briefs filed on behalf of respondents · was created in the months following the exxon valdez oil...

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No. 07-219

Exxon Shipping Co. and Exxon Mobil Corp., Petitioners, v.

Grant Baker, et al., Respondents.

Briefs Filed On Behalf Of Respondents

The Exxon Valdez Oil Spill

The Respondents in the case currently before the Supreme Court are the 32,677 commercial fi shermen, businesses, landowners, Native Alaskans, and others who were harmed by the Exxon Valdez oil spill. At Exxon’s request, the federal district court in Anchorage consolidated all of their claims for trial, including claims for punitive damages. After an 83-day, 3-phase trial in 1994, an Alaska federal jury found both Exxon and Captain Hazelwood reckless, and entered a verdict of $5 billion in punitive damages against Exxon. After 13 years of appeals, the U.S. Court of Appeals for the Ninth Circuit halved that award to $2.5 billion. Nonetheless, Exxon appealed to the Supreme Court.

The Respondents’ brief lays out the facts and law that support the decision of the jury, the district court, and the Ninth Circuit to order Exxon to pay punitive damages. The brief outlines the legal defects in Exxon’s argument that 19th Century admiralty law decisions should allow it to escape payment of punitive damages in the 21st Century; takes on Exxon’s incredible argument that the Clean Water Act--the nation’s premier environmental law--should be interpreted to shield oil polluters from punitive damages; and argues that Exxon’s plea for additional “maritime law” restrictions on punitive damages awards is nothing but the result-oriented special pleading of the nation’s most notorious corporate polluter.

Brief For Respondents

Map — “What If – The Exxon Valdez Had Hit Plymouth Rock”

Summary of Amicus Briefs

Sixteen separate amicus (friend of the court) briefs were fi led by individuals, governmental and private organizations, and Indian tribes, urging the Supreme Court to affi rm the $2.5 billion punitive damages award against Exxon. These briefs refl ect a fundamental consensus across all political, professional, and geographic strata of American society that what Exxon did in leaving a relapsed alcoholic in charge of a supertanker was highly reprehensible, and that this case demonstrates why punitive damages must be available and imposed upon the worst corporate and environmental offenders in the country.

Among the public offi cials and bodies urging the Supreme Court to affi rm the punitive judgment are the State of Alaska; the Alaska legislature and all living former governors of the State including former Governor and Secretary of the Interior Walter Hickel; the Alaska congressional delegation led by Senator Ted Stevens; numerous

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No. 07-219Exxon Shipping Co. and Exxon Mobil Corp., Petitioners, v. Grant Baker, et al., Respondents.


Alaska and Pacifi c Northwest Indian tribes, villages, and organizations; and the Regional Citizen Advisory Committees set up in Prince William Sound and Cook Inlet after the spill as oil industry-funded watchdogs. A bipartisan group of thirty-four other states, led by Maryland and including all West Coast states, also fi led a brief endorsing punitive damages for Exxon’s reckless conduct.

Prominent individuals from all walks of life fi led amicus briefs. Natural scientists led by oceanographer Jean-Michel Cousteau fi led a brief detailing the persistent harm to Prince William Sound’s sea and birdlife from the oil spill. Social scientists and economists fi led a brief detailing the human cost of the spill, much of which Exxon never compensated. Former Coast Guard and merchant marine captains including a former Exxon master fi led a brief rejecting Exxon’s contention that the out-dated law of 19th Century seafaring should apply in today’s world. The leading experts on alcohol abuse in the workplace and an association of substance abuse professionals fi led a brief excoriating Exxon for its failure to deal with Captain Hazelwood’s drinking problem. The leading admiralty law scholar in the country, Professor Thomas Schoenbaum (whose book even Exxon cites), and the leading trial procedure scholar, former Harvard Law Professor Arthur Miller, fi led briefs urging the Court to uphold the judgment.

A long list of Alaska and national environmental groups fi led a brief, as did the American Association for Justice. This means that everyone from Ted Stevens and Walter Hickel on the one hand, to the Humane Society and the trial lawyers on the other, are now on record opposing Exxon’s efforts to hide behind the Clean Water Act and evade liability for its oil spill.

Exxon argues that the Supreme Court should absolve it of paying punitive damages in order to aid maritime commerce. Fishermen’s associations representing thousands of fi shing families and small commercial fi shing businesses, and a trade association of corporate fi sh processing and retailing companies have told the Court that they too have commercial interests at stake in preventing oil spills and punishing those who cause them.

In sum, a broad swath of American society -- public state, local and tribal bodies; businesses large and small; ship captains; environmentalists; scientists and scholars have urged the Court not to let Exxon escape punishment for the Exxon Valdez oil spill. Summaries of each amicus brief and links to the briefs are contained below.

Briefs of Amicus Curiae

Brief Of The State Of Alaska As Amicus Curiae In Support Of Respondents

Interest of Amicus Curiae: The State of Alaska was the site of the Exxon Valdez oil spill and most, though by no means all, of the people directly harmed by the spill were Alaska residents. Because the State of Alaska is critically dependent upon maritime commerce as well as the operations of the petroleum industry, the State has an interest in ensuring that the availability of strong remedies under general

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maritime law protects all maritime interests and compensates Alaska’s citizens for, and properly deters and punishes, oil spillers. Summary of the Argument: The punitive damages award in this case is necessary not only to punish and deter but also to serve the classic maritime law purpose of remedying uncompensated harm. The State of Alaska urges the Supreme Court to adopt a rule that recognizes punitive damages for vicarious liability, consistent with maritime law and the vast majority of states. The State also argues that the punitive damage award in this case is not excessive under maritime law, nor is it foreclosed by the Clean Water Act.

Brief Of The Alaska Legislative Council, On Behalf Of The Alaska State Legislature, And Former Alaska Governors Walter Hickel, Anthony Knowles, Steve Cowper, And William Sheffi eld As Amici Curiae In Support Of Respondents

Interest of Amici: The Alaska Legislative Council is a permanent committee of the Alaska State Legislature, composed of the President of the Senate, the Speaker of the House of Representatives, and twelve other Representatives and Senators. In addition to current elected Alaska state legislators, amici also include all of the living former Governors of the State of Alaska.

Summary of the Argument: In general, amici draw the Supreme Court’s attention to the fact that the construction of the Trans-Alaska Pipeline was based on repeated assurances by the oil industry that the pipeline would be constructed and operated with the highest possible standards of care in order to protect Alaska’s natural resources, which form the backbone of the regional economy. In particular, amici highlight that the Trans-Alaska Pipeline Authorization Act of 1973 (“TAPAA”) establishes the federal law governing the Exxon Valdez oil spill and that TAPAA expressly preserves the availability of punitive damages for spills of Trans-Alaska Pipeline oil.

Brief Amicus Curiae Of United States Senator Theodore F. Stevens, United States Senator Lisa Murkowski, And United States Representative Don Young In Support Of Respondents

Interest of Amici: Amici are Alaska’s entire Congressional delegation. Senator Stevens practiced and published in the area of admiralty law early in his career and entered the United States Senate in 1968. He was involved with the passage of the Clean Water Act from its earliest stages of development. Senator Murkowski, the only member of Congress born in Alaska, is a member of the Senate Energy and Natural Resources Committee. Representative Young is the only licensed mariner in Congress and the current Ranking Member and former Chairman of the House Natural Resources Committee, with jurisdiction over domestic and international fi shery issues.

Summary of the Argument: Amici argue that the Clean Water Act (CWA) does not preclude punitive damages under federal maritime common law. In particular, neither the Act nor its legislative history evidences Congress’s intent to displace punitive

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damages. Congress undertook the framing of the CWA’s oil spill provisions with the understanding that courts would apply the statute in concert with existing maritime and common law remedies to enhance liability against polluters, not shield them.

Brief Of Amici Curiae National Congress Of American Indians, Alaska Federation Of Natives, Alaska Inter-Tribal Council, Indigenous Peoples’ Committee On Marine Mammals, And Additional Alaska Native Organizations, Corporations And Tribes In Support Of Respondents

Interest of Amici: On behalf of numerous Native Alaskan organizations, corporations, and tribes, amici describe the centuries-old subsistence way of life that continues to prevail across coastal Alaska, the enormity of the impact of the Exxon Valdez disaster on that way of life, and their support for the punitive damages award in light of the severe but uncompensated injury suffered by thousands of Alaska Native people living in coastal villages.

Summary of the Argument: While Exxon asserts that the punitive damage class members were fully compensated for the injuries suffered as a result of the Exxon Valdez spill, Native amici explain why that is a “remarkably shallow, and callous, claim.” Amici describe the non-economic (but devastating) injuries suffered by Alaska’s Native subsistence communities and how those injuries underscore the egregiousness of Exxon’s actions and the corresponding appropriateness of the punitive damages award in this case. Amici also remind the Court that the non-economic, subsistence injuries highlight the need for deterrence to avoid future devastating damage to Alaska’s Native subsistence communities.

Brief Of Amicus Curiae Prince William Sound Regional Citizens’ Advisory Council AndCook Inlet Regional Citizens’ Advisory Council In Support Of Respondents

Interest of Amici: Amicus Prince William Sound Regional Citizens’ Advisory Council (PWSRCAC) is a non-profi t corporation comprised of 18 member organizations. It was created in the months following the Exxon Valdez oil spill, after representatives of Prince William Sound commercial fi shing interests approached Alyeska Pipeline Service Company and persuaded it of the need for citizen oversight of the Valdez oil terminal and the tanker operations within Prince William Sound. Alyeska, a corporation primarily owned by several major oil companies producing and shipping oil from Alaska’s North Slope, is the operator of the Trans-Alaska Pipeline and the Marine Terminal located in Valdez, Alaska. Similarly, amicus Cook Inlet Regional Citizens’ Advisory Council was established under the Oil Pollution Act of 1990 to provide citizen oversight for oil industry operations in the Cook Inlet region.

Summary of the Argument: Amici argue that punitive damages are essential here as a means of deterring Exxon and other oil companies. Despite advances in vessel monitoring, marine safety and communications, and spill prevention, the conduct that led to the Exxon Valdez oil spill could recur without the threat of punitive damages. Because oil spills can never be completely cleaned up, legal tools like

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punitive damages are needed to ensure that oil and shipping companies use extra care in their operations.

