Oil and Water Do Not Mix: An Argument for the United States Supreme Court's Deferral to Congress in Exxon v. Baker

• Author: Paige Kohn
• Position: Will receive her J.D. from Capital University Law School in May 2010
• Pages: 229-270

OIL AND WATER DO NOT MIX: AN ARGUMENT FOR THE

UNITED STATES SUPREME COURT’S DEFERRAL TO

CONGRESS IN EXXON V. BAKER

PAIGE KOHN*

I.INTRODUCTION

In 1994, an Alaskan jury entered a verdict of $5 billion in punitive

damages against oil giant Exxon, which at the time was the largest punitive

damages award in American history.1 The award stemmed from events

that occurred in 1989, when Exxon Valdez, a tanker owned and operated

by Exxon,2 collided with an underwater reef, thereby breaking the hull and

leaking eleven million gallons of oil into Prince William Sound, Alaska.3

The oil spill was also “the worst in American history”4 and wreaked

enormous environmental,5 economic,6 and emotional damage7on both

Copyright © 2009 Paige Koh n.

* Paige Kohn will receive her J.D. from Capital University Law Scho ol in May 2010.

She received her B.A. in Histo ry from The Ohio State University in August 200 4. The

author would like to thank Capital Un iversity Law Professor R achel M. Janutis for o ffering

valuable f eedback throughout the writing of this article. S he would also like to thank the

many friends, family memb ers, and professors who provided insight and assistance.

1In re Exxon Valdez, 270 F.3d 1215, 1225 (9th Cir. 2001).

2 Exxon Shipping Co . v. Baker, 128 S . Ct. 2605, 2611–12 (2008). The tanker was

operated by Exxon Shipping Co., Inc., a subsid iary of the corporation now called Exx on

Mobil Corp. See, e.g., Renamed E xxon Valdez Will Ply D ifferent Waters, N.Y. TIMES, July

7, 1990. Exxon Mobil acquired their new n ame after Exxon’s merger with Mobil in 1999.

See, e.g., Exxon-Mobil Merger Done, CNNMONEY.COM, No v. 30, 1999, http://money.cnn.

com/1999/11/30/deals/exxo nmobil.

3Exxon Shipping Co., 128 S. Ct. at 2612–13 (2008). See also EXXON VALDEZ OIL

SPILL TRUSTEE COUNCIL, MAP OF THE EXXON VALDEZ OIL SPILL (1993), http:/ /www.

evostc.state.ak.us/facts/spil lmap.cfm (displaying a map of the areas affected by the Exxon

Valdez oil spill).

4 Adam L iptak, Damages Cut Against Exxon in V aldez Case, N.Y. TIMES, June 26,

2008, at A19.

5See, e.g., Charl es H. Peterson et al., Long-Term Ecosystem Response to the Exxon

Valdez Oil Spill, 302 S CIENCE 2082, 2082 (2003) (“[M]ass mortalities of 1000 to 2800 sea

otters . . . and u nprecedented numbers o f seabird deaths estimated at 250,000 . . . were

documented during the days after the spi ll.”); Jeff Short, Stanley Rice & Mandy Lindeberg,

The Exxon Valdez O il Spill: How Much Oil R emains?, ALASKA FISHERIES SCIENCE CENTER,

Sept. 2001, http://www.afsc.noaa.go v/Quarterly/jas2001/feature_jas01.htm (“Long-term

(continued)

230CAPITAL UNIVERSITY LAW REVIEW [38:229

humans and wildlife. Although hundreds of lawsuits stemmed from the

devastation,8the plaintiffs represented in Exxon v. Baker were over 32,000

Alaska Natives, landowners, and commercial fishermen.9 The case was

also a consolidated and mandatory punitive damages class action.10 The

United States Supreme Court opinion in Exxon v. Baker effectively ended

the punitive damages matter that had been the source of complex litigation

for over a decade.11

Exxon v. Baker raised three issues of law: vicarious liability, federal

preemption, and punitive damages.12 However, this article only analyzes

monitoring in the oiled areas has also shown that fauna from hig her trophic levels such as

sea otters and sea ducks still have not recovered.”); Kyl e Hopkins, D ebate Persists About

Long-Term Effects Of Exxon Valdez Oil Spill, ANCHORAGE DAILY NEWS, F eb. 6, 20 09, at

A1, available at http://www. adn.com/exxonvaldez/story/682335.html.

6See, e.g., Exx on Valdez Oil Spill Trustee Council, Economi c Impacts of the Spill,

http://www.evostc.state.ak.u s/facts/economic.cfm (providing five studies und ertaken by the

Alaskan stat e government eva luating the econo mic impact to recreational fishing, tourism,

and replacing birds and mammals); SAMUEL K. SKINNER & WILLIAM K. REILLY, THE

EXXON VALDEZ OIL SPILL: A REPORT TO THE PRESIDENT 31–32 (1989) (explaining the

harmful impacts the oil spil l had on commercial fisheries, recreation , and natives).

