## Facts

- An oil tanker grounded on Bligh Reef in Prince William Sound, Alaska, releasing roughly 11 million gallons of crude oil and causing widespread economic harm tied to commercial fishing.
- Numerous civil actions were consolidated in federal court, including claims by commercial fishermen, Alaska Natives, landowners, and others asserting economic injury.
- The district court certified a mandatory class for punitive damages and tried common issues to a jury.
- The jury awarded punitive damages of $5 billion against the corporate defendants.
- The jury was instructed not to award damages for environmental harm; governmental settlements and penalties had addressed environmental injury.
- Evidence permitted findings that the shipowner knew of the captain’s alcohol-abuse history and nonetheless entrusted him with command and failed to enforce safety and substance-abuse policies.

## Issues

1. Whether federal maritime law permits punitive damages against a vessel owner and a vessel’s captain for conduct leading to a major oil spill causing economic harm.
2. Whether punitive damages may be imposed on the corporate owner based on its own culpable conduct and/or on the captain’s conduct under vicarious-liability principles.
3. Whether a $5 billion punitive award violates due process as constitutionally excessive under the Supreme Court’s punitive-damages guideposts.
4. How maritime law and preemption doctrines affect recovery by claimants alleging purely economic loss.

## Decision

- The court affirmed that punitive damages were available under maritime law against both the corporate defendants and the captain on the record presented.
- The court rejected a categorical maritime bar on punitive damages against a shipowner where evidence supported the owner’s own reckless disregard contributing to the harm.
- The court held the $5 billion punitive damages award constitutionally excessive under due process standards.
- The court vacated the punitive damages amount and remanded for reduction to an amount consistent with due process.
- The court resolved related issues concerning class-wide treatment and economic-loss claims largely in a manner preserving substantial recovery, subject to the required reduction of punitive damages.

## Legal Principles

- Federal maritime law permits punitive damages for reckless or wanton conduct; historical limits on punitive liability protect only an “innocent” owner lacking participation, authorization, or culpable fault.
- A corporate shipowner may be liable for punitive damages where the owner’s own conduct (including knowing entrustment and inadequate enforcement of safety policies) supports a finding of reckless disregard for a high risk of harm.
- Due process constrains punitive damages; courts evaluate reprehensibility, the ratio between punitive and compensatory damages, and comparable sanctions, including prior penalties already imposed for related conduct.
- Prior criminal, civil, and regulatory sanctions may be considered when assessing whether an additional punitive award is proportionate and necessary for punishment and deterrence.
- In large maritime casualty litigation, economic-loss recovery and state-law remedies may be available to some claimants, subject to maritime-law limits and preemption constraints.

## Conclusion

The court sustained the availability of maritime punitive damages against both the captain and the corporate shipowner based on evidence of corporate fault, but held the $5 billion punitive award exceeded constitutional limits and required reduction on remand under due process guideposts, while generally maintaining the class framework and substantial economic-loss recovery subject to those limits.


In re Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001)