SCOTUS Fucks over Alaskans

[Alyrium Denryle]

As an Alaskan, FUCK YOU SCOTUS

WASHINGTON -- The U.S. Supreme Court dashed the hopes of more than 32,000 fishermen and Alaska natives who have been waiting for nearly 20 years to hear whether Exxon Mobil Corp. will have to pay out billions in punitive damages for its role in the 1989 Exxon Valdez oil spill.

In a 5-3 vote, the court decided this morning to reduce the $2.5 billion punitive damages. The award was excessive, the justices wrote, and reduced the damages to $507.5 million. The original multibillion punitive damages had been awarded as punishment for the company's role in spilling 11 million gallons of oil in the pristine fishing waters of Alaska's Prince William Sound.

"The punitive damages award against Exxon was excessive as a matter of maritime common law," wrote Justice David Souter in the majority opinion. "In the circumstances of this case, the award should be limited to an amount equal to compensatory damages."

The 32,677 plaintiffs in the case have been waiting for their compensation since 1994, when a jury in Anchorage returned a $5 billion punitive-damages award against Exxon Mobil Corp. The company has been appealing the verdict since then. In 2006, the 9th U.S. Circuit Court of Appeals cut the award to $2.5 billion. Exxon appealed that decision to the Supreme Court, which heard oral arguments in the case on Feb. 27.

Business groups such as the American Petroleum Institute and the U.S. Chamber of Commerce had hoped that the Supreme Court would use the Exxon Valdez case as a way to curb what they believe are large punitive damages against corporations.

Former Alaska governors, the current governor, the congressional delegation, supertanker captains, environmentalists, state lawmakers, Alaska Natives and experts in maritime law all joined with the 32,677 plaintiffs in asking that the Supreme Court uphold the $2.5 billion verdict.

The court in February had appeared sympathetic to Exxon's efforts to reduce a $2.5 billion punitive damages award for the company's role in the oil spill, although at the time, the justices didn't seem inclined to overturn the award. While they seemed to grapple with the size of the damages awarded, they also seemed to indicate that they thought Exxon failed to make a winning argument that it wasn't subject to punitive damages under maritime law.

Exxon based its appeal on an 1818 court decision that holds that ship owners aren't liable for punitive damages for the actions of their agents at sea unless they're complicit in their behavior.

These motherfuckers have been making money off the account they created to pay the punitive damages that is probably in excess of what they are now being forced to pay. After 20 years, 20 fucking years, they pay out a fraction of what the original damages were.

How the fuck is 2.5 billion excessive? How? Considering the fact that they have destroyed people's livelyhoods, laid waste to the coast-line (which has not recovered, their propaganda aside)

I do love our shamelessly pro-business court system. Fuck You SCOTUS

[The Duchess of Zeon]

So, each person is only going to get 16,000 USD now? That amount only equates to the likely amount that each of them lost during the first year, when the losses are continuing to the present. Ah well. In that context the original $5 billion award was quite reasonable.

[Glocksman]

IANAL, but isn't the question of punitive damages unrelated to actually compensating the plaintiffs for damages (hence the terms actual damages and punitive damages used in articles about lawsuits) and is instead intended to discourage such behavior?

[Alyrium Denryle]

IANAL, but isn't the question of punitive damages unrelated to actually compensating the plaintiffs for damages (hence the terms actual damages and punitive damages used in articles about lawsuits) and is instead intended to discourage such behavior?

Considering that that actual damages were a pittance and did not actually compensate any of the local people affected...

[Master of Ossus]

Considering that that actual damages were a pittance and did not actually compensate any of the local people affected...

Didn't the actual damages prevent the state of Alaska from going bankrupt? And regardless of whether you think that the actual damages were sufficient to cover the costs, punitive damages are unrelated to compensation.

[Singular Intellect]

It is indeed a dark time upon us when rich and powerful corperations get the backing of the law and government at the expense of hard hit citizens.

Who would have ever thought such things could happen...

[/sarcasm]

[FSTargetDrone]

You know, they are still finding crude floating around out there. Methinks the balance of those now-reduced damages should go to help mitigate that somewhat.

[Darth Wong]

So why are punitive damages allowed in any lawsuits, if the Supreme Court feels that damages should be limited to compensatory damages? Or does this ruling only apply to huge oil companies?

