The Exxon Valdex oil spill was the largest in U.S. history—but the oil giant will only have to pay for actual economic losses 19 years later.
The U.S. Supreme Court invoked the ire of 33,000 Alaskans who were hoping to score $75,000 each in belated compensation for the losses incurred by the 1989 Exxon Valdez oil spill in Prince William Sound. In a 5-3 decision, the highest court in the land ruled that the company shouldn"t have to pay a penny more than the actual economic losses—some $500 million—incurred by the fishermen, natives and landowners who first initiated the class action suit almost two decades ago.
Back in 1994, a lower court originally ruled that the company should pay $5 billion to plaintiffs for damages after the mammoth 11 million gallon spill, the nation"s largest to date. On appeal, the 9th Circuit of the U.S. Court of Appeals cut the amount the company owed in half to $2.5 billion. This latest ruling will put the issue to rest—and sets a new standard on maritime accidents that companies should not have to pay damages beyond the actual economic losses incurred.
"Given the need to protect against the possibility (and the disruptive cost to the legal system) of awards that are unpredictable and unnecessary, either for deterrence or for measured retribution, we consider that a 1:1 ratio . . . is a fair upper limit in such maritime cases," wrote Justice David Souter in the majority opinion on the case.
Writing in dissent, Justice Ruth Bader Ginburg said the court was engaging in "lawmaking" by concluding the punitive damages not exceed what ExxonMobil has already paid out to compensate victims for direct economic losses. "The new law made by the court should have been left to Congress," she wrote. Justices Stevens and Breyer joined Ginsburg in dissent.
Environmentalists are joining the plaintiffs in expressing outrage at the ruling. "I’m ashamed at the Supreme Court, ashamed at this decision, and I"m just shocked that, once again, the oil industry wins," Cindy Shogan of the non-profit Alaska Wilderness League told reporters.
Sources: Washington Post; MSNBC; ABC News