth Circuit last year that the case should not
be remanded to Judge Holland. We said it would result in further
serious delays and would be sending the case back to a court that
has already made numerous mistakes with regard to the punitive damages
issue," said Charles Matthews, vice president and general counsel
of Exxon Mobil Corporation.
The Anchorage federal court last year reduced the punitive damages
award from $5 billion to $4 billion, after the Ninth Circuit vacated
the original $5 billion award, calling it "excessive."
Both the plaintiffs and ExxonMobil appealed that decision to the
Ninth Circuit. The Ninth Circuit panel then vacated the District
Court's $4 billion award and sent the case back for the District
Court to reconsider its decision in light of the recent Supreme
Court decision in Campbell v. State Farm.
The Ninth Circuit Court of Appeals had previously 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 that "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. It
will, unfortunately, require 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,"
Matthews said.
Under State Farm, punitive damages would arguably be limited to
a 1:1 ratio with compensatory damages. In addition, the Ninth Circuit
has ruled that voluntary payments should not be included in any
punitive damage calculation. Because ExxonMobil responded immediately
and voluntarily with $3.2 billion in compensatory payments, cleanup
payments, and settlements, it has only had to pay $25 million in
court-ordered or non-voluntary compensatory damages.
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.
The Valdez oil spill was a tragic accident that the company deeply
regrets. The company took immediate responsibility for the spill,
cleaned it up, and voluntarily compensated those who claimed direct
damages.
ExxonMobil paid $300 million immediately and voluntarily 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 U.S. 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.
For more information see www.exxonmobil.com

Posted by Richard Price,
Editor Pipeline Magazine
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