Brief Of State Of Maryland And 33 Other States As Amici Curiae In Support OfRespondents

Interest of Amici: Thirty-three states have joined with the State of Maryland, which wrote this brief, to express their interest in ensuring that the common law and overall regulatory scheme governing toxic spills allow for punitive damages in order to deter and punish reckless maritime conduct to the same degree that common law deters and punishes land-based reckless conduct.

Summary of the Argument: Amici States argue that the Supreme Court should reject Exxon’s test for punitive damages under vicarious liability. Nearly all states follow an approach to vicarious liability for punitive damages that would allow punitive damages in this case. Exxon’s proposed test differs markedly from most states’ law, is substantially narrower, and is in substance a rule of corporate immunity that would threaten to undermine the States’ ability to deter and punish reckless misconduct and to protect their waterways through appropriate state regulations and common law. Amici States also urge the Court to reject Exxon’s argument that the Clean Water Act preempts punitive damages under federal maritime law.

Map of 35 States Supporting Respondents

Brief Of Jean-Michel Cousteau And Other Natural And Social Scientists As Amici CuriaeIn Support Of Respondents

Interest of Amici: Amici are a number of natural and social scientists who have studied and devoted much of their professional careers to the understanding of how oceanic ecosystems function and the necessity for their preservation. Amici range from Jean-Michel Cousteau, president of the Ocean Futures Society to John Ogden, Ph.D., Director of the Florida Institute of Oceanography, to Donald F. Boesch, Ph.D., President of the University of Maryland Center for Environmental Science, to John Teal, Ph.D., Scientist Emeritus for the Woods Hole Oceanographic Institution.

Summary of the Argument: These scientists explain the long-term devastating impact of the Exxon Valdez oil spill on the Prince William Sound marine ecosystem. In particular, government studies show that the injury to the entire ecosystem and to the human beings whose lives and livelihood have depended upon that ecosystem has been far greater than it was possible to discern at either the time of the spill in 1989 or even at the time of trial in 1994. In fact, almost twenty years after the spill, complete recovery is at minimum decades away, if ever. This scientifi c research demonstrates that the need for punitive damages to deter future reckless handling of oil is even greater now than initially assumed.

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Brief Amici Curiae Of Sociologists, Psychologists, And Law And Economics Scholars In Support Of Respondents

Interest of Amici Curiae: Amici are scholars in the fi elds of sociology, psychology, and law and economics. Several of the amici have conducted extensive empirical research in the Prince William Sound for over a decade. They all have a professional interest in ensuring that the Court is fully informed as to the full impact of the Exxon Valdez oil spill on the neighboring communities and on victims in particular.

Summary of the Argument: Amici explain that empirical research conducted over a seventeen-year period by teams of sociologists and psychologists specializing in disaster research reveals that non-economic harms caused by the Exxon Valdez oil spill were – and continue to be – profound. These impacts include high rates of anxiety, depression, and post-traumatic stress disorder among Prince William Sound residents exposed to the spill, and in particular among commercial fi shermen. And yet, as a result of the restrictive rules of maritime law, compensatory damages were available for only a small portion of the actual economic harms infl icted by the spill, and for none of the non-economic harms. Amici argue that when this uncompensated harm is considered, it becomes clear that an award of punitive damages is not only appropriate but essential in this case to ensure that Exxon and other oil companies are suitably cautious of the natural and human environments impacted by their businesses.

Amicus Curiae Brief Of Ship Masters And Expert Mariners Captains Mitchell Stoller, Joseph Ahlstrom, Roger Johnson, John Scott Merrill, And Tom Trosvig In Support Of Respondents

Interest of Amici: Captain Stoller worked for Exxon Shipping Company between 1975 and 1988, where he ended his career as a ship master and pilot. He worked for and with Captain Joseph Hazelwood, and was the master of several vessels that made the same run as the Exxon Valdez through Prince William Sound. Captain Stoller has also written safety manuals on oil spill prevention for major oil and shipping companies, and has served as an advisor to Congress and the U.S. Coast Guard. The other amici have similar backgrounds and expertise as ship masters and mariners. Captain Ahlstrom is a Professor of Marine Transportation at the State University of New York, Maritime College, and a well-known expert in the area of marine communications. Captain Johnson is a retired master of large ocean-going vessels carrying hazardous commodities, with 40 years of maritime experience. Captain Merrill, who is currently a ship master for the Alaska Marine Highway System, served in the Coast Guard for 23 years. Captain Trosvig is a retired offi cer of the United States Coast Guard.

Summary of the Argument: Modern commercial maritime business, navigational technology and ship-to-shore communications, and the hazardous nature of the cargo shipped, are all markedly different today than they were at the time that Exxon’s favored maritime case, The Amiable Nancy, was decided in 1818. Given the changed nature of the industry, amici argue that punitive damages are sometimes necessary

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to punish and deter reckless conduct, and that the award in this case was reasonable and appropriate.

Brief Amicus Curiae Of Experts On Alcohol In The Workplace

Interest of Amici: Amici Dr. Paul M. Roman and Dr. William J. Sonnenstuhl are the leading experts on alcohol abuse and treatment in the workplace. They have published extensively and conducted numerous studies to ascertain the causes of workplace problem drinking, and to determine the structure, content and effectiveness of employer alcohol policies and employee assistance programs. Amicus the Employee Assistance Professionals Association (EAPA) is the leading membership organization for employee assistance professionals. The EAPA sets and publishes professional standards for employee assistance programs.

Summary of the Argument: At the time of the spill, Exxon did not have an alcohol policy that conformed to industry standards. For safety-sensitive positions, a standard alcohol policy would have included procedures to determine whether an employee was fi t for duty, procedures for reporting violations of the alcohol policy, procedures governing enforcement of that policy, and fi nally, procedures for monitoring employees returning to work after undergoing alcohol or drug treatment. But Exxon’s alcohol “policy” consisted only of bare bones rules, which it did not implement or enforce. Exxon’s culture of tolerance to on-the-job drinking enabled Captain Hazelwood’s alcoholism and allowed for a relapsed alcoholic to be left in charge of a supertanker. Amici conclude that Exxon’s behavior was reckless and warrants no special rule absolving Exxon or any other shipping company from punishment.

Brief Amicus Curiae Of Professor Thomas J. Schoenbaum In Support Of Respondents

Interest of Amicus Curiae: Amicus Schoenbaum is a law professor and attorney who has spent much of his professional life in the practice and study of maritime law. He is the author of numerous books and articles, including ADMIRALTY AND MARITIME LAW (Westgroup ed., 4th ed. 2004), the leading admiralty law text today. This treatise and its previous editions are regularly cited in judicial opinions in maritime cases by federal and state courts, as well as by the Supreme Court.

Summary of the Argument: Professor Schoenbaum fi rst explains why no special rules regarding punitive damages are warranted in maritime law cases. Second, Professor Schoenbaum argues that the rule on vicarious liability for punitive damages adopted in this case by the lower courts is a fair and useful rule for maritime law. There is no reason to create a special rule for vicarious liability limited to the conduct of masters of vessels. Third, neither the Clean Water Act nor any rule of the general maritime law excludes the application of punitive damages in maritime cases. And fi nally, there is no principled way to impose a judicial limit on punitive damages applicable only to maritime law cases. The size of the award of punitive damages in maritime law cases is appropriately limited by the Due Process Clause of the U.S. Constitution, and the award in this case should be upheld.

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Brief For Amicus Curiae Professor Arthur R. Miller In Support Of Respondents

Interest of Amicus Curiae: Amicus Professor Arthur R. Miller is a highly-respected civil procedure scholar, who has written the leading treatise on trial procedure.

Summary of the Argument: Professor Miller addresses whether Exxon waived its ability to argue that the Clean Water Act forecloses punitive damages here. After closely examining the history of this case and the Federal Rules of Civil Procedure, Professor Miller concludes that the Ninth Circuit should never have considered the Clean Water Act preemption argument. He further concludes that it would be bad public policy for the Supreme Court to consider the issue now, because doing so would undermine trial judges’ ability to run their courtrooms and manage large cases like this one.

Brief Amicus Curiae Of Trustees For Alaska, Alaska Center For The Environment, Alaska Community Action On Toxics, Alaska Marine Conservation Council, Cook Inletkeeper, Defenders Of Wildlife, Environmental Law & Policy Center, Eyak Preservation Council, Humane Society Of The United States, Izaak Walton League Of America, National Wildlife Federation, Natural Resources Defense Council, Northern Alaska Environmental Center, Prince William Soundkeeper, Waterkeeper Alliance And The Wilderness Society In Support Of Respondents

Interest of Amici: Environmental amici include a wide range of Alaska and national environmental organizations dedicated to protecting the nation’s wildlife, wild places, and the integrity of the nation’s environmental laws, including the Clean Water Act.

Summary of the Argument: Environmental amici argue that the Clean Water Act (CWA) does not preempt maritime law remedies for damage to private property and other economic damages caused by oil spills. Rather, the CWA works together with state statutes and common law rights and remedies to provide a complementary and robust legal structure for cleaning up the nation’s waters. Indeed, the CWA includes savings clauses that explicitly preserve such private remedies.

Amicus Curiae Brief Of The American Association For Justice And Public Justice, P.C. In Support Of Respondents

Interest of Amici: Amicus the American Association for Justice is a voluntary national bar association whose trial lawyer members primarily represent individual plaintiffs in civil actions. Amicus Public Justice, P.C. is a national public interest law fi rm that specializes in precedent-setting and socially signifi cant civil litigation and is dedicated to pursuing justice for the victims of corporate and governmental abuses.

Summary of the Argument: Amici argue that the Clean Water Act’s provision of civil and criminal penalties does not preclude an award of punitive damages in this case. In fact, they argue that this is precisely the case in which an award of punitive damages can serve as a needed supplement to legislatively set criminal penalties.

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Finally, these amici argue that maritime law imposes no greater limitation on punitive damages than the constitutional due process limits.

Brief For The Pacifi c Coast Federation Of Fishermen’s Associations And The Institute For Fisheries Resources, As Amici Curiae In Support Of Respondents

Interest of Amici: PCFFA is the largest trade association of working commercial family fi shermen on the west coast of the United States. IFR, a separate nonprofi t organization dedicated to the protection and restoration of fi sh resources, also manages PCFFA’s sustainable fi shery conservation and restoration programs. Because the livelihoods of commercial fi shermen and women depend on healthy fi sheries, amicisupport federal maritime rules that adequately punish and deter conduct like Exxon’s that recklessly endangers fi shery resources and their industry.

