COURT strikes down $5 billion damages in Exxon Valdez case, recommends lower award

Wednesday, November 7th 2001, 12:00 am
By: News On 6

SAN FRANCISCO (AP) _ The $5 billion in punitive damages awarded for the 1989 Exxon Valdez spill is excessive, a federal appeals court ruled Wednesday, ordering a judge to determine a lesser amount.

An Anchorage, Alaska jury had ordered the award against Exxon to thousands of commercial fisherman, Alaska natives, property owners and others harmed by the nation's worst oil spill.

Exxon, which later merged with Mobil, argued that it shouldn't have to pay any punitive damages. The oil giant said it learned its lesson and spent more than $3 billion to clean up the Prince William Sound area and to settle federal and state lawsuits.

In its appeal, Exxon Mobil Corp. said the award was ``completely unwarranted, unfair and is excessive by any legal or practical measure.''

The 9th U.S. Circuit Court of Appeals said some damages were justified to punish the company, but agreed that $5 billion _ the largest punitive damage award in history at the time _ was excessive.

The plaintiffs noted that the spill, which polluted Alaska's Prince William Sound with 11 million gallons of crude oil and smeared black goo across roughly 1,500 miles of coastline, had reduced their property values and damaged fishing and hunting grounds.

The same jury also found recklessness by Exxon and the captain of the Valdez, Joseph Hazelwood, who caused the tanker to run aground on a charted reef. That finding of malfeasance made Exxon liable for punitive damages.

The plaintiffs had alleged that Hazelwood ran the ship aground while drunk and that Exxon knew he had a drinking problem and still left him in charge of tankers. Hazelwood, however, was acquitted in 1990 of operating the tanker while drunk.

The jury also awarded commercial fishermen $287 million to compensate them for economic losses suffered as a result of the spill. Months after the court battle, U.S. District Judge Russell Holland upheld the verdicts.

The 9th Circuit left the compensatory damage award intact.