The Anchorage Daily News reports that Alaska Senator Lisa Murkowski is trying to push a bill through Congress to give tax breaks to the plaintiffs in the Exxon Valdez case, should they receive a windfall punitive damages award. She doesn’t have much time, as the Supreme Court is expected to decide the case within the next week. And if our predictions about the likely outcome of the case prove correct, the windfall won’t be nearly as large as the $2.5 billion approved by the Ninth Circuit.
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“Exxon Valdez Ruling Could Reshape Tort Law”
LegalNewsline has this story about the impact of the forthcoming decision in the Exxon Valdez case. The article quotes Ted Frank, director of the American Enterprise Institute’s Legal Center for the Public Interest (and blogger at Overlawyered):
“It has the potential to be a major case,” Frank said. “The court could remove strictures on punitive damages and leave it to the discretion of the lower courts and juries, and if that happens that obviously gives free rein for gigantic punitive damages.”
He said the “more likely scenario” is that the high court “does something” to the punitive damage verdict against Exxon, noting that the justices decided to take the case when they could have declined it.
Our own assessment of the likely outcome, based on our review of the oral argument transcript, was that: “The most likely outcome seems to be a split-decision affirming the plaintiffs’ entitlement to punitive damages, but holding the amount of the award excessive under federal common law.“
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Still No Ruling On Cert. Petition in Williams II
As we noted in a prior post, the Supreme Court originally distributed the third cert. petition in Philip Morris v. Williams for consideration at its May 22 conference, but when the court issued its order list for the May 22 conference, the court did not rule on Williams II. The court then redistributed the case for consideration at its May 29 conference. Today, the order list for that conference is now available, and there’s still no ruling on Williams II. Does this mean (as my co-blogger Jeremy Rosen has suggested) that the Supreme Court is planning to issue a summary reversal and they’re taking additional time to draft their opinion? Are they having trouble reaching a decision on whether to grant cert.? Are they holding the case pending the disposition of the Exxon Valdez case (which seems unlikely, since the excessiveness issue in that case arises under federal common law rather than the Due Process clause, as in Williams)?
UPDATE: SCOTUSblog reports that Williams II has been re-distributed for the court’s June 5 conference.
FURTHER UPDATE: A reader points out: “Actually, it is the third petition for cert. in this saga. The first was GVR’d in light of State Farm, the second granted, and now this one.” Good point. We’ve corrected our post accordingly. We’re still referring to this as Williams II for now, since the Supreme Court’s opinion (if cert. is granted) will be its second in this case.
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Will the Exxon Valdez Case Produce a Unanimous Opinion?
Linda Greenhouse has an interesting article, “At Supreme Court, 5-to-4 Rulings Fade, but Why?” noting the substantial decline in 5-4 opinions from the United States Supreme Court this term. So far this term, only one of 35 opinions has been decided 5-4, whereas at this point last term, 13 out of 41 had been decided 5-4. Greenhouse posits that the reasons for this are “liberals using their limited leverage to exact some modest concessions as the price of helping the conservatives avoid another parade of 5-to-4 decisions.” As Greenhouse points out, three recent cases resulted in majority opinions with 6 or 7 justices in cases that might have been thought of as candidates for 5-4 decisions (the Indiana voter id law, the Kentucky lethal injection case, and the federal law on child pornography). This trend limits the influence of Justice Kennedy who last term was in the majority in all 24 5-4 decisions and only dissented in 2 of the 68 cases decided. This term, Justice Kennedy has already dissented 5 times.
The interesting question for purposes of this blog is how this potential trend toward greater agreement among the justices will play out in the Exxon Valdez case. By not focusing on the constitutional limits on punitive damages, Justices Scalia, Thomas and Ginsberg will not need to adhere to their prior dissents finding no due process limit on punitive damages. This potentially opens up a larger coalition to reverse the award. There is also a suggestion by Greenhouse that the recent cases that one might have expected to be 5-4 were more fact-driven opinions that did not rely on broad rules, which potentially enabled more justices to sign on. However, as we posted earlier, the oral argument in the Exxon case suggested a divided court. The question is how divided? Stay tuned to this blog to find out.
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“Conservative” Judges and Punitive Damages
A commentator on the recent Exxon Valdez argument in the U.S. Supreme Court opined that “The right wing judges who pollute our courts have drastically reduced punitive damages, which is the issue here, to the point where they’re completely useless.” As set forth in greater detail in an earlier post, it is difficult to make the traditional “liberal” vs. “conservative” judge argument with respect to punitive damages considering that Justices Scalia and Thomas (presumably two of the justices considered to be most “conservative”) have joined with Justice Ginsberg to dissent from the Supreme Court’s jurisprudence in finding due process limitations on the size of punitive damage awards. Similarly, Justices Stevens, Breyer, and Souter have joined with Justices Kennedy, O’Connor, Rehnquist, Alito and Roberts to find due process limitations on punitive damage awards.
