A multimillion-dollar tussle that started with the 1989 Exxon Valdez oil spill moved closer to completion last week when the Alaska Supreme Court ruled that attorney fees awarded following litigation should typically reflect local rates -- not costly Outside ones -- so Alaskans aren’t discouraged from filing lawsuits.
The Supreme Court’s judgment stems from a larger issue settled in 2006, when ExxonMobil agreed to pay $8 million to Nautilus Marine Enterprises and Cook Inlet Processing, seafood processors that lost work when the Exxon Valdez tanker bled crude oil into Alaska waters, said Charlie Coe, an attorney for Nautilus.
Both processors are no longer in operation, he said.
Exxon paid the principal, but the settlement agreement punted the question of interest -- how it should be calculated and how many additional millions Exxon might owe -- to federal court, Coe said. That federal case is on hold until the issues in state court are settled.
Barat LaPorte, an Anchorage-based attorney representing Exxon in the case, declined comment for this article.
The question over interest came to state court in 2009 after Exxon filed a complaint saying the interest should not be compounded. Exxon soon settled with Cook Inlet Processing but not Nautilus.
If the interest is compounded at 10.5 percent, the award could be worth $10 million to $12 million, Coe said. If it’s calculated as simple interest, it could be worth $5 million to $6 million.
“The difference is huge,” Coe said.
Though the Superior Court ruled that Exxon was the prevailing party in the state case -- entitling it to reimbursement of attorney fees from Nautilus -- it also ruled that the question of how to calculate interest should ultimately be answered by the federal court.
The Supreme Court on Friday agreed with those outcomes, but it ordered the lower court to recalculate the attorney fees it had awarded to Exxon, which came to $725,873.
Pushing up those fees were rates billed by a Los Angeles firm, O’Melveny and Myers. Two lawyers with the firm had charged between $700 and $800 per hour. Meanwhile, two of Exxon’s Anchorage-based lawyers had charged between $325 and $375 for similar work, the Supreme Court noted.
The lower court erred when it said out-of-state rates could be applied for the services of O'Melveny and Myers. Exxon had long used the L.A.-based firm as lead attorney in the case, but that's not enough to charge non-local rates, the Supreme Court decided. Out-of-state rates should be used only in “extraordinary circumstances,” a situation that did not exist given that Alaska had competent attorneys to do the work.
The prospect of having to pay such huge rates “may deter Alaskans from seeking redress in the courts for their bona fide disputes,” the court said.
For Nautilus, it’s a valuable decision, said Coe. But there’s a broader benefit.
“The good thing is Exxon can hire those people but when our court works out the fees, it won’t necessarily be at those rates,” said Coe.