July 15, 2008

Exxon Opposes Plaintiffs' Request for Interest on $500 Million Punitive Damages Award

Last week, the plaintiffs in Exxon Shipping Co. v. Baker asked the Supreme Court to clarify whether they are entitled to interest on their punitive damages award. The plaintiffs were concerned that they might be denied interest under Supreme Court Rule 42.1, which provides: “If a judgment is modified or reversed with a direction that a judgment for money be entered below, the mandate will contain instructions with respect to the allowance of interest.” In this case, the Supreme Court's opinion did not contain any instructions regarding interest. The plaintiffs claim they are entitled to about $488 million in interest.

Exxon has now filed a response. Exxon agrees that the Supreme Court should resolve the interest issue, but Exxon contends the plaintiffs are not entitled to any interest. Exxon argues that the purpose of awarding postjudgment interest is to compensate a plaintiff for the lost use of their money during the time between the ascertainment of the damages and the payment of the judgment. But Exxon contends that the plaintiffs in this case have no right to compensation of any kind, because they have already been fully compensated by the compensatory damages award. The punitive damages were awarded purely for the public purposes of punishment and deterrence, and those purposes will be served regardless of whether interest is added to the award. Exxon also argues that the extraordinary delay between the date of the original judgment and the Supreme Court's decision was caused by the plaintiffs, who repeatedly persuaded the district court to ignore the decisions of the Ninth Circuit and the Supreme Court.

Hat tip: SCOTUSblog.