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Court cuts Exxon Valdez award
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| Magnetonium |
Yet once again Supreme Court slashes a fine against a big corporation ...
http://www.theglobeandmail.com/serv...ory/energy/home
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Associated Press
June 25, 2008 at 11:22 AM EDT
WASHINGTON — The U.S. Supreme Court on Wednesday slashed the $2.5-billion (U.S.) punitive damages award in the 1989 Exxon Valdez disaster to $500-million.
The court ruled that victims of the worst oil spill in U.S. history may collect punitive damages from Exxon Mobil Corp., but not as much as a federal appeals court determined.
Justice David Souter wrote for the court that punitive damages may not exceed what the company already paid to compensate victims for economic losses, about $500-million compensation.
Mr. Souter said a penalty should be “reasonably predictable” in its severity.
Bill Scheer, of Valdez, Alaska, is covered in crude oil while working on a beach after the spill in 1989 (John Gaps III/AP)
Exxon Mobil
Exxon asked the high court to reject the punitive damages judgment, saying it already has spent $3.4-billion in response to the accident that fouled about 2,000 kilometres of Alaska coastline.
A jury decided Exxon should pay $5-billion in punitive damages. A federal appeals court cut that verdict in half in 1994.
The Supreme Court divided on its decision, 5-3, with Justice Samuel Alito taking no part in the case because he owns Exxon stock.
Exxon has fought vigorously to reduce or erase the punitive damages verdict by a jury in Alaska four years ago for the accident that dumped 11 million gallons of oil into Prince William Sound. The environmental disaster led to the deaths of hundreds of thousands of seabirds and marine animals.
Nearly 33,000 Alaskans are in line to share in the award, about $15,000 a person. They would have collected $75,000 each under the $2.5-billion judgment.
In dissent, Justice John Paul Stevens supported the $2.5-billion figure for punitive damages, saying Congress has chosen not to impose restrictions in such circumstances.
Justice Ruth Bader Ginsburg also dissented, saying the court was engaging in “lawmaking” by concluding that punitive damages may not exceed what the company already paid to compensate victims for economic losses.
“The new law made by the court should have been left to Congress,” wrote Ms. Ginsburg. Justice Stephen Breyer made a similar point, opposing a rigid 1 to 1 ratio of punitive damages to victim compensation.
Writing for the majority, Mr. Souter said that traditionally, courts have accepted primary responsibility for reviewing punitive damages and “it is hard to see how the judiciary can wash its hands” of the problem by pointing to Congress for a solution.
A jury decided that the company should pay $5-billion in punitive damages. A federal appeals court cut that verdict in half.
The problem for the people, businesses and governments who waged the lengthy legal fight against Exxon is that the Supreme Court in recent years has become more receptive to limiting punitive damages awards. The Exxon Valdez case differs from the others in that it involves issues peculiar to laws governing accidents on the water.
Overall, Exxon has paid $3.4-billion in fines, penalties, cleanup costs, claims and other expenses resulting from the worst oil spill in U.S. history.
The commercial fishermen, Native Alaskans, landowners, businesses and local governments involved in the lawsuit have each received about $15,000 so far “for having their lives and livelihood destroyed and haven't received a dime of emotional-distress damages,” their Supreme Court lawyer, Jeffrey Fisher, said when the court heard arguments in February.
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| jerZ07002 |
as much as i feel for the Alaskans (and i am certainly an environmentalist) it is a good thing courts are capping punitive damage awards. While I don't necessarily agree with a 1 to 1 cap, punitive damages are getting out of hand. By definition, punitive damages are not compensating the victims for anything, as that function was served by compensatory damages. So don't feel too bad for the people losing out on the reduction.
