Environmental Disaster Law

On March 23, 1989, the supertanker Exxon Valdez pulled out of Valdez, Alaska, loaded with more than 56,000,000 gallons of crude oil. Captain Joseph Hazelwood, the Master of the vessel, had spent the day drinking with crew members. He had consumed at least eight vodka doubles and his blood alcohol level stood at .241 - more than six times the permissible level under Coast Guard regulations. Third mate Gregory Cousins was on duty beyond the limits specified by federal fatigue laws. Hazelwood, Cousins and the rest of the crew faced a night voyage through ice in Prince William Sound. Hazelwood's intoxication was evident from the alcohol on his breath, his slurred speech (captured on audiotape) and, most of all, his actions as the ship navigated the sound.

While passing through fishing grounds, Hazelwood took the Exxon Valdez outside established shipping lanes to avoid ice. He put the vessel on automatic pilot, accelerating at Bligh Reef. Hazelwood then left the bridge in violation of Federal Pilotage Regulations. As he went below, Hazelwood gave vague instructions to the inexperienced and fatigued Cousins. Within minutes, the supertanker struck Bligh Reef, spilling 11,000,000 gallons of oil, thereby causing the largest oil spill and greatest environmental disaster at that time experienced in American history.

Following the grounding, lawsuits were filed in Alaska State and Federal Court on behalf of approximately 45,000 individuals, businesses, native corporations and local governments, seeking both compensatory and punitive damages. Most of the state court actions were ultimately removed to federal court. The Federal District Court carefully managed this litigation. It entered hundreds of orders, and the discovery master entered hundreds more. The trial plan provided for four separate phases of trial. The first three phases were to be tried to a single jury of 12 (rather than the customary six), with a unanimous verdict required. Trial proceeded as follows:

1. Phase 1 and began on May 9, 1994, 5 years after the spill, and ended on June 6, 1994. A week later, on June 13, 1994, the jury returned a verdict that both Exxon and Hazelwood had been reckless.

2. Phase IIA went to trial in June 20, 1994, to determine the lost harvest, loss price and permit valuation claims in the Prince William Sound, Kodiak, Cook Inlet, and Chignik salmon and herring fisheries. After deliberating a month (from July 11, 1994 to August 11, 1994), the jury awarded hundreds of millions in compensatory damages on these claims.

3. Phase III was tried between August 22, 1994 and August 29, 1994. In this phase, the jury was asked to decide whether Exxon and/or Hazelwood should be assessed punitive damages, and if so, in what amount. The jury returned its verdict on September 16, 1994, awarding punitive damages against Exxon in the amount of $5 billion and against and Hazelwood in the amount of $5,000.

The compensatory damage claims of all other plaintiffs, not earlier decided in Phase II of the trial, were to have been decided in Phase IV. Phase IV settled before trial, in mid-1996.

Exxon and Hazelwood filed countless post-trial motions. These motions resulted in the District Court issuing approximately 250 pages of rulings. Due to this delay, final judgment was not entered until September 24, 1996. An Amended Judgment was ultimately issued on January 30, 1997.

Appeals and cross appeals next ensued. The Ninth Circuit Court of Appeals issued its first decision on November 7, 2001. In essence, the court remanded the case to the trial judge, requesting that Judge Holland evaluate the appropriate amount of punitive damages in light of United States Supreme Court decisions, BMW and Cooper. (It should be noted that neither of these Supreme Court decisions existed at the time of the trial of the Exxon Valdez litigation.)

Ultimately, Judge Holland reluctantly reduced the jury's punitive damage award from $5 billion to $4.5 billion. Judge Holland went on to note that interest on the judgment itself would be somewhere in the range of approximately $2.5 billion. Exxon appealed again.

On Friday, December 22, 2006, the Ninth Circuit Court of Appeals again issued decision, reducing the punitive damage award against Exxon from $4.5 billion to $2.5 billion. Exxon immediately sought en banc rehearing before the Ninth Circuit Court of Appeals. On May 23, 2007, rehearing was denied. This left Exxon with the option of a writ to the United States Supreme Court, which it did.

Incredibly, on October 29, 2007, the United States Supreme Court granted Exxon's Writ, and has agreed to decide the propriety of the revised judgment. The case will likely be argued in during spring, 2008. One Justice, Samuel Alito, recused himself due to ownership of between $100,000 and $250,000 in Exxon stock.

Clearly, this is one of the oldest pieces of environmental disasters litigation in the country. Who would have ever imagined that following one of the largest oil spills in the world, caused by a clearly drunken Captain, over 18 years would pass without one penny in punitive damages being paid to those so greatly damaged by the spill.

From a practical standpoint, many damaged by the spill believe that Exxon has already prevailed because they've literally worn people out. Following the environmental disasters, numerous people were forced into bankruptcy. Since the spill, numerous others have died, leaving their heirs to seek recompense. Even some of the most prominent lawyers involved in the litigation (Melvin M. Belli, Sr., Jerry Cohen, Leonard Ring, Richard Gerry, among others), have since passed away. Though bittersweet, perhaps this tragic litigation is finally nearing completion.

From a legal perspective, there is much to be said about the Ninth Circuit Court of Appeals December 22, 2006, opinion. Was the award of $4.5 billion "grossly excessive"? After a defendant displays egregious, reprehensible, conduct sufficient to justify an award of punitive damages, should conduct taken by defendant thereafter serve to reduce a jury's punitive damage award? Perhaps these questions would be best answered through the analysis of cases other than the Exxon Valdez litigation. But, whether one agrees with Judge Schroeder's analysis, or not, surely everyone agrees with her comment, "It is time for this protracted litigation to end."

Unfortunately, with the United States Supreme Court's grant of Exxon's Writ, the saga is guaranteed to continue, and potentially with significant consequence to the victims of this avoidable tragedy.