Exxon Shipping Co. v. Baker
Encyclopedia
Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008), was a case decided by the Supreme Court of the United States
. The Court ruled in a 5-3 decision that the punitive damages
awarded to the victims of the Exxon Valdez oil spill
should be reduced from US$
2.5 billion to US$500 million.
The case was appeal
ed from the Ninth Circuit Court of Appeals. The Ninth Circuit had also ruled that Exxon could be held liable for the reckless conduct of the ship's captain, Joseph J. Hazelwood, who had left the bridge during the disaster and had been drinking vodka
that evening. The Supreme Court was split 4-4 on the question of whether Exxon was liable for Hazelwood's action. The result of the split is that the Ninth Circuit's ruling on Exxon's respondeat superior
liability for Hazelwood's conduct remains, because Hazelwood acted in a managerial capacity under the Restatement (Second) of Torts Section 909(c) approach to punitive damages.
After considering the punitive damage policies of foreign nations, the Court reasoned that although punitive damages were warranted, they may not exceed what Exxon already paid to compensate victims for economic losses, which was about US$500 million. Souter argued that a one-to-one ratio between punitive and compensatory damages was "a fair upper limit" in maritime cases that involved recklessness
, compared to the lower liability of negligence
or the higher liability of intentional conduct. Souter's reasoning, "The real problem, it seems, is the stark unpredictability of punitive awards," frustrates the goal of punitive damages—deterring reprehensible conduct—because predictable damages create an incentive to continue dangerous misconduct if the personal injury liability is less than the potential profit (e.g. Ford Pinto). Souter suggests giving a "bad man" the chance to look ahead and calculate the consequences of doing or not doing a bad act will deter harmful actions. Souter suggests the upper limits on punitive damages should be as predictable as the legislative range of criminal sentences, yet no minimum for punitive damages were discussed.
Justice David Souter
wrote for the majority, joined
in full by Chief Justice
John Roberts
and Justice
s Antonin Scalia
, Anthony Kennedy
, and Clarence Thomas
. Justice Samuel Alito
took no part in the decision because he owns Exxon
stock.
Justice Stevens wrote a separate opinion concurring in part and dissenting in part. Stevens' dissent advocates judicial restraint because Congress has chosen to regulate maritime tort law. Stevens states that the trial court award of $2.5 billion in punitive damages was not an abuse of discretion and should have been affirmed.
Of this reasoning, Boston University
law professor Keith Hylton said, "The court's elaborate and lengthy argument for the one-to-one ratio is troubling for several reasons. First, the whole discussion was largely unnecessary if the court really wanted to limit its decision to maritime cases. The court's majority appears to be trying to make the case for imposing the one-to-one ratio as a default rule in ordinary civil cases."
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
. The Court ruled in a 5-3 decision that the punitive damages
Punitive damages
Punitive damages or exemplary damages are damages intended to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit...
awarded to the victims of the Exxon Valdez oil spill
Exxon Valdez oil spill
The Exxon Valdez oil spill occurred in Prince William Sound, Alaska, on March 24, 1989, when the Exxon Valdez, an oil tanker bound for Long Beach, California, struck Prince William Sound's Bligh Reef and spilled of crude oil. It is considered to be one of the most devastating human-caused...
should be reduced from US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
2.5 billion to US$500 million.
The case was appeal
Appeal
An appeal is a petition for review of a case that has been decided by a court of law. The petition is made to a higher court for the purpose of overturning the lower court's decision....
ed from the Ninth Circuit Court of Appeals. The Ninth Circuit had also ruled that Exxon could be held liable for the reckless conduct of the ship's captain, Joseph J. Hazelwood, who had left the bridge during the disaster and had been drinking vodka
Vodka
Vodka , is a distilled beverage. It is composed primarily of water and ethanol with traces of impurities and flavorings. Vodka is made by the distillation of fermented substances such as grains, potatoes, or sometimes fruits....
that evening. The Supreme Court was split 4-4 on the question of whether Exxon was liable for Hazelwood's action. The result of the split is that the Ninth Circuit's ruling on Exxon's respondeat superior
Respondeat superior
Respondeat superior is a legal doctrine which states that, in many circumstances, an employer is responsible for the actions of employees performed within the course of their employment...
liability for Hazelwood's conduct remains, because Hazelwood acted in a managerial capacity under the Restatement (Second) of Torts Section 909(c) approach to punitive damages.
