Supreme Court cuts Exxon Valdez fine

Sandra Speares - Wednesday 25 June 2008

The Exxon Valdez oil spill. pic:AP The Exxon Valdez oil spill. pic:AP

THE US Supreme Court has cut the punitive damages awarded against Exxon from $2.5bn to $500m for the 1989 Exxon Valdez oil spill.
 
The Supreme Court ruled that the ceiling for punitive damages could not exceed the amount awarded in compensatory damages for economic loss, which totalled about $500m. 

The Alaskan court originally made a punitive damages award of $5bn against Exxon, which was cut on appeal to $2.5m. 

According to John Kimball, a partner with US law firm Blank Rome, while the court established a 1:1 ratio as the upper limit for awarding punitive damages in maritime cases, it did not decide on the issue of whether the owner could be held liable for punitive damages based on acts of the ship’s master or other employees.
 
This issue was one of three questions presented to the Supreme Court for consideration and the court was divide 4:4 on the issue, leaving the compensatory damages in place. 

“The court left that decision for another day,” Mr Kimball said. “That issue will continue to vex the lower courts.” 

There was also a split decision on quantum which some Supreme Court judges in favour of leaving the $2.5bn fine in place. 

The court also ruled that the Clean Water Act did not preclude an award for punitive damages, which was another question put to the Supreme Court for deliberation.

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