Appeals panel sends Exxon Valdez case back to Alaska court

Posted: Sunday, August 24, 2003

DALLAS - A federal appeals court has again ordered a court in Alaska to reconsider a multibillion dollar punitive damages award against ExxonMobil Corp. for the Exxon Valdez oil spill.

ExxonMobil, the world's largest publicly traded oil company, said Friday it should pay no more than $25 million in damages - a fraction of the original $5 billion award.

A jury in Alaska approved a $5 billion award to punish the company for spilling 11 million gallons of crude oil into Prince William Sound in 1989.

In 2001, the 9th U.S. Circuit Court of Appeals in San Francisco said the award to fisherman and Alaska Natives was excessive and sent it back to U.S. District Judge Russel Holland in Anchorage. Holland reduced the award to $4 billion last year.

Both sides appealed. ExxonMobil said the reduced figure was still too high because of a U.S. Supreme Court decision this year that a $145 million punitive damage award against State Farm Insurance was excessive. Punitive damages are meant to punish a corporation for wrongful conduct.

The decision to review the Valdez award was not shocking. State and federal appeals courts throughout the nation have been reviewing other cases in light of the Supreme Court ruling in the State Farm case.

Last year, under previous law, ExxonMobil lawyers argued that punitive damages for the Valdez spill should be no more than $40 million. After the State Farm case, ExxonMobil spokesman Tom Cirigliano said, the company believes the figure should be even lower - possibly $25 million, which he said is the amount ExxonMobil has been ordered to pay for actual damages from the spill.

David Oesting, an Anchorage lawyer representing fishermen in the case, said the State Farm case was unrelated and should not be used to reduce punitive damages in the Valdez case. He said sending the case back to Alaska would drag it out another six to 12 months, outraging his clients.

ExxonMobil said it cleaned up the spill and voluntarily compensated those who claimed direct damages.

The company said it paid $300 million immediately to more than 11,000 Alaskans and businesses affected by the spill and $2.2 billion more for cleanup operations from 1989 to 1992. The company also has paid $1 billion in settlements with the state and federal governments.

The latest decision to send the case back to Alaska was made by a three-judge panel of the 9th Circuit. It was dated Monday but not made available until Friday. Cirigliano said the oil company learned of the ruling Friday.

In trading Friday before news of the decision, shares of Texas-based Exxon Mobil fell 52 cents to $36.53. In extended trading, the shares gained 13 cents.

The case is Seahawk Seafoods Inc. v. Exxon, 03-35166.

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