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More information regarding this video can be found at The Huffington Post.

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Although Sarah Palin had disagreed with the United States Supreme Court’s decision in Exxon Shipping Co. v. Baker before, she recently could not give Katie Couric the name of a Supreme Court decision other than Roe v. Wade that she disagreed with:

Isn’t Sarah Palin’s husband a commercial fisher? Isn’t Palin the Governor of Alaska? Obviously, Exxon Shipping Co. v. Baker affected Alaska’s environment and fishing communities. The question was easy, but Palin failed in answering it. Furthermore, I doubt if she had answered Exxon Shipping Co. v. Baker that Katie Couric would have asked for another Supreme Court decision that she disagreed with. Contrarily, Joe Biden answered the question, emanating knowledge and intellect, by citing practical legislative experience and constitutional law.  This is another example or factor, amongst many, that suggests Sarah Palin isn’t ready to lead a diverse and complex country like the United States.

Personally I believe that Palin’s problem isn’t just Palin, but she is most likely too scared to give answers. As a result, John McCain’s campaign is certainly a problem for her too.

Tony Mauro at The Blog of Legal Times (BLT) notes that according to Stanford Law School professor and Davis Wright Tremaine partner Jeffrey Fisher, Sarah Palin and her husband could have but did not join the class action lawsuit that stemmed from the Exxon Valdez oil spill, since they were both (or at least Todd was) commercial fishers at the time. The BLT writes that:

Alaska Gov. Sarah Palin — Sen. John McCain’s pick for vice president — and her husband Todd, both commercial fishers at the time, could have qualified as members of the class. But neither filed claims by the deadline this past February.

Furthermore, Sarah Palin was critical of the Supreme Court’s decision in Exxon Shipping Co. v. Baker:

After the Supreme Court ruled, Gov. Palin was critical of the outcome. “I am extremely disappointed with today’s decision by the U.S. Supreme Court,” she was quoted as saying. “While the decision brings some degree of closure to Alaskans suffering from 19 years of litigation and delay, the Court gutted the jury’s decision on punitive damages.” She also said, “It is tragic that so many Alaska fishermen and their families have had their lives put on hold waiting for this decision. My heart goes out to those affected, especially the families of the thousands of Alaskans who passed away while waiting for justice.”

However, one commenter thought that Sarah Palin was disappointed in the decision because “her husband works for BP.” Another commenter observed that “fishermen got screwed by the Bush court, and that the only way to reverse the trend is to elect Obama, who will likely fill Supreme Court vacancies with individuals who care about justice for people, justice for ALL people, and not justice for the wealthy and the corporate interest only.”

It’s hard to understand where Sarah Palin stands on Big Oil and the environment, because although she was critical of the Supreme Court’s Exxon decision, she was enthusiastic for or channeled the mantra: “Drill, baby, drill!” at the Republican National Convention. Furthermore, she supports domestic drilling despite that (1) oil is sold on an international market, so “American” oil will go to China and India, (2) oil companies will profit most from domestic drilling and not the American people, (3) oil companies have yet to explore all their federal leases, (4) the significant public opposition (5) domestic drilling will have an insignificant impact on energy prices and will do nothing to curb world demand.

Sara Palin seems to frequent both sides of the fence. However, she can’t have her cake and eat it too. As a result, she doesn’t deserve or qualify to speak out against Big Oil if she wants to give Big Oil the rights to drill in wildlife refuges or other public lands. Drilling for oil is not new energy policy.

And to think Exxon didn’t even want to pay any damages in Exxon Shipping Co. v. Baker. I wonder how Exxon Mobil will spend their $11.68 billion 2Q profits. Will the oil giant use its profits to aggressively develop alternative or renewable energy sources, update their infrastructure to deliver their oil to the markets more efficiently, remedy the carbon they help pump into the atmosphere, or will they continue to keep everything at a bare minimum to milk as much profit from our pockets as possible. These big profits yield big power and political influence. That’s scary.

I would not exactly lump oil companies with heroes. It’s not like oil companies are delivering their product at a reduced price or at no cost where it would be detrimental or risky to their well being. For example, Exxon isn’t exactly altruistic. If Exxon was altruistic the energy giant would not have litigated Exxon Shipping Co. v. Baker for over 10 years. Furthermore, oil companies are making record profits by extracting some of their oil from some morally low governments. Basically, John Stossel is a tool.

It is constitutional to challenge the reasonableness of a punitive award but not a compensatory award. The goal of punitive damages is retribution or punishment and deterrence while compensatory damages are used to make a plaintiff whole or put them in the position they were before they met the defendant. According to the Supreme Court of the United States, the “Due Process Clause prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeaser.” Furthermore, the Court noted “it should be presumed that a plaintiff has been made whole by compensatory damages, so punitive damages should be awarded only if the defendant’s culpability is so reprehensible to warrant the imposition of further sanctions to achieve punishment or deterrence.”

