Supreme Court overturns Exxon Valdez $2.5 billion punitive damages award

The US Supreme Court has overturned the $2.5 billion in punitive damages against ExxonMobil Corp. for an oil spill from the tanker Exxon Valdez in Alaska’s Prince William Sound in 1989.

The nation’s high court said punitive damages should be limited to $507.5 million. In a ruling released June 25 in Washington, DC, the court was divided, 5-3. Associate Justice Samuel Alito had recused himself from the case because he owns ExxonMobil stock.

Associate Justice David Souter wrote the opinion, saying punitive damages could not exceed what ExxonMobil already paid to plaintiffs for economic losses. Associate Justices John Paul Stevens, Stephen Breyer, and Ruth Bader Ginsburg dissented.

ExxonMobil Chairman and Chief Executive Officer Rex W. Tillerson issued a statement saying ExxonMobil has “worked hard over many years to address the impacts of the spill and to prevent such accidents from happening in our company again.”

Alaska Gov. Sarah Palin said she was “extremely disappointed” with the Supreme Court decision.

“While the decision brings some degree of closure to Alaskans suffering from 19 years of litigation and delay, the court gutted the jury’s decision on punitive damages,” Palin said. “It is tragic that so many Alaska fishermen and their families have had their lives put on hold waiting for this decision.”

Tillerson’s comments

Tillerson called the Valdez oil spill “a tragic accident and one which the corporation deeply regrets.”

ExxonMobil has spent more than $3.4 billion, including compensatory payments, cleanup payments, settlements, and fines, Tillerson said.

The company cleaned up the spill and voluntarily compensated more than 11,000 Alaskans and businesses, he said.

“In the aftermath of the Valdez accident, we redoubled our long-time commitment to safeguard the environment, our employees and the communities in which we operate,” Tillerson said.

The punitive damages case arose from a 1994 lawsuit.

More than 32,000 plaintiffs, including commercial fishermen, private landowners, Alaskan natives, and other individuals and businesses sued the vessel’s captain Joseph J. Hazelwood, and ExxonMobil, the ship’s owner and Hazelwood’s employer.

The Supreme Court’s ruling overturned punitive damages set by the US Ninth Circuit Court of Appeals. ExxonMobil had appealed to the Supreme Court, which heard arguments Feb. 27 (OGJ, Mar. 10, 2008, p. 30).