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Exxon Shipping Co. v. Baker

Supreme Court of the United States · 2008 · Constitutional Law

Constitutional LawTortsMaritime lawPunitive damagesmaritime common lawpunitive damages1:1 ratioClean Water Act

Facts

The Exxon Valdez grounded on Bligh Reef in Prince William Sound and spilled 11 million gallons of crude oil, harming commercial fishermen and others dependent on the area for their livelihoods. Exxon had employed Captain Hazelwood after alcohol treatment, and the jury heard evidence that Exxon knew of his relapse yet presented no evidence that it monitored him after his return to duty or considered a shoreside assignment. On the night of the spill, Hazelwood drank heavily, left the bridge during a critical maneuver, put the tanker on autopilot, and left an unlicensed third mate to navigate, after which the ship failed to turn and ran aground. Exxon stipulated to negligence and compensatory liability, and the jury found Hazelwood and Exxon reckless and awarded punitive damages.

Issue

Does the Clean Water Act preempt maritime punitive damages for private economic harms resulting from an oil spill, and if not, what limit does maritime common law place on the size of a punitive damages award in a case involving reckless but non-malicious conduct and substantial compensatory damages? The Court was also presented with whether a shipowner may be derivatively liable for punitive damages without acquiescence, but it was equally divided on that question.

Rule

In maritime cases like this one involving reckless conduct that is worse than negligence but less than malicious, not profit-driven, and producing substantial compensatory recovery for substantial injury, punitive damages should not exceed compensatory damages, establishing a 1:1 punitive-to-compensatory ratio as a fair upper limit. The Clean Water Act does not clearly displace maritime punitive damages for private harms, because the statute does not speak directly to that common-law remedy and does not indicate an intent to fragment compensatory and punitive remedies.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

A freight vessel operated by Harbor Crest Marine struck a reef off the coast of Maine after its pilot ignored obvious navigation risks. Oyster harvesters and tour-boat operators in Portland proved $80 million in compensatory damages for lost income, and the jury also found the conduct reckless but not malicious or profit-driven.

Under federal maritime common law as articulated by the Court, what is the strongest argument for reducing a $200 million punitive damages award?

Explanation. The majority held as a matter of federal maritime common law that in cases of this type—reckless but less than malicious conduct, not motivated primarily by financial gain, and producing substantial compensatory recovery for substantial injury—a 1:1 punitive-to-compensatory ratio is a fair upper limit. The rule is not that punitive damages are never available, nor that they are always capped at 0.5:1, and the holding was grounded in maritime common law rather than constitutional due process alone.