June 15, 2009

Exxon Owes $500 $470 Million in Interest on Valdez Punitive Damages, Says Ninth Circuit

The Ninth Circuit issued an opinion today ordering Exxon Mobil to pay interest on the Exxon Valdez punitive damages award, dating back to September 1996, when the original judgment was entered. As a result, Exxon will owe about $500 $470 million in interest on top of the $500 million in punitive damages and $500 million in compensatory damages it has already paid.

As we mentioned in a prior post, Exxon was arguing that the interest didn't start running until the Supreme Court fixed the final amount of punitive damages. Exxon tried to get the Supreme Court to decide the interest issue, but the court sent the case back to the Ninth Circuit without ruling on the interest issue.

On remand, the Ninth Circuit ruled that the plaintiffs were entitled to interest running from the date of the original judgment because that's when the plaintiffs' right to recover punitive damages was "meaningfully ascertained," even though the actual amount wasn't decided until 13 years later. The Ninth Circuit also ruled, by a 2-1 vote, that the parties should bear their own costs. Exxon argued that it was entitled to $70 million in costs because it was largely successful in reducing the jury's $5 billion punitive damages award to $500 million. That argument persuaded Judge Kleinfeld, but not Judge Schroeder or Judge Thomas, who ruled that neither side was the clear winner, so they should bear their own costs.

This is probably the last stop for this 20-year litigation saga, unless Exxon Mobil can persuade the U.S. Supreme Court to step in again.

Hat tip: SCOTUSblog.