Court gives big win to ExxonMobil and US business

25 June 2008 22:31  [Source: ICIS news]

Exxon Valdez under tow after 1989 oil spillWASHINGTON (ICIS news)--The US Supreme Court handed ExxonMobil a major victory on Wednesday by cutting punitive damages against the energy giant for the 1989 Exxon Valdez tanker spill by 90% in a ruling broadly welcomed by US business.


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 Alaska’s Prince William Sound and that the company has paid out more than $3.4bn in compensation, cleanup work, settlements and fines.


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 US production sector, with the National Association of Manufacturers (NAM) saying the court action sets a key standard in “clarifying the limits on punitive damages”.


“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.


NAM along the American Chemistry Council and other business trade groups had filed legal briefs with the Supreme Court expressing support for ExxonMobil’s appeal. 


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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By: Joe Kamalick
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