July 5, 2011

Here we go again: Exxon Mobil ordered to pay $1 billion in punitive damages

The Associated Press is reporting that a Maryland jury has awarded $1 billion in punitive damages and $495 million in compensatory damages against Exxon Mobil in a lawsuit brought by 160 families and businesses affected by a gasoline leak at a gas station.  Exxon will undoubtedly file post-trial motions and, if necessary, an appeal.  If they can't knock out the punitive damages entirely, there's a good chance they'll succeed in getting the ratio reduced to 1 to 1.  The Exxon Shipping decision won't provide direct precedent, because the punitive damages in that case were reduced under federal maritime law.  But even without Exxon Shipping, Exxon will have a strong argument that any ratio in excess of 1 to 1 is excessive. 

Whatever happens, the appellate process shouldn't drag on for nearly as long as the Exxon Valdez case.  In that case the Ninth Circuit repeatedly remanded to the district court to re-evaluate the amount of punitive damages in light of the latest Supreme Court decisions.  By the time the case would make it up on appeal again, the Supreme Court would issue a new decision.  I don't foresee another string of Supreme Court decisions on excessive punitive damages this time around; the Court as presently constituted has declined several opportunities to jump back into this area.