In a 5-3 vote, the Supreme Court overturned the record punitive damages of $2.5 billion Exxon Mobil (nyse:XOM) had been required to pay as a result of the oil spill of the Exxon Valdez in 1989. The damages will now be $507.5 million, down from the original $5 billion awarded from the federal jury.
Over the course of the legal process, a federal judge whittled down the damages to $4.5 billion, while later on an appeals court dropped it to the $2.5 billion, which was what was brought before the Supreme Court to make a decision upon.
The reason there were only eight members of the court voting, was Justice Samuel Alito recused himself from the case because he owns shares of Exxon Mobil stock.
The oil spill ended up with over 11 million gallons of crude oil spread across over 1,200 miles of coastline, which resulted in the closing of fisheries and thousands of marine mammals and birds being killed. It came from the supertanker running aground off the coast of Alaska.
Some of the arguments from lawyers for Exxon Mobil, which the Justices evidently agree with, was the company had already paid out over $3.5 billion for the accident, and the punitive damages awarded were more than all the combined punitive award damages in U.S. history.
When talking of the $3.5 billion, the company was referring to fines, cleanup costs and other costs related to the spill.
The thinking of the court was the damages were excessive, and in accordance with U.S. maritime law, needed to be limited to "total relevant compensatory damages," which is where the $507.5 million figure came into play.
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