[FSTargetDrone]

A story about this on NPR this afternoon pointed out that some of the people who were waiting on a decision in this matter have died during the past 20 years. I wonder if their relatives will get their share, or does it only go to living recipients?

[Alyrium Denryle]

So why are punitive damages allowed in any lawsuits, if the Supreme Court feels that damages should be limited to compensatory damages? Or does this ruling only apply to huge oil companies?

The actual damages covered the costs of (poorly) cleaning up the coast-line and other direct damage relating to the spill. The punitive damages were SUPPOSED to cover the damages to people's livelyhoods etc etc etc. The actual damages awarded did not even cover the first year of economic hardship faced by the plaintifs as the fishery collapsed.

Punitive damages are not just for "emotional pain and suffering" but are also for the loss of livelyhood, etc etc etc which cannot be quantified as easily as the damage bill incurred to property and cleanup costs.

[JME2]

Damm; this sucks big-time.

[John of the Dead]

Furthermore, isn't the whole point of punitive damages to act as some form of punishment? If the amount is reduced to only cover damages, that's no longer punishing them, is it? Or am I mistaken about that?

Also, note that Exxon-Mobile made 2.5 billion every two days this year. From Reuters:

Soaring oil prices have propelled Exxon Mobil to previously unforeseen levels of profitability in recent years; the company posted earnings of $40.6 billion in 2007.

It took Exxon Mobil just under two days to bring in $2.5 billion in revenue during the first quarter of 2007.

So they don't even have to pay two days of revenue - it was reduced less that half a day's earnings. That's just ... what's the word? Infuriating? Flabbergasting? I'm stumped. And pissed.

[Alyrium Denryle]

Furthermore, isn't the whole point of punitive damages to act as some form of punishment? If the amount is reduced to only cover damages, that's no longer punishing them, is it? Or am I mistaken about that?

Also, note that Exxon-Mobile made 2.5 billion every two days this year. From Reuters:

Soaring oil prices have propelled Exxon Mobil to previously unforeseen levels of profitability in recent years; the company posted earnings of $40.6 billion in 2007.

It took Exxon Mobil just under two days to bring in $2.5 billion in revenue during the first quarter of 2007.

So they don't even have to pay two days of revenue - it was reduced less that half a day's earnings. That's just ... what's the word? Infuriating? Flabbergasting? I'm stumped. And pissed.

The sick part is, they didnt actually lose even that.

When the original judgment was 5 billion ish, they set that sum aside into an investment account. They made up this current punitive damage award in interest/dividends. And they did so... probably within a year or two

[FSTargetDrone]

There is a lot of oil that remains to be cleaned up.

According to a 2007 Rolling Stone article:

It has been almost two decades since the Exxon Valdez ran aground in Alaska, spilling more than 11 million gallons of oil into the waters of Prince William Sound. The poisonous black sludge killed thousands of fish and birds and contaminated Alaska's coastline, causing irrevocable damage to the surrounding ecosystems. "While the Exxon Valdez was not the largest in terms of volume of oil spills," says Rick Steiner, a marine conservation specialist at the University of Alaska, "it was certainly the most damaging oil spill in human history."

That's because the contamination continues to this day. Although $3.2 billion has been spent on clean-up efforts -- and ExxonMobil insists that "Prince William Sound is healthy, robust and thriving" -- the Valdez spill still plagues the environment. According to the National Oceanic and Atmospheric Administration, as many as 85 tons of oil will linger along parts of Alaska's shore for at least another twenty years. "The Sound is like a cancer patient," says Riki Ott, a marine biologist who has studied the spill. "The cancer may occupy just a little part of the body, but it can take out the whole body."

A visit to one of the northern bays of Knight Island reveals a dead zone: There's an unnatural silence that hovers over the bay. "It's like a graveyard out there," says Dune Lankard, a native fisherman from Cordova, a nearby fishing town that endured an extreme economic downturn in the wake of the spill. "You don't hear the birds -- you just don't have the sounds from the wildlife any more, and it will be a long time until you do."