Summary of the Argument: Amici argue that the Court should affi rm the punitive damage award against Exxon because the rule applied by the lower courts refl ects the realities of ship-to-shore communications in the modern maritime industry, it is consistent with the treatment of other industries in similar circumstances, and its results are fair to all maritime businesses. Amici further argue that the Clean Water Act does not bar recovery of punitive damages in this case.

Brief Amicus Curiae Of The National Fisheries Institute In Support Of Respondents

Interest of Amicus Curiae: Amicus National Fisheries Institute (“NFI”) is the nation’s leading seafood industry advocacy organization. NFI’s nearly 400 members range from small, family-owned fi shing vessels to large, nationally-traded corporations, and include such diverse representatives of business, education and government as Bumble Bee Foods, Gorton’s Seafoods, Seattle Fish Co., Kona Bluewater Farms, Chesapeake Fish Co., Trident Seafoods Corp., Outback Steakhouse, Long John Silvers, The University of Florida, The Oregon State University Seafood Lab, the California Fisheries and Seafood Institute, the New York Sea Grant, the North Carolina State Department of Agriculture, the Gulf Oyster Industry Council, the University of Maryland, the Virginia Polytechnic Institute, the Alaska Sea Grant College Program, the Northwest Fisheries Organization, and the U.S. Department of Commerce. In other words, NFI represents members from every link in the commercial seafood chain, from water to table.

Summary of the Argument: Amicus NFI reminds the Court that the fi shing industry is clearly part of traditional maritime activity, and to assert otherwise would amount to a repudiation of much of maritime history. NFI supports the punitive damages award levied in this case because Exxon’s reprehensible conduct put hundreds of maritime businesses into bankruptcy or in dire fi nancial straits. NFI argues that no special punitive damage rule is warranted in maritime law cases. Moreover, failure to affi rm the punitive award in this case will result in under-deterrence because traditional maritime law rules permitted Exxon to avoid paying for economic damages that did not otherwise result from direct physical contact with the spilled oil.

No. 07-219

IN THE

____________

EXXON SHIPPING CO. and EXXON MOBIL CORP.,

Petitioners,

v.

GRANT BAKER, ET AL.,

Respondents.

____________

On Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit

____________

BRIEF FOR RESPONDENTS ____________

James vanR. Springer David W. Oesting DICKSTEIN SHAPIRO LLP Counsel of Record 1825 Eye Street, N.W. Stephen M. Rummage Washington, DC 20006 David C. Tarshes Jeffrey L. Fisher Brian B. O’Neill DAVIS WRIGHT TREMAINE LLP FAEGRE & BENSON LLP Suite 800 2200 Wells Fargo Center 701 W. Eighth Avenue 90 S. Seventh Street Anchorage, AK 99501 Minneapolis, MN 55402 (907) 257-5300

TABLE OF CONTENTS

INTRODUCTION...........................................................1

STATEMENT .................................................................3

SUMMARY OF ARGUMENT......................................16

ARGUMENT ................................................................19

I. Both Captain Hazelwood’s Recklessness and That of Exxon’s Top Management Subjected Exxon to Punitive Liability..................................19

A. Exxon Was Responsible for Captain

Hazelwood’s Acts Because He Was a Managerial Agent.........................................21

B. Exxon’s Own Recklessness Subjected

the Corporation to Punitive Liability. .........36 II. Exxon’s Tardy Invocation of the Clean Water

Act Does Not Inhibit Respondents’ Ability to Recover Punitive Damages. .................................39

A. Exxon Irretrievably Waived Its CWA

Argument......................................................39

B. The CWA Does Not Foreclose Private Claims for Punitive Damages Based on Private Harm................................................44

III. The Size of the Punitive Award Is

Permissible. ..........................................................52

A. Maritime Law Follows Traditional Common-Law Review, Which This Award Satisfies. ...........................................53

ii

B. Even if This Court Were to Create New Maritime-Law “Guideposts,” the Award Would Satisfy Them.....................................57

CONCLUSION .............................................................69

APPENDIX: Selected Provisions of the Trans-Alaska Pipeline Authorization Act of 1973...............................................................1a

iii

TABLE OF AUTHORITIES

CASES

Albuquerque Concrete Coring Co. v. Pan-Am World Servs., 879 P.2d 772 (N.M. 1994) .................24

Amchem Prods. v. Windsor, 521 U.S. 591 (1997)..................................................61

American Dredging Co. v. Miller, 510 U.S. 443 (1994)..................................................27

American Export Lines v. Alvez, 446 U.S. 274 (1980)..................................................24

American Soc’y of Mech. Eng’rs v. Hydrolevel Corp., 456 U.S. 556 (1982).................................26, 32

Anderson v. Creighton, 483 U.S. 635 (1987)..................................................30

Askew v. American Waterways Opers., 411 U.S. 325 (1973)..................................................47

Bagley v. Shortt, 410 S.E.2d 738 (Ga. 1991) .......................................61

Barry v. Edmunds, 116 U.S. 550 (1886)..................................................53

Basquall v. The City of Carlisle, 39 Fed. 807 (D. Or. 1889).........................................32

Bates v. Merritt Seafood, Inc., 663 F. Supp. 915 (D.S.C. 1987)................................29

iv

BMW v. Gore, 517 U.S. 559 (1996).......................................... passim

Boudoin v. Lykes Bros. S.S. Co., 348 U.S. 336 (1955)..................................................56

Brady v. Dairy Fresh Prods., 974 F.2d 1149 (9th Cir. 1992)..................................25

Brady v. Roosevelt S.S. Co., 317 U.S. 575 (1943)..................................................49

Briner v. Hyslop, 337 N.W.2d 858 (Iowa 1983)..............................25, 33

Brown v. Swineford, 44 Wis. 282 (1878)....................................................62

Burlington N. & Santa Fe Ry. v. White, 126 S. Ct. 2405 (2006)..............................................62

Canny v. Dr. Pepper/Seven-Up Bottling Group, 439 F.3d 894 (8th Cir. 2006)....................................41

CEH, Inc. v. F/V Seafarer, 70 F.3d 694 (1st Cir. 1995) .............................. passim

City of Milwaukee v. Illinois, 451 U.S. 304 (1981)............................................46, 49

City of Springfield v. Kibbe, 480 U.S. 257 (1987) (per curiam) ............................43

Colegrove v. The S.S. City of Columbia, 11 Haw. 693 (1899) ..................................................22

v

Cone v. West Va. Pulp & Paper, 330 U.S. 212 (1947)..................................................42

Continental Oil Co. v. Bonanza Corp., 706 F.2d 1365 (5th Cir. 1983) (en banc)..................29

Conwood Co., L.P. v. U.S. Tobacco Co., 290 F.3d 768 (6th Cir. 2002)......................................1

Cook v. Ellis, 6 Hill 466 (N.Y. 1844) ..............................................52

Cooper Indus. v. Leatherman Tool Group, 532 U.S. 424 (2001).......................................... passim

Coryell v. Colbaugh, 1 N.J.L. 77 (1791).....................................................62

Coryell v. Phipps, 317 U.S. 406 (1943)..................................................29

Cupp v. Naughten, 414 U.S. 141 (1973)..................................................36

Curtis Publ’g Co. v. Butts, 388 U.S. 130 (1967)..................................................37

Dahl v. Sittner, 474 N.W.2d 897 (S.D. 1991).....................................33

Day v. Woodworth, 54 U.S. (13 How.) 363 (1851) ...............................1, 53

Denver & R.G. Ry. v. Harris, 122 U.S. 597 (1887)..................................................22

vi

Dias v. The Revenge, 7 F. Cas. 637 (D. Penn. 1814) (No. 3,877) ...............22

Dooley v. Korean Air Lines, 524 U.S. 116 (1998)............................................47, 48

Doralee Estates, Inc. v. Cities Serv. Oil Co., 569 F.2d 716 (2d Cir. 1977) .....................................33

East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1986)..........................................23

Eberhart v. United States, 546 U.S. 12 (2006)....................................................43

Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256 (1979) .....................24

EEOC v. W&O, Inc., 213 F.3d 600 (11th Cir. 2000)............................60, 61

Empresa Lineas Maritimas Argentinas S.A. v. United States, 730 F.2d 153 (4th Cir. 1984) ...........56

Exxon Co., U.S.A. v. Sofec, Inc., 517 U.S. 830 (1996)..............................................3, 24

Exxon Shipping Co. v. Airport Depot Diner, 120 F.3d 166 (9th Cir. 1997)..............................13, 63

Fay v. Parker, 53 N.H. 342 (1872) ...................................................62

Funk v. United States, 290 U.S. 371 (1933)..................................................33

vii

Gall v. United States, 128 S. Ct. 586 (2007)................................................54

Gasperini v. Center for Humanities, Inc., 518 U.S. 415 (1996)............................................13, 54

Getty Ref. & Mktg. Co. v. MT FADI B, 766 F.2d 829 (3d Cir. 1985) .....................................63

GMAC v. Froelich, 273 F.2d 92 (D.C. Cir. 1959) ....................................33

Goddard v. Grand Trunk Railway, 57 Me. 202 (1869).....................................................26

Great Lakes Dredge & Dock Co. v. City of Chicago, 3 F.3d 225 (7th Cir. 1993).........................29

Hanover Ins. Co. v. Hayward, 464 A.2d 156 (Me. 1983) ..........................................52

Hardeman v. City of Albuquerque, 377 F.3d 1106 (10th Cir. 2004)................................54

Hayes Sight & Sound v. Oneok, Inc., 136 P.3d 428 (Ks. 2006) ...........................................61

Holloway Concrete Prods. v. Beltz-Beatty, Inc., 293 F.2d 474 (5th Cir. 1961)....................................29

Hopkins v. Atlantic & St. Lawrence R.R., 36 N.H. 9 (1857) .................................................21, 22

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977)............................................62, 63

viii

In re A.H. Robins Co., Inc., 86 F.3d 364 (4th Cir. 1996)........................................1

In re Esta Later Charters, 875 F.2d 234 (9th Cir. 1989)..............................55, 56

In re the Exxon Valdez, 229 F.3d 790 (9th Cir. 2000)....................................14

In re Glacier Bay, 944 F.2d 577 (9th Cir. 1991)..............................45, 56

In re New Orleans Train Car Leakage Fire Litig., 795 So. 2d 364 (La. App. 2001) .......................1

In re Ta Chi Navigation Corp., 513 F. Supp. 148 (E.D. La. 1981) ............................29

