Exxon crude oil $US45.45: US Supreme Court ruling
In a landmark ruling, the US Supreme Court today slashed the damages bill against Exxon for the 11 million gallons of oil their drunken captain poured into a pristine Alaskan ecosystem just 20 years ago. Deciding that “the people” – as in of the, by the, and for the – of the original jury were brain damaged for originally awarding $5 billion in punitive damages against the company, Justice David Souter today pissed mightily in the faces of victimized communities, environments, and species for generations to come.
He found that Exxon should only have to pay $500 million in punitive damages, seeing as the company had already paid $507 million in damages to directly compensate communities of Prince William Sound for economic losses.
$500 million totals about $15 000 for each of the 33 000 claimants, and 4 days worth of Exxon’s profits last year, according to the full article here in Huffington Post. And it’s an even stranger decision when one considers that even now, damage and contamination persist – a clear indication that much more remains to be done.
Potentially more durable, though, is the frightening principle which Souter has cemented within today’s ruling: that punitive damages against a corporation should not be unreasonably excessive, and that the measure of “reasonable” should be established by weighing punitive damages against payment made for economic loss.
In addition to $507 million spent supposedly recompensing locals for economic loss, Exxon claims to have spent $3.5 billion cleaning up after themselves in Alaska. But why should this number – however grand it might sound – generate any sympathy from a court deciding punitive damages?
“Okay, Exxon, you say you spent a bunch on penguin shampoo and buckets. You gave these people some cash to make up for the fish they couldn’t sell. Apart from 20 years spent treating them like annoying parasites, you have really made an effort. To make sure you don’t do it again, we’re going to take away your pocket money for a week… Oh, I can’t stay mad at you Exxon – not like that Enron bastid. Better make it four days.”
Remember how as a kid you broke something of your parent’s? It could have been a vase, could have been a car. Either way, you got your ass kicked, and you had to fix it, and you made sure as hell not to do it again, and you got grounded/tied down and didn’t stop hearing about it at least once every Xmas for the next 20 years. Unless your folks were on Prozac, there was no “at least you tried to fix what you broke, let’s shake our head at you and forget the whole thing.”
Furthermore, by explicitly stating the proportional relationship between compensatory and punitive damages, Souter has given every future corporate-sponsored apocalyst a get-out-of-white-collar-jail-free card.
Consider this: I run a nuclear power plant. I decide not to institute the $3 billion program that is recommended to me for monitoring of personnel and installation of advanced failsafes. I don’t run background checks, I don’t verify resumes, I don’t run blood or urine checks for supervisors or operators, I don’t even install those groovy computer gizmos that monitor a panel operators eyelids to make sure they aren’t sleeping on the job. One day, hiccup, snore, crack, bang – a sleeping supervisor and a drunken materials handler combine to create a mini emergency. Waste is released into the water supply used by the nearby town of 50 000.
As a conscientious (and crafty) corporate cat, I rush in with $10 000 for every man, woman and child so that they don’t suffer while their businesses are closed, so they can buy masses of bottled water and so they can go shopping to cheer themselves up – just like the Prez-o-dent told people to after 9-11. Meanwhile I spend $1 billion cleaning up the mess I made, and $200 million making sure that environmental agency heads have the equipment and resources to go and look at problems elsewhere.
Of course the townsfolk take me to court. Of course the court orders me to pay punitive damages. But by Souter’s Exxon precedent it must order me to pay less than $(50 000 x 10 000). Instead of spending $3 billion on extensive but basic corporate responsibility in the first place, I’m paying $2.2 billion + lawyer’s fees to clean up my own mess.
Even if the numbers aren’t this convenient, even though it’s obviously better for everyone to prevent, rather than just hope against, the 1-in-10000 cataclysm, why bother?
Take a look at the different websites regarding the gassing deaths of more than 3 000 people in India by Union Carbide. According to the company (now a Dow property), Union Carbide Corporation worked diligently to provide immediate and continuing aid to the victims and set up a process to resolve their claims. According to activists still struggling for justice for survivors of Bhopal, at least 15 000 people died in the first month after the accident and the ongoing contamination and myriad health issues continue unabated and unaddressed.
BUT, Union Carbide squeezed out under a billion dollars in court settlements, compensation, and strategic donations within a relatively short time after the accident. And therefore, by Justice Souter’s logic, they should have to pay less than $1 billion in punitive damages. Which would work out at less than $70 000 per life, as long as you don’t consider future generations, deformities, destroyed aquifers and waterways, decimated forests, livestock, and native animals, intergenerational equity, etc., etc.
But, at least if you’re an American Enterprise, the lives of Indians – like otters, seals, penguins, bears, fish, birds, clean water, fresh air, and the planet in general – have always been pretty cheap.
So thankyou Justice Souter! Thankyou for making sure that economic irrationalism has prevailed over those manipulative eco-terrorists. Never again need MegaCash Ltd fear spraining their bottom line on little things like ‘punitive damages’, ‘restorative justice’, or ‘basic human decency’.
The Supreme Court has today sent a very clear message to future victims of massive disasters yet to happen.
Although obviously in agreement with environmentalists, scientists, and a majority of the world’s population that the value of life can not be measured, rather than risk setting a price that is too high, Justice Souter decided that he – and future Justices – should not even try.