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Member, Beacon International Group, Ltd.
IRVING, Texas--ExxonMobil Corp. will appeal a federal judge's Jan. 28 decision to increase punitive damages levied against the oil company in connection with the 1989 Exxon Valdez oil spill off Alaska.
U.S. District Court Judge H. Russel Holland increased a punitive damage award imposed on Irving, Texas-based ExxonMobil to $4.5 billion plus interest from a $4 billion award levied by the U.S. District Court for Alaska in Anchorage in 2003. The 9th U.S. Circuit Court of Appeals had vacated the $4 billion punitive damage award, remanding it to the district court in light of the U.S. Supreme Court's decision in State Farm vs. Campbell.
The $4 billion punitive damage award itself represented a reduction from an earlier $5 billion punitive damage award, which had also been vacated by the appeals court on the grounds that it was "excessive." ExxonMobil, at the time it sought the reduction, said punitive damages should be in line with a federal fine of $25 million levied after the spill (BI, June 17, 2002).
The Supreme Court's 2003 decision in State Farm vs. Campbell held that punitive damage awards of more than single-digit multiples of underlying compensatory damages would generally not pass constitutional muster. The State Farm decision also said that under some circumstances involving very large compensatory awards, a one-to-one ratio between compensatory and punitive damages may be the maximum constitutionally permitted.
"This ruling flies in the face of the guidelines set by the appeals court when they sent this case back to Judge Holland," said ExxonMobil in a statement issued after Judge Holland's decision. "It will, unfortunately, require us once again to appeal an order that is entirely inconsistent with the law already established by the 9th Circuit, as well as principles set forth by the Supreme Court," according to the statement.