Federal judge reconsiders Exxon Valdez award

Posted: Sunday, October 13, 2002

ANCHORAGE -- A federal judge in Anchorage is reconsidering the $5 billion punitive award against Exxon Corp. for spilling 11 million gallons of crude oil into Prince William Sound 13 years ago.

An Alaska jury in 1994 approved the big award in the Exxon Valdez oil spill, but now U.S. District Judge Russel Holland has the difficult job of reviewing the award.

Holland heard arguments Friday in the case. As might be expected, the people suing Exxon said the $5 billion was perfectly appropriate. Exxon said ''a huge reduction'' is required, maybe all the way down to zero.

After the 1994 verdict, Exxon appealed the $5 billion as excessive, arguing that the company was effectively punished and deterred by the billions it had 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 that Exxon should pay some punitive damages but agreed that $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.

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 appeals decision it considers unfair to the U.S. Supreme Court.

''They will appeal until the end of time,'' said Brian O'Neill, attorney for the plaintiffs, which consist of about 30,000 fishermen, communities, businesses and landowners. He said 900 plaintiffs have died since the lawsuit was filed.

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 that 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 is not a worst offender.

The appeals court also agreed that 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.

Roland Maw, a fisherman from Kasilof, said since the spill he has mostly survived the financial and emotional turmoil the spill caused him and his family, but it was tough for a while.

''You try to talk to a banker about why you don't have a $30,000 and a $60,000 boat payment,'' Maw said. ''That's an interesting situation in life.''

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