In March 1989 the Exxon Valdez supertanker grounded on Bligh Reef in Prince William Sound, Alaska, releasing millions of gallons of crude oil.
Exxon Shipping Company, the vessel's owner and now known as SeaRiver Maritime, Inc., together with its parent Exxon Mobil Corporation, confronted widespread liability from the spill. The company settled a class action brought by more than 32,000 commercial fishermen, Native Americans, landowners, and others for $2.5 billion in compensatory damages. Exxon also pleaded guilty to violations of the Clean Water Act, the Migratory Bird Treaty Act, and the Refuse Act, paying $150 million in criminal fines, and spent an additional $2.1 billion on cleanup.
Respondents, other persons whose businesses and livelihoods were disrupted by the spill, filed this civil action seeking punitive damages. The United States District Court for the District of Alaska divided the plaintiffs into three classes and conducted a three-phase trial. In the first phase the jury found Exxon Shipping Company and Captain Joseph Hazelwood, the ship's master, reckless and therefore potentially liable for punitive damages. In the second phase the jury awarded $5 billion in punitive damages against Exxon.
The District Court later reduced the punitive award to $2.5 billion. On appeal the Ninth Circuit reinstated the jury's original $5 billion punitive damages award. The Supreme Court granted certiorari to consider whether the $2.5 billion punitive damages award was excessive under maritime law.
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