The U.S. Supreme Court on Wednesday rejected a $2.5 billion punitive damages order against Exxon Mobil Corp., ruling that the amount was excessive and should have been in line with the actual harm caused after the Exxon supertanker Valdez ran aground off the coast of Alaska in 1989, spilling millions of gallons of crude oil into Prince William Sound.
In today's 5-3 decision, the Court held that in maritime cases like the Valdez accident, punitive damages should not exceed the amount of compensatory (or actual) damages attributable to the incident. The Court re-set the punitive damages award to $507.5 million, an amount equal to the lower court's calculation of appropriate compensatory damages caused by the spill. In 1994, a federal jury in Alaska ordered Exxon to pay $5 billion in punitive damages, an amount that was later cut to the $2.5 billion award at issue in today's ruling. Reuters reports that Exxon lawyers called the $2.5 billion award "larger than the total of all punitive damage awards upheld by federal appellate courts in U.S. history," while "[l]awyers for the plaintiffs said the award represented just a few weeks of Exxon Mobil's current net record profits."