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Punitive Damages in Maritime Law: Exxon Shipping v. Baker

A recently proposed piece of legislation would attempt to undo a Supreme Court decision limiting punitive damages available to plaintiffs who are harmed due to an oil spill. The 2008 decision was a result of the Exxon Valdez oil spill in 1989. Originally, the plaintiffs sued the Exxon Shipping Co. and were awarded $2.5 billion in punitive damages.

The defendant appealed to the Supreme Court, which decreased the amount of the award to $500 million. The court’s ruling imposes a 1-to-1 ratio of compensatory damages to punitive damages. The Exxon Shipping suit resulted in compensatory damages of just one-fifth the punitive damages awarded. The ruling was based on common law, but parts of the opinion suggest that the same result could have been reached based on constitutional grounds.

The proposed legislation would do away with the mandated ratio and allow litigants to obtain punitive damages without regard to the actual amount of compensatory damages. Legal scholars are unsure if Congress has the authority to put such a measure into action. Congress has authority to overturn the court’s ruling but may not be able to do so in this case for constitutional reasons.

Additionally, in light of the recent oil spill in the Gulf of Mexico, it is unclear if Congress could give the law retroactive effect, punishing those responsible. Often when a statute is enacted and results in monetary damages, the courts are unlikely to allow the law to be enforced against acts that occurred prior to the enactment.

Four senators have introduced the bill, but the Senate has not yet cast its vote. If it passes in the Senate, the bill must still pass through the House of Representatives as well as withstand legal attacks from the bill’s opponents before having any effect on those involved in the Deepwater Horizon rig explosions and the ensuing Gulf oil spill.