General Maritime Claims

Punitive Damages: The Effect of Exxon Shipping Co. v. Baker
Posted by: rzehl
October 16, 2008

This recent Supreme Court decision involving the supertanker Exxon Valdez could have a profound effect on the amount awarded for maritime punitive damages in the future. The Court found that the problem with maritime punitive damage awards generally is that they are unpredictable. The Court, having decided that the punitive damage figure was too high in the case at hand, entertained three options for recalculating the amount.

First, the Court considered giving instructions to the jury including specific standards, criteria and limitations for the award. This was to be further bolstered by making this jury decision subject to appellate review upon issuance. Second, the Court considered a simple cap on the dollar amount that could be awarded for punitive damages. Third, the Court considered attaching punitive damages to compensatory damages using a ratio.

After considering each option, the Supreme Court decided that the ratio formula was the most fair. While determining the specific ratio to be used in calculation, the Court considered up to a 3:1 ratio before finally settling on a 1:1 ratio of punitive to compensatory damages under maritime law. This was deemed to be fair because Exxon’s actions were considered worse than negligent but less than malicious. Basically, what Exxon did was on the low-end of the scale in terms of behavior, in the Court’s eyes. Unfortunately, this 1:1 ratio may stand for future maritime punitive damage awards, even in cases where the defendant was acting maliciously and seeking to augment profit by doing so. This decision to reduce maritime punitive damages could have the unintended effect of encouraging risky corporate behavior for the sake of profits.

If you or someone you know has been injured offshore, contact the experienced Louisiana Jones Act attorneys at the Fitts Zehl Law Firm by email at info@gulfcoastmaritimelawyer.com or by phone at (800) 99-FITTS. We represent clients from cities throughout the gulf coast region including: Houston, New Orleans, Baton Rouge and Cameron.

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Can I Recover Punitive Damages Under Maritime Law?
Posted by: rzehl
October 09, 2008

Generally, punitive damages have always been recoverable under general maritime law. However, a recent Supreme Court decision, Exxon Shipping Co. v. Baker, presented three questions: (1) whether punitive damages are barred by the enactment of federal statutory law, like the Clean Water Act (CWA), (2) whether a corporation may be held liable for punitive damages because of the conduct or behavior of a managerial employee and (3) whether the award of $2.5 billion in punitive damages against Exxon was excessive under general maritime law. This case involved the infamous supertanker “Exxon Valdez” and the environmentally devastating oil spill it caused in Prince Edward Sound.

In its decision, the Court concluded that punitive damages are allowed under maritime law and are not preempted by any federal statutory law, including the CWA. The Court did, however, find the $2.5 billion award to be excessive and, using its rule-making powers bestowed upon it by Article III, § 2 of the U.S. Constitution, introduced a punitive damage cap of no more than the amount awarded for compensatory damages. This basically means that you can only recover punitive damages up to the amount you receive in compensation for your actual loss, a maximum ratio of 1:1. This resulted in the reduction of the $2.5 billion award to $507.5 million, the amount awarded in compensatory damages.

Interestingly enough, the Court was split (4-4 with J. Alito not participating) as to the issue of whether a corporation may be held liable for punitive damages stemming from the reckless and wanton behavior of its managerial employees. Because of this split, the Court followed long-standing precedent and left the opinion of the Ninth Circuit holding Exxon punitively liable for the actions of its managerial employee.

If you or someone you know has been injured offshore, contact the experienced Jones Act attorneys at the Fitts Zehl Law Firm by email at info@gulfcoastmaritimelawyer.com or by phone at (800) 99-FITTS. We represent clients from throughout the entire Gulf Coast region including: Homa, Gulfport, Houston and Tibideaux.

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