As surely everyone knows, the United States Supreme Court has recently brought the Due Process Clause to bear on awards of punitive damages made pursuant to state law. The law of the land now includes a judicially manageable standard that protects a defendant otherwise liable for punitive damages from awards that are so excessive as to be unfair, that is, arbitrary and capricious. Punitive damages are usually assessed by juries, subject to review by trial and appellate courts. This initiative has sparked considerable controversy, and the exact parameters of the constitutional standard are still far from certain.
Into this situation came the case of Exxon Shipping Co. v. Baker. The case was one within admiralty jurisdiction, although by a tortuous path it ended up in federal court based on federal questions. Applying federal maritime law, a jury assessed damages, both compensatory and punitive. Trial by jury is not unheard of in cases in which maritime law governs, but it is not the norm. Having already sketched out a constitutional limit to the size of punitive damages, the Supreme Court was presented in this case with an opportunity for something humbler, that is, an opportunity to either find in federal maritime law the same limit or else to set a different one within the constitutional outer boundary. The Court chose to take a step, and no more, along the latter course. The length of that step and where the next might carry federal maritime law remain to be seen. The better view of what has been decided in this case is a modest one.