On Exxon… The Supreme Corp Returns
I can't believe it. Exxon is essentially rewarded for dragging its feet for nearly two decades, after its role in one of history’s most devastating oil spills ever. Today's 5-3 Supreme Court decision reduced a $4.5 billion punitive damages award down to $500 million--for this mega corporation a paltry sum equivalent to a few days' profits. (Here's my prior post on the Exxon case) Here's what others are saying about it:
Right now the folks at Exxon Mobile are probably writing out their 'Thank You' cards to the U.S. Supreme Court Justices. Even though the company posted a "disappointing" $10.9 billion profit in the first quarter of 2008 (the second highest U.S. corporate profit ever – the highest being themselves in 2007) the U.S. Supreme Court ruled today that the company only has to pay $500 million (nope, I didn't forget a zero) in punitive damages to the 30,000 victims of the Exxon Valdez oil spill. (Keep Reading)On ScotusBlog:
Although the equal division of the Court on the question of Exxon’s liability for its ship captain’s actions meant that an award of punitive damages against Exxon would be permitted, the Court’s adoption of a strict 1:1 ratio for punitive damages to compensatories nevertheless comes as a huge blow to the over 32,000 plaintiffs, many of whom are either dead or bankrupt, in this case. After nineteen years of litigation, the Court’s reduced award means that each class member will now receive about $15,500 in compensatory damages and an equal amount in punitive damages, for a total award of roughly $31,000 per class member. (Keep Reading)
The decision strikes yet another blow against what is essentially the capital punishment of the civil justice system, in a long-running campaign by Exxon and other big companies to try to abolish these sorts of awards entirely. Punitive damages are the extra damages added to a jury verdict to punish especially egregious conduct by a civil defendant. As the former West Virginia Supreme Court Justice Richard Neely once wrote, punitive damage awards aren't given out for innocent mistakes, but are generally reserved for "really stupid defendants, really mean defendants, and really stupid defendants who could have caused a great deal of harm by their actions but who actually caused minimal harm." Punitive damages put the real teeth in the legal system, and serve as an ad-hoc form of regulation by standing as a potential deterrent to all sorts of egregious behavior. That, of course, is why business really hates them. (Keep Reading. Also see the comments section--interesting stuff.)
What more can I say? This is a tremendous, tremendous victory for big business. The Supreme Court is back to its Supreme Corp rulings.
The majority held that "unpredictability of high punitive awards is in tension with their punitive function," asserting that these awards (which it describes as "eccentrically high") are unfair because they are unpredictable. The majority says "a penalty should be reasonably predictable in its severity, so that even Holmes’s 'bad man' can look ahead with some ability to know what the stakes are in choosing one course of action or another." Is a punitive award of a few days' worth of profits really an "eccentrically" excessive punishment? Is the result of this decision really that corporate actors will choose the proper course of action--forgoing a bad behavior because it will cost the corporation twice the actual damages?
As it pays so much attention to making sure corporations can reasonably calculate the consequences of bad behavior, does the Court give due concern for the effect of inadequate punishment on the victims, the larger public, and others that could be harmed by such behavior?
Nope. I'm disgusted.