Legal Disputes Over 1989 Exxon-Valdez Oil Spill Wind Down

June 30, 2009

Exxon Mobil Corp. within two days will pay $470 million in court-ordered interest on the punitive award for the 1989 Valdez oil spill, nearly ending all legal wrangling over the disastrous tanker grounding, an attorney for the spill plaintiffs said Monday.

Exxon has agreed to wire the full interest charge to the plaintiffs by Wednesday, said Dave Oesting, an Anchorage attorney who guided the lawsuit filed by about 32,000 fishermen, Alaskan property owners and others who sought redress for the worst U.S. tanker spill.

The company has decided to stop challenging the much-shrunken punitive award, with the exception of $70 million in disputed legal costs, Oesting said. Other than that, “It is the end of the road as between plaintiffs and Exxon,” he said.

“Exxon is doing the right thing by stepping forward to compensate those Alaskans and others who are still feeling the effects of the oil spill 20 years later,” said Senator Mark Begich, a Democrat.

“Lives were permanently disrupted, businesses bankrupted, fisheries affected for generations, thousands of birds and wildlife killed,” Begich said. “Paying the court-ordered compensation and interest is long overdue so I know Alaskans will appreciate Exxon’s decision.”

The 9th Circuit Court of Appeals on June 15 ordered Exxon to pay $507.5 million in punitive damages, plus interest charged over the past 13 years. That appeals court decision followed a ruling last year by the U.S. Supreme Court that dramatically reduced the punitive fine Exxon would have paid for the 11 million-gallon spill.

The 9th Circuit also ordered Exxon to pay 5.9 percent interest on the punitive award as accrued back to Sept. 24, 1996, the date judgment was entered in the original class-action case.

Two years earlier, a U.S. District Court jury ordered Exxon to pay a punitive fine of $5 billion, about equivalent to the corporation’s annual profit at the time. The verdict was reached at the end of a summer-long civil trial in Anchorage over damages sustained by fishermen and other plaintiffs in the class-action case.

Exxon appealed the verdict and, through successive rulings, had it whittled down to $2.5 billion before the Supreme Court issued its decision a year ago. Exxon had argued that if any punitive fine was justified, it should be no more than $25 million.

Now that Exxon has ceased almost all of its challenges to the punitive award, most plaintiff payments would likely be distributed by August, Oesting said.

“Obviously, the actual outcome was a disappointment for us, with the huge reduction in recoveries that we thought we had secured,” the Alaskans’ lead lawyer said. “I can’t say that they’ll be overwhelmed or overjoyed.”

Oesting said he was not surprised that Exxon declined to continue challenging the interest charge. “It struck me, and I’m biased, of course, that they didn’t have any possibility of prevailing on that,” he said.

Exxon has already started paying the $507.5 million final punitive award, though it is subtracting a portion under a previous side deal with seven seafood processors, Oesting said.

Exxon has petitioned the 9th Circuit to reconsider its ruling that the corporation is not entitled to a reimbursement of $70 million in legal costs, Oesting said.

A spokesman for Exxon was not immediately available for comment late Monday.

In addition to the private civil case, Exxon in 1991 settled a combined state and federal government criminal and civil complaint for $1.025 billion. The corporation paid that settlement over a period of 10 years.

Under a special reopener provision in the settlement, Exxon could be liable for another $92 million in compensation to the state and federal governments for unanticipated ecological damages from the spill.

(Reporting by Yereth Rosen; Editing by Gary Hill)

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