High Court Slashed Exxon Valdez Punitive Damages

WASHINGTON (CN) - The U.S. Supreme Court voted 5-3 to cut the $2.5 billion punitive damage award against Exxon Mobil for the 1989 Exxon Valdez oil spill that fouled up 1,200 miles of Alaskan coast line.

The justices said the punitive damage amount should be limited to about $507.5 million - the amount the company has already paid to compensate victims of the spill.

Exxon had argued that it should pay no punitive damages, because it has already spent $3.4 billion on cleanup efforts.

The oil supertanker dumped 11 million gallons into Alaska's Prince William Sound, making it the worst oil spill in U.S. history. Exxon claimed the $2.5 billion award - the largest ever approved by a federal appeals court - was excessive under shipping laws.

The 9th Circuit had slashed the damages award from $5 billion to $2.5 billion, partly because Exxon blamed the spill on a reckless captain who ran the Valdez into a reef with 53 million gallons of crude oil in its hold.

"We are equally divided on the owner's derivative liability," Justice Souter wrote, "and hold that the federal statutory law does not bar a punitive award on top of damages for economic loss, but that the award here should be limited to an amount equal to compensatory damages."

Justices Stevens, Ginsburg and Breyer dissented in part, and Justice Alito took no part in the decision.

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