Page 38 - Lawtext Environmental Liabilty Journal Example

[2008] 3 Env. Liability : Case Commentaries Punitive damages ruled excessive in Exxon Valdez : Battista 105105
105
105
105
on punitive damages. Using principles of fairness and After considering the experience of states with 3:1 and
common sense for support, the Court discussed what those 2:1 ratios of punitives to compensatory damages, the Court
principles ought to be in relation to punitive awards. The settled on a 1:1 ratio as a reasonable upper limit for such
Court first considered various state precedents regarding awards. Citing several studies showing the median ratio of
qualitative limits including the following review factors when punitive to compensatory verdicts of about 0.65:1,
courts assess the reasonableness of a jury’s punitive damage reflecting what juries and judges have considered reasonable
award: across many hundreds of punitive awards, the Court found
that a 1:1 ratio is ‘a fair upper limit in … maritime cases’. 13
• deterrence value
• degree of reprehensibility of the relevant conduct The dissenters
• whether the defendant profited by the conduct Justice Stevens did not agree that the Court should have
• whether the punitive damages bear a reasonable applied an empirical formula for assessing punitive damages
relationship to the compensatory damages awarded for three main reasons. First, because United States
• defendant’s ability to pay. maritime law has a significant statutory component, Justice
Stevens wrote it would be more appropriate for Congress
Such factors are too soft and uncertain the Court concluded to act on the issue of punitive award limitations. Secondly,
and are not the ‘best insurance against unpredictable the numerical limits the Court relies on in the majority
outliers’. The preferable method of providing consistency opinion are typically imposed by legislatures, not courts.
10
and predictability is to correlate punitive awards to Justice Stevens criticized the majority for not citing any
compensatory damages using a quantitative formula such as precedent for a court imposing a precise punitive damage
a ratio or maximum multiple. There is fair amount of ratio under common-law authority. Thirdly, Stevens noted
precedent for this – many states have adopted such the majority’s failure to explain why abuse-of-discretion
mathematical models and the United States Congress has review, the traditional common law standard for oversight
passed analogous legislation under certain circumstances. of punitive damages, was not adequate to address the
But there remained the issue of whether establishing problem of outlier punitive awards. For Justice Stevens,
numerical controls over runaway punitive awards should the abuse-of-discretion standard should be the appropriate
be the task of courts or the legislature. Justice Souter said check on punitives and, under that standard, Stevens would
that ‘the answer rests on the fact that we are acting here in have upheld the lower court’s $2.5 billion award.
the position of a common law court of last review, faced Justice Ginsburg, in her dissenting opinion, agreed with
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with a perceived defect in a common law remedy’. He Justice Stevens that Congress is better equipped than the
explained that courts have traditionally accepted the Court to evaluate the empirical data and evaluate competing
responsibility of reviewing punitive damage awards which policy interests in establishing a bright-line quantitative test.
has resulted in judicially-derived standards for the She questioned whether this was a wise path for the Court
development of punitive damages as a remedy. Justice – ‘… is the Court holding only that 1:1 is the maritime
Souter wrote that the Court has a responsibility to address ceiling, or is it also signaling that any ratio higher than 1:1
a problem that it helped create and that the Court cannot will be held to exceed ‘the constitutional outer limit’?’ 14
simply ‘wash its hands of a problem . . . simply by calling Justice Breyer wrote separately, focusing on Exxon’s
12
quantified standards legislative’ – referring to Justice actions, explaining that there should be exceptions to the
Ginsburg’s dissent (discussed below). 1:1 ratio in cases such as this where the defendant’s conduct
was not simply reckless but ‘egregious’ and ‘highly
reprehensible’. Indeed, Justice Breyer thought that the $2.5
billion punitive award was justified because the ‘jury could
common law area where the Court has broad discretion in the reasonably have believed that Exxon knowingly allowed a
absence of any Congressional legislation on the subject. Exxon
Shipping, at 28–29. relapsed alcoholic repeatedly to pilot a vessel filled with
10 Exxon Shipping, at 31. millions of gallons of oil through waters that provided the
11 ibid at 34. 15
12 ibid at 34, see also fn 21 where Justice Souter said that ‘we may livelihood for many plaintiffs in this case’.
not slough off our responsibilities for common law remedies
because Congress has not made the first move, and the absence of
federal legislation constraining punitive damages does not imply a
congressional decision that there should be no quantified rule. . .
Where there is a need for a new remedial maritime rule, past 13 ibid at 40.
precedent argues for our setting a judicially derived standard, 14 ibid, Ginsburg dissenting opinion at 2.
subject of course to congressional revision’. 15 Id., Breyer dissenting opinion at 2.

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