In re Tug Allie-B., 273 F.3d 936 (11th Cir. 2001)..................................45

In re Wilson, 451 F.3d 161 (3d Cir. 2006) .......................................1

International Paper Co. v. Ouellette, 479 U.S. 481 (1987)............................................46, 47

Jaffee v. Redmond, 518 U.S. 1 (1996)......................................................33

Johansen v. Combustion Engineering, Inc., 170 F.3d 1320 (11th Cir. 1999)................................44

Johnson v. Rogers, 763 P.2d 771 (Utah 1988) ........................................33

ix

Jones v. United States, 527 U.S. 373 (1999)..................................................36

Knabe v. National Supply Div., 592 F.2d 841 (5th Cir. 1979)....................................44

Kolstad v. American Dental Ass’n, 527 U.S. 526 (1999)................................ 20, 25, 34, 35

Laidlaw Transit v. Crouse, 53 P.3d 1093 (Alaska 2002) .....................................33

Lake Shore & M.S. Ry. v. Prentice, 147 U.S. 101 (1893).......................................... passim

Lewis v. Lewis & Clark Marine, 531 U.S. 438 (2001)..................................................55

Little Rock Ry. & Elec. Co. v. Dobbins, 95 S.W. 788 (Ark. 1906) ...........................................26

Louis Pizitz Dry Goods Co. v. Yeldell, 274 U.S. 112 (1927)..............................................1, 27

Louisiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019 (5th Cir. 1985)..................................63

Lowery v. Circuit City Stores, 206 F.3d 431 (4th Cir. 2000)....................................35

Lyons v. Jefferson Bank & Trust, 994 F.2d 716 (10th Cir. 1993)..................................42

Matter of P&E Boat Rentals, Inc., 872 F.2d 642 (5th Cir. 1989)....................................23

x

McNamara v. King, 7 Ill. 432 (1845) ........................................................62

Middlesex County Sewage Auth. v. National Sea Clammers Ass’n, 453 U.S. 1 (1981) .........................46

Miles v. Apex Marine Corp., 498 U.S. 19 (1990).................................. 24, 27, 48, 56

Missouri Pac. Ry. v. Humes, 115 U.S. 512 (1885)..................................................59

Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978)............................................48, 49

Morales v. Trans World Airlines, 504 U.S. 374 (1992)..................................................46

Motorola Credit Corp. v. Uzan, 509 F.3d 74 (2d Cir. 2007) .........................................1

Neder v. United States, 527 U.S. 1 (1999)................................................36, 37

New York Cent. & Hudson River R.R. v. United States, 212 U.S. 481 (1909) .....................................28

Newell v. Norton & Ship, 70 U.S. 257 (1865)......................................................3

Norwich Co. v. Wright, 80 U.S. 104 (1871)....................................................55

Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1999).............................................. passim

xi

Philip Morris, U.S.A. v. Williams, 127 S. Ct. 1057 (2007)..............................................36

Poe v. PPG Indus., 782 So. 2d 1168 (La. App. 2001) ..............................44

Ralston v. The States Rights, 20 F. Cas. 201 (E.D. Pa. 1836).................................23

Rhyne v. K-Mart Corp., 594 S.E.2d 1 (N.C. 2004)..........................................61

Robbins v. Trident Marine Corp., 613 F. Supp. 41 (N.D. Ohio 1985)............................30

Robert C. Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297 (1959).......................................49

Robins Dry Dock & Repair v. Flint, 275 U.S. 303 (1927)..................................................63

Robles v. Exxon Corp., 862 F.2d 1201 (5th Cir. 1989)..................................42

Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985)..................................................51

Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984)..................................................47

Smith v. Wade, 461 U.S. 30 (1983)..............................................26, 50

South Port Marine v. Gulf Oil Ltd. P’ship, 234 F.3d 58 (1st Cir. 2000) ......................................43

xii

Southern Pac. Co. v. Jensen, 244 U.S. 205 (1917)..................................................64

Sprietsma v. Mercury Marine, 537 U.S. 51 (2002)....................................................42

State Farm Mut. Auto. Ins. v. Campbell, 538 U.S. 408 (2003).......................................... passim

Stuart v. Western Union Tel. Co., 66 Tex. 580 (1885) ..............................................61, 62

Texaco, Inc. v. Pennzoil, Co., 729 S.W.2d 768 (Tex. App. 1987) ..............................1

The Amiable Nancy, 16 U.S. 546 (1818)............................................ passim

The Genesee Chief, 53 U.S. 443 (1851)....................................................30

The Golden Gate, 16 F. Cas. 141 (C.C.N.D. Cal. 1836) ........................23

The Linseed King, 285 U.S. 502 (1932)..................................................32

The Ludlow, 280 F. Cas. 162 (N.D. Fla. 1922) .............................23

The Main v. Williams, 152 U.S. 122 (1894)..................................................57

The Marion E. Bulley, 94 F.2d 646 (2d Cir. 1938) .......................................30

xiii

The Seven Brothers, 170 F. 126 (D.R.I. 1909)...........................................23

The State of Missouri, 76 F. 376 (7th Cir. 1896)..........................................23

TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443 (1993).......................................... passim

U.S. Steel Corp. v. Fuhrman, 407 F.2d 1143 (6th Cir. 1969)......................23, 31, 37

United States ex rel. Bryant v. Williams Bldg. Corp., 158 F. Supp. 2d 1001 (D.S.D. 2001) .............34

United States v. A&P Trucking, 358 U.S. 121 (1958)..................................................28

United States v. Locke, 529 U.S. 89 (2000)................................................9, 69

United States v. O’Connell, 890 F.2d 563 (1st Cir. 1989) ....................................25

United States v. Reliable Transfer Co., 421 U.S. 397 (1975)..................................................33

United States v. Texas, 507 U.S. 529 (1993)..................................................49

Unitherm Food Sys. Co. v. Swift-Eckrich, Inc., 546 U.S. 394 (2006)............................................42, 43

Wise v. Daniel, 190 N.W. 746 (Mich. 1922) ......................................62

xiv

Yamaha Motor Corp. v. Calhoun, 516 U.S. 199 (1996)..................................................47

Yohay v. City of Alexandria Employees Credit Union, 827 F.2d 967 (4th Cir. 1987)........................25

STATUTES AND RULES

18 U.S.C. § 3572(a)........................................................66

28 U.S.C. § 2674 ............................................................49

Clean Water Act, 33 U.S.C. § 1311 et seq. ...........................................18

33 U.S.C. § 1319.......................................................40

33 U.S.C. § 1321.................................................10, 40

33 U.S.C. § 1321(b)(4) ..............................................48

33 U.S.C. § 1321(o).............................................47, 50

33 U.S.C. § 1365.......................................................40

33 U.S.C. § 1365(e)...................................................40

Oil Pollution Act of 1990, 33 U.S.C. § 2702 et seq. .....................................28, 43

33 U.S.C. § 2704(c)(1) ..............................................28

Trans-Alsaka Pipeline Authorization Act of 1973, Pub. L. No. 93-153, 87 Stat. 584..........................3, 39

43 U.S.C. § 1653(c)...................................................40

xv

43 U.S.C. § 1653(c)(3) ........................................40, 45

Limitation of Shipowners’ Liability Act, 46 U.S.C. § 30501 et seq. ................................. passim

49 U.S.C. § 44303(b)......................................................49

U.S.S.G. § 8B2.1 ............................................................34

U.S.S.G. § 8C2.5(f).........................................................34

U.S.S.G. § 8C2.8 ............................................................66

U.S.S.G. § 8C3.3 ............................................................66

Ala. Code 6-11-21(h)......................................................61

Alaska Stat. 46.03.759(a) ..............................................65

Alaska Stat. 46.03.759(c) ..............................................65

Miss. Code Ann. § 11-1-65(3)(d)....................................64

Mont. Code Ann. 27-1-220(3) ........................................61

N.C. Gen. Stat. § 1D-26.................................................65

N.J. Stat. 2A:15-5.14(c) .................................................64

Fed. R. Civ. P. 6(b) ........................................................43

Fed. R. Civ. P. 49(a).......................................................42

Fed. R. Civ. P. 50...............................................18, 42, 43

Fed. R. Civ. P. 50(a)(2) ..................................................41

Fed. R. Civ. P. 50(b).......................................................41

xvi

Fed. R. Civ. P. 58(2).......................................................42

Fed. R. Civ. P. 58(a)(2)(B) .............................................42

OTHER AUTHORITIES

American Law Institute, 50th Annual Meeting Proceedings (May 16, 1973) .....................................25

Assault: Criminal Liability as Barring or Mitigating Recovery of Punitive Damages, 98 A.L.R.3d 870 (1980) ............................................51

Exxon Mobil 2006 Annual Report, available at http://www.exxonmobil.com/corporate/files/ corporate/XOM_2006_SAR.pdf ...................................3

HENRY FLANDERS, A TREATISE ON THE LAW OF SHIPPING (1853)...................................................22

10 WILLIAM M. FLETCHER, CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS (perm. ed., rev. vol. 2001) ..................................33, 34

Marc Galanter & David Luban, Poetic Justice: Punitive Damages and Legal Pluralism, 42 AM. U. L. REV. 1393 (1993)............................68, 69

Thomas C. Galligan, Jr., Augmented Awards: The Efficient Evolution of Punitive Damages, 51 LA. L. REV. 3 (1990) .............................................69

GRANT GILMORE & CHARLES L. BLACK, JR., THE LAW OF ADMIRALTY (2d ed. 1975) .........32, 44, 56

xvii

Andrew W. Homer, Red Sky at Morning: The Horizon for Corporations, Crew Members, and Corporate Officers as the United States Continues Aggressive Criminal Prosecution of Intentional Pollution from Ships, 32 TUL. MAR. L.J. 149 (2007) ...................................28

H.R. REP. NO. 101-200 (1989) .......................................10

Int’l Maritime Org., IMO and Dangerous Goods at Sea (1996).............................................................32

Intoxication of Automobile Driver as Basis for Awarding Punitive Damages, 33 A.L.R.5th 303 (1995) .....................................51, 52

2 JOHN KIRCHER & CHRISTINE WISEMAN, PUNITIVE DAMAGES LAW & PRACTICE (2d ed. 2005) .............................................................24

Kimberly D. Krawiec, Organizational Misconduct: Beyond the Principal-Agent Model, 32 FLA. ST. U. L. REV. 571 (2005).................34

