California Punitives by Horvitz & Levy

  • NY Times Story on Exxon Shipping Footnote 17

    The New York Times has this story by Adam Liptak about Exxon Shipping‘s footnote 17, in which the Supreme Court stated that it would not rely on research funded by Exxon. Liptak suggests that the footnote may represent a trend away from reliance on empirical work:

    The Supreme Court has often considered academic studies in its decisions, starting with Louis D. Brandeis’s famous 1908 brief collecting medical and other evidence to support laws limiting work hours. Lawyers still call such submissions “Brandeis briefs.” The court’s signal triumph, Brown v. Board of Education in 1954, cited studies from psychologists and others, and citations to empirical work are commonplace these days. The Exxon footnote, many law professors fear, may be a sign that the court is moving in a different direction, at least when studies are financed by interested parties.

    The last clause (“at least when the studies are financed by interestd parties”) is an important qualifier, since the Exxon Shipping opinion relied heavily on empirical studies. Just not the studies funded by Exxon.

    Loyola Law Professor (and H&L academic consultant) Rick Hasen previously posted a critique of footnote 17 on his Election Law blog.

  • District Court Rejects Challenge To Exxon Valdez Payment Plan

    The Anchorage Daily News is reporting that Judge H. Russel Holland, the district court judge presiding over the Exxon Valdez case, has rejected a challenge to his previously approved plan for allocating the $507.5 million punitive damages award.

    Exxon has paid $383 million of that total (with the rest to be paid after the parties resolve their dispute about the amount of interest Exxon owes), but infighting among the plaintiffs has delayed payment of the $383 million. Judge Holland’s ruling clears the way for payments to begin, unless the party who challenged the payment plan decides to appeal. As the history of this case illustrates, an appeal to the 9th Circuit can result in years of delay.

  • Squabbling Among Exxon Valdez Plaintiffs Delays Payment of Punitive Damages

    The commercial fishing plaintiffs in the Exxon Valdez litigation, after years of complaining about the delays created by ExxonMobil’s appeals, are now creating further delays by fighting amongst themselves over the distribution of the punitive damages award.

    Back in August, ExxonMobil agreed to pay a portion of the punitive damages award ($383 million). The money is set to be distributed under a plan devised by the district court back in 1996, but one of the plaintiffs,Sea Hawk Seafoods, Inc., a Seattle-based corporation that ran a processing plant in Valdez, has now filed a lawsuit to challenge that plan. You can read the details in the Anchorage Daily News.

    Hat tip: TortsProf Blog.

  • Bailout Bill Includes Tax Break for Exxon Valdez Plaintiffs

    You may have heard that the bailout bill that Congress passed today includes some “tax sweeteners.” Some might call it “pork.”

    Among them is a provision that gives the class of commercial fisherman in the Exxon Valdez case a variety of tax breaks on their $500 million punitive damages award. The provision (section 504 of the 2008 Emergency Economic Stabilization Act) gives the plaintiffs the right to average out their punitive damages awards over three years rather than suffer a one-time tax hit. They are also permitted to make 401k or IRA contributions that exceed the normal limits. The San Francisco Chronicle reports that the provision is expected to cost the federal government about $49 million in lost revenue.

    Various reports (like the Chronicle story linked above) say the provision was added to gain the vote of Rep. Don Young, R-Alaska. But the Anchorage Daily News reports that Young actually voted against the bailout bill, even with the earmark for the Exxon Valdez plaintiffs. Senator Lisa Murkowski, R-Alaska, who had previously sponsored a separate bill to provide a tax cut for Exxon Valdez plaintiffs, had this to say about the provision in the bailout bill:

    While I was extremely disappointed in the Supreme Court’s decision to reduce the punitive damage award to the victims of the Exxon Valdez oil spill, our provision will help lessen the tax burden and allow the 30,000 plaintiffs to keep more of the compensation they receive.

    Technically, of course, punitive damages are not designed to provide “compensation,” which is awarded separately through compensatory damages. The Exxon Valdez plaintiffs received over $500 million in compensatory damages long ago.

  • Erwin Chemerinsky Article on Exxon Shipping Co.: “A Narrow Ruling on Punitive Damages”

    Professor Erwin Chemerinsky, the founding dean of the University of California, Irvine, School of Law, has an article in the September 2008 edition of “Trial,” a publication of the American Association of Justice (formerly the Association of Trial Lawyers of America.) The article (subscription required) describes the U.S. Supreme Court’s holding in Exxon Shipping Co. v. Baker. Chemerinsky concludes that the Supreme Court’s reasoning should not have much application outside the maritime context:

    Businesses, and those seeking to limit punitive damages, will attempt to read the Court’s holding broadly and apply it in many different contexts. But the Court was clear that it was dealing only with punitive damages in maritime cases. At most, its reasoning can be applied to other areas of federal common law where punitive damages are allowed.
    Yet there’s no doubt that the case reflects a Court that generally is hostile to punitive damages and wants to impose limits, whether based on due process or common law principles. There’s also no doubt that Exxon Shipping is not the Court’s last word on punitive damages.

