Exxon Mobile returns to court over €4bn judgement
Exxon Mobil’s appeal of a £2.8bn (€4.08bn) judgment Alaska jurors levied as punishment for the 1989 Valdez oil spill was heading back to a federal appeals court today.
The case, one of America’s longest-running civil disputes, stems from a 1994 decision by an Anchorage jury to award the punitive damages to 34,000 fishermen and other Alaskans.
Their property and livelihoods were harmed when the Valdez struck a charted reef, spilled 11 million gallons of crude oil and smeared black goo across roughly 1,500 miles of Alaskan coastline.
It’s the third time the case has come before the San Francisco-based 9th US Circuit Court of appeals.
The legal jockeying is best described as a game of cat-and-mouse between US District Judge Russel Holland of Anchorage and the appeals court.
Twice before, the appeals court ordered Holland to reduce the award – the nation’s largest at the time – saying it was unconstitutionally excessive in light of US Supreme Court precedent.
Holland begrudgingly complied in 2002, reducing it to £2.2bn (€3.2bn). Exxon, of Irving, Texas, again appealed.
The following year, the appeals court ordered Holland to revisit his decision, this time balancing it against a new 2003 Supreme Court ruling that said punitive damages usually could not be more than nine times general damages. The Anchorage jury awarded £161m (€235m) in general damages – and issued punitive damages that were 17 times that amount.
Holland, appointed by President Ronald Reagan in 1984, declared Exxon’s conduct “reprehensible” and set the figure at £2.5bn (€3.6bn) plus interest, ruling that the Supreme Court’s precedent did not directly apply to the case.
“The court reduces the punitive damages award to £2.5bn (€3.6bn) as the means of resolving the conflict between its conclusion and the directions of the court of appeals,” Holland wrote in January 2004.
Exxon again appealed, and will argue Friday that it should have to pay no more than £14m (€20m) in punitive damages, which are meant to punish a company for misconduct.
Exxon, which reported third-quarter earnings of £5.6bn (€8.1bn), says it has spent more than £1.5bn (€2.2bn) to settle federal and state lawsuits and to clean the Prince William Sound area.
In 1994, a federal jury found recklessness by Exxon and the captain of the Valdez, Joseph Hazelwood, who caused the tanker to run aground. That finding of malfeasance made Exxon liable for punitive damages.
The plaintiffs alleged that Hazelwood ran the ship into a reef while drunk and that Exxon knew he had a drinking problem but left him in command of tankers.
