Litigation Update: Ninth Circuit Awards Valdez Plaintiffs $500 million in Interest on Punitive Damages

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SandBar 8:3, October, 2009 Recommended citation: Bowling, Terra , Litigation Update: Ninth Circuit Awards Valdez Plaintiffs $500 Million in Interest on Punitive Damages , 8:3 SandBar 22 (2009). Litigation Update: Ninth Circuit Awards Valdez Plaintiffs $500 million in Interest on Punitive Damages Exxon Valdez v. Exxon Mobil Corp., 568 F.3d 1077 (9th Cir. Alaska 2009). *Terra Bowling, J.D.* In 1989, the Exxon Valdez grounded in Prince William Sound, spilling over 11 million gallons of oil along the Alaska coastline. The spill resulted in the deaths of hundreds of thousands of birds, marine mammals, and marine life. Researchers estimate that as many of 26,000 gallons of oil remain embedded in the shoreline and in nearby rivers and streams. In 1993, commercial fishermen, small businesses, and other groups filed suit against Exxon. The U.S. District Court for the District of Alaska originally entered a punitive damage award of $5 billion. The Ninth Circuit Court of Appeals remanded the case twice on the issue of punitive damages. The District Court’s award was ultimately reduced to $2.5 billion. In 2008, the U.S. Supreme Court ruled that the company was required to pay punitive damages, but reduced the $2.5 billion punitive damage award against Exxon to about $500 million. The Supreme Court remanded the case to the U.S. Court of Appeals for the Ninth Circuit to decide issues related to interest and appellate costs. In June, the Ninth Circuit ordered Exxon to pay about $500 million in interest to the plaintiffs. The court found that the assessment of post-judgment interest against Exxon Mobil runs from the date of the original 1996 punitive damages judgment. Exxon had argued that the interest should have run only from the 2008 ruling. In making its decision, the appellate court noted that “interest ordinarily should be computed from the date of the original judgment’s initial entry when the evidentiary and legal bases for an award were sound.” In this instance, the court found that the plaintiffs’ entitlement to punitive damages was “meaningfully ascertained” after the 1996 ruling. The court also found that each party in the litigation should bear its own costs. Exxon had argued that as the “winner” of the litigation, the plaintiffs should bear all or at least 90% of the company’s appellate costs. The court noted that its usual practice in instances where punitive damages are reduced is to order each party to bear its own costs. In July, the Ninth Circuit heard a subsequent appeal from one of the plaintiffs, Sea Hawk Seafoods, regarding the allocation of punitive damages among the plaintiffs. Shortly after the Exxon Valdez litigation began, several of the plaintiffs, including Sea Hawk, signed agreements providing for allocation of damages. In its 2008 decision, the U.S. Supreme Court did not discuss allocation of punitive damages. Sea Hawk filed a motion to void the agreement, claiming that the Supreme Court’s decision controlled allocation. The Ninth Circuit affirmed the district court’s denial of the motion. The appellate court ruled that the allocation agreements remain “fair, reasonable, and adequate” within the meaning of Federal Rule of Civil Procedure 23(e).
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SandBar 8:3, October, 2009
Recommended citation: Bowling, Terra , Litigation Update: Ninth Circuit Awards Valdez Plaintiffs $500 Million in Interest on Punitive Damages , 8:3 SandBar 22 (2009).

Exxon Valdez v. Exxon Mobil Corp., 568 F.3d 1077 (9th Cir. Alaska 2009).

Terra Bowling, J.D.

In 1989, the Exxon Valdez grounded in Prince William Sound, spilling over 11 million gallons of oil along the Alaska coastline. The spill resulted in the deaths of hundreds of thousands of birds, marine mammals, and marine life. Researchers estimate that as many of 26,000 gallons of oil remain embedded in the shoreline and in nearby rivers and streams.
      In 1993, commercial fishermen, small businesses, and other groups filed suit against Exxon. The U.S. District Court for the District of Alaska originally entered a punitive damage award of $5 billion. The Ninth Circuit Court of Appeals remanded the case twice on the issue of punitive damages. The District Court’s award was ultimately reduced to $2.5 billion.
      In 2008, the U.S. Supreme Court ruled that the company was required to pay punitive damages, but reduced the $2.5 billion punitive damage award against Exxon to about $500 million. The Supreme Court remanded the case to the U.S. Court of Appeals for the Ninth Circuit to decide issues related to interest and appellate costs.
      In June, the Ninth Circuit ordered Exxon to pay about $500 million in interest to the plaintiffs. The court found that the assessment of post-judgment interest against Exxon Mobil runs from the date of the original 1996 punitive damages judgment. Exxon had argued that the interest should have run only from the 2008 ruling. In making its decision, the appellate court noted that “interest ordinarily should be computed from the date of the original judgment’s initial entry when the evidentiary and legal bases for an award were sound.” In this instance, the court found that the plaintiffs’ entitlement to punitive damages was “meaningfully ascertained” after the 1996 ruling.
      The court also found that each party in the litigation should bear its own costs. Exxon had argued that as the “winner” of the litigation, the plaintiffs should bear all or at least 90% of the company’s appellate costs. The court noted that its usual practice in instances where punitive damages are reduced is to order each party to bear its own costs.
      In July, the Ninth Circuit heard a subsequent appeal from one of the plaintiffs, Sea Hawk Seafoods, regarding the allocation of punitive damages among the plaintiffs. Shortly after the Exxon Valdez litigation began, several of the plaintiffs, including Sea Hawk, signed agreements providing for allocation of damages. In its 2008 decision, the U.S. Supreme Court did not discuss allocation of punitive damages. Sea Hawk filed a motion to void the agreement, claiming that the Supreme Court’s decision controlled allocation. The Ninth Circuit affirmed the district court’s denial of the motion. The appellate court ruled that the allocation agreements remain “fair, reasonable, and adequate” within the meaning of Federal Rule of Civil Procedure 23(e).