The plaintiffs who sued over the Exxon Valdez oil spill lost big at the U.S. Supreme Court last year but took some consolation from the 9th U.S. Circuit Court of Appeals on Monday. In addition to unanimously siding with the plaintiffs' argument for hundreds of millions of dollars in interest, a panel also ruled 2-1 that Exxon Mobil can't recoup tens of millions in costs for its largely successful appeal.
The majority concluded that Exxon and the plaintiffs -- fishermen and seafood companies -- will each have to cover their own costs for the epic series of appeals over the issue of the punitive damages assessed against Exxon for the infamous 1989 oil spill.
"In this case, neither side is the clear winner," wrote Judge Mary Schroeder.
A jury first decided punitive damages should be $5 billion. And though the Supreme Court reduced that amount by roughly 90 percent in 2008, Exxon was forced to pay $60.6 million in premiums in the meantime for a bond guaranteeing payment of the original $5 billion. Exxon's total costs, including those premiums, approached $70 million, according to the opinion.
Judge Andrew Kleinfeld disagreed in a partial dissent, saying Exxon deserved some reimbursement because it got the punitives reduced. He noted that the Supreme Court awarded Exxon its costs for that stage of the appeal.
"The Supreme Court concluded that Exxon prevailed to so great a degree as to deserve costs," Kleinfeld wrote in his dissent. "We abuse our discretion by pretending otherwise."
In its 2008 decision, the Supreme Court ruled that maritime law prevented punitive damages from exceeding the original $507.5 million in compensatory damages awarded to the plaintiffs. Following that decision, Exxon and the plaintiffs agreed on a $507.5 million punitive damages award.
Since Exxon won that 90 percent reduction, Kleinfeld wrote, the plaintiffs should now pay 90 percent of the $60.6 million in premiums Exxon incurred while appealing the punitive damage award.
"The $60.6 million was the price of Exxon's train ticket to victory," Kleinfeld wrote. "The rules, in place with little change for many centuries, say that a party that wins on appeal is entitled to have the loser reimburse the price of that train ticket."
An attorney for the plaintiffs, Davis Wright Tremaine partner Jeffrey Fisher, said he was "satisfied and grateful."
In addition to ordering Exxon to pay its own costs on appeal, the court ruled that interest on the $507.5 million in punitives should run from the day the original judgment was entered in 1996, back when the interest rate was 5.9 percent, rather than a later date following the Supreme Court's 2008 decision.
That means the plaintiffs are now entitled to around $500 million in interest, Fisher said.
"Our view all along was that the law was just dead clear on this," the Seattle-based attorney said. "We would've liked to ask for our own costs, but the law is just quite clear that we get interest and the parties bear their own costs in a split outcome like this."
Exxon attorney Jonathan Hacker, a Washington, D.C.-based partner at O'Melveny & Myers, wrote in an e-mail that he was not authorized to speak for Exxon. The corporation's media relations department in Dallas was not available on Monday afternoon.
Schroeder's opinion, joined by Judge Sidney Thomas, asserted that the 9th Circuit is allowed to award costs as it pleases when an original judgment is modified, and that it is the court's "usual practice" to order each side to pay their own bill "when each side wins something and loses something."
Schroeder said the court also wanted to avoid the "thicket" of Exxon's proposed percentage-based system of determining costs. Kleinfeld argued it wouldn't be difficult.
"This percentage approach is no more complicated than calculating a tip....those who find it challenging could always use a calculator," Kleinfeld wrote.
The ruling is Baker v. Exxon Mobile Corp, 08 C.D.O.S. 7348.