Recent Development by Megan Anne Healy
What began with five double vodka shots for Captain Joseph Hazelwood ended with millions of gallons of oil pouring into the waters of Prince William Sound. In 1989, Captain Hazelwood grounded the EXXON VALDEZ, a supertanker carrying fifty-three million gallons of crude oil, off the coast of Alaska. At the time of the accident, Exxon knew that their employee, Captain Hazelwood, had stopped all treatment of his alcohol addiction; yet Exxon did not remove him from his job as Captain. This case arose as a civil suit seeking to award compensatory and punitive damages to landowners, commercial fisherman, and Native Alaskans who were adversely affected by the oil spill. At trial, the United States District Court for the District of Alaska instructed the jury that the law states that “[a] corporation is responsible for the reckless acts of those employees who are employed in a managerial capacity while acting in the scope of their employment.” The jury found Exxon and Hazelwood reckless and awarded $5 billion in punitive damages against Exxon. On appeal, the United States Court of Appeals for the Ninth Circuit upheld the jury instruction but remitted the punitive damages award under due process review to $2.5 billion.
The noted case addresses three questions: (1) whether a shipowner can be held liable under maritime law for punitive damages based on the acts of its managerial agents, (2) whether the Clean Water Act (CWA) bars an award of common law punitive damages, and (3) whether, in maritime common law, the $2.5 billion award of punitive damages in this case was excessive. The Supreme Court of the United States, equally divided, could not make a definitive ruling as to whether a shipowner should be held liable for the tortious acts of an employee acting in a managerial capacity. The Supreme Court held that the CWA does not preempt the availability of maritime punitive damages but the award should be limited to a maximum ratio of 1:1, punitive-to-compensatory damages, in this case, $507.5 million. Exxon Shipping Co. v. Baker, 128 S. Ct. 2605, 2611, 2634 (2008).
About the Author
Megan Anne Healy. J.D. candidate 2010, Tulane University School of Law; B.A. 2007, Southwestern University in Georgetown, Texas.
Citation
83 Tul. L. Rev. 1521 (2009)