It's not hard, standing on the coastline, to demonstrate that oil remains: Simply dig a hole in the sandy shore. As water fills up the hole, a greasy sheen quickly covers the surface. It is slick to the touch and smells like a mechanic's shop -- a shockingly industrial element in the midst of such seemingly unspoiled surroundings. According to a 2001 study funded by the Exxon Valdez Oil Spill Trustee Council (EVOSTC), approximately twenty acres of shoreline are still contaminated with oil -- the linear equivalent of 3.6 miles. "What we have found is that this lingering oil is really harmful," says Ott. "Once you get oil on the beaches, you've had a tremendous impact on the wildlife."

The EVOSTC estimates that the spill killed 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles, as many as 22 orcas, and billions of salmon and herring eggs. Only a third of the plant and animal groups affected by the spill have fully recovered, and some -- like the region's herring population -- have actually seen their numbers significantly plummet. Scientists with the National Oceanic and Atmospheric Administration have discovered that 400 parts per trillion of the spilled oil is enough to kill herring eggs -- meaning that even an oily sheen on a puddle would prove toxic to the unborn fish. As a result, what was once an essential cornerstone of the sound's fishing industry, as well as a crucial link in its food chain, has now withered to a state of disrepair. According to the Alaska Department of Fish and Game, the area's herring stock crashed in 1993 from an expected 120,000 tons to barely 16,000 tons -- well below the 20,000 tons needed to sustain the ecosystem in Prince William Sound.

Before the spill, herring fishing was a $50 million industry in Cordova, making the town one of the most profitable seaports in America. "You can imagine that economy and that vibrancy in the community," says Lankard. "Every year when those herring would crank up, the whole place would come alive. But now those herring don't come back, and this place is quiet. We haven't fished herring in but three of the last seventeen years."

Proper compensation has been hard to come by for those whose livelihoods were devastated by the spill. In December, as part of a case that dated back to 1994, a federal court awarded $2.5 billion in punitive damages, with an additional $2 billion in accumulated interest. But ExxonMobil has successfully kept the case tied up in court for more than a decade and may still appeal the verdict. "Of the original 32,000 plaintiffs, over 3,000 have already died," says Lankard. "So ten percent of the original plaintiffs are dead without ever seeing compensation in their lifetime. How can Exxon just want to wait it out with hopes that half or all of us die before we see a settlement?"

Despite overwhelming evidence to the contrary, ExxonMobil stands by its claim that Prince William Sound has fully recovered. "Residual oil remains," concedes company spokesman Mark Boudreaux. "But the issue is whether or not that oil is bio-available, and whether it is still creating any significant concerns with the environment. Our position is that if the oil were exposed and bio-available, it would have degraded over the past seventeen years."

But numerous studies suggest otherwise -- and those who monitor ExxonMobil say the company has a disturbing track record of denying its own role in polluting the environment. According to a study by Friends of the Earth International, the oil produced by ExxonMobil is responsible for three percent of all global warming since 1882 -- and two percent of the rise in sea levels. Yet the company has reportedly paid lobbyists $55 million over the last six years to help undermine efforts to fight planet-warming pollution. "ExxonMobil is to climate change what Big Tobacco is to lung cancer," says Kevin Knobloch, president of the Union of Concerned Scientists. "Their biggest crime is not simply putting their head in the sand over global warming but working aggressively and undercover to try to inject uncertainty into what is a powerful consensus among scientists: that global warming is under way."

That same pattern of denial, environmental activists say, is being played out once again in the waters off Alaska, where the devastation caused by the Valdez will continue for years to come. "The ExxonMobil executive team would be right at home at Custer's last stand or the wheelhouse of the Titanic," says Knobloch. "They put forward a combination of arrogance and willful ignorance -- which is a tough combination when all of life on the planet is at stake."

I tried to find a relatively neutral source on this (that is, not Greenpeace or similar organization). Anyway, nauseating. From where I stand, the initial damage amount wasn't high enough. I started to highlight and bold stuff, but what the hell. The whole article would be bolded.

[Master of Ossus]

So why are punitive damages allowed in any lawsuits, if the Supreme Court feels that damages should be limited to compensatory damages? Or does this ruling only apply to huge oil companies?

Punitive damages are constitutionally limited, except in cases of gross misconduct that involve only very small actual damages but in which there are clear psychic harms (the example is usually a hotel owner who knowingly allows a guest to stay in a room infested with bed bugs).

[Master of Ossus]

The actual damages covered the costs of (poorly) cleaning up the coast-line and other direct damage relating to the spill. The punitive damages were SUPPOSED to cover the damages to people's livelyhoods etc etc etc. The actual damages awarded did not even cover the first year of economic hardship faced by the plaintifs as the fishery collapsed.

