Devoted to Managers and those that seek to improve their management skills

The long-term case against Exxon Mobile Corp. (XOM) concerning the 1989 oil spill off Alaska by the Exxon Valdez, has been taken up by the Supreme Court, as it relates to punitive damages.

Originally, the case was centered around the captain of the boat, who was the only one on the ship qualified and licensed to operate the ship through the specific part of the dangerous reef they encountered. Breaking the company's rules, the capatin left the bridge and turned the wheel over to the third mate of the tanker.

Unable to properly navigate through the treacherous waters, the boat hit the reef, which resulted in an oil spill of 11 million gallons.

The resultant trial ended with the company paying out $3.4 billion in cleanup costs, fines, settlements and restoration payments.

The argument before the Supreme Court, will deal with a $2.5 billion punitive damage award from a jury, which Exxon claims violates federal maritime law. That's the reason the court agreed to take the case, to rule on that particular issue.

At the same time, the court turned down an argument asserting the award was so large that it violated the constitution. The court also rejected an appeal from the plaintiffs to reinstate the original $5 billion award for punitive damages, which the 9th Circuit Court of Appeals reduced to $2.5 billion, saying it's the maximum they could impose.

Exxon Mobile issued a statement saying, "We do not believe any punitive damages are warranted in this case. It is also important for the Supreme Court to uphold long-standing maritime law that provides that shipowners are not liable for punitive damages based upon conduct by the shipmaster who disregarded the owner's rules and policies."

In a troubling assertion by the lawyers for the plaintiffs, it was argued that the recent large profits by the company makes it easy to afford paying the damages.

It's ugly because it's an attempt to bypass the issue and punish them for running a good company and making profits.

The only issue is if the punitive damages breaks maritime law or not, not whether they make profits.