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Tuesday, October 21, 2008

Exxon-Valdez Award Still Being Litigated

Just when you thought that the victims of Alaska’s disastrous 1989 Valdez oil spill might finally see some of their settlement money, another case has been filed in federal court that could delay disbursement of the funds even further. While we noted the harm that the Supreme Court’s June decision had done to victims of corporate negligence immediately after the decision was released, we never could have foreseen the latest consequence of that decision.

In its decision, the Court opined that punitive damages, in maritime cases, must be proportional (1:1) with compensatory damages. While we criticized this interpretation of maritime law, claiming that it undermined the purpose of punitive damage awards, it turns out there is yet another potential consequence of this arbitrarily set 1:1 ratio. According to the Associated Press, Sea Hawk Seafoods Inc. has challenged its award allotment, claiming that the proportional method outlined by the Court requires that it receive a larger share of the award money.

The justices never examined the actual allotment process, but rather the process used to determine punitive damages, and for months, litigants involved in the case assumed that a process set by District Judge H. Russell Holland in 1996 would determine the allocation of funds. Unfortunately, lawyers for Sea Hawk Seafoods interpreted the proportional policy laid out by the Court to also affect the distribution.

If successful, Sea Hawk’s challenge could potentially cut the shares of the other litigants even further. Their shares have already been cut almost 90% by two previous court decisions. In a strange turn of events however, lawyers for ExxonMobil are opposing Sea Hawk’s claim and siding with individual commercial fisherman, arguing “they just want a whole lot more money that they're not really entitled to.”

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