Federal appellate court cuts Exxon Valdez oil
spill disaster punitive award to $2.5 billion
Aerial photograph of the Exxon Valdez, dated April 13, 1989.
Photo courtesty www.fakr.noaa.gov
By Julia Cheever, Bay City News Service
December 22, 2006
SAN FRANCISCO (BCN) - A federal appeals court in San Francisco
today cut a punitive damages award against Exxon Mobil Corp. for
a massive oil spill in Alaska in 1989 from $4.5 billion to $2.5
The 9th U.S. Circuit Court of Appeals said a substantial punitive
award was appropriate because the oil company engaged in "highly
reprehensible conduct'' in allowing a relapsed alcoholic to serve
as captain of the oil tanker Exxon Valdez.
But the court said a $4.5 billion award set by a federal trial
judge in Alaska was too high under standards set by the U.S. Supreme
A panel of the appeals court said by a 2-1 vote that the award
should be reduced to $2.5 billion because Exxon did not intend
to cause the disaster and acted promptly to clean up the spill
and compensate people whose livelihood was harmed.
The award was made in a lawsuit filed against Texas-based Exxon
by commercial fishermen, landowners and Alaska natives who depended
on subsistence fishing.
The Exxon Valdez spilled 11 million gallons of oil into Prince
William Sound after it ran aground on a reef on March 24, 1989.
The captain, Joseph Hazelwood, an alcoholic who had been drinking,
left the ship's bridge just before a crucial maneuver that was
needed to avoid the reef.
The panel said, "Exxon's reckless misconduct in placing
a known relapsed alcoholic in command of a supertanker, loaded
with millions of gallons of oil, to navigate the pristine and
resource-abundant waters of Prince William Sound was reckless
and warrants severe sanctions.''
The court rejected Exxon's claim that the punitive damages should
be reduced to $25 million.
The decision was the third time the appeals court ruled on the
case. A jury in Anchorage originally ordered a punitive award
of $5 billion in 1994, but the trial judge reduced that amount
to $4.5 billion. Both sides then appealed.
The economic damages case is separate from more than $3 billion
in environmental cleanup costs and fines paid by Exxon.
Exxon representatives did not immediately respond to requests
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