High court let Exxon off with a rap on the knuckles

Tom Blackburn

is a former member of the Palm Beach Post Editorial Board

Let us pause to savor the damage done to talk-show mythology by the Supreme Court's recent Exxon decision. It was a twofer, undercutting both "runaway jury awards" and "lawmaking from the bench."

The oil tanker Exxon Valdez ran aground on an Alaskan reef in 1989. The captain drank, witnesses said, the equivalent of five double vodkas and left the bridge in unauthorized hands during tricky maneuvers. Exxon knew its captain had a drinking problem, but he hadn't sunk any ships before.

The resulting oil spill fouled 1,300 miles of coastline and wiped out the economy of Aleut and Tlingit villages. Exxon - which merged with Mobil in 1999 to form ExxonMobil - paid $2.1 billion to clean up some of its mess plus $900 million in civil penalties to the federal and state governments and faced damage suits, some of which it settled.

What was still unsettled went into a class-action lawsuit. A jury awarded plaintiffs $507.5 million, or about $15,000 apiece for their ruined boats and lost fishing seasons. Then the jury said that, to encourage the oil company to be careful whom it puts in charge of ships, it must also pay plaintiffs $5 billion in punitive damages. An appeals court cut the amount in half. Exxon said it shouldn't be punished and appealed to the Supreme Court.

After almost 20 years, the Supreme Court ruled that $507.5 million in punitive damages - an amount equal to the compensation for losses - is enough. The jury was the last assessor to hear all the evidence, but when the Supremes (who didn't hear the evidence) were through, the award had gotten far from the jury and shrank by nine-tenths.

It took Exxon nearly 20 years to get this deal. But the corporate giant has time and lawyers. Justice David Souter, who wrote the majority opinion for the 5-3 court, referred to a "flood" of motions. Wonder whose lawyers poured on all those motions.

People who complain about "runaway jury awards" usually mean that some corporation had to pay a lot. But the Exxon case is what usually happens when irate juries go high. Justice Souter discusses the issue in his decision. He concludes that the complaints about nutty juries are mostly hot air. In fact, most observers think that if Justice Sam Alito (who recused himself because he owns ExxonMobil stock) had voted, the court would have had five votes to agree with Exxon that it should pay

nothing

.

With one conservative sidelined, the only way Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas and Anthony Kennedy could help poor, suffering Exxon was to let Justice Souter write the opinion. Without his vote, it would have been a 4-4 tie, and the appeals court's $2.5 billion penalty would have stood.

It must have hurt, and Justice Souter rubbed it in by admitting that they were making law from the bench. "Some will murmur," he wrote, that the 1-to-1 ratio of compensatory to punitive damages the majority settled on "smacks too much of policy and too little of principle." But, he said, courts always have accepted responsibility for punitive damages. He then went on to mention other areas of judge-made law.

Justices Scalia and Thomas aver that they never do such a thing. We have President Bush's word that they don't. And Sen. John McCain's. But they signed on to a decision that calls itself a judge-made law. Priceless.

Justice Souter called Exxon's failures with its ship "worse than negligent but less than malicious." When the jury heard the case, $5 billion was a year's worth of Exxon profit. Nearly 20 years later, it is about half of one quarter's profit for Exxon. When the Supreme Court got through, Exxon will pay

four days'

worth of profit if it can't think of any more delays.

Punitive damages are supposed to deter a repeat of the action that drew the penalty. What does it take to get the attention of a megalith like Exxon? A fly-swatter is a mere distraction to a rhinoceros, life and death to a fly. Exxon won a distraction from the Supreme Court.