The Supreme Court Took 19 Years to Decide Exxon's Fine. A Fifth of the Plaintiffs Were Dead by Then.

At 12:04 a.m. on March 24, 1989, the supertanker Exxon Valdez struck Bligh Reef in Alaska's Prince William Sound, tearing open its single hull and spilling roughly 11 million gallons of crude oil into the water. Captain Joseph Hazelwood was below deck at the time; the wheel was in the hands of a third mate not certified to navigate that stretch of the Sound. Hazelwood's blood wasn't tested for alcohol until about ten hours after the grounding, by which point it measured 0.06 — still above the Coast Guard's 0.04 limit for masters, and, worked backward at a standard metabolism rate, consistent with a blood-alcohol level near 0.19 at the moment of impact.

A federal jury decided in 1994 that Exxon owed the roughly 32,000 fishermen, Alaska Native villagers, landowners and businesses harmed by the spill $5 billion in punitive damages, on top of compensatory damages the courts later fixed at $507.5 million. It took the U.S. Supreme Court until 2008 — nineteen years after the spill — to decide how much of that $5 billion Exxon actually had to pay. By then, roughly a fifth of the plaintiff class had died waiting.

Eleven Million Gallons in Prince William Sound

The spill oiled an estimated 1,300 miles of Alaskan coastline. The Exxon Valdez Oil Spill Trustee Council, the state-federal body created to manage the settlement funds, later put the wildlife toll at somewhere between 100,000 and 250,000 seabirds, about 2,800 sea otters, roughly 250 bald eagles, up to 22 orcas, and untold billions of salmon and herring eggs. The Sound's herring population, a mainstay of the local fishing economy the punitive-damages class was built to compensate, collapsed a few years after the spill and, per the Trustee Council's own long-term monitoring, never fully recovered.

Exxon spent roughly $2.1 billion on the cleanup itself between 1989 and 1992, and separately paid about $1.8 billion in a combined civil and criminal settlement with state and federal governments — money that went to restoration and government damages, not to the fishermen and villagers who would spend the next two decades in court over the punitive award.

A Jury, a Verdict, and Fourteen Years of Appeals

• 1994: An Anchorage federal jury awards $5 billion in punitive damages to the class of roughly 32,000 plaintiffs, on top of $507.5 million in compensatory damages.
• 2001–2006: The Ninth Circuit Court of Appeals twice finds the $5 billion award excessive and sends it back for reduction, eventually settling on $2.5 billion — half the original verdict, still the largest punitive award in U.S. history at the time.
• 2006: Exxon appeals the $2.5 billion figure to the U.S. Supreme Court, which agrees in 2007 to hear the case.
• February 27, 2008: The Supreme Court hears oral argument in Exxon Shipping Co. v. Baker, nineteen years after the spill.
• June 25, 2008: The Court rules 5–3 (Justice Samuel Alito recused, owning Exxon stock) that punitive damages in maritime cases generally shouldn't exceed compensatory damages by more than a 1:1 ratio, and applies that cap to reduce the award to exactly $507.5 million — the same figure as the compensatory damages already on the books.

The reduction brought the punitive award to roughly a tenth of the original 1994 jury verdict. Justice David Souter, writing for the majority, did not dispute that Exxon's conduct was reckless; the opinion turned entirely on what ratio of punitive-to-compensatory damages federal maritime law should tolerate, a question the jury that heard the actual evidence had not been asked.

A Fifth of the Plaintiffs Didn't Live to See It

In briefs filed with the Supreme Court, the plaintiffs' attorneys noted that approximately 20 percent of the roughly 32,000-member class had died in the years between the 1994 verdict and the case's final resolution — commercial fishermen and Alaska Native villagers whose estates, in most cases, would eventually collect a fraction of what a jury of their peers had originally decided Exxon owed.

Even after the June 2008 ruling set the punitive figure at $507.5 million, Exxon was not finished. The company argued it should only owe interest on that sum starting from the date of the Supreme Court's decision, rather than from the original 1996 judgment that first attached a dollar figure to the case. The Ninth Circuit disagreed in 2009, ordering Exxon to pay interest accrued since 1996 at 5.9 percent — pushing Exxon's total payout past $1 billion once roughly $488 million in accumulated interest was added to the $507.5 million principal. Checks did not begin reaching plaintiffs until late 2009, twenty years after the tanker ran aground.

The Year In Between

In 2007, the year before the Supreme Court capped Exxon's punitive liability at $507.5 million, ExxonMobil reported an annual profit of $40.61 billion — at the time the largest annual profit ever recorded by a U.S. corporation. The $507.5 million the Court ultimately allowed the Baker class to collect amounted to roughly 1.25 percent of that single year's profit, for harm done to an ecosystem and an economy the litigation had already spent nineteen years trying to price.

The Ship, and the Law It Inspired

Congress passed the Oil Pollution Act of 1990 within a year of the spill, requiring that new oil tankers operating in U.S. waters be built with double hulls — a design that might have kept the Valdez's cargo out of Prince William Sound even after it struck the reef. The law gave the tanker industry until 2015 to phase out existing single-hulled vessels, a 25-year runway for a fix prompted by a single-hulled ship that had already sunk 11 million gallons of oil into the water it was regulating.

The Exxon Valdez itself never sank. Banned permanently from Prince William Sound by an act of Congress, it was repaired, renamed the Exxon Mediterranean, then SeaRiver Mediterranean, then simply Mediterranean, and spent the next two decades hauling oil and ore between ports in Europe, the Middle East, and Asia — a working ship, under an unrelated flag, for longer than the legal case over the damage it caused took to resolve. It was finally sold for scrap and dismantled at a beach in Alang, India, in 2012.

Filed from public reporting:

• History.com — Exxon Valdez Oil Spill
• Wikipedia — Joseph Hazelwood
• Wikipedia — Exxon Shipping Co. v. Baker
• Cornell Law School (Legal Information Institute) — Exxon Shipping Co. v. Baker, Syllabus
• Exxon Valdez Oil Spill Trustee Council — Q and A
• SCOTUSblog — Exxon Valdez: $500 Million Interest Due
• Center for Public Integrity — Amid Record Profits, Exxon Tries to Shirk Interest Payments in Valdez Oil Spill Case
• Oil & Gas Journal — Supreme Court Overturns Exxon Valdez $2.5 Billion Punitive Damages Award
• NOAA Office of Response and Restoration — After the Big Spill, What Happened to the Ship Exxon Valdez?
• gCaptain — What Happened to the Ship Exxon Valdez After the Big Spill?
• Blank Rome LLP — The Legacy of the Oil Pollution Act of 1990
• Audubon — The Infamous Exxon Valdez Has Run Aground for Good