Media Coverage

Exxon Valdez Seeking Decrease in Punitive Damages

John Kimball provided insight into Exxon Mobil Corporation’s recently filed petition asking the U.S. Supreme Court to review and overturn a $2.5 billion punitive award—the largest punitive damages award ever affirmed by a federal appellate court in history.

In the past 17 years, the Supreme Court decided only eight cases on punitive damages, reviewing awards made under state law. Exxon, however, is asking the high court to examine the $2.5 billion award—reduced from $5 billion by the Ninth U.S. Circuit Court of Appeals—through the lens of the general maritime law.

“It’s a case that in maritime law circles has world renown and is referred to all the time,” said Mr. Kimball, a partner in the firm’s New York office. “The punitive damages issue has been looked at very closely by marine insurance markets as a sign of what’s going on in the U.S. and what is the magnitude of risk in a major environmental damage case.”

After the Exxon Valdez, a 900-foot oil tanker, unloaded 11 million gallons of oil into the environmentally pristine Prince William Sound, Congress enacted the Oil Pollution Act of 1990, governing oil spills and establishing private remedies. The act does not dictate the availability of punitive damages.

When the Oil Pollution Act was drafted, Mr. Kimball recalled, the shipping industry was very fearful it was entering an era of unlimited liability. “The reaction of insurers was to put a cap of the $1 billion on insurance they would provide,” he said. “Punitive damages normally are not insurable, so if they’re not insurable and not limited in some way, that leaves the shipowner or cargo owner wide open. My sense is we would all like to hear what the Supreme Court has to say about it.

“It’s Still Not Over” by Marcia Coyle appeared in the National Law Journal on September 10, 2007.