25 June 2008 22:31 [Source: ICIS news]
The High Court ruled that punitive damages of $2.5bn (€1.6bn) assessed against ExxonMobil by a lower federal court were excessive and said that the punitive or punishment amount should instead reflect the $507.5m assessed by the federal jury for compensatory damages.
The Supreme Court sent the 19-year-old case back to the appellate court level with the instruction to reconsider the jury’s $2.5bn punitive award.
ExxonMobil chief executive Rex Tillerson recognized the ruling with a subdued statement that lacked any celebratory terms, saying that “The Valdez spill was a tragic accident and one which the corporation deeply regrets”.
Tillerson said that ExxonMobil took immediate responsibility for the 24 March 1989 tanker spill at
A federal court jury had initially assessed a $5bn punitive damages against ExxonMobil in addition to the $507.5m compensatory assessment, but a federal appeals court cut that punitive penalty in half.
The High Court’s decision on Wednesday means that the initial $5bn punitive damages award will likely be reduced by about 90% to $507m.
The ruling was welcomed by the broader
“The justices clearly found the original punitive damage award excessive and arbitrary,” said Quentin Riegel, the association’s deputy general counsel.
“By settling on a one-to-one standard - punitives equal to compensatory damages - they provided a standard that other courts can turn to,” Riegel said.
Manufacturers in general were worried that, if allowed to stand, the $2.5bn punitive award against the energy company would serve as a precedent that could influence a broad range of future product liability rulings.
($1 = €.64)
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