In State Farm the U.S. Supreme Court determined that “few awards exceeding a single-digit ratio between punitive and compensatory damages will satisfy due process.” As a result, single-digit multipliers or anything under 9:1 will reflect the State’s goals to punish and deter while corresponding with due process. However, the more reprehensible and malicious the conduct the greater the award can be. The relationship of punitive damages to compensatory damages acts as a guidepost only. As a result, double-digit multipliers are not impossible. The Court returned to the question of punitive damages in Exxon Shipping Co. v. Baker.

In Exxon Shipping Co. v. Baker the Court was divided 4-4 (Justice Samuel Alito did not participate in the decision because he owns stock in Exxon) on whether “maritime law allows corporate liability for punitive damages based on the acts of managerial agents”, so the Court left the Ninth Circuit’s opinion “undisturbed.” The Court also held that the Clean Water Act’s water pollution penalties “do not preempt punitive-damages awards in maritime spill cases”, and that the “punitive damages award against Exxon was excessive as a matter of maritime common law [and]…the award should be limited to an amount equal to compensatory damages.”

Regarding the third holding the question in Exxon Shipping Co. v. Baker was what ratio between punitive and compensatory damages would be appropriate or reasonable. The Court did not use a constitutional analysis or argue whether the state-court award violated due process, because Exxon Shipping Co. v. Baker took place under federal maritime jurisdiction. As a result, the Court applied judge-made federal common law, because federal question jurisdiction exists in maritime actions so federal law is applied. Over the years, where federal courts have subject matter jurisdiction they have developed their own federal common law.

Furthermore, the Court went through an interesting history of damages and investigative analysis of the role of punitive awards. The Court looked at how different states use punitive awards, and (some states do not allow punitive awards) the Court even compared the United States’s use of punitive awards with other countries. Apparently, the use of punitive damages in the United States is more robust. The Court performed a summary analysis on punitive damages, because it wanted to emphasize that punitive awards do not compensate. This emphasis was important for the holding.

The Court argued that if the $2.5 billion award would be allowed then the punitive to compensatory damage ratio would be an outlier. Additionally, a higher amount would fly in the face of how lower courts have traditionally applied punitive damages. The Court was seeking reasonableness. To do this, the Court examined data across all types of cases that awarded damages. The Court was looking for a median ratio that would give an indicator of what a reasonable ratio between punitive and compensatory damages looked like.

However, the Exxon Valdez disaster itself was an outlier. It was the worst anthropogenically-caused environmental disaster in America’s history and one of the worst anthropogenically-caused environmental catastrophes in the world. The affects from the oil spill are still being observed in the ecosystems and fisheries of the spill area in Alaska.

Why should Exxon pay out a $2.5 billion punitive award? First, Exxon knew of Captain Joseph Hazelwood’s drinking habits. In fact, the Captain was still drunk many hours after the accident. The Captain stopped going to Alcoholics Anonymous meetings. He drank all over Alaska including with Exxon officials. Furthermore, management knew of his problem. Witness testimony noted that before “the Valdez left port on the night of the disaster, Hazelwood downed at least five double vodkas in the waterfront bars of Valdez, an intake of about 15 ounces of 80-proof alcohol, enough ‘that a non-alcoholic would have passed out.’”  Second, Exxon’s profits in 2007 were $40.6 billion.

The Court justified a lower punitive award, because punitive damages are to punish and not to compensate the plaintiff for their loss. However, given Exxon’s reprehensible behavior and record profits the Court should have used a higher number to send the message that such conduct will not be tolerated. A few million dollars is not going to send the proper message to a multibillion-dollar company that continues to make record profits amongst high fuel prices. The Court scrambled to find reasonableness but it failed.

On the Net: Fishers argue that lawyer’s fees in the Exxon case were not excessive and worth it – scroll down and see comments
On the Net: Environmental Punitive Damages Awards and Due Process: Lessons Learned from the Exxon Valdez Oil Spill
On the Net: A letter to the California Court of Appeal regarding damages
On the Net: Exxon Valdez oil spill lingers in Alaska
On the Net: ENVIRONMENTAL LAW: A rough guide to understanding the damages awarded and reduced in the Exxon Valdez case

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Photo source for attribution here. The author or licensor of this image does not endorse me or my work and their image is protected under an attribution license.

According to the CNNMoney.com “[T]he punitive damages award should be brought into line with compensatory damages calculations made by lower courts earlier in the litigation.” Therefore, the award was reduced to $507.5 Million to reflect previous compensatory damages calculations.

