Punitive Damages in Maritime Law

As the Gulf disaster continues, it is worth thinking about about the potential liability of BP and other parties.  Following the Exxon Valdez disaster, the Supreme Court held, acting in its capacity as a common-law court, that punitive damages in admiralty could not exceed the compensatory damage award.  Justice Breyer dissented from this part of the opinion, explaining that “this was no mine-run case of reckless behavior. The jury could reasonably have believed that Exxon knowingly allowed a relapsed alcoholic repeatedly to pilot a vessel filled with millions of gallons of oil through waters that provided the livelihood for the many plaintiffs in this case. Given that conduct, it was only a matter of time before a crash and spill like this occurred.”

Perhaps some future court will distinguish Exxon from a suit against BP, but the opinion is awfully clear that a 1:1 rule is the law.  Congress, though, is free to change this, since Exxon is not part of the Court’s due process jurisprudence on punitive damages (which treats anything above 10:1 as suspect). Just as Congress may amend the Limitation of Liability Act in response to this crisis, they should also look at the punitive damage question.

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7 Responses

  1. Curt Cutting says:

    Senator Whitehouse has introduced a bill to do exactly what you discuss – change the 1:1 rule of Exxon Shipping. (See S.3345, the “Big Oil Polluter Pays Act.”) The proposed bill is so broadly worded, however, that it is almost certainly unconstitutional under the Supreme Court’s recent punitive damages jurisprudence.

    See:
    http://calpunitives.blogspot.com/2010/05/big-oil-polluter-pays-act-probably.html

  2. Chris says:

    Wouldn’t there be ex-post-facto/bill-of-attainder-like due process concerns with retroactive punishment, especially under the “fair notice” stuff from BMW?

    Exxon’s 4-4 bit on the food-chain issue is depressing to remember. If BP’s compensatories don’t bankrupt them, maybe the Supreme Court will resolve it. Hope Alito wouldn’t be recused on this one.

  3. vassil_petrov says:

    The question is can Congress change the law retroactively?

  4. JayR says:

    I’m also surprised by the 1:1 rule. Of all entities, oil companies should be the ones most liable for losses that are so widespread, in my opinion.

    See also:
    http://lawblog.legalmatch.com/2010/06/10/common-misconceptions-about-punitive-damages/

  5. Jim Maloney says:

    V. Petrov asks whether the law re: punis may be changed retroactively. A good question. I followed the link C. Cutting provided, which raises the question of whether such an Act would be constitutional. The way I see it, Exxon v. Baker is jurisprudential, not constitutional, and BMW v. Gore straddles the fence a bit. You can call it a due process question, but you can call just about anything a due process question. An honest evaluation would examine whether a law expanding punis retroactively is subject to Ex Post Facto clause analysis. I think it ought to be. Any argument out there otherwise?

  6. Chris says:

    Calder v. Bull says E/P/F is only criminal, not civil.

  7. Jim Maloney says:

    OK. A state (or Congress) enacts a statute providing for “punitive civil assessments” (not “fines,” mind you) to be paid by persons or corporations found guilty of having committed a certain activity that was not prohibited before the enactment. Can we say with a straight face that that escapes application of the E/P/F clause? Ditto for retroactive punitive damages. Or, smoke:fire::punishment:crime (as in “Where there’s …”).