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JUDGE OKs EXXON VALDEZ AWARD.

U.S. District Judge H. Russel Holland has affirmed an award of $4.5 billion in punitive damages against Exxon Mobil Corp. in the 1989 oil spill of the Exxon Valdez. The company said it would appeal.

In his Order No. 364 In re the Exxon Valdez, Holland also ordered the company to pay $2.25 billion in interest that has accrued in the long-running litigation.

The Ninth U.S. Circuit Court of Appeals has vacated Holland's award as excessive twice, most recently telling him to reconsider in light of the U.S. Supreme Court's decision last year in State Farm v. Campbell setting further standards on the proportion punitive damages must bear to compensatory damages and suggesting a single-digit ratio would pass muster.

"State Farm adds no new, free-standing factor to the constitutional analysis of punitive damages that the court might 'tie onto' its previous order," Holland responded in his latest order.

"In fact, there are aspects of the due process evaluation of punitive damages awards which have not changed at all as a result of State Farm," he added.

"The Supreme Court instructed that punitive damages awards must be subjected to an 'exacting' review" to ensure that they are "based on an application of law, rather than a decisionmaker's caprice," Holland wrote, quoting from State Farm.

"This court has engaged in an exacting review of the $5 billion punitive damages award not once or twice, but three times, with a more penetrating inquiry each time. This court once again concludes that a $5 billion award was justified by the facts of the case and is not grossly excessive so as to deprive Exxon of fair notice - its right to due process."

The award was 9.74 times the actual harm, he said, in line with the Supreme Court's guidelines, and comparable civil and criminal penalties could have exceeded $5 billion.

Attorneys calculated the actual damages caused by the spill at more than $500 million.

Nevertheless, Holland said, the Ninth Circuit has ordered the award reduced, so he was cutting it to $4.5 billion.

Exxon Mobil spokesman Tom Cirigliano said the order "flies in the face of the guidelines set by the appeals court" and would be appealed.

The lawsuit was brought by 32,000 fishermen, Alaska Natives, landowners, small businesses and municipalities affected by the spill in Alaska's Prince William Sound.
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Publication:Liability & Insurance Week
Geographic Code:1USA
Date:Feb 2, 2004
Words:394
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