Punitive Damages: The Effect of Exxon Shipping Co. v. Baker

Posted by: rzehl
October 16, 2008
Topic: General Maritime Claims

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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