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SUPREME COURT REDUCES DAMAGES IN EXXON VALDEZ SPILL CASE; SUGGESTS 1:1 DAMAGES RATIO FOR MARITIME CASES

The Supreme Court ruled Wednesday to reduce punitive damages in the Exxon Valdez oil spill case from an original jury award of $5 billion to about $500 million. The ExxonMobil supertanker caused one of the severest environmental catastrophes in American history when it dumped 11 million gallons of crude oil into Prince William Sound in Alaska in 1989. The captain, Joseph J. Hazelwood, was drunk and not present on the vessel's bridge at the time of the accident.

The Court's ruling will likely effect the awarding of punitive damages in maritime cases in general. Punitive damages, which are intended as a punishment for bad behavior and a deterrent to future negligence, are awarded in addition to compensatory damages, which are intended to compensate plaintiffs negatively affected by the spill.

Justice Souter, writing for the 5-3 majority, suggested that a 1:1 ratio of compensatory damages and punitive damages was appropriate in maritime cases. Since Exxon Mobil has paid about $507 million in compensatory damages to over 32,000 plaintiffs negatively affected by the spill, including landowners, commercial fishermen, and Native Alaskans, Souter found that the company should not have to pay more than $507 million in punitive damages.

Although it is unclear whether the 1:1 ratio will apply to fields outside of maritime law, it is likely that this ruling will effectively limit punitive damages in maritime cases with large monetary awards. Justices Ginsburg, Stevens, and Breyer dissented.

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