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

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SPILLIONAIRES
A $5 BILLION EXXON PAYDAY COULD MAKE RICH ALASKANS AS COMMON AS MOOSE

By NATALIE PHILLIPS
Daily News reporter

Anchorage Daily News
Date: 03/17/96
Day: Sunday
Edition: Final
Section: Metro
Page: B1

ANCHORAGE- Theoretically, Alaska will see a whole new crop of millionaires in the next three or four years. Nobody can say how many. Nobody can say for sure when. Attorneys have just put the final touches on a complex plan to distribute $5 billion awarded by the jury in the Exxon oil-spill case.

Under the plan, the money will be split by more than 30,000 people damaged by the 1989 spill, including tender operators, Native villagers, cannery workers, businesses, landowners and fishermen. Before the payout can begin, the record verdict must survive an appeals process that could last for years.

By far, the biggest chunk of change will go to commercial fishermen and their attorneys. The fishermen get to divide roughly $3 billion, with most of that going to salmon fishermen. For example, on the high end, the 100 salmon fishermen holding permits in the Chignik area will split more than $185 million, for an average $1.9 million apiece. The 600 Kodiak-area salmon fishermen will share $725 million, for an average of $1.2 million. The 850 Prince William Sound salmon fishermen will divide $700 million, for an average $850,000 apiece.

If the verdict holds, more than $1 billion will be shared by the 80-some law firms that have worked on the massive lawsuit over the past seven years. And that is just to cover their fees. The lawyers get an additional $25 million for their expenses under the allocation plan.

''You are not going out on a limb to say there will be millionaires,'' said David Oesting, one of the lead plaintiff attorneys.

Cordova fisherman Ross Mullins cautioned that because the distribution plan is complex, ''it is hard to figure out on average what anyone is going to end up with, but you

can do the math.''

In late January, 15-page legal notices were mailed to 34,000 potential claimants, many identified through state fishing records. Claimants have until Monday to file objections to the allocation plan.

U.S. District Court Judge RusselHolland has given it preliminary approval and scheduled a hearing for final approval on April 26.

Just two weeks after the plan was filed, a group of fish processors known as the ''Seattle Seven'' sued to be included. They settled their claims against Exxon out-of-court before the 1994 trial began, but contend they still should share in the punitive damage award. And there are a handful of plaintiffs who separated themselves from the class-action suit before the start of the trial in the spring of 1994.

Oesting guessed that it could take 21/2 to four years for the verdict to survive the appeals Exxon has promised.

Jurors were looking for a figure that would penalize the multinational corporation. The $5 billion was roughly equivalent to one year's earnings for the company. Some of the jurors said after the trial that they wondered if the award could go to a fund to benefit more than just the plaintiffs.

Roughly 20 states have laws that limit punitive damages or require part of a punitive damage award to be turned over to the state treasury or some sort of victim's fund. Alaska is not one of them.

Two years before the trial began and long before attorneys had any money to divvy up, work began on the allocation plan. Committees were formed. Representatives of all the different types of plaintiffs were consulted. Attorneys wanted to have a plan in place before any settlements or jury verdicts were reached.

At the same time a trial strategy was developed. All the plaintiffs agreed that their best shot at a big jury award was to focus their case on the strongest claims. That turned out to be those of the red salmon fishermen who worked in the areas tainted with oil -- Prince William Sound, Kodiak and Cook Inlet. Many of those fishermen -- who became known as ''the oiled fishermen'' -- didn't get to fish the year of the spill, and they also saw depressed prices for their salmon in the years after the spill.

The plaintiffs built their case on those losses. And the allocation plan was built on the same principles. A retired economics professor, now working as an attorney, spearheaded the effort. The matrix assigning percentages to the different groups of claimants was built, factoring in historical fishing successes, the value of their fish and the probability of a win for their type of claim. When the case finally went to trial, a federal court jury awarded the commercial salmon and herring fishermen plaintiffs $287 million in actual damages. Other claimant groups either settled out of court for much less, or had their cases heard in state court and won smaller awards. The federal court jury also returned a $5 billion punitive damage award, which was to be shared by all.

The matrix was tweaked to reflect how the jury split up the actual damages between the different groups of fishermen. More meetings were held, more compromises made.

''Whenever you are dealing with groups of people you have to do that,'' said Mullins, the fisherman. He's with a group of fishermen called the Prince William Sound Plaintiffs Committee, formed to negotiate their share. ''The alternative was to grow old and die with nothing happening. You don't have much choice.''

The matrix also rewards ''the unoiled fishermen,'' including some from the Yukon and Kuskokwim rivers, Bristol Bay, Southeast Alaska and Norton Sound. In their claim against Exxon, they contended their salmon was worth less after the spill because the public feared oil-tainted fish.

Judge Holland ruled that under maritime law, they could not sue. They had a right to appeal that decision, but that risked tying up progress on the stronger, ''oiled fishermen'' suit. So the ''unoiled fishermen'' agreed to not pursue their appeal in exchange for being included in the distribution at a discounted rate. If the ''oiled fishermen'' prevailed, they would be in on the spoils. The gamble paid off. Under the plan, the ''unoiled fishermen'' get $85 million.

''By people agreeing to this sharing construction and plan we put together, we have a chance to spread the award to all the victims, whether Holland thinks they are a victim or not,'' Oesting said.

The attorneys also got an upfront agreement from different plaintiff groups -- tenders, businesses, landowners, cannery workers and Native villagers -- to distribute all awards using the matrix. That means the $20 million out-of-court settlement awarded to Native subsistence claimants in the summer of 1994 won't go strictly to Native claimants. Instead, it will be divvied up according to the matrix. As Exxon pays on other out-of-court agreements, checks can be distributed to everyone.

The trickiest and most detailed part of the matrix is the split of money by the ''oiled fishermen.'' Under that category, there are 35 different subgroups divided by the type of fish they catch and the type of gear they use, from pot shrimpers to salmon seiners. Each subgroup is assigned a percentage ranging from 0.004 to 15.23 percent.

How the money will be further split among the permit holders in those gear groups is still being worked on.

''Everyone is an individual,'' Mullins said. ''There is no real average. Different people have different histories. . . . Each gear group will have to determine their method of distribution.''

In addition to permit holders, crews, vessel owners and spotter pilots will get to share in the award.


Story Index:
Main | The Legal Battles
Overall: story 335 of 380 Previous Next
The Legal Battles story 72 of 87 Previous Next

   
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