    For those who don’t subscribe to Trial, you can find the article on Westlaw with this citation: 44-SEP JTLATRIAL 62.

  • Video Interview With Gov. Palin on Exxon Valdez Decision

    Following up on the posts below, here’s a video interview with Governor Palin about the Supreme Court’s opinion reducing the punitive damages in Exxon Shipping Co. v. Baker.

  • VP Candidate Palin Was Eligible to Participate in Exxon Valdez Class

    This post on the Blog of Legal Times reports that Senator McCain’s running mate, Alaska governor Sarah Palin, was eligible to join the plaintiff class in the Exxon Valdez case. Her husband, Todd Palin was a commercial fisherman at the time of the Valdez spill. They were eligible to join the class but they declined to file claims by last February’s deadline.

    Stanford law professor Jeffrey Fisher, who represented the plaintiffs in the Supreme Court, says that Gov. Palin was always strongly supportive of the plaintiffs’ quest for punitive damages. Fisher observes, however, that “the Justices Sen. McCain likes” were not as supportive.

  • The Presidential Race, and Views on Punitive Damages

    Interesting that Slate faulted Obama for not bashing SCOTUS over the “activist” Exxon Valdez decision, saying, “Obama spent the final days of the Supreme Court term celebrating conservative constitutional outcomes rather than calling out dubious conservative methodology. Who was better situated to chide the court’s conservatives for what sure seems to be an activist ruling that saved Exxon $2 billion in damages stemming from the Valdez oil spill?”

    Meanwhile, McCain’s newly announced running mate, Alaska governor Sarah Palin, did express disappointment with the Exxon Valdez decision, reportedly saying that the court “gutted the jury’s decision on punitive damages” and undercut one of the principal deterrents for marine shipping accidents in Alaska. Without apparently identifying any flaw in the court’s legal analyis (which, as an interpretation of federal common law was well within their purview, and would hardly seem the type of “activist” treatment of statutes or state law that judges are often accused of), Palin was also reported as complaining, “It is tragic that so many Alaska fishermen and their families have had their lives put on hold waiting for this decision” and, “My heart goes out to those affected, especially the families of the thousands of Alaskans who passed away while waiting for justice.”

  • Partial Settlement Reached on Exxon Valdez Punitive Damages

    The Associated Press is reporting (via the Seattle Post Intelligencer) that the parties in Exxon Shipping Co. v. Baker have reached a partial settlement.

    As anyone reading this blog probably knows by now, the U.S. Supreme Court cut the punitive damages in that case down to $507 million earlier this year, but the parties have continued to fight about the amount of interest that should be added to that amount. The plaintiffs contend Exxon owes interest from the date of the original judgment, for a total of about $488 million. Exxon contends that it doesn’t owe any interest at all, but if it does, the interest did not start running until June 25, 2008, when the Supreme Court issued its decision.

    Apparently, Exxon has agreed to pay $383 million now, but intends to continue litigating over the interest issue. If all of the $383 million went to the 33,000 commercial fisherman in the plaintiff class, they’d get about $11,600 each. That’s on top of roughly $500 million in compensatory damages Exxon already paid (approx. $15,000 per plaintiff). If the plaintiffs prevail on the interest issue, the additional $488 million plus the remaining balance of the punitive damages ($124 million), would come out to about $18,500 per plaintiff. So the maximum recovery per plaintiff seems to be around $45,000. Of course, a big chunk of the payments will go towards attorneys’ fees and costs. At the end of the day, the plaintiffs might end up with less than $25,000 each, even in a best case scenario (i.e., including the maximum interest award that plaintiffs are seeking).

  • Exxon Valdez Plaintiffs’ Lawyers Comment on Interest Ruling (or Lack Thereof)

    The Associated Press has this story on the U.S. Supreme Court’s decision not to decide whether the plaintiffs in Exxon Shipping Co. v. Baker are entitled to interest on their $507 million punitive damages award. (Scroll down to see our blog post on the same topic.) The AP story has several quotes from Stanford law professor Jeffrey Fisher, who represented the plaintiffs in the Supreme Court. Fisher says the Ninth Circuit has never refused to award interest in any similar case, and he doesn’t expect them to depart from that precedent here.

    (Note: the AP story incorrectly states that the plaintiffs are seeking interest dating from the jury’s verdict in 1994, but the plaintiffs have actually requested interest from the date of the judgment, which occurred in September 1996. See the plaintiffs’ request for a Supreme Court ruling on the interest issue.)

    Alaska Public Radio also has an audio report on the Exxon Valdez interest issue. In the report, Andrew Ott, an Alaska lawyer representing the plaintiffs, says it isn’t surprising that the Supreme Court declined to decide the interest issue, because it’s a matter of first impression that is more appropriately decided by the lower courts. He suggests that, no matter how the Ninth Circuit rules, the case may again make its way to the Supreme Court, extending the already two-decades-long life of this litigation.