Letter from United States and Alaska to Counsel for Natives and Native Corporations (Oct. 31, 1991) ..........................................................49

THEOPHILUS PARSONS, A TREATISE ON MARITIME LAW (1859)................................................................22

W. PROSSER, HANDBOOK OF THE LAW OF TORTS (4th ed. 1971)............................................................51

KENNETH REDDEN, PUNITIVE DAMAGES (1980) .............62

xviii

RESTATEMENT (SECOND) OF AGENCY § 217C .................24

RESTATEMENT (SECOND) OF AGENCY § 229....................34

RESTATEMENT (THIRD) OF AGENCY § 7.03................24, 25

RESTATEMENT (SECOND) OF TORTS § 908.......................51

RESTATEMENT (SECOND) OF TORTS § 908(2) ..................66

RESTATEMENT (SECOND) OF TORTS § 909.................24, 32

David Robertson, Punitive Damages in American Maritime Law, 28 J. MAR. L. & COM. 73 (1997)........................................2, 22, 55

PETER B. SCHROEDER, CONTACT AT SEA (1967) .......31, 32

S. REP. NO. 101-94 (1989), reprinted in 1990 U.S.C.C.A.N. 722......................................................10

2 THOMAS G. SHEARMAN & AMASA A. REDFIELD, A TREATISE ON THE LAW OF NEGLIGENCE (5th ed. 1898)............................................................37

Jeffrey W. Short, et al., Slightly Weathered Exxon Valdez Oil Persists in Gulf of Alaska Beach Sediments After 16 Years, 41 ENVTL. SCI. & TECH. 1245 (National Marine Fisheries Serv. 2007)................................................................16

2 H.G. WOOD, A TREATISE ON THE LAW OF RAILROADS (1885) .....................................................26

9B CHARLES A. WRIGHT, ET AL., FEDERAL PRACTICE & PROCEDURE § 2537 (3d ed. 2008) .........41

INTRODUCTION “It is a well-established principle of the common

law, that in ... all actions on the case for torts,” juries may impose punitive damages. Day v. Woodworth, 54 U.S. (13 How.) 363, 371 (1851). “Imposing exemplary damages on [a] corporation when its agent commits [a tort] creates a strong incentive for vigilance by those in a position ‘to guard substantially against the evil to be prevented.’” Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 14 (1999) (quoting Louis Pizitz Dry Goods Co. v. Yeldell, 274 U.S. 112, 116 (1927)). Punitive damages also punish the corporation for its wrongdoing and force it to internalize the full consequences of its misconduct. BMW v. Gore, 517 U.S. 559, 568 (1996); id. at 592-93 (Breyer, J., concurring).1

Exxon asks this Court to turn its back on these settled principles because this is a maritime case. According to Exxon, special maritime concerns require unique judge-made limitations on punitive liability for corporate vessel operators.

1 As corporations and the ramifications of their wrongdoing have grown, so have punitive awards in cases involving significant harm. See, e.g., Motorola Credit Corp. v. Uzan, 509 F.3d 74, 87 (2d Cir. 2007) (upholding $1 billion award); In re Wilson, 451 F.3d 161, 165 (3d Cir. 2006) ($3.75 billion settlement for claim seeking punitive damages); In re A.H. Robins Co., Inc., 86 F.3d 364, 367-68 (4th Cir. 1996) ($2.47 billion settlement for claim seeking punitive damages); Texaco, Inc. v. Pennzoil, Co., 729 S.W.2d 768, 866 (Tex. App. 1987) (upholding $1 billion award); In re New Orleans Train Car Leakage Fire Litig., 795 So. 2d 364, 387 (La. App. 2001) (upholding $850 million award). The same is true with respect to antitrust treble damages. See Conwood Co., L.P. v. U.S. Tobacco Co., 290 F.3d 768, 795 (6th Cir. 2002) (upholding $1.05 billion award).

2

Since the earliest days of this Nation, however, it has been clear that “[c]ourts of admiralty allow [exemplary damages] upon the same principles, as they are often allowed damages in cases of torts, by courts of common law.” Boston Mfg. Co. v. Fiske, 2 Mason 119, 121 (1820) (Story, J.). “Although rarely imposed, punitive damages have long been recognized as an available remedy in general maritime actions” – just as in other tort actions – “where [a] defendant’s intentional or wanton and reckless conduct amounted to a conscious disregard of the rights of others.” CEH, Inc. v. F/V Seafarer, 70 F.3d 694, 699 (1st Cir. 1995); see also David Robertson, Punitive Damages in American Maritime Law, 28 J. MAR. L. & COM. 73, 86-98 (1997) (maritime law always has “firmly recognized” availability of punitive damages).

This case fits well within that archetype. “The evidence established that Exxon gave command of an oil tanker to a man they knew was an alcoholic who had resumed drinking after treatment that required permanent abstinence, and had previously taken command in violation of Exxon’s alcohol policies.” Pet. App. 83a. Unlike any previous shipping disaster, Exxon’s reprehensible conduct inflicted such widespread harm to private parties’ interests that the district court, at Exxon’s request, certified a mandatory punitive damages class to protect Exxon from the threat of multiple punitive damage verdicts. Pet. App. 67a. The 83-day, three-phase trial and subsequent appeals established that 32,677 claimants suffered an average of about $15,500 in recoverable economic harm, apart from substantial unrecoverable economic and non-economic harm.

3

Plaintiffs were awarded an average of approximately $76,500 each in punitive damages – just less than five times their average compensable economic harm. The aggregate punitive judgment stands at $2.5 billion, or about three weeks of Exxon’s current net profits.2 This judgment is rational and propor-tionate, and should be affirmed.

STATEMENT Respondents set forth the facts of this case as

found by the courts below and other governmental entities, with citations to the trial record only when necessary to fill out the picture. Exxon claims that some of these matters were “hotly disputed,” Petrs. Br. 9 n.3; points elsewhere to “Exxon’s evidence,” id. 9; and recites as “facts” various snippets of friendly testimony. But the jury “plainly did not” interpret the evidence according to the tale Exxon tells. Pet. App. 87a. Nor did the district court or the Ninth Circuit in performing de novo due process reviews. Pet. App. 22a-31a, 120a-124a, 149a-157a. More fundamentally, this is not the place to argue about evidence that a district court observed over a five-month trial and that it and a court of appeals already have examined, sorted, and distilled from an immense record. See Exxon Co., U.S.A. v. Sofec, Inc., 517 U.S. 830, 841 (1996); Newell v. Norton & Ship, 70 U.S. 257, 267-68 (1865).

1. a. In 1973, Congress passed the Trans-Alaska Pipeline Authorization Act (TAPAA), Pub. L. No. 93-153, 87 Stat. 584, which permitted oil companies, including Exxon, to bring crude oil from Alaska’s

2 Exxon Mobil 2006 Annual Report 5, available at http://www. exxonmobil.com/corporate/files/corporate/XOM_2006_SAR.pdf.

4

North Slope to market. From the pipeline’s terminus in Valdez, oil tankers would travel through the “icy and treacherous waters of Prince William Sound,” Pet. App. 22a, before heading southward.

As the proceedings leading to TAPAA emphasized, “[t]he economy of this area depends almost entirely on commercial fishing, the processing of the catch, and related activities.” JA1442; see also Pet. App. 41a, 155a; JA1439, 1475-81. The Sound and adjacent waters also are home to thousands of Native Alaskans, who have engaged for centuries in subsistence living. Congress therefore passed TAPAA only after securing the industry’s assurance that tankers would employ extensive safety measures to protect the Sound’s pristine and resource-rich waters. See Br. of Alaska Legislative Council 4, 10-13.

Like the rest of the industry, Exxon knew the consequences of breaking its commitment – namely, that “a major oil spill in the Valdez area would cause [an] incalculable disaster to the rich fisheries,” as well as to Native Alaskans’ subsistence cultures. JA1488; see also Pet. App. 122a, 232a; JA213-14, 1437-41, 1475-94. The official contingency plan for the area acknowledged that the oil companies could not contain any spill exceeding 200,000 barrels (8.4 million gallons). SJA60sa-62sa. And the industry knew that oil from such a spill would “persist for years.” C.A. 2004 Supp. ER1114.

b. Exxon Shipping Company ran Exxon’s tanker operations out of the Port of Valdez.3 An alcoholic 3 Petitioners stipulated that Exxon Corporation (now Exxon Mobil Corporation) and its subsidiary Exxon Shipping Company would be treated as one entity. JA212-13. Except where

5

culture pervaded the company. Supertanker crews partied with alcohol aboard ship; drank together in port; “destroyed” confiscated liquor by drinking it; and violated rules that forbade returning to duty within four hours of drinking.4 Although on paper Exxon had an alcohol policy that prohibited drinking aboard ship, it did not enforce the policy, and Exxon’s crews were “pretty conscious of” the fact that reporting alcohol violations by officers “could come back to haunt you.”5

Exxon put Captain Joseph Hazelwood in command of the EXXON VALDEZ, one of the thousand-foot supertankers that transited Prince William Sound. Hazelwood was a drinking alcoholic, and Exxon knew it. In 1985, Exxon officials learned through internal complaints that Hazelwood had been drinking aboard ship and had been drunk on several occasions when he boarded ship.6 Because Hazelwood had not self-reported his on-duty drinking, JA355-56, Exxon’s written alcohol policy called for him to be fired. JA599. Exxon, however, did not fire him.

Hazelwood instead attended a 28-day alcohol treatment program and started, but dropped out of, a prescribed after-care rehabilitation program. Pet. App. 63a. Nevertheless, after “fail[ing] to evaluate” his fitness for duty or “consider[ing] whether he

context requires, this brief refers to the two collectively as “Exxon.” 4 JA226-37, 306-08, 314-15, 331-38, 379-80, 423-24, 445-47, 499, 562-71, 639-40, 649, 750-54; SJA118sa-29sa. 5 JA721-22; see also JA372-73, 434, 537, 566-68, 628-35, 707, 713, 742-43, 1012, 1095-96, 1104; SJA360sa. 6 JA1033-34; SJA135sa-36sa.

6

should be given a shoreside assignment,” Exxon reassigned him to commanding supertankers. Pet. App. 256a; SJA210sa. Hazelwood’s supervisor held his back-to-work meeting while enjoying a beer in a bar. JA294-95.

