Torts II, Pages 584–588

Exxon Shipping Co. v. Baker

Supreme Court of the United States, 2008

Facts:

Defendant's supertanker grounded on Bligh Reef, off the Alaskan coast, and spilled millions of gallons of crude oil into Prince William Sound. Defendant settled state and federal claims for environmental damage for over $1 billion.

Plaintiffs are commercial fishermen and native Alaskans who are suing for economic losses due to their livelihoods' dependences upon the sound.

Evidence showed that the captain left the bridge just before the difficult navigation of the the sound. Blood testing showed that he had been drinking and that Exxon had some knowledge of his alcoholism.

Procedural History:

LexisNexis IconWestLaw LogoGoogle Scholar LogoPage 481 (not in casebook)The jury awarded $5 billion in punitive damages, which was remanded twice and eventually remitted down to $2.5 billion dollars.

Issue:

Is the award of $2.5 billion in punitive damages larger than maritime law should allow in the circumstances?

Reasoning:

Punitive damages should be reasonably predictable to have a sense of fairness and to properly dissuade future would-be tortfeasors. Yet, jury instructions can only do so much, and setting dollar figure limits fails to account for circumstances or inflation. Instead, a ratio to compensatory damages should be used.

The median for punitive damages is 1:1 compensatory damages. As this case does not have intentional or malicious conduct nor was defendant driven primarily by greed nor did defendant have a low chance of detection, it should probably be below the median at about 0.65:1. For future cases, an upper limit in such maritime cases should be a 1:1 ratio.

Rule/Holding:

Maritime cases such as this should have their punitive damages limited to an amount equal to their compensatory damages.

Judgment:

Vacated and remanded.