Fourteen years ago, Exxon Mobil Corp. was ordered to pay $5 billion in punitive damages for the destruction of beaches and wildlife in Prince William Sound, Alaska. This was then reduced to $2.5 billion in 1994 by a federal appeals court. On Wednesday, June 25th, this was further reduced to $500 million by the U.S Supreme Court. In a 5-3 decision, Justice David Souter, writing for the court, stated that because the company has already exceeded the $2.5 billion amount in compensation to victims for economic losses, punitive damages have already been paid out. Exxon has asked the high court to throw out the punitive damages claiming it has spent $3.4 billion due to the damages which occurred along 1,200 miles of coast line.
Writing for the dissent, Justice John Paul Stevens stated that it was Congress who chose not to impose restrictions on punitive damages under the circumstances. Also in dissent, Justice Ruth Bader Ginsburg said the court was “engaging in lawmaking” with their conclusion. She believes the decision should have been left to Congress. Justice Stephen Breyer agreed with her by opposing a one to one ratio of punitive damages to victim compensation.
Justice Samuel Alito took no part in the decision because he owns Exxon stock.
This decision has left many Alaskans affected and in line for compensation in dismay. Under the original award nearly 33,000 would have collected $75,000 each. Now they stand to gain only $15,000 a person. According to Supreme Court lawyer Jeffrey Fisher, Native Alaskans, landowners, businesses, local governments, and commercial fishermen have had “their lives and livelihood destroyed and haven’t received a dime of emotional-distress damages.”
Revenue and profit margins of Exxon Mobil have surpassed $330 billion a year for the last several years, and is currently the world’s richest corporation whose net income was almost $40 billion last year. As other oil companies, Exxon Mobil is under the threat of investigation for price gouging during a time of record gas prices, as well as for funding global warming skeptics while spending less than a percent on researching alternative energy sources.
While the Exxon Valdez was captained by an alcoholic who had five double vodkas the night of the spill, the fact remains that massive oil tankers continue to dump oil into the oceans, polluting the beaches and killing wildlife, which affects many people’s livelihood. Because of this, environmental litigation is sure to have some kind of staying power. However, due to the Supreme Court’s ruling, potential punitive damage claims may be significantly reduced.