On the Net: EXXON SHIPPING CO. v. BAKER: Supreme Court did not apply a constitutional standard in Exxon Shipping Co. v. Baker
On the Net: ENVIRONMENTAL LAW: A rough guide to understanding the damages awarded and reduced in the Exxon Valdez case

According to the Associated Press the Supreme Court is meeting this morning to decide some “major cases still unresolved [that] include the ban on handguns in Washington, D.C., whether people convicted of raping children can be given the death penalty and the $2.5 billion punitive damages judgment against Exxon Mobil Corp. for the Exxon Valdez disaster.”

On the Net (UPDATE): EXXON SHIPPING CO. v. BAKER: Supreme Court did not apply a constitutional standard in Exxon Shipping Co. v. Baker

There will be no Exxon Shipping Co. v. Baker (Exxon Valdez punitive damages) decision released today. The decision is eagerly awaited because it will end almost 20 years of litigation. Furthermore, the case may be pivotal in redefining the role of punitive damages in U.S. tort law. The case is still on the Supreme Court of the United States docket but a decision is due before the Court begins its summer recess scheduled later this month.

On the Net (UPDATE): EXXON SHIPPING CO. v. BAKER: Supreme Court did not apply a constitutional standard in Exxon Shipping Co. v. Baker
On the Net: ENVIRONMENTAL LAW: A rough guide to understanding the damages awarded and reduced in the Exxon Valdez case

Exxon continues to report record-breaking quarterly profits. The most recent was $11.7 billion. However, Exxon on Wednesday asked the U.S. Supreme Court to strike down the $2.5 billion punitive damage award for the 1989 Exxon Valdez oil spill. Originally, a trial court jury awarded $5 billion in punitive damages and $287 million in compensatory damages. Damages are important in tort law because they make the injured party whole again or seek to put the party in the position had they never met the defendant. Additionally, tort damages act as a mechanism to punish and deter.

A tort action results from a civil wrong committed against another person or when a breach of duty to another person occurs. As a result, the law allows for recovery in the form of damages for the civil wrong or injury. Assault, battery, trespass to land, or chattels, in addition to negligence are examples of tort actions. Several types of damages are available to the plaintiff.

An introduction to tort damages

The plaintiff must prove some type of harm to be awarded damages. Economic, environmental, and psychological damages resulted from the Exxon Valdez oil spill. Commercial and native fishing communities suffered loss profits including future economic losses. Additionally, their social institutions were disrupted. It could be argued that recreational fishers suffered too.

The psychological impact from the sheer magnitude of the spill is a complex issue. Environmental damage can be hard to quantify and understand. Exxon claimed the area affected by the oil spill recovered quickly. However, the negative affects of the Exxon Valdez oil spill still linger.

Prince William Sound provides an ecosystem service in the form of food. Loss profits from reduced fishing effort and damaged fisheries are quantifiable. Therefore, it is easily argued that the plaintiffs suffered massive damages from the Exxon Valdez oil spill and are still suffering. Federal permits to fish are worthless if there are no fish to catch. Boats must be maintained and banks need to be repaid. As a result, the plaintiffs must be made whole again or put back in the position they were before the spill.

There are three types of damages in torts: nominal, compensatory, and punitive. Nominal damages are awarded to affirm the fact that someone did something wrong although no damage resulted. Trespass to land cases may award nominal damages. However, most damages in tort claims relate to compensatory damages, which are used to make the plaintiff whole again. Compensatory damages compensate the plaintiff for a wrongful act or anything that can be traced to the wrongful conduct. Punitive damages do not compensate but are used to punish and deter. The plaintiff is not always allowed to recover punitive damages.

A jury determines damages; therefore, damages are a question of fact, which means that damages are a question for the jury because the law would rather have members of the community or a collective to determine a question of fact rather than one person. As a result, damages are arbitrary.

Punitive Damages

For Exxon to be punished with punitive damages, it must be proven that the defendant acted with (1) common law malice or in bad faith; (2) with the intent to injure or (3) with a reckless disregard as whether injury would have occurred. Common law malice is a dual standard: Intent or reckless disregard to whether an injury would occur. Therefore, the goal of punitive damages is to deter, punish, or enact retribution because of what happened.

Jurisdictions are split to whether the plaintiff may recover punitive damages if they have suffered no compensable harm. Some jurisdictions require compensatory damages before one may recover punitive damages, and some jurisdictions have allowed recovery of punitive damages on showing of nominal damages. What is more, some states do not allow the recovery of punitive damages.