Less than a year after returning to duty, Hazelwood relapsed. Pet. App. 63a-64a, 121a. He did not hide his drinking. JA306. He drank – often with other Exxon personnel – “in bars, parking lots, apartments, airports, airplanes, restaurants, hotels, at various ports, and aboard Exxon tankers.” Pet. App. 255a-256a.7 He also ignored rules requiring him to remain on the bridge while transiting Prince William Sound. JA432-33, 448.

Hazelwood’s supervisors promptly began receiving reports that he “had fallen off the wagon.” Pet. App. 63a-64a, 154a-155a; JA409-26, 849. The first report was relayed to the President of Exxon Shipping, who was told that “Hazelwood was acting kind of crazy or kind of strange.” JA960-61.

Shortly before the official 1988 stewardship review for the EXXON VALDEZ, Hazelwood’s supervisors, one of whom reported directly to the President, witnessed Hazelwood’s relapse. Following a loud encounter in which Hazelwood was “erratic” and “abusive” toward his boss, the supervisor told another officer that “Joe had perhaps gone back to drinking because of his behavior.” SJA374sa-375sa. During the review meeting itself, the drunken Hazelwood, whose “physical appearance was very bad” and whose “eyes were bloodshot,” fell asleep. 7 JA227-29, 235, 306-08, 314-37, 357, 379-80, 411-26, 444-47, 562-71, 640-42, 647-50, 694-746, 752-57, 830, 848-50; SJA364sa-383sa; BIO App. 42a-43a.

7

SJA379sa-380sa. The supervisor and his boss signaled the officer conducting the review to “just keep rolling ... as if nothing happened.” SJA380sa-383sa.

“[T]he highest executives in Exxon Shipping” continued to receive reports concerning Hazelwood’s drinking. Pet. App. 64a. Less than two weeks before the grounding of the EXXON VALDEZ, Hazelwood’s supervisor was told that Hazelwood had been drinking and insulting another captain over the ship’s radio. JA693-707, 727-35, 745-46. It was apparent that “[s]omething was wrong with” Hazel-wood. JA704. As the district court summarized:

For approximately three years, Exxon’s management knew that Captain Hazelwood had resumed drinking, knew that he was drinking on board their ships, and knew that he was drinking and driving. Over and over again, Exxon did nothing to prevent Captain Hazelwood from drinking and driving.

Pet. App. 154a; see also id. 29a, 64a, 83a, 89a-91a, 121a-122a, 153a-157a. To make matters worse, Exxon “routine[ly]” staffed its ships, including Hazelwood’s, with overworked and fatigued crews. Pet. App. 90a, 254a; SJA70sa.

c. On the night of March 23, 1989, the EXXON VALDEZ departed Valdez loaded with 53 million gallons of crude oil. Hazelwood was the captain and the only officer aboard licensed to navigate through Prince William Sound. Predictably, he also was drunk – “so drunk that a non-alcoholic would have passed out.” Pet. App. 87a. Before boarding the ship, Hazelwood had consumed between five and nine double vodkas (between fifteen and twenty-

8

seven ounces of 80-proof alcohol) in waterfront bars. Pet. App. 64a.

Shortly after getting underway, Hazelwood – his blood alcohol level at about .241, Pet. App. 256a – steered the vessel away from some ice and toward Bligh Reef, a “known and foreseen hazard.” Pet. App. 61a, 253a. He put the ship on an “autopilot program [that] sped the vessel up,” something not ordinarily done when a vessel is outside shipping lanes. Pet. App. 63a, 87a. With the reef “only minutes away,” Pet. App. 253a, Hazelwood abandoned the bridge and went down to his cabin. He left control to the third mate – who was “fatigued” on his second consecutive watch – with “vague” orders concerning the “tricky” turn necessary to avoid the approaching reef. Pet. App. 63-64a, 87a; JA469-72; SJA294sa. With the third mate unable to perform both his own job and Hazelwood’s, the supertanker ran aground.

Exxon invites this Court to infer that the “[i]mmediate cause” of the grounding was the mate’s failure to execute a simple turn. Petrs. Br. 2. But Exxon stipulated in the district court that Hazelwood “was negligent in leaving the bridge of the vessel on the night of the grounding, that such negligence was a legal cause of the oil spill, and that the Exxon defendants are responsible for this act of negligence.” JA212. Expert mariners elaborated that the turn was not simple, Pet. App. 62a-63a, and Hazelwood’s decision-making that night defied “common sense.” Pet. App. 63a, 87a; JA460-84. Hazelwood took these improper actions because “his judgment was impaired by alcohol,” Pet. App. 63a, 87a – a fact apparent from the tape of his contemporaneous

9

report of the grounding to the Coast Guard. PX92A (Resps’ DVD).8

After speaking by satellite phone with an Exxon executive in San Francisco, Hazelwood tried to rock the supertanker off the reef. Pet. App. 122a, 234a n.13; JA223-24, 354-55, 872-76; SJA295sa. Had he succeeded, the ship “would probably have foundered, risking the loss of the entire cargo and the lives of those aboard.” Pet. App. 122a, 167a-68a.

As it was, the reef ruptured the ship’s hull, releasing 11 million gallons of crude oil into the Sound, causing the “most notorious oil spill in recent times.” United States v. Locke, 529 U.S. 89, 96 (2000). Wind and water spread the oil across 600 linear miles (roughly the distance from Cape Cod, Massachusetts, to Cape Lookout, North Carolina) and over 10,000 square miles of the surrounding marine ecosystem. For days, this situation was “exacerbated greatly by an unreasonably slow, confused and inadequate response by industry and government that failed miserably in containing the

8 Exxon’s suggestion, Petrs. Br. 9 n.3, that Hazelwood was not drunk illustrates just how brazenly its Statement of the Case ignores the detailed decisions below and how severely Exxon slants the record. The jury heard testimony about Hazelwood’s drinking on March 23 from crew members who drank with him, bartenders, another customer, and Hazelwood himself. JA219-21, 239-55, 334-35; Tr. 2729, 2766-67. The state-employed pilot testified that he smelled alcohol on Hazelwood’s breath before the grounding, JA267-71, as did Coast Guard officers who boarded the ship after the grounding. JA489-92, 1015-16. Coast Guard blood alcohol tests confirmed that Hazelwood had been extremely drunk. Pet. App. 108a, 256a-257a. Even Exxon’s Chairman conceded shortly after the spill that Hazelwood was “drunk,” PX2 at 7:05 (Resps’ DVD); SJA207sa, and Exxon fired him for that reason. SJA198sa.

10

spill and preventing damage.” S. REP. NO. 101-94, at 2 (1989), reprinted in 1990 U.S.C.C.A.N. 722, 723-24.

d. Eventually, “[i]n keeping with ... legal obligations” imposing a duty even on innocent spillers to clean up toxic discharges, “Exxon undertook a massive cleanup effort.” Pet. App. 124a (citing 33 U.S.C. § 1321). But a congressional report determined that Exxon’s response was “wholly inadequate.” H.R. REP. NO. 101-200, at 6 (1989). Exxon cleaned up only 13-14% of the oil. DX5505A.

What is more, the jury could have concluded that Exxon directed its cleanup efforts more at appearances than effects. In taped conversations with the Alyeska Emergency Center, an Exxon official was reminded, and acknowledged, that the oil industry’s contingency plan could not contain a spill this big. PX722A (Resps’ DVD). He nonetheless urged the deployment of “bright and yellow” cleanup equipment to avoid a “public relations nightmare.” Id. at 1:50, 6:03. Exxon’s representative explained: “I don’t care so much whether [the equipment is] working or not but ... it needs to be something out there that looks like an effort is being made....” Id. at 1:54. “I don’t care if it picks up two gallons a week. Get that shit out there ... and ... standing around where people can see it.” Id. at 6:37.

Meanwhile, Exxon’s Chairman publicly acknow-ledged that its executives had known about Hazelwood’s alcoholism and that it had been a “gross error” to assign him to the safety-sensitive position of ship master. PX2 at 19:40 (Resps’ DVD). He called the assignment a “bad judgment ... on a going in basis.” Id. at 15:03.

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The oil spill “disrupted the lives (and livelihood) of thousands of [people in the region] for years.” Pet. App. 24a. The likelihood that any “fish harvested [would be] adulterated by oil,” JA1118, required the State of Alaska to close fishing seasons in 1989. The spill also reduced harvests in later years and depressed the prices of all Alaska fish, including those from unoiled areas. JA1155-56. The oil damaged approximately 1,300 miles of shoreline, much of it privately owned. It destroyed the subsistence activities of Native Alaskans, “for whom subsistence fishing is not merely a way to feed their families but an important part of their culture.” Pet. App. 123a. As one would expect from a disaster that cripples an entire region’s economy, “[t]he social fabric of Prince William Sound and Lower Cook Inlet was torn apart,” producing a high incidence of severe depression, post-traumatic stress disorder, and generalized anxiety disorder among those whose lives depended on harvesting the resources of the Sound. Pet. App. 150a-151a, 166a-167a; SJA386sa-572sa.

2. Thousands of individuals and local businesses sued Exxon respecting their private harm. The Limitation of Shipowners’ Liability Act, now codified at 46 U.S.C. § 30501 et seq., generally allows a shipowner six months to petition to limit its liability (to the value of the vessel and cargo) if it lacked “privity or knowledge” as to crewmembers’ tortious conduct. But Exxon’s counsel advised that Exxon “will never be able to sustain its burden to show lack of privity or knowledge with the use of alcohol by Captain Hazelwood,” BIO App. 43a, and Exxon did not even attempt limitation.

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The federal government and State of Alaska separately pursued civil and criminal cases against Exxon for the oil spill’s environmental impacts. But Exxon quickly entered into settlements with the governments – pleading guilty to three crimes that were punishable by a combined $3 billion fine, but paying only $25 million, and agreeing in the civil matters to pay $900 million over ten years for environmental restoration. Pet. App. 173a-175a, 240a-241a.

Exxon made some compensatory payments to some commercial fishermen, but it refused to pay anything for most of the harm it caused. See Pltfs. 2004 C.A. Br. 47-49. It also refused to compensate other injured groups and opposed administrative relief from the Trans-Alaska Pipeline Fund. Id.; JA1428-29. So plaintiffs proceeded with this litigation, providing the first opportunity for an adversarial proceeding to develop the facts fully. Pet. App. 174a n.111.

