By ERIKA BOLSTAD
Anchorage Daily News
February 27, 2008
On Wednesday, the court will consider Exxon Mobil's appeal, a 14-year effort that, if successful, would overturn a $2.5 billion punitive-damages award considered by many to be the largest verdict ever against a U.S. corporation.
The case is superlative in many ways, most notably for the environmental havoc caused by 11 million gallons of crude oil in Prince William Sound. An estimated 85 tons of crude have yet to be removed, according to a federal study released last year.
But it also is notable for how it pits nearly everyone in Alaska against the world's biggest oil company -- a company so profitable that its $40.6 billion in profits last year broke all records for a publicly traded company.
Former governors, the current governor, supertanker captains, environmentalists, state lawmakers, Alaska Natives and experts in maritime law have all joined sides with the 33,000 plaintiffs whose lawyers will ask the nation's highest court to uphold the $2.5 billion verdict.
"I've said this before, but this seems to be a case of justice delayed being justice denied," Gov. Sarah Palin, a Republican, said. "Nineteen years later after the spill, the ongoing tragedy is that there has not been this closure. And truly we need to see closure in this case."
Exxon has been appealing the verdict since 1994, when a jury in Anchorage returned a $5 billion punitive-damages award against the company. In 2006, the 9th U.S. Circuit Court of Appeals cut the award to $2.5 billion; Exxon appealed to the Supreme Court, which agreed last year to hear the case.
The court will consider three very specific areas of law, including whether the company can be punished under maritime law for the actions of its ship captain, Joseph Hazelwood. Prosecutors said Hazelwood was drunk when the ship ran aground on March 24, 1989, but he denied it and was acquitted of the charge in criminal court.
The court also will consider whether punitive damages should be allowed when the company already has been punished under provisions of the federal Clean Water Act -- and, if so, whether the verdict's size is allowable under the limits of maritime law.
The company's arguments will be based on an 1818 court decision, which holds that ship owners shouldn't be punished for the actions of their agents at sea. The company also intends to argue that the punishment for oil spills is already covered in federal law, including the Clean Water Act.
For Exxon and its allies, which include the U.S. Chamber of Commerce and the American Petroleum Institute, the case is an opportunity to press for the Supreme Court to scale back massive awards for punitive damages.
A $2.5 billion award is "far more than reasonably necessary to punish and deter," wrote lawyers with the American Petroleum Institute in a friend-of-the court brief filed on Exxon's behalf.
Exxon has long maintained that it took full responsibility for the spill and that the punitive damages are excessive and duplicate the fines it paid the state and federal government.
"It is our view that the Supreme Court has an important opportunity to provide guidance to the lower courts in relation to the application of punitive damages," said Exxon spokesman Tony Cudmore. "Punitive damages are unwarranted in this case."
What also is important is that the Supreme Court consider what happened to Alaskans, said Andrew Wills, a former herring fisherman who now runs a bookshop and bed-and-breakfast in Homer. The lucrative herring fisheries sputtered out in the years following the spill, and they never came back, Wills said.
"We had a beautiful paradise and a very special job, and it just disappeared," he said. "We lost everything, but they've seen record profits. Justice has so not been done. It's very discouraging and stressful."
On Wednesday, just eight of the nine justices will hear the case. Judge Samuel Alito, who owns Exxon stock, recused himself, which legal observers see as a good omen for the Exxon plaintiffs. Without Alito, many predict that the justices could split 4-4, which would let the $2.5 billion award stand.
Regardless, Alaskans have made preparations for a post-verdict world in Alaska, said Sen. Lisa Murkowski, who signed onto a friend-of-the-court brief with her fellow Republican Alaskans in Congress, Sen. Ted Stevens and Rep. Don Young. Murkowski has sponsored legislation that would give plaintiffs a financial break if they do indeed receive a windfall from the Exxon settlement. If passed, it would allow people to put up to $100,000 away tax-free in retirement accounts.
It's time for the case to come to an end, Murkowski said.
"This is what has just kind of eaten at Alaskans for so many years," Murkowski said. "It's not as if it's a company that has an inability to pay. It's not as if this is a company where the amount of damages would really hobble their ability to operate in the future. For many, many Alaskans, myself included, the time has expired. Nineteen years and no final resolution is very difficult to deal with."
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