Court hears Exxon case

Before a capacity crowd that included Alaskan fishermen and others affected by the 1989 the Exxon Valdez oil spill, the Supreme Court heard arguments in a case that will determine whether Exxon Shipping Company should pay $2.5 billion in punitive damages for the conduct of the ship’s captain, a relapsed alcoholic who was inebriated and violated protocol before the ship ran aground and spilled 11 million gallons oil off the Alaskan coast.

The punitive damage issue in Exxon Shipping Co. v. Baker, No. 07-219, remains in dispute nearly 14 years after a jury awarded $287 million in compensatory damages and $5 billion in punitive damages to the fishermen who suffered economic loss from the spill. Years later on appeal, the punitive award was reduced to $2.5 million by the 9th Circuit Court of Appeals, working out to roughly $75,000 per plaintiff.

Walter Dillinger, representing the oil company, argued that there is no basis in maritime law for imposing punitive liability on a company based on the actions of a ship’s captain because he is too far down the corporate chain. Chief Justice John G. Roberts, Jr., like other justices, wondered just where that line fell.

“Do you have to have a shareholder driving the boat before you can assess liability?” Roberts asked Dillinger. “Where do you draw the line between the CEO and the cabin boy?”

“One has to be in authority to set company policy,” Dillinger argued.

Justice Anthony Kennedy noted the autonomy vested in ship captains. “A captain can decide when [the ship] leaves,” Kennedy said. “He decides the course.”

But, Dillinger said, “he is unable to set the policy” for any of these issues. You are a company actor, he argued, “when you are advancing the policies of the company.”

Jeffrey L. Fisher, arguing on behalf of the plaintiffs in the case, argued that the captain of a supertanker like the Exxon Valdez essentially “runs a business unit” of the company.

“He was the person in charge of deciding it was safe to leave,” Fisher said, adding later: “I don’t think [the issue] should rest on [job] labels.”

Justice Antonin Scalia seemed skeptical. “I doubt that a captain is high enough” on the corporate ladder to be a corporate actor, he said.

More on this case later on this blog, tomorrow on the Lawyers USA website, and in the next issue of Lawyers USA.