WASHINGTON (Legal Newsline)-The U.S. Supreme Court on Wednesday reduced the $2.5 billion punitive damages award in the long-running Exxon Valdez lawsuit to no more than $507.5 million.
The high court, voting 5-3, said the original award was excessive under federal maritime law.
The class action lawsuit, which has been running for nearly twenty years, centered on a dispute over the $2.5 billion in punitive damages awarded after 11 million gallons of crude oil spilled in March 1989 in Alaska's Prince William Sound after the ship ran aground.
In the high court's majority opinion, Associate Justice David Souter wrote that the punitive damages award should be brought into line with compensatory damages awarded earlier in the case.
"The award here should be limited to an amount equal to compensatory damages," Souter wrote.
He said, "A 1:1 ratio, which is above the median award, is a fair upper limit in such maritime cases."
Joining Souter in the majority were Chief Justice John Roberts and Associate Justices Antonin Scalia, Clarence Thomas and Anthony Kennedy.
Dissenting were Associate Justices John Paul Stevens, Ruth Bader Ginsburg and Stephen Breyer.
Ginsburg, in her dissenting opinion, said the justices were engaging in "lawmaking" by ruling punitive damages may not exceed what the company already paid in compensation for victims' economic losses.
"The new law made by the court should have been left to Congress," Ginsburg wrote.
The 32,677 plaintiffs in the case have been waiting for their award since 1994, when an Anchorage jury returned a $5 billion punitive-damages verdict against Exxon Mobil Corp. for one of the worst environmental disasters in American history.
In 2006, the 9th U.S. Circuit Court of Appeals in San Francisco reduced the award to $2.5 billion. Exxon then appealed to the U.S. Supreme Court. The justices heard oral arguments in the case Feb. 27.
Exxon has based its appeals on an 1818 court decision that holds that ship owners aren't liable for punitive damages for the actions of their agents at sea unless they're complicit in their behavior.
Irving, Texas-based Exxon also argued it should not face any punitive damages because the company already has paid out $3.4 billion in fines and penalties, cleanup costs, claims, among other expenses.
Since the 1994 jury award, nearly 20 percent of the 33,000 fishermen, Native Alaskans, cannery workers and others who stood to benefit from the lawsuit have died in the ensuing years.
The case is Exxon Shipping Co. v. Baker, 07-219.
From Legal Newsline: Reach reporter Chris Rizo by e-mail at chrisrizo@legalnewsline.com.