Time Heals All Wounds, Except in Federal Court

Almost two decades after its Exxon Valdez supertanker ran aground near its namesake Alaskan port, Exxon Mobil is still battling a court order to pay punitive damages for the resulting spill of 53 million gallons, which fouled Prince William Sound, its fisheries, and wildlife.

The oil company got a boost today, when the U.S. Supreme Court agreed to review a lower court's decision to levy $2.5 billion in punitive damages in the case. The lower court had already halved the $5 billion in punitive damages a trial court jury had recommended.

Exxon Mobil, which says it spent more than $3 billion to clean up the 1989 spill, contends that it should not have to pay any punitive damage. In any case, it argues, $2.5 billion is out of proportion under maritime law.

Plaintiffs in the case—33,000 commercial fishermen, cannery workers, other local residents, and local governments— contend that a punitive award is appropriate to discourage negligence in the future, and should be large enough to have an effect on the company's bottom line.

Exxon Mobil posted a profit of $39.5 billion last year. A $2.5 billion award would represent about 23 days' profits. Adding the interest accrued since the award brings the total to about $4.5 billion now, or about 42 days' profit.

by Mark Stein