WASHINGTON — Nearly 19 years after the Exxon Valdez oil spill fouled Alaska's Prince William Sound, the Supreme Court debated Wednesday whether the world's largest oil company must pay a record $2.5 billion in punitive damages.
The eight justices who heard the case appeared closely split, although several of them said they were looking for a way to reduce the size of the award. Justice Samuel A. Alito Jr. sat out the case because he is an Exxon stockholder. His stock holdings could prove costly to the company: A tie vote would have the effect of affirming the $2.5-billion verdict.
No one disputed that the oil spill was an extraordinary disaster. The company's lawyer described it as "one of the worst environmental tragedies in U.S. maritime history."
And no one disputed that Exxon was responsible for paying for the cleanup and for the losses suffered by fishermen, cannery workers and other Alaska residents. Exxon paid $900 million in cleanup costs, and a jury ordered it to pay $287 million to 32,000 Alaskans, many of whom lost their livelihoods when the fishing industry was destroyed.
At issue Wednesday was whether extra damages were needed to punish Exxon for corporate recklessness.
In 1994, a jury in Alaska imposed $5 billion in punitive damages, money that would go to the plaintiffs. Years of appeals followed, and the verdict was cut in half. During this same stretch, the Supreme Court began putting limits on punitive damages, believing the amount should be tied to the actual harm.
The case heard Wednesday was unusual because it was apparently the first before the high court involving punitive damages for an accident on the high seas.
In centuries past, maritime law shielded ship owners from being punished for damage caused by their vessels. This made sense during the era of sailing ships, said Justice David H. Souter. "In those days, when a ship put to sea, the ship was sort of a floating world by itself," he said. It was gone and out of the control of its owner for months, even years, until it returned to port.
Representing Exxon, Washington lawyer Walter Dellinger cited this principle of maritime law and urged the court to throw out the entire punitive verdict. He cited the case of the Amiable Nancy in 1818 as having set a historical precedent shielding ship owners.
