WASHINGTON — The Supreme Court appeared sympathetic Wednesday to Exxon Mobil Corp.'s efforts to reduce a $2.5 billion punitive-damages award for its role in one of the nation's most catastrophic oil spills.
But the oil giant met with resistance when it came to overturning the award outright. While justices seemed to grapple with the size of the damages awarded, they indicated that they thought Exxon had failed to make an argument that it wasn't subject to punitive damages under maritime law.
If the court moves to reduce the award, it could mean a smaller payout for the fisherman and other plaintiffs in the case, who've been waiting since 1994 to see the money that a jury in Anchorage, Alaska, awarded. That would be an injustice, said Jeffery Fisher, the Stanford University professor who argued the case for the plaintiffs.
"What you have today are 32,000 plaintiffs standing before this court, each of whom have received only $15,000 for having their lives and livelihood destroyed and haven't received a dime of emotional distress damages," Fisher told the court.
After the hearing he added: "We think it's not too much to ask that some recompense and punishment be paid for the human toll of the spill and not simply the environmental impact."
From the start of the 90-minute hearing, many of the justices seemed critical of Exxon's central argument: That 200 years of maritime law has little precedent for levying punitive damages against a company for the actions of its agents at sea.
Within minutes, Justice Ruth Bader Ginsburg poked holes in the argument that an 1818 case was the final word on punitive damages in maritime law.
"It's rather, I think, an exaggeration to call it a long line of settled decisions in maritime law," she said.
Exxon based its appeal on a case that holds that ship owners aren't liable for punitive damages for the actions of their agents at sea unless they're complicit in their behavior. Justice Antonin Scalia jokingly referred to the case — known as the Amiable Nancy, for the ship involved — as the "Amiable whatever-it-is."
Clearly, money was on the minds of many of the justices. When Fisher suggested that the justices took the case to settle fundamental maritime legal issues, Scalia was again the jokester.
"That, and $3.5 billion," he said to laughter.
Several justices suggested that there might be a more conservative framework for awarding punitive damages within maritime law. They might consider capping punitive damages at twice the compensatory damages, Justice David Souter said. In 1994, a jury awarded the plaintiffs $287 million in compensatory damages.
The criminal code, which allows punitive damages to be double the loss, also could be the model, Justice Anthony Kennedy said.
Exxon has been appealing the verdict since 1994, when the Anchorage jury returned a $5 billion punitive-damages award against the company. In 2006, the 9th U.S. Circuit Court of Appeals cut the award to $2.5 billion. Exxon, which already has paid $3.5 billion in fines, compensation and settlements, appealed that decision to the Supreme Court.
The company's lawyer, Walter Dellinger, argued that Exxon has been punished enough by state and federal environmental regulators and that the money the company already has paid is deterrent enough.
"This was not an intentional act, it was not malicious, nor was there any possibility of concealment," Dellinger said. "The amount was enough to deter anybody or anything."
The justices spent much of their time on the central issue of whether maritime law allows Exxon to be held responsible for the Valdez's captain, Joseph Hazelwood. They repeatedly asked whether Hazelwood was considered an important enough executive in the company that it should be punished for what he did at sea.
Ultimately, corporations act through individuals, Chief Justice John G. Roberts said as he grilled Dellinger about the company's role.
Later, however, Roberts seemed to lean toward Exxon's view that the company wasn't responsible for Hazelwood's actions. He asked what corporations could do to avoid punitive damages, and said it appeared that there was little a company could do if it had established policies but top executives flouted them.
"It can hire fit, competent people," Fisher said. Exxon knew for three years that Hazelwood was an alcoholic and failed to act appropriately, Fisher told the court, and the original trial was about the company's role in the spill.
Prosecutors alleged that Hazelwood was drunk when the ship ran aground on March 24, 1989, but he denied the charge and was acquitted in criminal court. However, Fisher reminded the justices that there were 33 proven examples in the court record of Exxon employees drinking with Hazelwood or learning that he drank.
The captain "may be managerial for some purposes and not others," Kennedy said. "I think that's the way it's going to have to come out. Maybe not. But certainly he was not entitled to set aside the policy of Exxon that you cannot navigate a vessel while intoxicated."
Eight of the nine justices heard the case. Justice Samuel Alito, who owns Exxon Mobil stock, recused himself.
A decision is expected before the court's term ends in June. Many court observers expect the case to result in a 4-4 tie, which would benefit the plaintiffs in the case and uphold the $2.5 billion verdict.