Exxon’s legal guardians
The Supreme Court justices concocted legal precedent on the fly in a decision that defended the profits of oil giant ExxonMobil.
BEFORE CLINCHING the Democratic Party presidential nomination, Barack Obama contrasted his vision for the future role of the U.S. Supreme Court to rival John McCain's, arguing that the current Court's consistent bias in favor of "the powerful against the powerless" has allowed corporate and government interests to ride roughshod over "what ordinary people are going through."
In that populist vein, Obama went on to describe as his models for Supreme Court appointments Justices Stephen Breyer, Ruth Bader Ginsburg and David Souter--who he claimed are "people on the bench who have enough empathy, enough feeling" for those trampled on by Corporate America.
Once securely anointed in June, Obama immediately lost interest in ordinary people and began panting for corporate support. Perhaps for this reason, he felt no need to criticize the Court for its June 25 ruling on behalf of ExxonMobil that reduced to a mere pittance the amount in punitive damages that the most profitable corporation in history owes to the nearly 33,000 Alaskan fishermen, cannery workers and Natives whose livelihoods were destroyed by the 1989 Exxon Valdez oil spill, the worst environmental disaster in corporate history.
Souter himself penned the decision, which pronounced, "The punitive damages award against Exxon was excessive as a matter of maritime common law." Souter did not mention that maritime common law was virtually nonexistent, but was being invented on the fly by the current Supreme Court.
ExxonMobil had based its maritime appeal solely on an obscure 1818 decision known as "the Amiable Nancy," in which the Court ruled that a privateer ship's owners were not liable for punitive damages stemming from a robbery by a sailor in its employ. During questioning, Ginsburg--who dissented in the current ruling--noted that it was "an exaggeration to call it a long line of settled decisions in maritime law" as Exxon claimed, apparently to no avail.
Justice Samuel Alito recused himself from the case because he owns ExxonMobil stocks worth between $100,000 and $250,000, according to 2006 financial statements. But the court remained stacked with Exxon sympathizers.
"So what can a corporation do to protect itself against punitive damages awards such as this?" Chief Justice John Roberts asked in exasperation during questioning. When the plaintiffs' lawyer, Jeffrey Fisher, noted that Exxon should not benefit from an argument its legal team had not made, Justice Antonin Scalia retorted, "They don't have to make every tiny little argument."
IT HAS been nineteen long years since the Exxon Valdez, under the authority of drunken captain Joseph Hazelwood (who reportedly downed five double vodkas before boarding the ship), gushed at least 11 million gallons of crude oil over 1,300 miles of unspoiled Alaskan coastline.
In a scenario worthy of the Titanic, Hazelwood abandoned his post shortly before the ship hurtled toward Bligh Reef on that fateful night in March 1989. Eleven hours after the accident, the captain's blood-alcohol content measured at .241.
But Hazelwood's alcohol problem was already well known within the extensive Exxon hierarchy. Lloyd Miller, a lawyer representing Native villages in the lawsuit, noted a pervasive alcoholic culture in Exxon's shipping arm. Indeed, witnesses testifying before the Supreme Court explained that Hazelwood was a well-known alcoholic who had dropped out of an alcoholism treatment follow-up program.
The Supreme Court decision acknowledged, "Although Exxon had a clear policy prohibiting employees from serving onboard within four hours of consuming alcohol...Exxon presented no evidence that it monitored Hazelwood after his return to duty or considered giving him a shore-side assignment."
Yet the Court's majority concluded that Exxon had not acted without "intentional or malicious conduct"--to justify rejecting Exxon's responsibility to pay significant punitive damages to the tens of thousands of human victims whose lives were upended by the disaster.
In 1994, a jury awarded $287 million to the Alaskan plaintiffs to compensate for immediate economic losses, averaging roughly $15,000 per claimant. But the jury added an additional $5 billion in punitive damages for the company's "reckless" behavior.
ExxonMobil paid the compensatory damages, but CEO Lee Raymond said privately at the time that he would fight tooth and nail to prevent paying a dime in punitive damages. Since then, the corporation has spent hundreds of millions of dollars fighting this court case, delaying the outcome for 14 years, with tremendous success.
In 2006, an appeals court halved the punitive claim to $2.5 billion. And last week, the Supreme Court reduced that amount by 80 percent, to roughly $500 million--an average of $15,000 per plaintiff. When Raymond retired from Exxon years ago, he received a $400 million retirement package all to himself. Now the Exxon Valdez's nearly 33,000 victims are left to scramble for a tiny share of a settlement amounting to roughly the same real value--at $15,000 per claimant--or 10 percent of the original 1994 award.
