Federal Judiciary

Exxon Valdez: One last fight

By Akin Gump Supreme Court Practice Group

Exxon Mobil Corp. and its oil tanker subsidiary notified lawyers for fishermen and others harmed by the massive Alaska oil spill 20 years ago that on Wednesday it will pay them $470,268,908, but returned to a federal court to continue a fight over another $54.5 million.

The larger payment represents interest back to September 1996 on the punitive damages award that the company had already paid; the smaller figure represents 90 percent of what Exxon Mobil still owes to cover the $60.6 million it still owes in premiums on a “letter of credit” it obtained while it pursued appeals in the federal courts, up to and including the Supreme Court over the punitive damages award.  The Court ruled that the company could be assessed punitive damages for the incident involving the grounding of the supertanker Exxon Valdez, but said the punitive award could be no higher than the compensatory damages award of $507.5 million.

Two weeks ago, a three-judge panel of the Ninth Circuit Court ruled unanimously that Exxon Mobil must pay more than 12 years of interest on the punitive award — an issue the Supreme Court did not decide. But the panel divided, 2-1, in ruling that each side in the prolonged court battle must pay its own costs.

In a petition for en banc rehearing, filed Monday (available here), the company asked for reconsideration of the panel majority’s refusal to award Exxon any part of its court costs.

It made an argument based on simple arithmetic and on law. Its numbers argument said that the Supreme Court had reduced the punitive damages award from $5 billion to about $500 million — thus cutting it by 90 percent — so the fishermen and others who sued should have to pay 90 percent of Exxon’s credit premium costs of $60.6 million, or $54.5 million.

Its legal argument was that there is a “centuries-old principle that a successful litigating party should be compensated for the costs incurred to achieve its success.”  The company said it had to obtain a letter of credit to serve as financial security while it contested the punitive damages award in appeals, and that the premiums on that instrument “eventually exceeded $60.6 million.”  It asks that the full Circuit Court require it to pay only $6.1 million of that, as the amount spent to win a reduction of punitives, with the challengers required to pay the other $54.5 million.

Its filing made only one mention of the interest obligation, noting that it plans to pay that amount — minus enough to cover its court costs — on Wednesday.

Full post as published by SCOTUSBLOG on June 29, 2009 (boomark / email).