Judge reconsiders Exxon Valdez award

Posted: Monday, October 14, 2002

ANCHORAGE - A federal courtroom in Anchorage is the site of the latest scuffle in the 13-year battle for damages for thousands of Alaska fishermen, communities, businesses and landowners seeking compensation for the Exxon Valdez oil spill.

U.S. District Judge Russel Holland heard arguments Friday as he reconsidered the $5 billion punitive award Exxon Corp. was ordered to pay for spilling 11 million gallons of crude oil into Prince William Sound in 1989.

The people suing Exxon said $5 billion was perfectly appropriate, given the ecological and economic devastation left after its tanker struck a reef near Valdez. The corporation said "a huge reduction" is required, maybe all the way down to zero, because of all the other payouts Exxon made to clean up the sound and help those affected.

Some 900 of the 30,000 plaintiffs in the case have died since the lawsuit was filed.

"They will appeal until the end of time," said Brian O'Neill, attorney for the plaintiffs.

An Alaska jury in 1994 approved the big payout in the Exxon Valdez oil spill. After the verdict, Exxon appealed the award as excessive, arguing the company was effectively punished and deterred by the billions it paid out in cleanup costs, compensation to hundreds of claimants and government fines.

Exxon shouldn't have to pay any punitive damages, the company said, but in no case was $5 billion fair or legal.

The U.S. 9th Circuit Court of Appeals concluded Exxon should pay some punitive damages but said $5 billion was too much. It sent the case back to Holland to re-evaluate the award in light of new guidelines and to suggest a lesser amount for them to consider.

Punitive awards should be determined by the "reprehensibility" of the behavior and by comparison with punishments meted out in similar cases, the appeals court said. They also should bear a reasonable relationship to the actual damages, said the appeals court opinion, written by Judge Andrew Kleinfeld, who is from Alaska.

Kleinfeld concluded Exxon was "reprehensible" for putting a drunken captain in charge of the supertanker that ran aground on a reef. But he noted the company did not spill the oil deliberately or kill anyone so it is not a worst offender.

The appeals court also agreed the cleanup costs paid by Exxon should be considered a deterrent, meaning less punitive damages are required. The company has spent about $3.5 billion, John Daum, attorney for Exxon, said Friday.

Holland said he would issue his decision as soon as possible.

There's no end to this case in sight. Holland decided years ago that the $5 billion judgment was permissible. Whatever he decides now will almost certainly be appealed back to the appeals court, and Exxon has said it will take any decision it considers unfair to the U.S. Supreme Court.

Roland Maw, a fisherman from Kasilof, said since the spill he has survived the financial and emotional turmoil it caused him and his family, but talking to bankers about why he cannot make payments on boat loans presented "an interesting situation in life."



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