HARD AGROUND - Wreck of the Exxon Valdez - March 24, 1989



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Daily News reporter

Anchorage Daily News
Date: 09/17/94
Day: Saturday
Edition: Final
Section: Nation
Page: A1

ANCHORAGE- After 4 months of listening to testimony and 13 days of deliberating, a federal jury returned a $5 billion damage award Friday against Exxon Corp. as punishment for spilling 11 million gallons of oil in Alaska's Prince William Sound in 1989.

It's the second largest jury verdict in U.S. history and the largest punitive award ever levied against a corporation.

In an interview Friday night, jury foreman Ken Murray said all the jurors "had the tenacity to just hang in there and do what good citizens do. And hopefully the world will understand that enough is enough.

The jury notified U.S. District Judge Russel Holland after 11 a.m. that it had reached its decision, and the word quickly went out. When Holland convened court around noon, about 60 attorneys, law clerks, journalists and one fisherman crowded into the courtroom. Not a word was whispered as Holland read the judgment. It wasn't until the 11 jurors and judge had left the courtroom that the plaintiffs' attorneys began crying tears of joy and sharing hugs.

"We are ecstatic," said attorney Brian O'Neill, representing 14,000 commercial fishermen, Alaska Natives, businesses and land owners who sued the oil giant. "The money is going to be used to put a lot of people's lives back together again. There are a lot of people who have unfortunately been unable to get on with their lives in the last 5 years."

Across town, at the Hotel Captain Cook, Exxon announced it would appeal the verdict.

"It's far from over. This is not the final number," said Exxon attorney Patrick Lynch. "I think it is a case of the jury not appreciating what $5 billion means."

In a prepared statement issued from Exxon Corp. headquarters in Irving, Texas, chairman Lee Raymond said, "This verdict is totally unwarranted and unfair. We will use every legal means available to overturn this unjust verdict, which is not a final judgment. It will be reviewed and we trust it will be modified by the trial court or appellate courts."

The jury also ordered former Exxon Valdez tanker Capt. Joe Hazelwood to pay $5,000. The plaintiffs had asked for a $15 billion judgment against Exxon and a symbolic $1 award against Hazelwood stating he had already suffered enough.

O'Neill said the $5 billion award was appropriate because it is the equivalent to Exxon's net profits for one year.

The verdict reached the East Coast just moments after the official close of the New York Stock Exchange. However, in after-hours trading in other stock markets, Exxon stock went from $58.75 to $60.25. Some analysts had expected a bigger verdict.

Holland told the jurors they were no longer bound by his order forbidding them to discuss the case. However, he recommended that the jurors not discuss their decision with anyone other than family members.

A dozen of the 100-plus plaintiffs' lawyers, most of whom are from other states, retreated to their makeshift office in a small downtown building at 9th Avenue and K Street. They sat amid packed files and popped champagne. About 150 miles away, in the tiny fishing town of Cordova, a Saturday night party was being planned.

"I think it's excellent," said Dorne Hawxhurst, executive director of Cordova District Fishermen United. "It will probably be sufficient to teach this company a lesson.

"We've been fighting this for 20 years, while they continue to move their eggs in a wet paper bag," said Hawxhurst, referring to the organization's battle that began in the early 1970s when it tried to stop construction of the Valdez pipeline terminal. "Oil and fish don't mix."

One of the plaintiffs, Cordova fisherman James Myklen, said, "This verdict does not help me. There is no money in my hand, and my feeling is Prince William Sound is not fully restored. That is how I make my money, and it is not restored."

"I'm very happy," countered another plaintiff, Cook Inlet fisherman Ken Duffus, who was one of the handful of fishermen who sat through most of the trial and was in court for the verdict. "It obviously wasn't as much as what we hoped for, but I think it should still send a message to everybody else that you can't do business like that. You can't steal from us, you can't destroy the environment, and you can't walk away and say, 'Hey, we are Exxon."'

But in Boston, a law professor and expert on punitive damage awards said he didn't think the verdict would hold up under appeal.

"I think they should appeal," said Michael Rustad, who teaches at Suffolk University. "That really seems out of line with the record."

And if the verdict is like the record $10.5 billion judgment a Texas jury found against Texaco in 1985 over a business dispute with Pennzoil, Friday's award will simply become a point of negotiating a settlement. In that case, after several years of appeals, Texaco paid Pennzoil $3 billion.

"There have been a large number of punitive awards in the $100 million range, something like 50 to 60 in the last three years," Rustad said. "But most of those involved business contracts and you end up with Golaith vs. Golaith, like the Texaco case."

"This area of toxic tort cases is fairly new," he added. "There is nothing similar to this Exxon trial. There have been some other cases, such as Love Canal and Bhopal, but those were mostly out-of-court settlements."

Three years ago Union Carbide agreed to pay $470 million to settle claims of the victims of a 1984 gas leak that killed 2,000 people in Bhopal, India. The makers of the chemical defoliant Agent Orange settled out of court by agreeing to pay 6,000 Vietnam veterans and their families $180 million.

More recently, a New Mexico jury returned a $2.7 million punitive damage award against McDonald's Corp. after an elderly woman sued because she was burned by the company's coffee. But earlier this week a state court judge reduced that award to $480,000.

In the Exxon case, the federal jurors began listening to testimony in the complex trial in early May. The 14,000 plaintiffs were divided in groups. Some of their claims were heard in state court, where a jury is deliberating whether to award a handful of communities and Native corporations the $120 million they are seeking for damage to property and archaeological damages. Some claims were settled out of court. About 3,500 Alaska Natives settled for $20 million for damage done to their traditional harvests of wild foods.

In the first phase of this massive federal case, the jurors ruled Exxon and Hazelwood acted recklessly in causing the massive spill, the nation's largest environmental disaster. In July, they deliberated for 23 days before awarding 10,000 fishermen $287 million in actual damages, which was about one-third of what the fishermen sought.

The decision Friday doesn't close the book on the 1989 disaster. About $300 million in claims are still pending in state and federal courts.

Story Index:
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