Supreme Court Cuts Exxon Valdez Spill Damages

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Supreme Court Cuts Exxon Valdez Spill Damages

WASHINGTON -- The decision regarding the appeal of $2.5 billion in damages from the 1989 Exxon Valdez oil spill was reduced to $500 million by a Supreme Court ruling yesterday.

While the court ruled that victims of the worst oil spill in U.S. history were entitled to punitive damages, the original ruling was deemed excessive, The Associated Press reported. Justice David Souter wrote in his ruling that punitive damages may not exceed what the company already paid to compensate victims for economic losses, about $500 million compensation, according to the report.

Souter wrote that the Exxon Valdez case involves reckless action that was "profitless" for the company and has already resulted in substantial recovery for substantial injury. A penalty, he added, should be "reasonably predictable" in its severity.

Exxon pleaded with the high court to reject the punitive damages judgment, citing the fact that to date it has spent $3.4 billion in response to the accident, which dumped 11 million gallons of oil into Prince William Sound, which ultimately impacted 1,200 miles of Alaska coastline.

While a jury originally found the company liable for $5 billion in punitive damages, a federal appeals court overruled that amount in 1994 reducing it by half. Today's vote found the Supreme Court divided on its decision by 5-3. Justice Samuel Alito was not able to participate due to owning Exxon stock.

Justice John Paul Stevens voted in support of the $2.5 billion amount for punitive damages, stating Congress has chosen not to impose restrictions in such circumstances.

Justice Ruth Bader Ginsburg also voted for the original amount saying the court was engaging in "lawmaking" by concluding that punitive damages may not exceed what the company already paid to compensate victims for economic losses. "The new law made by the court should have been left to Congress," wrote Ginsburg.

Approximately 33,000 plaintiffs will share in the award, which averages roughly $15,000 a person. They would have collected an average of $75,000 each under the $2.5 billion judgment, reported the AP.

Exxon has paid $3.4 billion in fines, penalties, cleanup costs, claims and other expenses, the AP reported. First-quarter profits at Exxon Mobil Corp. were $10.9 billion. The company's 2007 profit was $40.6 billion.