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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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