Punitive damages are not just for "emotional pain and suffering" but are also for the loss of livelyhood, etc etc etc which cannot be quantified as easily as the damage bill incurred to property and cleanup costs.

Ummm, no. Pain and suffering is a form of actual damages, as are damages to someone's livelihood through things like reduced earnings or promotion opportunities. For that matter, any of the emotional distress claims are forms of compensatory damages, since they by definition are designed to restore victims to their original state. Punitive damages are designed to punish a party for gross misconduct, but as I just mentioned there are constitutional limits as to the ratio of punitive damages to actual damages (IIRC, it's part of Due Process).

[Edi]

Punitive damages are a very bad idea if they are awarded to the plaintiff. Actual damages to plaintiff and punitive damages to state coffers would be a more viable incentive. This would give the state incentive to put effective regulation in place and enforce it and it would give companies a real stick to fear and consequently obey said regulations.

What I fail to see here is why Exxon was not forced to cough up the full amount of harm (as projected to the future) as actual damages, but given the US legal (as opposed to justice) system, this is no surprise.

[Alyrium Denryle]

The actual damages covered the costs of (poorly) cleaning up the coast-line and other direct damage relating to the spill. The punitive damages were SUPPOSED to cover the damages to people's livelyhoods etc etc etc. The actual damages awarded did not even cover the first year of economic hardship faced by the plaintifs as the fishery collapsed.

Punitive damages are not just for "emotional pain and suffering" but are also for the loss of livelyhood, etc etc etc which cannot be quantified as easily as the damage bill incurred to property and cleanup costs.

Ummm, no. Pain and suffering is a form of actual damages, as are damages to someone's livelihood through things like reduced earnings or promotion opportunities. For that matter, any of the emotional distress claims are forms of compensatory damages, since they by definition are designed to restore victims to their original state. Punitive damages are designed to punish a party for gross misconduct, but as I just mentioned there are constitutional limits as to the ratio of punitive damages to actual damages (IIRC, it's part of Due Process).

I stand corrected. Though frankly, the actual damages awarded did not actually offset the harm done to the people living in the area.


PostPosted: Wed Jun 25, 2008 4:02 pm Post subject:
Punitive damages are a very bad idea if they are awarded to the plaintiff. Actual damages to plaintiff and punitive damages to state coffers would be a more viable incentive. This would give the state incentive to put effective regulation in place and enforce it and it would give companies a real stick to fear and consequently obey said regulations.

What I fail to see here is why Exxon was not forced to cough up the full amount of harm (as projected to the future) as actual damages, but given the US legal (as opposed to justice) system, this is no surprise.

Because our legal system does not actually give a damn about individual human beings, or even aggregates, but only really panders to people with money?

[Anguirus]

Fuck SCOTUS with a rusty cattle prod. This is outrageous.

[Surlethe]

NPR this afternoon made it sound like the court's hands were tied by some part of maritime law, which limited punitive damages to be less than or equal to compensatory damages.

[ArmorPierce]

Punitive damages are not compensatory damages, they are meant as a punishment for what is seen as a gross incompetence and to deter that party from doing it again. I believe there is also a difference in tax treatment in punitive damage vs compensator damage.

[Keevan_Colton]

Split the unrelated stuff.

[phongn]

For those interested, the ruling is available here in PDF format.

The NYT has a good article on the issue:

Damages Cut Against Exxon in Valdez Case
By ADAM LIPTAK

WASHINGTON — The Supreme Court on Wednesday reduced what had once been a $5 billion punitive damages award against Exxon Mobil to about $500 million. The ruling essentially concluded a legal saga that started when the Exxon Valdez, a supertanker, struck a reef and spilled 11 million gallons of crude oil into the Prince William Sound in Alaska in 1989.

The decision may have broad implications for limits on punitive damages generally. Punitive damages, which are meant to punish and deter, are imposed on top of compensatory damages, which aim to make plaintiffs whole.

Justice David H. Souter, writing for the majority in the 5-to-3 decision, said a ratio between the two sorts of damages of no more than one-to-one was generally appropriate, at least in maritime cases. Since Exxon has paid about $507 million to compensate more than 32,000 Alaska Natives, landowners and commercial fishermen for the damage caused by the spill, it should have to pay no more than that amount in punitive damages, Justice Souter said.

