Exxon's payout cut by a billion

Firm still thinks punitive damages are unwarranted, plans to appeal

Posted: Sunday, December 08, 2002

ANCHORAGE - A federal judge has reduced the punitive damage award against Exxon Corp. for spilling 11 million gallons of crude oil into Prince William Sound 13 years ago - but only by 20 percent.

U.S. District Judge Russel Holland in a ruling late Friday reduced the original $5 billion punitive damages award to $4 billion.

A spokesman for ExxonMobil said the company will appeal.

"Our position is no punitive damages are really warranted in this case," said company spokesman Tom Cirigliano.

Dave Oesting, lead counsel for the roughly 32,000 plaintiffs, which include fishermen, communities, businesses and landowners, said he was pleased with the decision. He said Judge Holland followed guidelines ordered by the 9th U.S. Circuit Court of Appeals.

"He believes $4 billion is an appropriate number, nothing less," Oesting said.

An Alaska jury in 1994 approved the big award in the Exxon Valdez oil spill. After the verdict, Exxon appealed to the 9th Circuit, which agreed with the company that the award was "excessive."

Exxon argued that the company was effectively punished and deterred by the billions it had paid in cleanup costs, compensation to hundreds of claimants, and government fines.

That included $300 million in damages, compared to actual damages of $287 million, Cirigliano said, plus $2.2 billion in cleanup costs, and $1 billion in settlements with state and federal governments.

"We had claims offices set up throughout Prince William Sound and down to Seattle," Cirigliano said.

Holland heard arguments in the case in October. Attorneys for Exxon said "a huge reduction" was required, maybe all the way down to zero. But under criteria laid out by the appeals court, it should be no more than $40 million, they said.

ExxonMobil Vice President and General Counsel Charles Matthews said Friday that Holland's latest ruling will be appealed.

"This ruling flies in the face of the guidelines set by the appeals court when they sent this case back to Judge Holland," Matthews said.

The 9th Circuit found no "aggravating factors" identified by the U.S. Supreme Court, such as violence, intentional spilling of oil, or trickery to hide the spill, according to ExxonMobil.

"While the plaintiffs' counsel's challenge to Judge Holland to send a message to the Ninth Circuit 'that they are wrong' is entertaining courtroom bravado, it requires us once again to appeal an order that is entirely inconsistent with the law already established by the 9th Circuit, as well as principles set forth by the Supreme Court," Matthews said.

Oesting and Lloyd Miller, the plaintiff's liaison attorney, said they had read only part of Holland's 52-page written decision by late Friday.

Miller said the judge made note of the enormity of the event and the company's recklessness, which could have led to far greater damages, such as an explosion that killed the tanker crew or harmed cleanup workers.

"We're thrilled with the result," Miller said. "It's exactly what we've been urging the court to do."

Gov. Frank Murkowski said he was encouraged that another step had been taken in the litigation. He said it was in the best interest of those affected by the spill to resolve the matter as soon as possible.

"I would hope Exxon would consider this option, rather than engaging in further appeals," Murkowski said in a written statement.

Fishermen who could be affected by the decision were cautious.

"It's a positive decision, but the way the court systems work I don't know what to think," said Rick Berns, a fisherman at Old Harbor on Kodiak Island. "It's another step toward the positive, but it takes so darn long. As long as Exxon can keep it tied up. It's another false hope, is the way I look at it."

"I don't know what to think any more," said Al Cratty Jr., another Old Harbor fisherman. "Ever since Exxon happened, our prices have never come back. It's had a drastic effect on the villages and the economics. The villages are dying. Our prices have never recovered because of the publicity of the oiled fish. It gave the farmed fish a better market."

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