Torts - Cases, Principles, and Institutions Fifth Edition, 2016a

Witt & Tani, TCPI 10. Damages
Court affirmed its earlier decision, citing independent grounds in Oregon state law sufficient to
sustain the state court punitive damages award:
[W]e are called upon to reconsider and reassess our earlier holding, which arose in
the context of the trial court’s refusal to give a particular proposed jury instruction
that defendant had requested. Having reconsidered and reassessed the issue, we
now conclude that the proposed jury instruction at issue here also was flawed for
other reasons that we did not identify in our former opinion. We therefore reaffirm
this court’s prior conclusion that the trial court did not err in refusing to give the
instruction. We otherwise reaffirm our prior opinion in all respects.
The United States Supreme Court granted Philip Morris’s petition for writ of certiorari to review
the Oregon courts’ decision yet again. Observers of the Court expected the Court to enforce its
judgment on the Oregon courts. Petitioner Philip Morris described the Oregon courts as flouting
the authority of the United States Supreme Court. But on March 31, 2009, after briefing and after
oral arguments, the Court (without comment) dismissed the writ of certiorari as improvidently
granted. The $32 million Oregon punitive damages judgment was left in place.
2. The Exxon Valdez litigation. As Justice Ginsburg noted in her State Farm dissent,
curtailing punitive fines in state cases raises particular federalism concerns. However, in the
Exxon Valdez case, the Supreme Court was unimpeded by such concerns because it was ruling on
the case based on its maritime jurisdiction. Instead of applying a due process analysis, the Court
was building federal maritime common law.
The Exxon Valdez litigation arose out of a massive, 11-million-gallon oil spill in Prince
William Sound, Alaska, in 1989. A 900-foot-long supertanker ran aground on Bligh Reef during
a turning maneuver in the Valdez Narrows. The vessel’s captain, Joseph Hazelwood, was an
alcoholic who had recently dropped out of AA. Hazelwood had inexplicably left the helm shortly
before the vessel ran aground. Subsequent blood tests by the Coast Guard found that at the time
of the accident, he had a blood alcohol level three times the legal driving limit in most states.
Numerous civil claims and criminal charges followed against Hazelwood and Exxon.
Exxon expended $2.1 billion in cleanup efforts. Civil claims settlements amounted to more than
$1 billion. When certain claims went to trial in the federal district court for the District of Alaska,
Exxon conceded liability and contested only its damages. A jury awarded commercial
fisherman—the only group that had not settled its compensatory damages claims—$287 million
in compensatory damages. The same jury then concluded that Hazelwood’s actions had been
reckless and awarded plaintiff commercial fishermen, Native Alaskans, and landowners $5,000 in
punitive damages from Hazelwood and $5 billion in punitive damages from Exxon, an amount
that was later reduced to $2.5 billion by the Ninth Circuit, citing the Supreme Court’s due process
cases on excessive punitive damages awards.
At the Supreme Court, Justice Samuel Alito recused himself because he owned stock in
Exxon. The remaining eight justices split evenly on the question whether under federal maritime
law, a corporation can be held vicariously liable in punitive damages for the reckless acts of its
employees. The split left undisturbed the Ninth Circuit’s conclusion that such punitive damages
awards were appropriate under federal maritime law. But on the question of what the relationship
between punitive and compensatory damages is in federal maritime law, the Court reduced the
680