Today, at a time when gas prices and oil company profits are record highs, the U.S. Supreme Court has taken $2 billion from 32,000 Americans who lost their livelihood in the worst oil spill in U.S history... and given it back to Exxon.
The Court's reduction of punitive damages in Exxon Shipping Co. v. Baker is a nakedly activist decision that pulls its standard for limiting damages out of thin air, demonstrates hostility to the role of Congress, and continues a pattern of ignoring the Framers' views on the importance of civil juries. Progressives would do well to treat this decision with resounding scorn, and highlight it as a textbook example of why the Supreme Court matters.
The case arose from the 1989 Exxon Valdez spill, wherein Exxon allowed Joseph Hazelwood, a relapsed alcoholic, drunk at the time, to the helm of a massive oil tanker navigating the treacherous waters of Alaska's Prince William Sound at night. The ship ran into a reef, ruptured and spilled 11 million gallons of crude oil, devastating the Sound's fragile and pristine ecosystem. Grant Baker is one of 32,000 commercial fishermen and Alaska Natives that sued Exxon for their economic losses and for punitive damages against Exxon.
More than 6,000 of these victims have died during the course of this litigation, which Exxon has tenaciously prolonged for 16 years with appeal after appeal. In 2006, the Ninth Circuit Court of Appeals cut what was originally a $5 billion jury verdict down to $2.5 billion. Today, the Court cut this again for Exxon to a maximum of $500 million.
The Court's majority opinion, joined by Chief Justice Roberts, and Justices Scalia, Thomas, Souter and Kennedy (Justice Alito was recused) reads like Goldilocks and the Three Bears. The Court crafts a 1:1 ratio between compensatory and punitive damages based on his own calculation of what ought to be reasonable rather than any actual law or precedent. This is judicial lawmaking at its worst, and it deprives maritime law trial judges and juries of their long-standing power and responsibility to determine the appropriate remedy for reckless corporate behavior.
As Justice Stevens notes in a pointed dissent, the Court cannot identify a single state court in the entire country that has adopted the Court's 1:1 ratio. Stevens also explains that the majority ignores the will of Congress, which deliberately chose not to restrict the availability of punitive damages in this context.
Like other recent cases such as Ledbetter v. Goodyear (equal pay for women), Exxon v. Baker illustrates that the conservative majority on the Supreme Court is willing to bend the law in favor of corporate interests that have improperly prevailed too often in recent years. It is a reminder, if progressives need one, of just how important it is to fight for the future of the Supreme Court.