Exxon Goes Before SCOTUS to Fight Damages Claims

Exxon Mobil Corp. is going into the arguments Wednesday asking the high court to erase a federal court's awarding of punitive damages to nearly 33,000 fishermen, Native Alaskans, landowners, businesses and local governments.

The 33,000 were the plaintiffs in a class-action lawsuit who claimed private economic harm from the spill. The company claimed it had already paid many millions in government fines, as well as $3.4 billion in cleanup costs.

A jury awarded $5 billion to the plaintiffs in 1994. A federal court later cut that amount in half, but it still was believed to be the largest punitive damages judgment of its kind in U.S. courts.

Impatience and frustration, residents say, are the guiding emotions 19 years later.

"Our region needs closure, and this is a vital component of our healing process," said Travis Vlasoff, a native Chugach fisherman from the village of Tatitlek, near Cordova. "We deserve justice for all we've endured and continue to endure for Exxon's reckless behavior."

Much of the initial blame for the accident was placed on Capt. Joseph Hazelwood, who was cited by various courts for relapsed alcoholism that contributed to mistakes, leaving his vessel helplessly stuck on Bligh Reef.

But the issue is whether, based on past high court decisions limiting punitive awards, the judgment was too high. The company argues it should not have to pay any damages, and says the case has dragged on too long.

Special maritime laws govern these kinds of disputes, and previous cases will be important benchmarks.

Lawyers for the plaintiffs claimed the company has deep financial pockets, and said in their appeal that even a multibillion-dollar judgment amounts to "barely more than three weeks of Exxon's net profits."

Alaskans gathered at a press conference in Washington on Tuesday. They said the Texas-based company reported an annual profit last year of $40.6 billion, a record for a U.S. corporation.

Exxon Mobil also argues the federal Clean Water Act does not allow for punitive damages for oil spills and other similar open-water environmental incidents. It says federal maritime law prevents company owners from being held liable for personally negligent conduct by a captain or crew.

Company officials did not respond to requests for comment before the arguments, but last fall a news release issued by company spokesman Tony Cudmore said, "This case has never been about compensating people for actual damages.

"Rather it is about whether further punishment is warranted in a case where the company voluntarily compensated most plaintiffs within a year of the spill, and has spent over $3.5 billion, including compensatory payments, cleanup payments, settlements and fines. We do not believe any punitive damages are warranted in this case."

The Supreme Court has generally tried to limit punitive damages that are deemed excessive. Last term, it threw out a $79 million award to an Oregon smoker's family who claimed tobacco giant Philip Morris contributed to his death by cancer.

The justices, in their divided ruling in that case, said in most cases punitive damages should match "actual" damages.

In the Exxon case, a federal appeals court said the company should be credited for paying for the cleanup costs, but said that company officials had long been aware of Hazelwood's problems.

"Spilling the oil was an accident, but putting a relapsed alcoholic in charge of a supertanker was not," the appeals court ruled in upholding the damages award.

Exxon still argues that it remains "hotly contested" whether Hazelwood was drunk at the time of the March 23, 1989, incident, and that a state court later cleared him of operating a vessel while intoxicated.

Justice Samuel Alito has withdrawn from the case. Although no reason was given, financial disclosure reports indicated the newest justice had owned substantial amounts of Exxon stock.

Without him, the high court could wind up deadlocked 4-4, which would leave in place the lower court ruling favoring the Alaska residents.

Derek Blake's family has fished in the sound for 85 years, spanning four generations. He was 6 when the spill happened.

"We were forced to move away," said the young fisherman. "Overnight, Cordova went from a thriving fishing village to a devastated and economically depressed community. We knew what we had lost -- we lost our way of life."

The Exxon Valdez is still on the high seas, now named the S/R Mediterranean, but is banned from Prince William Sound.

The case is Exxon Shipping Co. v. Baker (07-219). A ruling is expected by late June.

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I think it's shameful that Exxon, a highly profitable oil company, has refused to do the right thing and pay it's ordered damages. I'm not one for frivolous lawsuits but in this case, Exxon's failure to remove a known alcoholic from the bridge of their tanker gives the company culpability in the matter. It was their lack of attention that allowed Hazelwood's poor judgement to occur in the first place. Somehow, Exxon feels that by paying a fine and cleaning up the mess, they've absolved themselves of any responsibility to the people the spill affected the most.