Supreme Court Cuts Exxon Valdez Oil Spill Damages The Supreme Court rule that the punitive damage award imposed on Exxon, stemming from the huge oil spill in Alaska, was excessive. The justices said the punitive damages should not be more than the compensatory damages.
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Frank Langfitt discusses Wednesday's ruling on 'All Things Considered'

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Supreme Court Cuts Exxon Valdez Oil Spill Damages


Frank Langfitt discusses Wednesday's ruling on 'All Things Considered'

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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From NPR News, this is All Things Considered. I'm Michele Norris.


And I'm Robert Siegel. After nearly two decades, Exxon Mobil will finally have to pay punitive damages for the Valdez oils spill. But in the victory for the company, the Supreme Court slashed those damages to just over 500 million dollars. It's a small fraction of what the plaintiffs, including thousands of fishermen, had hoped for. NPR's Frank Langfitt reports.

FRANK LANGFITT: In March 1989, the Exxon Valdez struck a reef off the coast of Alaska. The captain, Joseph Hazelwood, had been drinking, and at the time of the accident, he wasn't even on the bridge. After he returned, he described what happened over the radio.

Mr. JOSEPH HAZELWOOD (Captain, Exxon Valdez): (unintelligible) Ah, it's Valdez here. We should be on the radar there, and we've fetched(ph) up on the ground, and we're leaking some oil.

LANGFITT: Actually, a lot of oil, almost 11 million gallons worth. It was the worst spill on record in North America. The herring fishery in Prince William Sound has never recovered. A lower court told the company to pay 2.5 billion dollars as punishment.

But today, the Supreme Court knocked that number down dramatically. Concerned about over-sized damage awards, the court said a company shouldn't pay more in punitive damages than it has already paid in compensatory damages. The plaintiffs, which included thousands of fishermen, were naturally disappointed. David Frederick filed a friend of the court brief to the State of Alaska.

Mr. DAVID FREDERICK (Attorney, Kellogg, Huber, Hansen, Todd, Evans & Figel): For the people who were harmed, they will recover approximately 15,000 thousand dollars apiece, which is a pittance compared to the devastation the oil spill wreaked on their lives.

LANGFITT: Frederick also says the damage amount is too small to serve as a deterrent. Given the high price of oil, 500 million dollars won't dent a company like Exxon.

Mr. FREDERICK: This decision is tantamount to barely a week's profits. It doesn't deter the company from engaging in a kind of recklessness that the jury found and which the court upheld.

LANGFITT: Andy Frey says that's nonsense. He filed a brief for the American Petroleum Institute, an industry group. Frey points out that Exxon had already paid more than 3 billion dollars in clean up, penalties, and compensation.

Mr. ANDY FREY (Attorney, Mayer Brown): When you look at all the consequences that they already suffered and all the money that they already paid, making them pay more money is not likely to make them or other oil companies significantly better behaved than they otherwise would be.

LANGFITT: While the case focused on Exxon, today's decision could have implications well beyond the company. Amy Wildermuth represents an association of fishermen along the Pacific coast. She didn't like the ruling. The way she sees it, the justices were sending a message about what they see as excessive awards.

Ms. AMY WIKDERMUTH (Representative, Association of Fishermen): I think the court thought, here's an opportunity for us to make a statement, you know, that these punitive damages are sort of running off the rails, and we need to rein them back in.

LANGFITT: And if that message resonates, it's good news for business. Amar Sarwal is general litigation counsel for the U.S. Chamber of Commerce. He says companies see punitive damages as a dangerous wildcard.

Mr. AMAR SARWAL (General Litigation Counsel for U.S. Chamber of Commerce): When a business accepts a perspective jury award, there's sense of fear because what's to constrain that jury from driving it out of business?

LANGFITT: Today's ruling came under federal maritime law, a small corner of the legal world. But lawyers on both sides of the case expected will be cited soon in others. Frank Langfitt, NPR News, Washington.

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