Maritime law (punitive damages).

IN NINETEEN-YEAR-OLD LITIGATION OVER EXXON'S SUPERTANKER OIL SPILL IN ALASKAN WATERS, DIVIDED U.S. SUPREME COURT HOLDS, AS MATTER OF MARITIME COMMON LAW, THAT INHERENT INCONSISTENCIES IN JURY DETERMINATIONS OF PUNITIVE DAMAGES JUSTIFIES LIMITING SAME TO NO MORE THAN AMOUNT OF COMPENSATORY DAMAGES

On or about March 29, 1989, Petitioner Exxon's supertanker Valdez grounded on a reef off Alaska, spilling crude oil into Prince William Sound. The tanker was over 900 feet long and Exxon used it to carry crude oil from the end of the Trans-Alaska Pipeline in Valdez, Alaska, to the lower 48 States. On the night of the spill it was carrying 53,000,000 gallons of crude oil, or over 1,000,000 barrels.

The accident came about soon after Captain Joseph Hazelwood--for some unknown reason--walked off the bridge. This action placed a tricky course correction in the inexperienced hands of unlicensed subordinates. Moreover, Hazelwood had a history of alcohol abuse and his blood still had a high alcohol level eleven hours after the spill. Witnesses testified that, before the Valdezleft port on the night of the disaster, Hazelwood had consumed at least five double vodkas in the waterfront bars of Valdez, an intake of about 15 ounces of 80-proof alcohol, enough that a non-alcoholic would have passed out. There also was evidence that Exxon officials knew that Hazelwood's various sessions with AA etc. had failed to succeed in curing his alcohol addiction. Nevertheless, Exxon kept him in command of this super tanker.

After the disaster, Exxon spent some $2.1 billion in cleanup activities. It also (1) pled guilty to criminal violations for which it paid fines, (2) settled a civil action brought by the United States and the state of Alaska for at least $900 million, and (3) voluntarily paid another $303 million to various private parties adversely affected by the spill.

In the resulting civil actions, the Alaska federal court consolidated related actions against Exxon into this one. Plaintiffs brought it against Exxon, Hazelwood, and others to recover economic losses suffered by Respondents (collectively Baker), who depend on the health of Prince William Sound to earn a living. Plaintiffs also demanded punitive damages.

At Phase I of the trial, the jury decided that Exxon and Hazelwood had acted recklessly, thus opening the door for punitive damages claims. The trial court charged the jury that a corporation is responsible for the reckless acts of employees acting in a managerial capacity within the scope of their employment.

In Phase II, the jury came in with $287 million in compensatory damages to some of the Plaintiffs--other Plaintiffs had settled their compensatory claims for $22.6 million. In Phase III, the jury awarded $5,000 in punitives against Captain Hazelwood and $5 billion against Exxon. The Ninth Circuit upheld the Phase I jury instruction on corporate liability and ended up remitting the punitive damages award against Exxon to $2.5 billion.