Corporations must be able to predict their liabilities. With recent punitive damage awards it has become very difficult for corporations (and even doctors and other professionals) to predict civil liabilities. While Exxon is certainly a bad beginning to the caps (because i certainly would have no sympathy for exxon or its shareholders if they were to pay the entire 2.5 billion) this is a necessary step to ensure our businesses can stay competitive. |
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| Krypton |
| I agree with a 1:1 ratio cap in this case as I would think it unfair to hold XOM responsible for the captain's mistakes. Still, they should be held responsible for any clean up costs + compensation, which I think they did. |
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| jerZ07002 |
| quote: | Originally posted by Krypton
I would think it unfair to hold XOM responsible for the captain's mistakes. |
that's agency liability. exxon has a responsibility to hire and keep qualified and responsible navigators and ship captains. To the extent they don't they are, and should be, held responsible. You can't possibly think the ship captain should be responsible for billions of dollars in damage. |
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| Krypton |
| quote: | Originally posted by jerZ07002
that's agency liability. exxon has a responsibility to hire and keep qualified and responsible navigators and ship captains. To the extent they don't they are, and should be, held responsible. You can't possibly think the ship captain should be responsible for billions of dollars in damage. |
I guess not. So what cap is good for punitive damages then? |
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| jerZ07002 |
| quote: | Originally posted by Krypton
I guess not. So what cap is good for punitive damages then? |
i don't disagree that there should be a cap, i was just responding to your statement that it is unfair to hold exxon responsible for the mistake of its employee. I think there should be some flexibility in punitive damages, just not to the extent there has been in the past. A 1:1 cap seems fine in this case, but in other cases a 1:1 cap would not be suitable.
Imagine a case if a pharma corporation knowingly sold medicine in which some of the medicine in the batch was tainted and other medicine in the batch was not tainted. The company sold the medicine knowing this because it could not distinguish the good from the bad. At the end of the day, the tainted medicine killed only a few and made a couple more sick. The compensatory damages would be rather low - perhaps a few million per persons. However, this is a ripe case for disproportionate punitive damages. The 1:1 damages would unjustifiably protect the company. |
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| Krypton |
| Well, Exxon Mobil is held responsible as you said, because they have an obligation to hire competent personnel. Punitive damages, which I know to be a tool of deterrence against future malpractice, should be capped where? |
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| jerZ07002 |
| quote: | Originally posted by Krypton
Well, Exxon Mobil is held responsible as you said, because they have an obligation to hire competent personnel. Punitive damages, which I know to be a tool of deterrence against future malpractice, should be capped where? |
i don't know the answer to that. perhaps it should be based on the revenue of the company (or earning potential of the individual). Instead of basing it on a compensatory award, base it on the companies ability to pay, and how damaging it would be for the company. Perhaps a 2-5% of revenue cap :conf: |
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| Magnetonium |
I heard that the big winners in this case were the lawyers, as usual in big-money cases. Dont recall the exact numbers, but they got more money out of this than anyone else by a loooooooong margin.
Besides, for the kind of disaster Exxon caused, and the amount of money that was ACTUALLY spent on fixing the environmental crisis of the spill, its appallingly low. Besides, money cant fix the damage that was done. Almost daily there are oil spills of different proportions, but only the big ones get the story and the attention. Who cares, right?
In the end, people made money, and the nature got even more polluted and destroyed. . |
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| tathi |
| there was a documentary on this last week on foreign correspondant, the fisherman have lost their entire livelihoods because ever since "the day the water died" the lake and everything in it has become dead. depression is rife in this place, the guy who was reigning mayor at the time of the spill committed suicide and mentioned this on the note he left. the lawyer that they interviewed seemed like scum with no soul |
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| Magnetonium |
| quote: | Originally posted by tathi
there was a documentary on this last week on foreign correspondant, the fisherman have lost their entire livelihoods because ever since "the day the water died" the lake and everything in it has become dead. depression is rife in this place, the guy who was reigning mayor at the time of the spill committed suicide and mentioned this on the note he left. the lawyer that they interviewed seemed like scum with no soul |
Types of people I hate the most:
#1. Politicians
#2. Lawyers |
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