The Exxon Valdez oil spill case finally is headed for appeals -- more than two years after an Anchorage jury decided Exxon Corp. and Exxon Shipping Co. should pay $5 billion in punitive damages to those who suffered as a result of the 1989 oil spill in Prince William Sound.
The judgment was filed Tuesday in U.S. District Court. Now interest on the huge award begins to mount. The judgment also takes the case out of the hands of U.S. District Judge Russel Holland, who presided over the four-month trial that ended with the jury's verdict on Sept. 16, 1994.
Exxon said Tuesday the company will appeal.
''Entry of this judgment allows the appeal process to begin,'' Exxon chairman Lee Raymond said in a statement. ''During the past two years, Exxon has raised a number of legal issues concerning the trial.... The punitive damages in this case are unwarranted and fail every legal or logical test of reasonableness. We believe that this judgment should be set aside or substantially reduced by appellate courts.''
But until a mandate from the higher courts, the company has to provide a letter of credit from a consortium of banks guaranteeing payment of $6.75 billion, according to David Oesting, a lawyer for the plaintiffs. That amount includes the original $5 billion, plus interest at 5.9 percent for five years.
''Five years is what we think it will take -- on the outside,'' Oesting said. He said lawyers for the plaintiffs, for Exxon, and for the Bank of America worked out arrangements for the letter of credit over the last few days. Bank of America is the lead bank in a consortium providing the letter.
The outline of the deal will be filed with the court in the next day or two, Oesting said. The letter of credit is due within 10 days of the judgment.
That letter of credit -- a pledge from the banks to cover the damage amount if needed -- will cost Exxon $6 million to $10 million a year, said Ed Burwell, a spokesman for the company in Dallas.
He said the company would file its formal notice of appeal in a few days. Briefs in the case -- Exxon's arguments -- will be filed in the 9th U.S. Circuit Court of Appeals in San Francisco by the end of the year, Burwell said, with that court expected to hear the case sometime next year.
The judgment Tuesday also provides for $19.6 million in compensatory damages beyond the amount Exxon already has paid to commercial fishermen who couldn't fish in 1989.
The jury had ordered payment of $287 million for actual losses, but Exxon has paid out much of that already. Exxon also will be liable for nearly $38 million in interest on the compensatory damages between the time of the incident and the filing of the judgment -- if the decision is upheld on appeal.
Asked whether the compensatory damage award would be appealed, Exxon spokesman Burwell said, ''We're not going to spell out the details of the appeal until the brief is filed.''
Any eventual punitive damage award will be split among roughly 30,000 plaintiffs, including fishermen, Natives, businesses, landowners and others.
Tuesday's judgment also finalized the $5,000 in punitive damages the jury levied against Capt. Joseph Hazelwood, who was in command of the Exxon Valdez tanker when it ran aground, spilling 11 million gallons of crude oil.