The Supreme Court on Wednesday reduced what had once been a $5 billion punitive damages award against ExxonMobil to about $500 million. The ruling essentially concluded a legal saga that started when the Exxon Valdez, a supertanker, struck a reef and spilled 11 million gallons of crude oil into the Prince William Sound in Alaska in 1989.
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The decision may have broad implications for limits on punitive damages generally. Punitive damages, which are meant to punish and deter, are imposed on top of compensatory damages, which aim to make plaintiffs whole.
Justice David H. Souter, writing for the majority in the 5-to-3 decision, said a ratio between the two sorts of damages of no more than one-to-one was generally appropriate, at least in maritime cases. Since Exxon has paid about $507 million to compensate more than 32,000 Native Alaskans, landowners and commercial fishermen, Justice Souter said, it should have to pay no more than that amount in punitive damages.
That works out to $15,000 for each plaintiff for compensation and $15,000 more as punitive damages.
Justices Cut Damages Award in Exxon Valdez Spill, N.Y. Times, June 26, 2008 (it's dated tomorrow but it's on the web today).
The opinion in Exxon Shipping Corp. v. Baker is here.
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