7In re Exxon Valdez, 236 F. Supp. 2d 1043, 1 062 (D. Alaska 2002) (“Communities

affected by the spill ‘reported increased incidences of alcohol and drug abuse, domestic

violence, mental he alth problems, and occupation r elated problems.’” (quoting Duane A .

Gill, Environmental D isaster and Fishery Co-Management in a Natural Resource

Community: Impa ct of the Exxon Valdez Oil Sp ill, in FOLK MANAGEMENT IN THE WORLD’S

FISHERIES 207, 227 (Christopher L. Dy er & James R. McGoodwin eds., 1994))).

8In re Exxon Valdez, 270 F.3d 12 15, 1223–24 (9th Cir. 2001); see, e.g., Eyak Native

Village v. Exxon Corp., 25 F.3d 773, 775 (9th Cir. 1994) (discussing civil and criminal

prosecutions brought by the state of Alask a and the United State s government); State v.

Hazelwood, 866 P.2d 827, 828 (Alaska 1993) (discussing criminal pros ecutions brou ght

against the ship’s captain, Joseph J. Hazelwood).

9 Exxon Shipping Co . v. Baker, 128 S. Ct. 2605, 2613 (2008).

10Id.

11 Liptak, supra note 4, at A1.

12SeeExxon Shipping Co., 128 S. Ct. at 2611. See Aaro n T. Duff, Comm ent, Punitive

Damages in Maritime Torts: Examining S hipowners’ Punitive Damage Liability in the

Wake of the Exxon Valdez Decision, 39 SETON HALL L. REV. 955 (2009), for r ecent

analyses on the v icarious liability issue; B randon T. Morris, Comment, Oil , Money, and the

Environment: Punitive D amages Under Due Process, Preempt ion, and Maritime Law in the

Wake of the Exxon Valdez L itigation, 33 TUL. MAR. L.J. 165 (2008).

2009] EXXON v. BAKER231

the punitive damages aspect of the opinion, and only in a limited fashion.13

As a result, the area of law under consideration will not only be punitive

damages, but also federal maritime law, which was the jurisdictional basis

for which the Supreme Court accepted the case on certiorari.14 The 5-3

decision in Exxon v. Baker created a 1:1 ratio between compensatory and

punitive damages in federal ma ritime law, drastically reducing the original

$5 billion punitive damage award to $507 million15 to be shared amongst

the 32,000 plus plaintiffs.16

Analyzing wh ether the Supreme Court made the right decision in

Exxon v. Baker is not an easy task. On the surface, it may appear that

people who support the opinion are against the environment, and people

who side with the plaintiffs are anti-corporation.17However, this

simplistic approach fails to consider the nuanced legal equities involved in

13 For example, this article does not evaluate the pros and cons of punitive damages,

whether pun itive damages are excessive, or wh ether a lower ratio will ups et the objectives

of punitive damages such a s deterrence and punishment. See Jeffrey L. Fisher, The Exxon

Valdez Case and Regularizing Pu nishment, 26 ALASKA L. REV. 1 , 16–2 3 (2009)

(comparing p unitive damages to crimin al sentencing), for analyses of other punitive

damages issue s in light of the Exxon v. Baker decision; Charles S. Doskow, Wha t Do You

Do with a Drunken Sailor? Reprehensibi lity, The Exxon Valdez, and Punitive Damages, 2 7

QUINNIPIAC L. REV. 465 (200 9) (considering the issue of reprehensib ility and due process in

punitive damages).

14Exxon Shipping Co., 128 S. Ct. at 2614.

15Id. at 2633–34. The figure ros e, however, to about $99 5 million when interest was

included. Nate R aymond, Attorneys' Fees Plummet Following Exxon Valdez Decisio n, THE

AM LAW DAILY, June 2 5, 2 008, http://amlawdaily.typepad. com/amlawdaily/2008/06/

attorneys-fees.html. For a breakdown of how the punitive damages will be divided and

general update s on lingering Exxon Valdez issues see th e ANCHORAGE DAILY NEWS

website, http://www.adn. com/exxonvaldez.

16Id. at 2613. Interestingly, “Exxon itself will actually get 11 percent of the verdi ct,

under a settlement with a group o f seafood comp anies known a s ‘the Seattle Seven.’ The

firm agreed in 1991 to pay them $63.75 million fo r their stake. That stak e, it turns out, is

worth around $106 millio n.” Raymond, supra note 15.

17See, e.g., A Supreme Court on th e Brink, N.Y. TIMES, July 3, 2008, at A22

(“Corporations fared especially well in this term.”); Exxon verdict: Supreme Court Makes

Life Easier for Corporate Wrongdoers, ANCHO RAGE DAILY NEWS, June 26 , 2008, at B4;

Supreme Cou rt: A Win fo r Big Oil, SEATTLE POST-INTELLIGENCER, June 25, 2008, at B6

(discussing how corporat e responsibility has not exactly been on this court's agenda).