Exxon Shipping Co. v. Baker

554 U.S. 471, 128 S. Ct. 2605 (2008)

 

RULE:

A 1:1 ratio of compensatory-to-punitive damages is a fair upper limit in maritime tort cases.

FACTS:

Oil spilled from a tanker. The owners contended that punitive damages were not available against the owners them based solely upon the recklessness of its managerial employee, that the express pollution penalties of the Clean Water Act (CWA), 33 U.S.C.S. § 1251 et seq., precluded an additional penalty of punitive damages, and that the punitive award of approximately five times the amount of the compensatory award was excessive. While equally divided concerning whether the owners could be held vicariously liable for punitive damages, the U.S. Supreme Court held that the CWA did not preclude the award but a reduction of the amount of the award was warranted. However, punitive damages in the maritime tort case were not warranted in an amount greater than the amount of the compensatory damages award, and thus the punitive damages were excessive.

ISSUE:

Was the award of $ 2.5 billion greater than maritime law would allow in the circumstances?

ANSWER:

Yes.

CONCLUSION:

The punitive-damages award against the owner was excessive as a matter of maritime common law. In the circumstances of the case, the award should be limited to an amount equal to compensatory damages. Furthermore, The prevailing American rule limits punitive damages to cases of "enormity," in which a defendant's conduct is outrageous, owing to gross negligence, willful, wanton, and reckless indifference for others' rights, or even more deplorable behavior. The consensus today is that punitive damages are aimed at retribution and deterring harmful conduct.

Click here to view the full text case and earn your Daily Research Points.