The district court “did a masterful job of managing this very complex case.” Pet. App. 67a. At Exxon’s request, the district court certified a mandatory punitive damages class. Pet. App. 126a; JA 115. The class includes 32,677 commercial fishermen, related individuals and businesses, private landowners, Native Alaskans, municipalities, and others.

After years of discovery, the parties tried the case to a jury in 1994. The trial comprised three phases over 83 trial days (filling 7,714 pages of transcript), with 155 witnesses and 1,109 exhibits.

In the first trial phase, the jury found that Hazelwood and Exxon each had been reckless, thus

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establishing a necessary but not sufficient condition for assessing punitive damages. Pet. App. 67a.

In the second phase, the jury awarded $287 million in compensatory damages for economic harm to fishermen in the major commercial fisheries. Pet. App. 160a. In post-trial proceedings, the district court and court of appeals determined that the class members, including victims whose claims had been dealt with outside of Phase II, recovered economic damages exceeding $500 million. Pet. App. 38a, 160a-163a. Plaintiffs, however, could not recover for all their harm. The district court dismissed as barred by maritime law or too remote (and the court of appeals refused to reinstate) claims for various other economic injuries and emotional damages. Exxon Shipping Co. v. Airport Depot Diner, 120 F.3d 166, 167 n.3 (9th Cir. 1997); see Pet. App. 115a-116a; JA118-61, 1368-81, 1384-90.9

In the third phase, the jury was asked to “determine liability for and the amount of punitive damages, if any, for all plaintiffs.” JA165 (emphasis added). The district court gave the jury “unusually detailed” instructions, which embodied “the very same concepts” later elaborated in this Court’s due 9 The court of appeals did allow “tenderboat operators and crews, and seafood processors, dealers, wholesalers, and processor employees” to assert certain claims under state law. Pet. App. 115a. These claims later settled for about $5 million. “‘For rights that are state created, state law governs the amount properly awarded as punitive damages, subject to an ultimate federal constitutional check for exorbitancy.’” Petrs. Br. 45 (quoting Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 430 n.12 (1996)). The Court should recognize that the ability of these class members to recover punitive damages under state law will not be affected by its rulings on the federal questions presented.

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process cases. Pet. App. 127a, 146a. The instruc-tions further emphasized that “[t]he fact that you have found a defendant’s conduct to be reckless does not necessarily mean that it was reprehensible, or that an award of punitive damages should be made.” BIO App. 12a, 17a.

The jury returned separate verdicts for $5000 against Hazelwood and for $5 billion against Exxon, finding that each award was “necessary in this case to achieve punishment and deterrence” with respect to each defendant. JA1408. The district court upheld the verdicts as supported by the evidence and substantively reasonable. Pet. App. 231a-245a.10

3. In 2001, the Ninth Circuit affirmed the jury’s compensatory verdict and its decision to award punitive damages. Exxon also argued that the punitive award was constitutionally excessive. But in case the Ninth Circuit “d[id] not wish to reach the issue of constitutional excessiveness,” Exxon said that “it should exercise its power as a common law maritime court to reduce the award to no more than the amount, if any, that is necessary to the objective of punishment and deterrence in a maritime context.” Exxon 1997 C.A. Br. 81. The court of appeals elected to undertake the constitutional 10 Exxon will not have to pay the full amount of any judgment. Before trial, it entered into secret agreements with certain seafood-processor plaintiffs in which those plaintiffs agreed to “cede back” any punitive awards they receive. The agreements entitle Exxon to an 11.38% rebate on any award. SJA341sa-342sa. The Ninth Circuit found the agreements enforceable, though it did “not condone Exxon’s conduct” in representing to the jury (and the district court) that it obtained “only receipts in return” for payments it made in connection with these agreements. In re the Exxon Valdez, 229 F.3d 790, 800 (9th Cir. 2000).

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review and twice remanded the case for the district court to reconsider the size of the punitive award in light of this Court’s evolving due process jurisprudence.

4. The district court twice more analyzed the voluminous record. It finally concluded that “a $5 billion award was justified by the facts of the case and is not grossly excessive so as to deprive Exxon of ... its right to due process.” Pet. App. 178a-179a. In an eighty-one page opinion, the district court reasoned that: (1) it was “highly reprehensible” for Exxon knowingly and repeatedly to allow a relapsed alcoholic to captain a supertanker full of toxic crude oil through Prince William Sound; (2) the ratio of the punitive verdict to compensated economic harm was 9.74 to 1, and falls still lower once non-economic and potential harms are taken into account; and (3) “comparable civil and criminal penalties could have exceeded $5 billion.” Id. But because the Ninth Circuit had directed it not only to apply the due process guideposts “in the first instance,” Pet. App. 95a, but also to reduce the award, Pet. App. 104a, the district court entered a new judgment reducing the award to $4.5 billion – representing roughly a 9:1 ratio between punitive damages and economic harm. Pet. App. 179a-180a.

5. A divided Ninth Circuit reduced the award to $2.5 billion. The majority held that, on these facts, due process would not allow more than a 5:1 ratio to economic harm. Pet. App. 24a, 40a. Judge Browning dissented. He noted that the majority’s ratio analysis had not accounted for the vast noneconomic harm or additional potential harm, and “agree[d] with the district court’s assessment that there is no

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principled means by which this award should be reduced.” Pet. App. 42a-56a.

6. The Ninth Circuit denied rehearing en banc. Without discussing the facts, Judge Kozinski argued in dissent that a shipowner should not have to pay punitive damages when it merely has “the misfortune of hiring a captain who committed a reckless act.” Pet. App. 291a. Judge Bea argued that a 5:1 ratio was excessive. Pet. App. 293a.

7. During the 13 years that Exxon has pursued its post-verdict challenges, approximately 20% of the members of the plaintiff class have died. Hundreds have gone bankrupt. Still others continue to struggle, as roughly 26,000 gallons of oil remain in the water and in subsurface sediments, impairing fish stocks and marine habitat. Jeffrey W. Short, et al., Slightly Weathered Exxon Valdez Oil Persists in Gulf of Alaska Beach Sediments After 16 Years, 41 ENVTL. SCI. & TECH. 1245 (National Marine Fisheries Serv. 2007). Exxon, meanwhile, has more than recouped the $2.5 billion judgment by operation of the differential between its internal rate of return and the statutory judgment rate. It has assured the district court that paying even the $5 billion jury verdict “would not have a material impact on the corporation or its credit quality.” SJA334sa.

SUMMARY OF ARGUMENT This punitive award is consistent with well-

accepted common-law principles, and nothing about maritime law warrants deviation from those standards.

I. The Phase I jury instruction that Exxon was responsible for the acts of its managerial agents does not warrant vacating the judgment.

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A. Exxon concedes that Captain Hazelwood was a managerial agent, and the common law of almost every state allows punitive liability against corpora-tions based on managerial agents’ recklessness. Federal statutes governing pollution likewise authorize punitive damages and penalties based on the wrongdoing of managerial agents (or any other shipboard employees). Nothing in maritime policy or precedent – especially not the dictum concerning privateers in The Amiable Nancy, 16 U.S. 546 (1818) – requires a different agency rule here, particularly since Captain Hazelwood acted recklessly before leaving port and did not ground the tanker during any crisis at sea. Nor does Exxon’s current claim that Hazelwood violated corporate policies alter this analysis. Tort law does not absolve corporations from punitive liability when managerial agents violate company policy. In any event, Exxon did not enforce – or even claim at trial that it enforced – any serious alcohol policy that would have prevented the disaster.

B. Even if Phase I’s managerial agent instructions had been flawed, the judgment should still stand. The jury considered whether to award punitive damages in Phase III, after being instructed to assess Exxon’s conduct separately from Hazelwood’s and hearing arguments focused entirely on Exxon’s conduct in leaving a drinking alcoholic in command of the EXXON VALDEZ. The jury’s $5 billion verdict against Exxon makes clear that “Exxon is not in the position of the owners in The Amiable Nancy or Lake Shore.” Pet. App. 83a. “[T]he jury found that the corporation, not just the employee, was

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reckless” in giving command of an oil tanker to a relapsed alcoholic. Id.

II. The Clean Water Act (CWA) does not absolve Exxon of punitive liability.

A. Exxon’s argument is not properly before this Court. Exxon never made a timely Rule 50 motion seeking CWA relief in the district court. When a party fails to preserve an argument under Rule 50, appellate courts are powerless to reach it.

B. In any event, the CWA’s scheme of penalties does not inhibit respondents’ ability to recover punitive damages under maritime law. The CWA does not occupy the field of remedies with respect to oil spills – let alone spills of trans-Alaskan oil, which the Trans-Alaska Pipeline Authorization Act specifically governs. The CWA concerns only the government’s ability to enforce statutory discharge standards so as to redress environmental harm. Respondents’ claims, by contrast, are tort claims brought by private parties, based upon harm to private economic and quasi-economic interests.

III. The size of the award satisfies maritime-law review.

A. When “no constitutional issue is raised, the role of the appellate court, at least in the federal system, is merely to review the trial court’s determination [concerning the size of the award] under an abuse-of-discretion standard.” Cooper Indus. v. Leatherman Tool Group, 532 U.S. 424, 433 (2001) (quotations omitted). The district court did not abuse its discretion. After overseeing the government’s criminal prosecution of Exxon and later presiding over this lengthy trial, the district

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court properly concluded that the jury reasonably could have determined that a multi-billion dollar punitive award was necessary to achieve punishment and deterrence. Maritime law requires nothing more; Congress already has set forth the scope of shipowners’ supplemental protection from substan-tial liability in the Limitation of Shipowners’ Liability Act, and the Act does not apply here.

B. The award satisfies any set of guideposts this Court might apply. Placing a relapsed alcoholic at the helm of a supertanker transiting Prince William Sound was highly reprehensible conduct. It fore-seeably caused catastrophic harm. The ratio of the punitive award to the mandatory class members’ economic harm for which they were able to recover is less than 5:1, and the ratio of the punitive award to the totality of their injuries is smaller still. Comparable penalties also gave Exxon ample notice it could face multi-billion dollar punishment for its wrongdoing. Finally, the jury had ample reason to reject Exxon’s contention that prior penalties and cleanup expenditures – which totaled only $25 million more than an innocent spiller would have paid – had punished and deterred Exxon enough for recklessly and “massive[ly] disrupt[ing]” the lives of tens of thousands of Alaskans and businesses for years. Pet. App. 24a-26a, 242a-245a.

