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WASHINGTON—US
Supreme Court justices questioned the $2.5-billion
punitive-damage award assessed against Exxon Mobil Corp.
for the 1989
Valdez oil spill, the largest in American history.
Hearing
arguments in Washington Thursday, some justices
suggested that federal law bars Exxon Mobil from being
punished for the conduct of the tanker’s captain, Joseph
Hazelwood. The 83-day trial included evidence that
Hazelwood was drunk on the night the vessel crashed into
a reef in Alaska.
“I don’t
see what more a corporation can do,” Chief Justice John
Roberts said, pointing to the company’s prohibition on
alcohol use by on-duty vessel officers.
Other
justices, including Stephen Breyer and David Souter,
suggested they might vote to limit the company’s
payment, while stopping short of barring the award
altogether. Exxon Mobil contends that it has paid
enough—$3.4 billion in cleanup costs, fines and other
spill-related expenses.
Souter
raised the possibility that punitive damages would be
limited to “double” the damages for actual harm caused
by the spill. That reasoning might slash the award to $1
billion or less.
Still,
the 90-minute argument session made clear that the court
was likely to be divided, possibly 4-4 on some aspects
of the case. Justice Samuel Alito, who said on his 2007
financial disclosure report that he owned Exxon stock,
isn’t taking part.
The
punitive award would go to a group that originally
consisted of 33,000 commercial fishermen, seafood
processors, landowners, native Alaskans and small
businesses. The victims sued in 1989, won a $5 billion
punitive damage award in 1994, then saw the case spend
the next 14 years bouncing up and down the court system.
Justice
Ruth Bader Ginsburg emerged as perhaps the staunchest
champion for the victims among the justices Thursday.
“The
jury could have found that Exxon knew that this captain
had a severe alcohol problem, and yet they let him stay
on voyage after voyage and did nothing about it,” she
said.
Unlike
similar cases the court has considered, the fight
doesn’t involve the constitutional limits on punitive
awards.
Exxon
Mobil instead says the award violates federal maritime
law, a largely judge-made set of principles governing
the rights and duties of commercial vessels.
In
maritime cases, “there’s no established tradition of
punitive damages,” argued Exxon’s lawyer, Walter
Dellinger.
Exxon
Mobil last year broke its own record for annual profit
by a US corporation with $40.6 billion. The company,
based in
Irving,
Texas,
has obtained a letter of credit and set aside $5.4
billion to cover its payments in the case. Exxon fell 50
cents to $89.39 at
4:01 p.m. in trading on the New York Stock Exchange.
Exxon
Mobil contends that Congress laid out the criminal and
civil penalties for oil spills in the Clean Water Act
and that courts can’t use maritime law to impose
additional punishment.
Alternatively, Exxon Mobil says maritime law doesn’t
permit “vicarious” punitive damages—those that punish a
company for the misconduct of its employees. A victory
on that issue could mean a new trial in the case.
The
company also contends that, even if punitive damages are
permissible, the Valdez award is too large. Should the
company pay the full award, plus more than $2 billion in
accrued interest, it would be the largest-ever punitive
damage payment.
The
victims’ lawyer, Jeffrey Fisher, argued that Exxon
should be held responsible for Hazelwood’s actions.
“He was
the person who decided on behalf of Exxon that it was
safe to leave port the night of
March 23, 1989,” Fisher argued.
Fisher
met resistance on that issue from Roberts, Antonin
Scalia and Anthony Kennedy, who questioned whether
Hazelwood’s position in the company was high enough to
warrant punishing Exxon Mobil.
“Certainly he was not entitled to set aside the policy
of Exxon that you cannot navigate a vessel while
intoxicated,” Kennedy said.
To win
the case, Exxon Mobil must secure five votes—most likely
Roberts, Scalia, Kennedy, Clarence Thomas and either
Breyer or Souter.
Neither
Breyer nor Souter offered much support for Dellinger’s
contention that Exxon Mobil shouldn’t be punished for
Hazelwood’s actions. Both, however, have backed
constitutional limits on punitive damages and voiced
interest Thursday in applying the reasoning from those
cases to the maritime context.
Alaska’s
top political leaders, including its Republican governor
and US senators, are backing the victims, as are 34
states. The Bush administration, taking a low profile,
didn’t file a Supreme Court brief even though the
dispute involves the meaning of the US Clean Water Act.
Damage
estimates vary.
Up to
2,800 sea otters and 250,000 seabirds died in the days
after the spill, according to a 2003 study published in
Science magazine. Harbor seals, killer whales and other
wildlife also died, and the herring fishery in the
village of Cordova closed. (Bloomberg) |
