Exxon Shipping Company, et al. v. Baker, et al.

Case Updates

The Supreme Court held that a $2.5 billion punitive damages award against Exxon was excessive as a matter of maritime common law, and limited the award to a 1:1 ratio of compensatory to punitive damages. In the ruling, the Court was equally divided on whether maritime law allows corporate liability for punitive damages for the acts of a shipowner’s agents, and left that part of the lower court’s decision undisturbed. The Court also rejected the argument that the Clean Water Act displaced federal common law remedies such as punitive damages. Although the decision focused on maritime law, the Court’s sensitive and rigorous analysis of punitive damages is likely to be cited before judges state and federal for the proposition that tight ratios provide the best solution to outlier decisions by juries.

NCLC filed twice in this case: once to support review and once on the merits. NCLC urged the Supreme Court to hold that the Clean Water Act displaces federal common law remedies, including imposition of punitive damages, and to make clear, in the alternative, that the federal common law provides judicial standards for limiting excessive punitive damages. Arising from the Exxon Valdez shipping accident in 1989, this case presented an opportunity for the Court to issue clear guidance to lower courts as to excessive punitive damages awards in the maritime context.