Federal Court Halves Valdez Fine Against Exxon

SAN FRANCISCO -- The 9th U.S. Circuit Court of Appeals cut in half a $5 billion jury award last week for punitive damages against ExxonMobil Corp., in connection with the 1989 Valdez oil spill that spread oil across roughly 1,500 miles of Alaskan coastline, The Associated Press reported.

The case stems from a 1994 decision by an Anchorage jury to award punitive damages to 34,000 fishermen and other Alaskans who were harmed when the Valdez oil tanker struck a reef, spilling 11 million gallons of crude oil, the report stated.

The action marks the third time the federal appeals court ordered the Anchorage court to reduce the $5 billion award, saying it was unconstitutionally excessive in light of U.S. Supreme Court precedent, the AP reported.

What differs in this ruling from previous is that the federal court ordered a specific amount in damages, where before, rulings demanded a lower court to decide its own figures, the AP reported.

"It is time for this protracted litigation to end," wrote Chief Judge Mary Schroeder and Judge Andrew Kleinfeld, which was cited by the AP.

In 2002, U.S. District Judge H. Russel Holland of Anchorage complied, and reduced damages to $4 billion. Then, Irving, Texas-based Exxon appealed.

The following year, the appeals court ordered the judge to revisit his decision, stating a Supreme Court ruling that said punitive damages usually could not be more than nine times the general damages, the AP reported. The Anchorage jury awarded $287 million in general damages, while the punitive damages were 17 times that amount, according to the AP.

Following that, Holland declared Exxon's conduct "reprehensible" and set the figure at $4.5 billion plus interest, and stated the Supreme Court's precedent did not directly apply to the case, the AP reported.

The company appealed again, arguing it should have to pay no more than $25 million in punitive damages, which are meant to punish a company for misconduct, the AP reported.

Exxon spokesman Dave Gardner told the AP the spill was "a tragic accident that ExxonMobil deeply regrets." Gardner declined to tell the AP whether the company would appeal the decision.

"In our opinion, the facts of this case do not warrant an award this size," he said.

The court majority ruled Exxon should pay punitive damages equal five times the amount of general damages the jury awarded, along with more than $200 million that the oil giant paid to Alaska natives, fish processors and other businesses and fishing interests, which equals $2.5 billion, the AP reported.
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