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Court cuts 'Valdez' damages in half

By ASSOCIATED PRESS
Published December 23, 2006

SAN FRANCISCO - A federal appeals court on Friday cut in half a $5-billion jury award for punitive damages against Exxon Mobil Corp. in the 1989 Valdez oil spill that smeared black goo across roughly 1,500 miles of Alaskan coastline.

The case, one of the nation's longest-running, noncriminal legal disputes, stems from a 1994 decision by an Anchorage jury to award the punitive damages to 34,000 fishermen and other Alaskans. Their property and livelihoods were harmed when the Valdez oil tanker struck a charted reef, spilling 11-million gallons of crude oil.

In the original decision, a federal jury found recklessness by Exxon and the captain of the Valdez, Joseph Hazelwood, who caused the tanker to run aground. That finding of malfeasance made Exxon liable for punitive damages.

The disaster, the worst oil spill in U.S. history, prompted Congress in 1990 to pass a law banning single-hulled tankers like the Valdez from domestic waters by 2015.

The plaintiffs alleged Hazelwood ran the ship into a reef while drunk and Exxon knew he had a drinking problem, but left him in command of tankers.

It's the third time the 9th U.S. Circuit Court of Appeals court ordered the Anchorage court to reduce the $5-billion award, the nation's largest at the time, saying it was unconstitutionally excessive in light of U.S. Supreme Court precedent.

This time, in its 2-1 decision, the court ordered a specific amount in damages, while its previous rulings demanded a lower court come up with its own figures.

"It is time for this protracted litigation to end," Chief Judge Mary Schroeder and Judge Andrew Kleinfeld wrote.

The company, whose $36.1-billion in earnings last year were the highest ever by any U.S. corporation, said it has spent more than $3-billion to settle federal and state lawsuits and to clean the Prince William Sound area. The company earned about $5-billion when the spill occurred.

In October, Exxon Mobil reported earnings of $10.49-billion in the third quarter, the second-largest quarterly profit ever recorded by a publicly traded U.S. company.

Exxon spokesman Dave Gardner criticized the decision, calling the spill "a tragic accident that Exxon Mobil deeply regrets."

Gardner did not say whether the company would appeal the decision.

David Oesting, the lead lawyer from Anchorage representing the plaintiffs, said he was considering whether to ask the court to rehear the case with 15 judges or to go to the U.S. Supreme Court.

"Exxon could decide to continue grappling with us and we can decide we want to reach for more," Oesting said. "And, of course, what one does depends on what the other does."

Frank Mullen of United Cook Inlet Drift Association, which represents a fleet of 600 Alaskan salmon gill-netters, said many plaintiffs want the case to end. "Exxon wins on this one because they've literally worn people out and I think most people just want to get this over with."

The court majority said Exxon should pay punitive damages that equal five times the amount of general damages the jury awarded in addition to the more than $200-million the oil giant paid to Alaska natives, fish processors and other businesses and fishing interests. That equals $2.5-billion.

[Last modified December 22, 2006, 23:32:18]