Thousands of Alaskans, including the attorneys at the Alaska Personal Injury Law Group, are awaiting the United States Supreme Court’s decision in the Exxon Valdez case, which is set for oral argument on February 27, 2008. In contrast to several punitive damage cases decided by the Supreme Court in recent years, the Court elected not to hear Exxon’s constitutional “due process” challenge to the now $2.5 billion (plus interest) punitive damage award. The Court instead limited its review of the Ninth Circuit decision to whether the punitive damage award violates federal maritime law or is inconsistent with the Clean Water Act. Regarding the maritime issue, Exxon asserts there is a longstanding common law maritime rule prohibiting the award of punitive damages against a ship owner based on the conduct of a ship’s master. The historic rationale for this asserted rule, according to Exxon, is that a ship’s master must make prompt unilateral decisions without consultation with his far-off superiors and it would be unfair to make the vessel owner responsible for the master’s independent reckless conduct. While this rationale may have made sense 100 or 200 years ago, it makes little sense today when communications with a modern commercial vessel are equivalent to communications with a distant land-based commercial operation. If a New York company is responsible for the reckless conduct of its managers at California manufacturing plant, there is no reason why a Houston shipping company should not be responsible for the reckless conduct of its master operating a modern supertanker in Alaska. It will be interesting to see whether the United States Supreme Court thinks the rule advocated by Exxon makes sense today in an age of instant electronic communcation.
I finally wanted to note that Justice Alito recused himself from the Exxon appeal because he owns stock in Exxon. Because a tie goes to the appellee (the plaintiffs here), Exxon will now have to find five votes from the eight remaining justices to overturn the Ninth Circuit decision.