After considering the punitive damage policies of foreign nations, the Court reasoned that although punitive damages were warranted, they may not exceed what Exxon already paid to compensate victims for economic losses, which was about US$500 million. Souter argued that a one-to-one ratio between punitive and compensatory damages was "a fair upper limit" in maritime cases that involved recklessness
Recklessness
Recklessness may be:* Recklessness , a legal term describing a person's state of mind when allegedly committing a criminal offence* Recklessness , a state of mind in which a person acts without caring what the consequences may be...
, compared to the lower liability of negligence
Negligence
Negligence is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances. The area of tort law known as negligence involves harm caused by carelessness, not intentional harm.According to Jay M...
or the higher liability of intentional conduct. Souter's reasoning, "The real problem, it seems, is the stark unpredictability of punitive awards," frustrates the goal of punitive damages—deterring reprehensible conduct—because predictable damages create an incentive to continue dangerous misconduct if the personal injury liability is less than the potential profit (e.g. Ford Pinto). Souter suggests giving a "bad man" the chance to look ahead and calculate the consequences of doing or not doing a bad act will deter harmful actions. Souter suggests the upper limits on punitive damages should be as predictable as the legislative range of criminal sentences, yet no minimum for punitive damages were discussed.
Justice David Souter
David Souter
David Hackett Souter is a former Associate Justice of the Supreme Court of the United States. He served from 1990 until his retirement on June 29, 2009. Appointed by President George H. W. Bush to fill the seat vacated by William J...
wrote for the majority, joined
Concurring opinion
In law, a concurring opinion is a written opinion by one or more judges of a court which agrees with the decision made by the majority of the court, but states different reasons as the basis for his or her decision...
in full by Chief Justice
Chief Justice of the United States
The Chief Justice of the United States is the head of the United States federal court system and the chief judge of the Supreme Court of the United States. The Chief Justice is one of nine Supreme Court justices; the other eight are the Associate Justices of the Supreme Court of the United States...
John Roberts
John Roberts
John Glover Roberts, Jr. is the 17th and current Chief Justice of the United States. He has served since 2005, having been nominated by President George W. Bush after the death of Chief Justice William Rehnquist...
and Justice
Associate Justice
Associate Justice or Associate Judge is the title for a member of a judicial panel who is not the Chief Justice in some jurisdictions. The title "Associate Justice" is used for members of the United States Supreme Court and some state supreme courts, and for some other courts in Commonwealth...
s Antonin Scalia
Antonin Scalia
Antonin Gregory Scalia is an American jurist who serves as an Associate Justice of the Supreme Court of the United States. As the longest-serving justice on the Court, Scalia is the Senior Associate Justice...
, Anthony Kennedy
Anthony Kennedy
Anthony McLeod Kennedy is an Associate Justice of the United States Supreme Court, having been appointed by President Ronald Reagan in 1988. Since the retirement of Sandra Day O'Connor, Kennedy has often been the swing vote on many of the Court's politically charged 5–4 decisions...
, and Clarence Thomas
Clarence Thomas
Clarence Thomas is an Associate Justice of the Supreme Court of the United States. Succeeding Thurgood Marshall, Thomas is the second African American to serve on the Court....
. Justice Samuel Alito
Samuel Alito
Samuel Anthony Alito, Jr. is an Associate Justice of the U.S. Supreme Court. He was nominated by President George W. Bush and has served on the court since January 31, 2006....
took no part in the decision because he owns Exxon
Exxon
Exxon is a chain of gas stations as well as a brand of motor fuel and related products by ExxonMobil. From 1972 to 1999, Exxon was the corporate name of the company previously known as Standard Oil Company of New Jersey or Jersey Standard....
stock.
Justice Stevens wrote a separate opinion concurring in part and dissenting in part. Stevens' dissent advocates judicial restraint because Congress has chosen to regulate maritime tort law. Stevens states that the trial court award of $2.5 billion in punitive damages was not an abuse of discretion and should have been affirmed.
Of this reasoning, Boston University
Boston University
Boston University is a private research university located in Boston, Massachusetts. With more than 4,000 faculty members and more than 31,000 students, Boston University is one of the largest private universities in the United States and one of Boston's largest employers...
law professor Keith Hylton said, "The court's elaborate and lengthy argument for the one-to-one ratio is troubling for several reasons. First, the whole discussion was largely unnecessary if the court really wanted to limit its decision to maritime cases. The court's majority appears to be trying to make the case for imposing the one-to-one ratio as a default rule in ordinary civil cases."