Between 1994 and 2008, Exxon's profits have soared, further reducing the punitive impact of the current ruling. While the 1994 jury required Exxon to pay roughly one year of its profits to the victims of the 1989 oil spill, the Court's new ruling amounts to just four days' profits for the oil giant, which raked in a record $40.6 billion in profits last year.
The immediate wildlife death toll of the Exxon Valdez oil spill included at least 250,000 birds, 2,800 sea otters, 300 seals, 250 bald eagles and billions of salmon and herring larvae. Nearly two decades later, many species, including herring--a source of food for many other species of wildlife--have yet to return.
As salmon fisherman Buck Meloy commented earlier this year in the Cordova Times, "Even now, 19 years later, one still finds gooey, sticky, stinking, toxic crude oil only a few inches below the surface of some gravel beaches on the heavily oiled western side of the sound."
FROM THE beginning, the company's team of spin doctors spared no expense in preparing for the inevitable legal battle to follow, focusing on its contrived public image rather than effective cleanup.
As marine ecologist Thomas Okey, who arrived shortly after the spill, recounted, "I heard that political and legal pressures had influenced the science and muzzled some of the reporting of information during the months immediately following the spill. In retrospect, I realize that, even then, the involved parties had already started building their legal cases. The rhetorical showdowns of 'experts' would soon ensue, a parade deemed not amusing to native Aleut communities, which had gathered their food from Prince William Sound for millennia."
Exxon inexplicably waited three days after the spill before launching a recovery effort, by which time, the oil had spread too far for containment. As Alaskan Native Kellie Kvasnikoff described, "Apparently, Exxon was more interested in cleaning up its image than in cleaning the oil. On tape, we have Don Cornett, Exxon's chief public relations officer, yelling frantically to Exxon's cleaners: 'I want something people can see.'"
In the end, the company chose a dramatic public relations success that worsened the ecological nightmare: hosing scorching hot water at high pressure on the shoreline. As Kvasnikoff recalled, many scientists judged that this strategy "did as much harm as good. The hallmark of Exxon's post-spill cleanup -- 140-degree water applied at high pressure -- was, according to these scientists, poison to the beach and area's many animals."
The company's public relations campaign since then has relied primarily on a horde of "earth scientists" on Exxon's payroll who are regularly rolled out to discredit environmentalists' claims of ecological devastation in Prince William Sound.
Exxon admirer L.D. Sociack commented, "[I]n Exxon's case, public approval has been very much dependent upon what the corporation's earth sciences people have been able to say and do to convince the public that the environmental damage to the Alaskan coastline is nowhere near as damaging as other earth scientists have claimed...in order to defend themselves against charges that they are liable for billions of dollars in environmental damage to the ecosystem of Prince William Sound."
By 1995, Sociak reported, "Exxon followed up on these efforts with the release of an Exxon-funded study by Christopher Wooley which concluded that Prince William Sound was better off after the spill than it had been before."
The aftermath continues to devastate the region's ecosystem and the tens of thousands of human lives intertwined with it.
As Kvasnikoff described, "The Valdez spill severely hurt the towns' economies and centuries-old reliance on providing themselves food and clothing from the sea. The result: Increases in clinical depression. Domestic violence. Attempted suicide. Broken families. Researchers have shown that the more exposed an Alaskan area to Valdez oil, the more social and psychological problems have resulted."
While ordinary Alaskans mourn, Corporate America is celebrating. The American Petroleum Institute and the U.S. Chamber of Commerce submitted friends of the court briefings on behalf of Exxon and are relishing the Supreme Court's gift to businesses shielding themselves from their victims' lawsuits. As Tom Donohue, president of the U.S. Chamber of Commerce, responded to the ruling, "This is good news for companies concerned about reining in excessive punitive damages."
It is very possible, however, that these corporate brethren have won this battle while losing the war of public opinion. As ordinary Americans reel from spiraling gasoline and food prices alongside lower wages, perhaps they are less inclined to empathize with the very corporations that are bilking them at the pump.
More likely, they realize that, in a parallel scenario to Exxon Valdez, the lawyer for a drunk driver who killed someone could not reasonably argue in criminal court that the only compensation they owe is for funeral expenses for the deceased. Punitive damages would be in order.
Corporate America is celebrating the Supreme Court decision in the Exxon Valdez case that shields the world's most profitable company from punitive damages.