Exxon Valdez

In 1994, a trial court jury in the Exxon Valdez case returned a verdict of $5 billion in punitive damages and $287 million in compensatory damages. The Ninth Circuit Court of Appeals final ruling reduced the punitive award to $2.5 billion. The punitive award was reduced because the court considered Exxon’s actions after the spill in mitigating economic and environmental damage. However, some argue that Exxon’s actions were not enough. In further lowering the punitive award, the Ninth Circuit considered the reasonableness of the punitive award by examining the ratio of punitive to compensatory damages. State Farm Mutual Automobile Insurance co. v. Campbell determined that single digit multipliers are reasonable and anything over a 9-to-1 ratio is probably unreasonable. However, some argue that punitive damages should be based on net worth and not necessarily a ratio between compensatory and punitive damages.

Exxon acted in bad faith when it knowingly placed a captain with a drinking problem at the helm of an oil tanker traveling through dangerous waters. In fact, Exxon admitted to knowing of Captain Joseph Hazelwood’s drinking problem. These facts were important in arguing for damages. Therefore, putting an alcoholic at the helm of an oil tanker traveling through dangerous waters reflected bad judgment. Exxon acted in reckless disregard as to whether injury would have occurred. Furthermore, Exxon should be responsible for its employee because it has a special employer/employee relationship. However, Exxon argued before the Supreme Court on Wednesday that it is not responsible for its employee nor should be responsible for punitive damages because the accident happened at sea. Federal courts have jurisdiction over maritime law but punitive damages are a matter of state law. However, some argue that punitive damages have been available in maritime law.

From NPR:

Stanford law professor Jeffrey Fisher, representing the Alaskan plaintiffs, counters that punitive damages have been available for hundreds of years in maritime law, “basically under the same circumstances they are available in tort law, when a defendant acts egregiously or in callous disregard for the rights of others.”

State Farm and the establishment of the single-digit ratio between punitive and compensatory damages

It has been constitutional to challenge the reasonableness of a punitive award but not a compensatory award. Therefore, the issue according to the Supreme Court of the United States is that the “Due Process Clause prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeaser.” Furthermore, the Court also noted “it should be presumed that a plaintiff has been made whole by compensatory damages, so punitive damages should be awarded only if the defendant’s culpability is so reprehensible to warrant the imposition of further sanctions to achieve punishment or deterrence.” The Supreme Court’s main point in State Farm is to be prepared to have a punitive award decision overturned if it is more than nine times greater than the compensatory damages awarded. Single digit multipliers will both reflect the State’s goals to punish and deter but also correspond with due process. However, the more reprehensibility the conduct and the more malicious the conduct the greater the award can be and on rare instances more than nine times has been awarded. The relationship of punitive damages to compensatory damages acts as a guidepost only.

Dissenting opinions in State Farm

In State Farm Ginsburg, Scalia, and Thomas did not believe there was a constitutional basis to take on punitive damages. The theme of the dissenting opinions was that if a state wants to punish they should be able to punish to whatever extent they want and that the Due Process Clause does not protect against excessive or unreasonable punitive awards. In addition, the decision in State Farm impedes on states’ rights to regulate and enforce punitive damages.

Why such a large punitive award?

Evidence of a defendant’s wealth is admissible in tort cases when punitive damages are involved. The evidence is relevant, because the award should be based on the harm done to the plaintiff and not on the defendant’s ability to pay. When it comes to punishment the jury needs to know what constitutes punishment. Therefore, wealth is an indicator of what will constitute punishment. The courts wants Exxon’s attention so at the next boardroom meeting the discussion is how Exxon can avoid liability or improve safety and not how Exxon can elevate profits. A million dollar award to a huge company like Exxon means nothing. The original $5 billion punitive award was used to get Exxon’s attention. Punitive damages must be absorbed with discomfort to the defendant. Troutman notes “the Court considered as a deliberate act that Exxon knowingly put a relapsed alcoholic at the helm.” As a result, but for Exxon knowingly putting a relapsed alcoholic at the helm of a major commercial tanker full of crude oil traveling through some of the most dangerous waters the accident would have never happened. In my opinion, Exxon should pay more than $2.5 billion and it can easily afford to do so. Exxon should have paid the $5 billion in 1994. Adjusted for inflation, $5 billion today is over $7 billion.

On the Net: Fishers argue that lawyer’s fees in the Exxon case were not excessive and worth it – scroll down and see comments
On the Net: Environmental Punitive Damages Awards and Due Process: Lessons Learned from the Exxon Valdez Oil Spill
On the Net: A letter to the California Court of Appeal regarding damages
On the Net: Exxon Valdez oil spill lingers in Alaska

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Photo source for attribution here. The author or licensor of this image does not endorse me or my work and their image is protected under an attribution license.