February 12, 2008

The Potential Impact of the United States Supreme Court's Exxon Valdez Punitive Damages Opinion

The Daily Journal has an article (subscription required) previewing the February 27 oral argument in the Exxon Valdez case. The article begins: "When the Exxon Valdez oil tanker ran aground off the coast of Alaska in March 1989, the Berlin Wall had not fallen, NBC was making plans for a new sitcom called 'Seinfeld,' and John Roberts was a 34-year-old climber looking to make a name for himself as an appellate lawyer. Nineteen years later, Eastern Europe's transformation and Seinfeld's celebrated run are a part of history, but the Valdez dispute remains, as the Roberts-led Supreme Court is preparing to decide how much, if any, punitive damages Exxon owes for spilling 11 million gallons of oil into the Prince William Sound. The case, with arguments scheduled for Feb. 27, comes to the high court after three trips to the San Francisco-based 9th U.S. Circuit Court of Appeals, which settled on a $2.5 billion punitive-damages award to fishermen and other Alaskans who suffered economic harm from the massive environmental disaster. Though the figure was half the amount awarded by an Alaska jury, it was by far the largest punitive-damages award affirmed by a federal appellate court. Exxon protested that the award should be significantly lower, if not eliminated."

The article makes the point that if the court sets forth a common law limitation on punitive damages, the case could have widespread impact, but if it simply applies maritime law, it is not likely to have much impact. The article also points out that the three primary dissenters in due process punitive damages cases (Justices Scalia, Thomas, and Ginsberg) may well be in play for Exxon in this case because the analysis under maritime law is different from the analysis under due process.

We previously blogged about the potential impact of the Exxon Valdez opinion here. And see here for a post about professor Erwin Chemerinsky's article on the same subject.

UPDATE (by Lisa Perrochet on 2/13/08 at 9:55 a.m.): Cal Law has a similar story today [subs. req'd] regarding the imminent Exxon Valdez argument. Reporter Tony Mauro notes that Justice Alito has recused himself from the proceedings, opening the door for a 4-4 split. Mauro further observes, "Exxon supporters are hoping to win over Justices Antonin Scalia and Clarence Thomas, who have never found in their copies of the Constitution a bar against punitive damages. However, under maritime law — a form of judge-made common law — the two justices might join others who have voted to limit punitive damages in recent years." Mauro also quotes Mayer Brown's Andy Frey: "'The shackles are off' Scalia and Thomas" and, says Frey, even though the ruling may stress maritime law, it may also be "'very important for the issue of punitive damages generally.'"

FURTHER UPDATE (by Jeremy Rosen on 2/13/08 at 1:21 pm): Some of the 32,000 class members in the case have created their own "whole truth" website. According to the BLT (the Blog of Legal Times), the class members started the website to "highlight the continuing impact on the lives and work of Native Alaskans and others in the Prince William Sound. The group also plans a candlelight vigil in D.C. around the time of the arguments."