The $5 billion jury award in the Exxon Valdez oil spill case is legal, a federal judge said Friday, buoying victims of the 1989 disaster but in real terms merely setting the stage for an appeals battle likely to last years.
In a series of 12 separate orders disposing of more than 20 Exxon challenges to the September verdict, U.S. District Court Judge Russel Holland said evidence presented during trial supported the jury's decision that Exxon was reckless, and the $5 billion amount does not violate federal court rules governing punitive awards.
Exxon immediately issued a press release from its Texas headquarters vowing to "use every means available to overturn this unjust verdict," which means the case is headed to San Francisco, to the 9th U.S. Circuit Court of Appeals.
Anchorage attorney David Oesting, speaking for the plaintiffs, said Holland's rulings "confirmed the correctness of this verdict."
The $5 billion award was returned in Anchorage on Sept. 16 after four months of trial and 13 days of deliberation. It was the second-largest jury verdict in U.S. history and the largest punitive damages ever assessed against a corporation. Lawyers for the victims argued that it was an appropriate amount, approximately equivalent to Exxon's net profits for one year.
In motions filed after the verdict, Exxon asked Holland to either grant a new trial, drastically reduce the amount of the punitive award, or rule that the company was not reckless and should not pay any punitive damages. Their attorneys urged Holland to bring the amount more in line with awards in other disaster lawsuits.
But Holland demurred: "(N)o two punitive damages cases1 are truly identical and meaningful comparisons are difficult to make," he wrote. "The Exxon Valdez case in particular, is quite dissimilar. .
. The 11,000,000 gallon oil spill was the largest oil spill and greatest environmental disaster in American history. The spill disrupted the livelihoods of tens of thousands of people. This case simply does not compare to the numerous cases referenced by Exxon."
Exxon did not argue against the nature of the disaster. Instead, it pointed out that the company accepted responsibility from the beginning for cleaning up the spilled oil and reimbursed many of those damaged, paying more than $300 million to 11,000 claimants. "In total, Exxon spent $3.5 billion for cleanup, compensation, and settlements," the company press release said.
Exxon also argued that payment of a $25 million fine plus $100 million in restitution to the state and federal governments in a separate criminal case was punishment enough.
Holland disagreed. "The criminal payment may have been one of the greatest on record," he wrote, "but so was the oil spill."
Finally, Exxon argued that punitive damages are meant to deter future bad conduct, but such deterrence is not necessary because Exxon has "modified its behavior to prevent future spills."
Exxon has "gotten the message," the company said.
Holland said that weighing such evidence was up to the jury, which heard testimony from Exxon officials. Jurors might have awarded even higher damages without evidence of the company's changed procedures, he wrote. Or they may have "inferred a lack of remorse" on the part of company witnesses.
"(T)he jury could reasonably have reached a conclusion that a very large punitive award was necessary for purposes of punishment and further deterrence despite the evidence concerning Exxon's changes in policy and procedure."
Still to be resolved before the case moves to the appeals level is a relatively minor math dispute between the parties involving the $237 million actual damages award also returned by the trial jury.