Below is the Syllabus of the Supreme Court Decision on the Exxon-Valdez Case. I have not read it as carefully as I'd like yet. But I have changed the format slightly. I've enlarged and bolded the numbers of the sections and bolded some of the lines that seemed to be the essence. But that's just my take. I'm still trying to figure out how everyone voted. I'll have to look at the whole thing to figure that out. The link should take you to the PDF file with the whole decision.
I should probably read the whole thing before I start commenting. Their formula for determining the punitive as no more than the compensatory seems a little arbitrary. For me, punitive should mean that it would discourage the company involved and other companies from doing damage. Which means that the award should spur them on to be careful and to take proactive steps to make sure that they aren't going to have an accident. Not simply that they shouldn't do it intentionally. Therefore, punitive damages shouldn't be connected to the compensatory damages as much as it should be connected to an amount high enough to get the company's (and those companies watching) attention. It should be high enough to hurt, but not to put the company out of business. Given Exxon's profits, $500,000,000 is a relief, not a deterrent.
But the Supreme Court needs to make its decisions based on the law, so I have to see what it is that led to that particular formula.
I should probably read the whole thing before I start commenting. Their formula for determining the punitive as no more than the compensatory seems a little arbitrary. For me, punitive should mean that it would discourage the company involved and other companies from doing damage. Which means that the award should spur them on to be careful and to take proactive steps to make sure that they aren't going to have an accident. Not simply that they shouldn't do it intentionally. Therefore, punitive damages shouldn't be connected to the compensatory damages as much as it should be connected to an amount high enough to get the company's (and those companies watching) attention. It should be high enough to hurt, but not to put the company out of business. Given Exxon's profits, $500,000,000 is a relief, not a deterrent.
But the Supreme Court needs to make its decisions based on the law, so I have to see what it is that led to that particular formula.
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
EXXON SHIPPING CO. ET AL. v. BAKER ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT
No. 07–219. Argued February 27, 2008—Decided June 25, 2008
reef off Alaska, spilling millions of gallons of crude oil into Prince
William Sound. The accident occurred after the tanker’s captain, Jo-
seph Hazelwood—who had a history of alcohol abuse and whose blood
still had a high alcohol level 11 hours after the spill—inexplicably ex-
ited the bridge, leaving a tricky course correction to unlicensed sub-
ordinates. Exxon spent some $2.1 billion in cleanup efforts, pleaded
guilty to criminal violations occasioning fines, settled a civil action by
the United States and Alaska for at least $900 million, and paid an-
other $303 million in voluntary payments to private parties. Other
civil cases were consolidated into this one, brought against Exxon,
Hazelwood, and others to recover economic losses suffered by respon-
dents (hereinafter Baker), who depend on Prince William Sound for
their livelihoods. At Phase I of the trial, the jury found Exxon and
Hazelwood reckless (and thus potentially liable for punitive damages)
under instructions providing that a corporation is responsible for the
reckless acts of employees acting in a managerial capacity in the
scope of their employment. In Phase II, the jury awarded $287 mil-
lion in compensatory damages to some of the plaintiffs; others had
settled their compensatory claims for $22.6 million. In Phase III, the
jury awarded $5,000 in punitive damages against Hazelwood and $5
billion against Exxon. The Ninth Circuit upheld the Phase I jury in-
struction on corporate liability and ultimately remitted the punitive
damages award against Exxon to $2.5 billion.
Held:
1. Because the Court is equally divided on whether maritime law
allows corporate liability for punitive damages based on the acts of
managerial agents, it leaves the Ninth Circuit’s opinion undisturbed
in this respect. Of course, this disposition is not precedential on the
derivative liability question. See, e.g., Neil v. Biggers, 409 U. S. 188,
192. Pp. 7–10.
2. The Clean Water Act’s water pollution penalties, 33 U. S. C.
§1321, do not preempt punitive-damages awards in maritime spill
cases. Section 1321(b) protects “navigable waters . . . , adjoining
shorelines, . . . [and] natural resources,” subject to a saving clause re-
serving “obligations . . . under any . . . law for damages to any . . . pri-
vately owned property resulting from [an oil] discharge,” §1321(o).
Exxon’s admission that the CWA does not displace compensatory
remedies for the consequences of water pollution, even those for eco-
nomic harms, leaves the company with the untenable claim that the
CWA somehow preempts punitive damages, but not compensatory
damages, for economic loss. Nothing in the statute points to that re-
sult, and the Court has rejected similar attempts to sever remedies
from their causes of action, see Silkwood v. Kerr-McGee Corp., 464
U. S. 238, 255–256. There is no clear indication of congressional in-
tent to occupy the entire field of pollution remedies, nor is it likely
that punitive damages for private harms will have any frustrating ef-
fect on the CWA’s remedial scheme. Pp. 10–15.
3. The punitive damages award against Exxon was excessive as a
matter of maritime common law. In the circumstances of this case,
the award should be limited to an amount equal to compensatory
damages. Pp. 15–42.
