Top court debates Exxon Valdez damages

WASHINGTON — Nearly 19 years after the Exxon Valdez oil spill fouled Alaska's Prince William Sound, the Supreme Court debated Wednesday how much money the company responsible for the disaster should pay in punitive damages.

A jury in Alaska said $5 billion. An appeals court said $2.5 billion. And Exxon's answer Wednesday was nothing at all, because the company said it already had paid plenty.

Justices explored just about every possible alternative through intense questioning during 1 ½ hours of arguments before a packed courtroom. By the end, it seemed several held the view that the company could be found liable for punitive damages, but perhaps not as much as even the appeals court had found.

There were several unusual aspects to Wednesday's arguments in a case that has bounced through the legal system for 14 years.

Justice Samuel Alito is recused because of his Exxon stockholdings, so even a 4-to-4 tie on the court would affirm the lower court's decisions that punitive damages are owed to nearly 33,000 fishermen, native Alaskans, businessmen and others consolidated into the single suit against Exxon.

And, as Justice David Souter noted, the court for a decade has struggled with determining whether punitive damages awarded by state courts were excessive. Now, he suggested, it is the Supreme Court's turn to "come up with a number."

Exxon has acknowledged that the captain of the Exxon Valdez, Joseph Hazelwood, was drunk at the time of the March 24, 1989, accident, and the corporation has paid about $3.4 billion in fines, compensation and cleanup costs.

Maritime law has shielded ship owners from being punished for damage caused by their vessels. This made sense during the era of sailing ships, Souter said. "In those days, when a ship put to sea, the ship was sort of a floating world by itself," he said.

Walter Dellinger, representing Exxon, cited this principle of maritime law and urged the court to throw out the entire punitive verdict. He cited the case of the Amiable Nancy in 1818 as having a historic precedent shielding ship owners.

But his argument quickly ran aground. "It's rather, I think, an exaggeration to call it a long line of settled decisions in maritime law," Justice Ruth Bader Ginsburg said.

As a fallback, Dellinger argued that the $2.5 billion verdict was too high. He cited several federal laws that, for example, fine those who pollute the environment. Typically, these legal fines may total millions of dollars but not billions, he said.

He also urged the justices to keep in mind that it was an accident. "This was not an intentional act. It was not malicious," he said.

But Stanford law professor Jeffrey Fisher, representing the workers, said Exxon deserved to be punished for "putting a drunken master in charge of a supertanker."

He said the jury heard testimony that Exxon officials knew Hazelwood was an alcoholic, and they had 33 reports that he had gone back to drinking.

Fisher said the captain was an agent of Exxon's management. "It is perfectly appropriate to expose the corporation to punitive damages based on the reckless acts of such an individual," he said.

Chief Justice John Roberts Jr. and Justice Antonin Scalia questioned why a corporation should be punished if one of its officials violates its corporate policy. Exxon had a firm policy against drinking.

Three other justices — Anthony Kennedy, Stephen Breyer and Souter — said they saw a need to reduce the punitive damages.