The United States Supreme Court on Wednesday threw out a punitive damages order against oil giant Exxon for one of the world’s worst environmental disasters, ordering it to pay the equivalent of two days’ earnings for the 1989 Exxon Valdez tanker spill off Alaska.
The judges, in a five-three decision, said an original award of $2,5-billion in punitive damages against Exxon was excessive. Instead, it ordered the company to pay $507,7-million to about 33 000 Alaska fishermen and other victims of the spill.
With soaring world oil prices, that sum represents two days’ earnings for Exxon, which last year posted record profits of $40,6-billion.
In writing the majority opinion, Justice David Souter said the $2,5-billion award was out of line with US maritime law, and that damages against Exxon should be limited to the amount of actual harm caused. He said there was a need for a ”fair upper limit” to the award.
The ruling comes after a 14-year court battle, during which more than 3 000 of the plaintiffs in the lawsuit have died. The survivors will now receive $15 000 each.
Reaction to the decision from environmentalists and legal experts was harsh. Patrick Leahy, Democrat chairperson of the Senate judiciary committee, described the ruling as a ”$2-billion windfall” for Exxon.
”This ruling is another in a line of cases where this Supreme Court has misconstrued congressional intent to benefit large corporations,” he said in a statement.
Greenpeace’s US director, John Passacantando, commented on the ruling: ”For the court to require a company that posted the highest quarterly results in US corporate history in February to pay a mere $500-million in punitive damages to affected Alaskans makes a mockery of justice.”
Exxon argued that it had already paid enough for the spill: $3,4-billion in clean-up costs and other expenses. But environmentalists argue that much of the oil was never recovered, and that fisheries remain destroyed.
The Exxon Valdez spill was caused when a supertanker piloted by a drunken captain ran aground in Prince William sound, sending a cascade of 11-million gallons of crude oil into Arctic waters. It damaged thousands of kilometres of coastline and killed thousands of sea mammals and hundreds of thousands of sea birds.
The suit’s plaintiffs had argued that Exxon should be liable because it put the captain, who was known to have a history of drinking aboard the ship, in charge of the huge tanker.
In 1994, an Alaska court awarded punitive damages of $5-billion, reduced to $2,5-billion in 2006 by a federal appeals court.
Wednesday’s case was heard by eight of the nine US Supreme Court judges. The ninth, Samuel Alito, recused himself because he owns Exxon shares. —