Today, the U.S. Supreme Court handed down its decision in the Exxon Shipping Co. v. Baker case, posted earlier here.
There were three issues on appeal: 1) does general maritime law allow for corporate liability for punitive damages based on the acts of managerial agents; 2) does the Clean Water Act preempt punitive damages awards in maritime spill cases; and 3) did the size of the punitive damages award ($5 billion) exceed the norms of general maritime law.
Justice Alito did not participate in the decision and the Court split 4-4 on the first issue, leaving undisturbed the Ninth Circuit's opinion that corporations could be held liable for punitive damages for the conduct of their managerial agents. On the preemption issue, the court found that the Clean Water Act did not preempt general maritime law provision of punitive damages awards.
On the issue of excessiveness of the damage award, the Court acknowledged that Exxon's conduct amounted to negligence and was not knowing. Under such circumstances, it decided, admittedly in legislative fashion, that a 1:1 ratio of punitive damages to compensatory damages was appropriate.
Scotusblog's analysis is here.
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