The Exxon Valdez ran aground in March of 1989, spilling 11 million gallons of oil into Prince William Sound and killing tens of thousands of wild creatures and fouling 1,300 miles of beaches and surface waters.
A class action jury trial was held in federal court in Anchorage, Alaska in 1994. That jury awarded $5 billion in punitive damages to the plaintiff class. The plaintiff class consisted of 32,000 fisherman, Alaska natives, landowners and others whose livelihoods were gravely affected by the disaster. Lieff Cabraser has served as co-counsel for the plaintiffs since the litigation began.
The punitive damages award was on repeated appeal by the Exxon Corporation ever since. In 2001, the Ninth Circuit Court of Appeals ruled that the original $5 billion punitive damages verdict was excessive.
On December 6, 2002, U.S. District Court Judge H. Russell Holland reinstated the award at $4 billion. Judge Holland stated that, "Exxon officials knew that carrying huge volumes of crude oil through Prince William sound was a dangerous business, yet they knowingly permitted a relapsed alcoholic to direct the operation of the Exxon Valdez through Prince William Sound." To read the court's 2002 order, click here (Adobe Acrobat format).
In 2003, the Ninth Circuit again directed Judge Holland to reconsider the punitive damages award under United States Supreme Court punitive damages guidelines.
On January 28, 2004, Judge Holland issued his order finding that recent Supreme Court decisions did not change the court's earlier analysis. The court specifically found that a punitive damages award of $4.5 billion plus $2.25 billion in interest was in accordance with Supreme Court authority.
In reaching this conclusion, the court noted:
[T]he most direct and palpable effect of Exxon's recklessness was upon the livelihood of Prince William Sound, Cook Inlet, and Kodiak area fishermen. However, the spilling of 11 million gallons of crude oil into Prince William Sound and Lower Cook Inlet also disrupted the lives of thousands of claimants and their families. The trauma was real although not physical.
The court further found that:
Exxon's conduct did not cause only economic harm. The court of appeals has aptly observed on Exxon's earlier appeal that "the huge oil spill obviously caused harm beyond the 'purely economic.'" In re Exxon Valdez, 270 F.3d at 1242. The social fabric of Prince William Sound and Lower Cook Inlet was torn apart. "[R]esearch on the community impacts of the Exxon Valdez oil spill clearly delineate a chronic pattern of economic loss, social conflict, cultural disruption and psychological stress. J. Steven Picou, et al., Community Recovery from the Exxon Valdez Oil Spill: Mitigating Chronic Social Impacts, at 6-7. Communities affected by the spill "reported increased incidences of alcohol and drug abuse, domestic violence, mental health problems, and occupation related problems. Duane A. Gill, Environmental Disaster and Fishery Co-Management in a Natural Resource Community: Impact of the Exxon Valdez Oil Spill, in Folk Management in the World's Fisheries 227 (Dyer & McGoodwin, eds., 1994). Also, several studies found that a high percentage of affected fishermen suffered from severe depression, post-traumatic stress disorder, generalized anxiety disorder, or a combination of all three. The spilling of 11 million gallons of crude oil into Prince William Sound and Lower Cook Inlet disrupted the lives (and livelihood) of thousands of claimants and their families for years.
Notwithstanding this repeated judicial review and vindication of the jury's decision, Exxon appealed, yet again, the punitive damages award. On January 27, 2006, Exxon asked the court of appeals to reduce the $4.5 billion punitive damage award to $25 million for the catastrophic oil spill, arguing that the company has been punished enough by having to pay billions in cleanup costs, compensation and a criminal fine.
At oral argument, Brian O'Neill, counsel for the plaintiffs, said the latest $4.5 billion award was justified, even in light of a 2003 U.S. Supreme Court ruling imposing new limits on punitive damages. Exxon knowingly "put a drunk in charge of a tanker in Prince William Sound," aware of the danger to the environment and the livelihoods of thousands of families, said O'Neill.
In December 2006, the Ninth Circuit Court of Appeals issued its ruling, setting the punitive damages award at $2.5 billion. Exxon sought to reverse the Ninth Circuit's award by seeking review before the U.S. Supreme Court, wihch granted review.
On June 25, 2008, the U.S. Supreme Court rendered an opinion permitting the assessment of punitive damages in a maritime spill under maritime law. However, the Court held that the punitive damages award against Exxon was excessive and should be limited to $507.5 million, an amount equal to the trial court’s calculation of appropriate compensatory damages. To read the Court’s opinion, click here.