WASHINGTON — The Supreme Court on Wednesday slashed the $2.5 billion punitive damages award in the Exxon Valdez disaster to $500 million, a decision that could have broader implications for limiting how much courts can order businesses to pay.
The decision was hailed by the business community and decried by environmentalists and Alaskans.
The court ruled that the victims of the worst oil spill in U.S. history may collect punitive damages from Exxon Mobil Corp. that amount to an average of $15,000 for each person who filed a claim against the energy company.
Justice David Souter wrote for the court that punitive damages may not exceed what the company already paid to compensate victims for economic losses, $507.5 million, an amount equal to about four days’ worth of Exxon Mobil Corp.’s profits last quarter.
The case grew out of the 1989 crash of the Exxon Valdez, a supertanker that dumped 11 million gallons of crude oil into Alaska’s Prince William Sound, fouling 1,200 miles of coastline.
A jury decided in 1994 that Exxon should pay $5 billion in punitive damages. In 2006, a federal appeals court cut that verdict in half.
Exxon asked the Supreme Court to reject the punitive damages judgment altogether, saying the company already has spent $3.4 billion to clean up the spill and compensate Native Alaskans, landowners and commercial fishermen.
Nearly 33,000 plaintiffs are in line to share in the award approved Wednesday.
The Supreme Court was divided on its decision, 5-3. Justice Samuel Alito took no part in the case because he owns Exxon stock.
In Colorado, attorney Merrill Davidoff, who represented landowners who sued the Rocky Flats contractors in one of the longest running cases in the state, said he doesn’t believe the Exxon Valdez decision will negatively affect the judgment, which was handed down in May.
“In the Rocky Flats case there are compensatory damages of $726 million and that greatly exceeds the $200 million punitive damage award,” Davidoff said.
The Rocky Flats jury was instructed on Colorado’s one-to-one cap on compensatory and punitive damages, Davidoff said, and the compensatory award is more than three and a half times larger.
Also, the U.S. Supreme Court invoked a federal maritime standard in the Exxon Valdez case, and in the Rocky Flats case, U.S. District Judge John Kane invoked Colorado’s rules on damages in his judgment, Davidoff said.
Denver Post staff writer Felisa Cardona contributed to this report.
