June 20, 2010

Media Misses the Boat on Parallels Between BP Oil Spill Fund and Exxon Valdez Punitive Damages Litigation

Many of the recent media reports about the Gulf of Mexico oil spill have, understandably, compared that spill to the Exxon Valdez disaster. But there's one recurring theme in the media reports that is a bit misleading.

The press often reports that the Valdez victims had to wait 20 years to be compensated, because Exxon litigated the case all the way to the Supreme Court. For example, this story in the Wall Street Journal discusses the $20 billion fund that BP is establishing to satisfy claims arising from the gulf disaster, and says that the fund will speed up payouts to claimants, who won't have to wait 20 years like the Valdez claimants did.

That's misleading because the award ExxonMobil litigated for 20 years was a punitive damages award. It had nothing to do with compensating the plaintiffs. Like all punitive damages awards, the Exxon Valdez punitive award was a windfall to the plaintiffs. ExxonMobil paid all the compensatory damages years before the punitive damages litigation made its way to the Supreme Court. So it doesn't really make sense to compare that litigation to the fund being established by BP. The BP fund will be for compensation, not for punitive damages.