Court Tosses Punitive Damages for Valdez Spill

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Court Tosses Punitive Damages for Valdez Spill

NEW YORK -- A federal appeals court yesterday struck down a punitive-damages award against Exxon Mobil Corp. in the 1989 Exxon Valdez oil spill.

The Wall Street Journal reported the decision means the oil giant may end up paying only a fraction of the jury's original $5-billion penalty. The paper says the Ninth U.S. Circuit Court of Appeals in San Francisco sent the damages award back to a lower court in Anchorage, Alaska, for the second time in two years.

The appellate court cited a recent U.S. Supreme Court case that severely limits jury awards. It suggested that punitive damages under certain circumstances should be no more than actual damages. In the Valdez case, the actual-damages award was $287 million.

ExxonMobil says its calculations indicate that the trial judge should lower the punitive damages to roughly $25 million. Punitive damages are intended to punish defendants and deter similar behavior.

The Irving, Texas-based oil giant said it paid $300 million immediately to more than 11,000 Alaskans and businesses affected by the Valdez spill. In addition, the company paid $2.2 billion for the cleanup of Prince William Sound, staying with the cleanup from 1989 to 1992, when the State of Alaska and the U.S. Coast Guard declared the cleanup complete. ExxonMobil also paid $1 billion in settlements with the state and federal governments. That money is being used for environmental studies and conservation programs for Prince William Sound.