Supreme Court Reduces Exxon’s Liability

As part of a flurry of activity at the close of the Court’s calendar, the Supreme Court, in a 5-3 decision, ruled last week to reduce the damages payable by Exxon Mobile in connection with the 1989 oil spill in Alaska. The judgement was reduced from $2.5 billion to $500 million, effectively eliminating the punitive damages awarded by the lower court(s).

This particular case involved the damages associated with maritime liability – and Justice Souter, in his opinion for the majority, stated that a 1:1 ratio (awarding damages only for actual damages) was an appropriate limit so to eliminate “unpredictable” liabilities and, it would seem, to deter plaintiffs from seeking unnecessary damages.

The Exxon Valdez tanker crashed into a reef on the Prince William Sound, causing some 11 million gallons of oil to spill into the water.

Lawyers for Exxon Mobile argued that as their company had spent some $3.4 billion to clean up the spill, that they had already done enough.

Alaskan politicians and lawyers for the plaintiffs are clearly disappointed by the decision.