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Exxon Shipping Co. v. Grant Baker

  • Public Land Law Review
  • Abbr : KPLLR
  • 2009, 43(2), pp.71-94
  • Publisher : Korean Public Land Law Association
  • Research Area : Social Science > Law

JEONG, HA MYOUNG 1

1경북대학교

Accredited

ABSTRACT

The U.S Supreme Court delivered Exxon Shipping Co. v. Grant Baker, which involves a challenge to the large punitive damages awarded in litigation over the Exxon Valdez oil spill in 2008. The U.S Supreme Court used the case to push for further limits on punitive damages, but the Court's decision is limited to the maritime context. The Court denied review on the due process issues relating to the excessive punitive damages. The litigation originates in a colossal environmental tragedy that happened nearly 20 years ago. On March 24, 1989, the oil tanker Exxon Valdez ran aground on Bligh Reef in Alaska's Prince William Sound and an the tanker's cargo spilled an estimated 11 million gallon of crude oil into the area. The environmental devastation was enormous and wildlife-rich Prince William Sound area was disrupted. Commercial fisheries throughout this area were totally closed for the 1989 season. Exxon undertook a massive cleanup effort and spent more than $2 billion to remove the oil from the waters and beaches of the environmentally devastated areas. Exxon also created a voluntary claims program and paid out $303 million to fishers in those areas whose livelihood was disrupted by the spill. The federal government and Alaska government sued Exxon for environment damage and the company agreed to pay $900 million over a period of 10 years to both governments. Exxon was fined $25 million and ordered to pay restitution of $100 million according to criminal prosecutions. Thousands of civil suits against Exxon followed, filed by individuals who were injured by the oil spill. The civil suits were consolidated and tried together. There was no dispute over Exxon's liability. There was dispute over the extent of the plaintiffs' economic losses and the amount of the damages award. The jury found in favor of the plaintiffs and awarded compensatory damages of $287 million and punitive damages of $5 billion against Exxon. The company appealed and the Ninth Circuit ruled that the $5 billion punitive damages was excessive in light of the Supreme Court's decision in BMW of North America v. Gore(517 U.S. 559 (1996)) and remand the case. In the meantime, the Supreme Court decided State Farm Mutual Automobile Insurance Co. v. Campbell(538 U.S. 408 (2003)) and Exxon again appealed. After the Ninth Circuit reduced the punitive damages to $2.5 billion, Exxon sought certiorari to the Court. In 2007, the Supreme Court decided Philip Morris U.S.A. v. Mayola Williams(127 S.Ct 1057) and reduced the punitive damages award on the ground of the 14th amendment's procedural due process. In this paper, the development of punitive damages is touched and the U.S. Supreme Court's case law regarding to its limits is analyzed.

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