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

Contents

Home

Introduction
The Event
The Clean-Up
The Impact On Life
The Captain
The Ship
The Legal Battles
The Legacy

Links
Reading List
Image Gallery

Timeline
Maps

Search
ADN Archives

Permissions
User Agreement

Line

Sponsored by:
Anchorage
Daily News

Story Index:
Main | The Legal Battles
Overall: story 343 of 380 Previous Next
The Legal Battles story 78 of 87 Previous Next

EXXON MUST ANTE UP
$6.5 BILLION BOND COVERS DAMAGES DURING APPEAL

By NATALIE PHILLIPS
Daily News reporter

Anchorage Daily News
Date: 08/08/96
Day: Thursday
Edition: Final
Section: Nation
Page: A1

ANCHORAGE- A federal court judge has ruled in favor of fishermen, Natives, business and land owners and others and will require Exxon to post a $5 billion bond before it can appeal the record jury verdict returned against the company two years ago.

But U.S. District Judge Russel Holland ruled the company doesn't have to post a traditional corporate bond. He gave the oil company until Aug. 23 to come up with an alternative.

''This is wonderful news for the plaintiffs,'' said Brian O'Neill, a Minneapolis attorney who represents the plaintiffs. ''It also means all this foolishness is almost over. They will have to do what every other loser in the courtroom has to do.

''They can pledge property or they can come up with the cash, but it will have to be for the full amount,'' he said. ''This is one of the three or so most significant decisions in this entire case because now we are playing with real money.''

O'Neill said the company will have to post $6.5 billion to cover the $5 billion verdict plus the $1.5 billion in interest that is expected to accumulate during the three- to four-year appeals process.

In a prepared statement, Exxon officials said they would ''work with the plaintiffs and the court to develop an alternative arrangement to provide security for the payment of whatever final judgment is due, if any, after completion of the appeals process.''

O'Neill said Holland's ruling allows Exxon ''to be creative as long as they make the plaintiffs secure.''

''They can pledge property or they can come up with cash,'' he said. ''I haven't had an opportunity to explore what the alternatives might be, but they have to give us a secured interest that we can file with the U.C.C. (Uniform Commercial Code).''

The plaintiffs either will work with Exxon as it devises an alternative or will have until Sept. 6 to oppose whatever the oil company comes up with, according to the judge's order.

Roughly 30,000 fishermen, Natives, business and land owners and others damaged in 1989 by the 11 million gallon Exxon oil spill sued Exxon and won a $5 billion verdict against the oil giant in the fall of 1994. The oil company vowed to appeal the verdict and has filed a number of motions during the past two years challenging the jury's findings.

In April, the company filed a motion seeking to be exempt from posting the bond that is required of all parties filing appeals of court verdicts. The company argued that there was no surety company willing to secure such a bond, that such a bond would cost $5 million to $10 million a year, and that the oil company has enough assets and is solvent enough that it should be exempt.

Exxon proposed that instead the company could provide the plaintiffs with ''periodic financial reports to reassure the plaintiffs of Exxon's continuing ability to fund'' the final judgment.

''There has never been any doubt that Exxon is able to pay the judgment in this case if that award is affirmed,'' the motion stated. ''Despite the verdict in this case, Exxon is and remains one of a few industrial corporations whose credit is rated triple-A both by Moody's and Standard & Poor's.''

An affidavit attached to the April motion quotes Keith Petersen, corporate ratings director for Standard & Poor's, as saying that the oil company's rating ''would not be materially affected'' if Exxon ultimately has to pay the jury award.

O'Neill said Exxon's motion was an attempt by the oil company to say ''we're too big to play by the same rules as everybody else.''

Holland agreed with Exxon's argument that there simply isn't a company that would write a $5 billion bond. ''This is truly an extraordinary circumstance,'' he wrote.

But he found that Exxon's proposal to provide the plaintiffs with periodic financial statements ''provides no security at all.'' The judge pointed out that a few years ago, Texaco filed a Chapter 11 bankruptcy proceeding in an effort to avoid a $10 billion judgment awarded to Pennzoil. ''While there are difference, there are some substantial similarities between the Texaco/Pennzoil situation and this case,'' Holland wrote.


Story Index:
Main | The Legal Battles
Overall: story 343 of 380 Previous Next
The Legal Battles story 78 of 87 Previous Next

   
Want to read more articles on this topic? ADNSearch.com has full-text articles published in the Anchorage Daily News Text Archives from late 1985 to the present - available to you with the click of your mouse. Make the Anchorage Daily News your source for Alaska and Anchorage history. Check out www.adnsearch.com right now!
All components of this site are copyright 1989-1999 by the Anchorage Daily News, Anchorage, Alaska unless otherwise noted. Unauthorized reproduction or use of any material available from this site is strictly prohibited. For information on obtaining reprints of, or republication rights to any of these materials, see Permissions.
We welcome your comments or questions regarding this site - webteam@adn.com
Anchorage Daily News Alaska's Eyewitness to History