Exxon seeks to stop $2.5 billion verdict

The Baltimore Sun

WASHINGTON -- Exxon Mobil Corp. made its final appeal yesterday to the Supreme Court to throw out a $2.5 billion verdict against the oil giant for its role in the 1989 spill of 11 million gallons of crude oil into Alaska's Prince William Sound.

In a 90-minute hearing on the Exxon Valdez case, the company argued that maritime law has little precedent for levying punitive damages against a company for the actions of its agents at sea. The case is unusual in that Exxon based its appeal on maritime law, specifically an 1818 case that holds ship owners aren't liable for their agents at sea unless they're complicit in their behavior.

The justices spent much of their time on that central issue. They repeatedly asked whether the Exxon Valdez's captain, Joseph Hazelwood, was considered an important enough executive in the company that it should be punished for what he did at sea.

Ultimately, corporations act through individuals, Chief Justice John G. Roberts Jr. said.

"I would suspect just instinctively that the captain driving these supertankers is a lot closer to the CEO than the cabin boy," he said.

Later, however, Roberts asked what corporations could do to avoid punitive damages. It seems there's little they can do if they have established policies but top executives flout them, he said.

"It can hire fit, competent people," said Jeffrey Fisher, the attorney who argued the case for the more than 30,000 fishermen and Alaska natives who first sued in 1989. Exxon knew for three years that Hazelwood was an alcoholic and failed to act appropriately, Fisher told the court, and the original trial was about the company's role in the spill.

Prosecutors alleged that Hazelwood was drunk when the ship ran aground March 24, 1989, but he denied the charge and was acquitted in criminal court.

If Exxon is successful, the court will overturn the $2.5 billion damage award by the 9th U.S. Circuit Court of Appeals, which many consider the largest punitive verdict ever against a U.S. corporation. If the plaintiffs prevail, $2.5 billion plus interest will flow into Alaska's economy.

"We think it's not too much to ask that some recompense and punishment be paid for the human toll of the spill and not simply the environmental impact," Fisher said.

Exxon has been appealing the verdict since 1994, when a jury in Anchorage returned a $5 billion punitive-damages award against the company. In 2006, the 9th U.S. Circuit Court of Appeals cut the award to $2.5 billion. Exxon, which already has paid $3.5 billion in fines, compensation and settlements, appealed that decision to the Supreme Court. The court agreed last year to hear the case.

The company's lawyer, Walter Dellinger, argued that Exxon has been punished enough by state and federal environmental regulators, and that the money the company already has paid is deterrent enough.

Eight of the nine justices heard the case. Justice Samuel A. Alito Jr., who owns Exxon Mobil stock, recused himself from the case.

A decision is expected before the court's term ends in June. Many court observers expect the case to result in a 4-4 tie, which would benefit the plaintiffs in the case and uphold the $2.5 billion verdict.

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