The plaintiffs have received an average of $15,000 each as compensation, and Wednesday’s decision means they will receive a similar amount in punitive damages.

Justice John Paul Stevens, in a dissent, said he would have upheld the punitive damages award, which the federal appeals court in California had reduced to $2.5 billion.

“In light of Exxon’s decision to permit a lapsed alcoholic to command a supertanker carrying tens of millions of gallons of crude oil though the treacherous waters of Prince William Sound, thereby endangering all of the individuals who depended upon the sound for their livelihoods,” Justice Stevens wrote, “the jury could reasonably have given expression to its moral condemnation of Exxon’s conduct in the form of this award.”

The Exxon Valdez spill was the worst in American history, damaging 1,300 miles of shoreline, disrupting the lives and livelihoods of people in the region and killing hundreds of thousands of birds and marine animals. It occurred after the ship’s captain, Joseph J. Hazelwood, left the bridge at a crucial moment. Mr. Hazelwood, an alcoholic, had downed five double vodkas on the night of the disaster, according to witnesses.

The question remaining after Wednesday’s decision is whether the one-to-one ratio will apply outside of maritime cases. In the Exxon case, the Supreme Court was acting as a state appellate court typically might, assessing the reasonableness of the punitive award under the common law rather than asking whether it violated constitutional due process protections.

The one-to-one ratio was not grounded in statutory law or other maritime cases. Justice Souter relied instead on studies showing that in hundreds of cases, the median punitive damage award was about 65 percent of the compensatory award.

“We consider that a 1:1 ratio, which is above the median award, is a fair upper limit in maritime cases,” Justice Souter wrote.

It is not clear what effect the decision will have in cases presenting the constitutional question. In 2003, in State Farm v. Campbell, the court ruled that a single-digit ratio (that is, no more than nine-to-one) was appropriate as a matter of due process in all but the most exceptional cases. In cases where compensatory damages are substantial, the State Farm decision went on, “a lesser ratio, perhaps only equal to compensatory damages,” might be warranted.

Justice Souter’s last footnote in Wednesday’s decision, Exxon Shipping v. Baker, No. 07-219, underscored the suggestion in State Farm that in cases with substantial compensatory awards “the constitutional outer limit may well be 1:1.”

The Exxon decision may also be influential in cases where state court judges are making their own common-law assessments of reasonableness. While the Supreme Court’s reasoning in a federal maritime case is not binding on them, at least some state judges will find it instructive and persuasive.

Justice Samuel A. Alito Jr. owns Exxon stock and did not participate in the decision. As a consequence, the court split 4-to-4 on a separate question, whether Exxon may be held accountable for Mr. Hazelwood’s recklessness. The effect of the split was to leave intact the ruling of the lower court, the United States Court of Appeals for the Ninth Circuit, which said Exxon might be held responsible.

In addition to Justice Stevens, two other justices issued dissents from the majority’s ruling reducing the punitive award.

Justice Stevens wrote that imposing a broadly applicable rule is a job for Congress, not the courts. He acknowledged the problem of “large outlier awards” but said courts could address those case by case.

Justice Ruth Bader Ginsburg asked a series of pointed questions in her dissent. For instance: “What ratio will the court set for defendants who acted maliciously or in pursuit of financial gain?” And: “On the next opportunity, will the court rule, definitively, that 1:1 is the ceiling due process requires in all of the states, and for all federal claims?”

In his dissent, Justice Stephen G. Breyer wrote that Exxon’s conduct warranted “an exception from strict application of the majority’s numerical rule.”

Jeffrey L. Fisher, a lawyer for the plaintiffs, said there was “a great deal of sadness” among his clients. “What is painful,” Mr. Fisher said, “is that there seems to have been some disagreement between the dissenters and the majority on how reprehensible Exxon’s conduct was.”

In a statement, Rex W. Tillerson, the chairman and chief executive of Exxon Mobil, said: “The company cleaned up the spill and voluntarily compensated more than 11,000 Alaskans and businesses. The cleanup was declared complete by the State of Alaska and the United States Coast Guard in 1992.”

[Vympel]

If only those damn LIEberals would let us drill in Prince William Sound we could be completely energy independent from those damn Ayerabs in 6 months ...