(a) Although legal codes from ancient times through the Middle
Ages called for multiple damages for certain especially harmful acts,
modern Anglo-American punitive damages have their roots in 18th-
century English law and became widely accepted in American courts
by the mid-19th century. See, e.g., Day v. Woodworth, 13 How. 363,
371. Pp. 16–17.
(b) The prevailing American rule limits punitive damages to
cases of “enormity,” Day v. Woodworth, 13 How. 363, 371, in which a
defendant’s conduct is outrageous, owing to gross negligence, willful,
wanton, and reckless indifference for others’ rights, or even more de-
plorable behavior. The consensus today is that punitive damages are
aimed at retribution and deterring harmful conduct. Pp. 17–21.
(c) State regulation of punitive damages varies. A few States
award them rarely, or not at all, and others permit them only when
authorized by statute. Many States have imposed statutory limits on
punitive awards, in the form of absolute monetary caps, a maximum
ratio of punitive to compensatory damages, or, frequently, some com-
bination of the two. Pp. 21–23.
(d) American punitive damages have come under criticism in re-
cent decades, but the most recent studies tend to undercut much of it.
authorized by statute. Many States have imposed statutory limits
Although some studies show the dollar amounts of awards growing
over time, even in real terms, most accounts show that the median
ratio of punitive to compensatory awards remains less than 1:1. Nor
do the data show a marked increase in the percentage of cases with
punitive awards. The real problem is the stark unpredictability of
punitive awards. Courts are concerned with fairness as consistency,
and the available data suggest that the spread between high and low
individual awards is unacceptable. The spread in state civil trials is
great, and the outlier cases subject defendants to punitive damages
that dwarf the corresponding compensatories. The distribution of
judge-assessed awards is narrower, but still remarkable. These
ranges might be acceptable if they resulted from efforts to reach a
generally accepted optimal level of penalty and deterrence in cases
involving a wide range of circumstances, but anecdotal evidence sug-
gests that is not the case, see, e.g., Gore, supra, at 565, n. 8. Pp. 24–
27.
(e) This Court’s response to outlier punitive damages awards has
thus far been confined by claims that state-court awards violated due
process. See, e.g., State Farm Mut. Automobile Ins. Co. v. Campbell,
538 U. S. 408, 425. In contrast, today’s enquiry arises under federal
maritime jurisdiction and requires review of a jury award at the level
of judge-made federal common law that precedes and should obviate
any application of the constitutional standard. In this context, the
unpredictability of high punitive awards is in tension with their pu-
nitive function because of the implication of unfairness that an eccen-
trically high punitive verdict carries. A penalty should be reasonably
predictable in its severity, so that even Holmes’s “bad man” can look
ahead with some ability to know what the stakes are in choosing one
course of action or another. And a penalty scheme ought to threaten
defendants with a fair probability of suffering in like degree for like
damage. Cf. Koon v. United States, 518 U. S. 81, 113. Pp. 28–29.
(f) The Court considers three approaches, one verbal and two
quantitative, to arrive at a standard for assessing maritime punitive
damages. Pp. 29–42.
(i) The Court is skeptical that verbal formulations are the best
insurance against unpredictable outlier punitive awards, in light of
its experience with attempts to produce consistency in the analogous
business of criminal sentencing. Pp. 29–32.
(ii) Thus, the Court looks to quantified limits. The option of
setting a hard-dollar punitive cap, however, is rejected because there
is no “standard” tort or contract injury, making it difficult to settle
upon a particular dollar figure as appropriate across the board; and
because a judicially selected dollar cap would carry the serious draw-
back that the issue might not return to the docket before there was a
business of criminal sentencing. Pp. 29–32.
need to revisit the figure selected. Pp. 32–39.
(iii) The more promising alternative is to peg punitive awards
to compensatory damages using a ratio or maximum multiple. This
is the model in many States and in analogous federal statutes allow-
ing multiple damages. The question is what ratio is most appropri-
ate. An acceptable standard can be found in the studies showing the
median ratio of punitive to compensatory awards. Those studies re-
flect the judgments of juries and judges in thousands of cases as to
what punitive awards were appropriate in circumstances reflecting
the most down to the least blameworthy conduct, from malice and
avarice to recklessness to gross negligence. The data in question put
the median ratio for the entire gamut at less than 1:1, meaning that
the compensatory award exceeds the punitive award in most cases.
In a well-functioning system, awards at or below the median would
roughly express jurors’ sense of reasonable penalties in cases like this
one that have no earmarks of exceptional blameworthiness. Accord-
ingly, the Court finds that a 1:1 ratio is a fair upper limit in such
maritime cases. Pp. 39–42.
(iv) Applying this standard to the present case, the Court takes
for granted the District Court’s calculation of the total relevant com-
pensatory damages at $507.5 million. A punitive-to-compensatory
ratio of 1:1 thus yields maximum punitive damages in that amount.
P. 42.
472 F. 3d 600 and 490 F. 3d 1066, vacated and remanded.
SOUTER, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and SCALIA, KENNEDY, and THOMAS, JJ., joined, and in which STE-
VENS, GINSBURG, and BREYER, JJ., joined, as to Parts I, II, and III.
SCALIA, J., filed a concurring opinion, in which THOMAS, J., joined. STE-
VENS, J., GINSBURG, J., and BREYER, J., filed opinions concurring in part
and dissenting in part. ALITO, J., took no part in the consideration or
decision of the case.