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The Implications of the Exxon Valdez Oral Argument
We have reviewed the transcript of this morning’s oral argument in the Exxon Valdez case and generally agree with the comments expressed elsewhere. Although the questions indicate a divided Court, Exxon seems unlikely to prevail on the argument that the actions of a ship captain cannot, as a matter of law, expose the ship owner to punitive damages. And Exxon is unlikely to prevail on the argument that the Clean Water Act prohibits the imposition of punitive damages in this case as a matter of law.
Nor does the Court seem likely to agree that Exxon is entitled to a new trial because the jury instructions erroneously allowed the jury to conclude that Captain Hazelwood had sufficient managerial authority to make Exxon liable for punitive damages. There is at least some possibility of a new trial on that issue, as the Chief Justice and Justices Scalia and Kennedy asked some hostile questions to plaintiffs’ counsel about the jury instruction. Justice Thomas was silent as usual, but is probably in Scalia’s camp on that issue. One more vote for Exxon could yield a new trial, but that vote may be hard to come by, especially since Justice Alito has recused himself.
The most likely outcome seems to be a split-decision affirming the plaintiffs’ entitlement to punitive damages, but holding the amount of the award excessive under federal common law. If the Court adopts an excessiveness test as a matter of maritime law or federal common law, technically that test won’t apply to many cases. But the Supreme Court’s reasoning may influence many state court judges in applying the common law excessiveness standards that many state courts have developed
Perhaps more importantly, if the Supreme Court holds that the ratio in this case should only be two-to-one (as some of the justices’ questions suggested), such a holding might lend additional weight to the court’s prior holdings on the ratio issue in the cases involving the due process limits on punitive damages. (BMW v. Gore and State Farm v. Campbell). In State Farm, for example, the Court suggested that the ratio of punitive to compensatory damages should be low, perhaps only one-to-one, where the compensatory damages are substantial. Few courts have paid any attention to that holding, but perhaps this case will serve as a reminder to the lower courts about this aspect of the Court’s earlier holdings. Indeed, it seems likely that the Court would refer to its ratio analysis in State Farm if the Court addresses the ratio issue in the Exxon Valdez case.We’ve recently seen two California cases in which the courts reduced punitive damage awards down to a one-to-one ratio (Jet Source v. Doherty and Walker v. Farmers Insurance) based on State Farm. This may become a growing trend if the Supreme Court revisits this notion in the Exxon Valdez opinion.
If the Court focuses on the ratio between the punitive damages and the plaintiffs’ actual harm, that will raise some interesting questions about exactly what the plaintiffs’ “actual harm” is. The Ninth Circuit’s opinion included not only the compensatory damages awarded, but also settlements and judgments obtained by “various plaintiffs.” The opinion does not make clear whether those “various plaintiffs” included parties not before the court in this case. Does that sort of analysis comport with the U.S. Supreme Court’s opinion last year in Philip Morris v. Williams, which held that defendants may not be punished for harm to others?Exxon argued that, for purposes of calculating its “actual harm,” the court should subtract Exxon’s payment of $493 million through its voluntary claims program and other settlements. Thus, if the actual harm was $513.1 million (as found by the Ninth Circuit), the remaining total would be only $20.1 million. Even at the maximum ratio of nine-to-one, that would cap the punitive damages at $180 million, a far cry from the $2.5 billion approved by the Ninth Circuit.
It will be interesting to see if the Court resolves any of these issues surrounding the calculation of the proper ratio, or simply sends the case back to the Ninth Circuit with directions to re-assess the ratio under some new standard announced by the Supreme Court.
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Exxon Valdez Oral Argument Transcript
The transcript of this morning’s oral argument is available here.
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Mixed Bag for Exxon in US Supreme Court?
SCOTUSblog has posted their initial impressions from the oral argument. They conclude that Exxon may lose on the argument that no punitive damages can be awarded in maritime cases but might win that the award is too high.
We will post our analysis of the oral argument once we have had time to digest the transcript of the argument.
UPDATE (by Curt Cutting on 2/27/08 at 10:51 AM): Here is a link to the AP story on the oral argument. The Supreme Court has not yet released the transcript.
UPDATE (at 11:27 AM): More links:
Further UPDATE (at 4:55 PM):
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Twenty Percent of the Plaintiffs are Dead: Has It Taken Too Long for the Exxon Valdez Case to Be Resolved?
The Washington Post has an interesting article focusing on the fact that it is now twenty years since the spill and fourteen years since the verdict in the Exxon Valdez litigation. During that time, twenty percent of the 33,000 fishermen, Native Alaskans, cannery workers and others who triumphed in court that day are dead.
Hat Tip to Above the Law.
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Article Profiles Plaintiffs’ Firm in Exxon Valdez Litigation
We’re not going to link to all of the many articles previewing the Exxon Valdez oral argument (coming up this Wednesday), but this one is worth mentioning. It takes a different angle from most of the others; it focuses on one of the 61 different firms representing the plaintiffs, Minnesota’s Faegre & Benson. The article says Faegre & Benson has invested $30 million dollars worth of attorney time in the case and has recovered only $1.5 million so far (from the compensatory damage award), but stands to earn over $100 million if the Supreme Court affirms the $2.5 billion punitive damages award.