## Facts

- In 1989, the oil tanker Exxon Valdez grounded on Bligh Reef in Prince William Sound, Alaska, spilling about 11 million gallons of crude oil.
- Private plaintiffs (including fishermen and businesses) sought compensatory and punitive damages for economic and quasi-economic losses arising from the spill.
- The punitive-damages phase expressly excluded consideration of environmental harm; punishment for environmental damage had been addressed in separate proceedings.
- Plaintiffs’ economic losses were estimated to exceed $500 million across 32,677 claimants.
- Evidence showed Exxon knew Captain Joseph Hazelwood was an alcoholic and had consumed alcohol before the incident, yet Exxon returned him to command of the tanker.
- A jury awarded $5 billion in punitive damages.
- The district court previously remitted the award to $4 billion, entered judgment, and both sides appealed.
- After the Supreme Court decided State Farm Mutual Automobile Insurance Co. v. Campbell (2003), the Ninth Circuit vacated the $4 billion judgment and remanded for reconsideration in light of State Farm.

## Issues

1. Whether the $5 billion punitive damages verdict violated due process under BMW of North America, Inc. v. Gore and State Farm Mutual Automobile Insurance Co. v. Campbell.
2. If unconstitutional, what reduced punitive damages amount would satisfy the BMW/State Farm guideposts on these facts.

## Decision

- The court vacated its prior punitive-damages reduction order to reevaluate the award under BMW and State Farm.
- The court denied Exxon’s renewed request for further reduction or remittitur.
- The court held the $5 billion punitive damages verdict was within constitutional limits and reinstated the $5 billion award.

## Legal Principles

- Constitutional review of punitive damages applies the BMW v. Gore guideposts as clarified by State Farm: (1) reprehensibility, (2) ratio to compensatory damages, and (3) comparison to comparable civil or criminal penalties.
- State Farm was treated as sharpening application of the BMW guideposts, not adding a new independent due-process factor.
- Reprehensibility may be heightened by conscious disregard of safety risks and creation of a high likelihood of catastrophic harm affecting many victims.
- Single-digit punitive-to-compensatory ratios are a strong benchmark but not an absolute cap; the constitutionality of a particular ratio depends on the facts, including the severity of misconduct and scale of harm.
- A punitive award may be evaluated against other penalties, but prior sanctions aimed at different interests (public environmental harms versus private economic harms) do not necessarily make a private punitive award duplicative.
- Due process limits on punishing for nonparty or extraterritorial conduct are less implicated when the punitive award is tied to a discrete event, localized conduct, and identified plaintiffs’ harms.

## Conclusion

On remand to apply State Farm’s due-process guidance to punitive damages, the district court concluded that Exxon’s conduct was highly reprehensible and that a $5 billion punitive award—about ten times compensatory damages exceeding $500 million for private economic injuries—was not constitutionally excessive, so it reinstated the jury’s $5 billion verdict and denied further remittitur.


In re the Exxon Valdez, 296 F. Supp. 2d 1071 (D. Alaska 2004)