ARGUMENT I. Both Captain Hazelwood’s Recklessness and

That of Exxon’s Top Management Subjected Exxon to Punitive Liability.

Because a corporation can act only through natural persons, jury instructions on corporate

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punitive damages must provide guidance as to whose conduct will be attributed to the corporation. This trial’s Phase I instructions followed the Restatements of Torts and Agency, which place “strict limits” on the jury’s ability to impute an employee’s acts to a corporation. Kolstad v. American Dental Ass’n, 527 U.S. 526, 542 (1999). The instructions allowed the jury to hold Exxon responsible for the reckless acts of only “those employees who [we]re employed in a managerial capacity while acting in the scope of their employment.” Pet. App. 301a (emphasis added). The instructions defined managerial employees as those who “ha[ve] responsibility for, and authority over, a particular aspect of the corporation’s business.” Id.

Exxon concedes that Captain Hazelwood was a managerial employee. Petrs. Br. 10; Pet. App. 264a n.8. It argues, however, that the Phase I instruc-tions were flawed because punitive damages simply “may not be awarded against a shipowner based solely on the conduct of a ship’s master.” Petrs. Br. 18. Exxon’s argument contradicts accepted tort and agency law, misconstrues maritime precedent, and rests on non-existent maritime policies. Further-more, even if a flaw had existed in the Phase I instructions, the judgment should still be affirmed: the Phase III proceedings and evidence establish that “the jury found that the corporation, not just the employee, was reckless.” Pet. App. 83a.

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A. Exxon Was Responsible for Captain Hazelwood’s Acts Because He Was a Managerial Agent.

1. Overreaching from the start, Exxon says that a “venerable line of cases” prohibits punitive damages based on a master’s recklessness, even one conceded to be a managerial agent. Petrs. Br. 15. In truth, this Court has never issued a decision – inside or outside the maritime context – inconsistent with the Restatement’s conservative approach treating a managerial agent’s tortious acts as those of the corporation for purposes of assessing punitive damages. Nor is any “venerable” maritime rule contrary to the Restatement established anywhere else.

The Amiable Nancy, 16 U.S. 546 (1818), upon which Exxon chiefly relies, did not lay down any “general doctrine” on this subject. Hopkins v. Atlantic & St. Lawrence R.R., 36 N.H. 9, 20 (1857). The case did not involve a corporation, a managerial agent, a master, or even a request for punitive damages. It arose from an unjustified robbery committed by the crew of a privateer (a governmentally commissioned warship), whose individual owners had no knowledge or forewarning of the wrongdoing. Justice Story stated that the plaintiff could not have gotten “vindictive damages” against the owners, because imposing such damages would “defeat the policy of the government, by burthening the service [of privateers] with a responsibility beyond what justice requires.” 16 U.S. at 559. Nineteenth century courts and treatises understood that dictum to be grounded in the “peculiar relations subsisting between the owners

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and the officers and crew of a privateer, and on reasons of public policy connected with the employment of privateers in our public wars.” Hopkins, 36 N.H. at 20; see also Dias v. The Revenge, 7 F. Cas. 637, 638-39 (D. Penn. 1814) (No. 3,877) (discussing quasi-public nature of privateers); HENRY FLANDERS, A TREATISE ON THE LAW OF SHIPPING ¶¶151, 154-56 (1853) (owners liable for recklessness of masters, but “different considerations prevail” respecting privateers); THEOPHILUS PARSONS, A TREATISE ON MARITIME LAW 391-94 (1859) (same).

Later cases recognized that corporations could be liable for punitive damages based on employees’ misconduct, without pinpointing what position an employee had to occupy before the employee’s conduct or acquiescence became that of the corporation. This Court held in 1887, for example, that a railroad could face punitive liability for tortious conduct by a vice-president and assistant general manager. Denver & R.G. Ry. v. Harris, 122 U.S. 597, 608-10 (1887). In Lake Shore & M.S. Ry. v. Prentice, 147 U.S. 101, 114 (1893), on the other hand, the Court held that another railroad could not be liable for punitive damages based on a conductor’s misconduct. In maritime cases, nineteenth and early twentieth century lower-court decisions adopted various approaches, ranging from “full vicarious liability” in punitive damages for any agent’s misconduct – whether shipboard or not – to more restrictive formulations. Robertson, supra, at 121 (discussing cases); Colegrove v. The S.S. City of Columbia, 11 Haw. 693, 700-01 (1899) (imputing recklessness of ship’s master to shipowner).

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More modern maritime cases likewise have taken varying approaches. See CEH, Inc. v. F/V Seafarer, 70 F.3d 694, 704-05 (1st Cir. 1995) (surveying cases). But over the past nearly 100 years, during which both the corporate form and maritime commerce have come of age, no federal court has held, as Exxon asks this Court to hold, that “[p]unitive damages may not be awarded against a shipowner based solely on the conduct of a ship’s master.” Petrs. Br. 18.11 No current maritime treatise mentions any such rule.

2. This Court draws maritime tort law from two primary sources: (a) state tort law and (b) federal statutory law and policy concerning related maritime issues. East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 864-65 (1986). These sources dictate that Phase I’s managerial agent instructions were correct.

11 Only two federal cases stand for Exxon’s proposition. See The Seven Brothers, 170 F. 126 (D.R.I. 1909); The Golden Gate, 16 F. Cas. 141 (C.C.N.D. Cal. 1836). None of the other cases Exxon cites had to decide whether punitive damages may be based solely on a master’s recklessness. The First Circuit in CEH held that it “need not resolve” the issue because the shipowner “share[d]” “some level of culpability.” 70 F.3d at 705. In U.S. Steel Corp. v. Fuhrman, 407 F.2d 1143, 1147 (6th Cir. 1969), the court found that the master’s conduct was not reckless. In Matter of P&E Boat Rentals, Inc., 872 F.2d 642, 652 (5th Cir. 1989), the Fifth Circuit considered only whether it should drop “the punitive damage hammer on the principal for the wrongful acts of the simple agent or lower echelon employee,” not a ship’s master. In The State of Missouri, 76 F. 376, 380 (7th Cir. 1896), the damages were not “other than compensatory,” so the Seventh Circuit did not decide what standard might govern punitive recoveries. The final two cases Exxon cites appear to endorse vicarious liability. The Ludlow, 280 F. Cas. 162, 163-64 (N.D. Fla. 1922); Ralston v. The States Rights, 20 F. Cas. 201, 208-09 (E.D. Pa. 1836).

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a. Federal maritime law presumptively follows the common law applicable to land-based torts. Exxon Co., U.S.A. v. Sofec, Inc., 517 U.S. 830, 838-39 (1996); see also American Export Lines v. Alvez, 446 U.S. 274, 284-85 & n.11 (1980) (adopting rule of “clear majority of States”); Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256, 260 (1979) (adopting general Restatement test). Borrowing from state common law promotes an integrated approach to maritime torts, as states retain concurrent jurisdiction over those torts in state waters. Miles v. Apex Marine Corp., 498 U.S. 19, 29-30 (1990).

Among the forty-eight states that permit punitive damages, nearly every one allows them to be imposed against a corporation based upon the reckless acts of at least a managerial agent. 2 JOHN KIRCHER & CHRISTINE WISEMAN, PUNITIVE DAMAGES LAW & PRACTICE § 24-5 (2d ed. 2005). The American Law Institute (ALI) endorses the “managerial agent” approach in the Restatements of Torts and Agency. RESTATEMENT (SECOND) OF AGENCY § 217C(c) (1958); RESTATEMENT (SECOND) OF TORTS § 909(c) (1979); RESTATEMENT (THIRD) OF AGENCY § 7.03 cmt. e, at 158 (2006). The Restatement rule rests on the premise that a managerial agent’s act is the principal’s act. It recognizes that “imposition of corporate punitive damages based upon the theory of managerial capacity tends to deter the employment of unfit persons for important positions and encourage their supervision.” Albuquerque Concrete Coring Co. v. Pan-Am World Servs., 879 P.2d 772, 778 (N.M. 1994) (citation omitted); see also

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RESTATEMENT (THIRD) OF AGENCY § 7.03 cmt. e, at 158.

Exxon treats the Restatement test as if it were an accident. But the ALI has endorsed the test on three occasions (in 1958, 1977, and 2005) over a fifty-year span. And the record of ALI proceedings that Exxon cites (Petrs. Br. 23) shows that (i) no one questioned that a managerial agent’s tortious conduct could result in corporate liability for punitive damages, and (ii) the motion to retain Section 909 was withdrawn as unnecessary because “there was no one who wanted it to be eliminated.” ALI, 50th Annual Meeting Proceedings 236-38 (May 16, 1973). Not only do the vast majority of states impose punitive liability based on a managerial agent’s conduct, but this Court has adopted a modified version of the Restatement rule for purposes of Title VII claims, and other federal courts have done so respecting various other federal statutory claims. See Kolstad, 527 U.S. at 540-46; Brady v. Dairy Fresh Prods., 974 F.2d 1149, 1153-54 (9th Cir. 1992) (RICO treble damages); United States v. O’Connell, 890 F.2d 563, 567-69 (1st Cir. 1989) (False Claims Act punitive damages); Yohay v. City of Alexandria Employees Credit Union, 827 F.2d 967, 972-73 (4th Cir. 1987) (Fair Credit Reporting Act punitive damages).

Indeed, for over a century, “[a] slight majority of states” has followed a rule of pure respondeat superior, under which a corporation may be held liable for punitive damages based on the wrongdoing of any employee. RESTATEMENT (THIRD) OF AGENCY § 7.03 cmt. e, at 157; see also Briner v. Hyslop, 337 N.W.2d 858, 863-65 (Iowa 1983) (surveying cases);

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Little Rock Ry. & Elec. Co. v. Dobbins, 95 S.W. 788, 791-92 (Ark. 1906) (“majority of the states” followed this rule); 2 H.G. WOOD, A TREATISE ON THE LAW OF RAILROADS § 317, at 1242-44 (1885) (any agent rule “is now generally held in the better class of cases”). Maine’s Supreme Judicial Court explained this doctrine in the much-cited decision in Goddard v. Grand Trunk Railway, 57 Me. 202 (1869), just as corporations were emerging as a fixture of American life:

A corporation … has no mind but the mind of its servants; it has no voice but the voice of its servants; and it has no hands with which to act but the hands of its servants. ... All attempts, therefore, to distinguish between the guilt of the servant and the guilt of the corporation; or the malice of the servant and the malice of the corporation; or the punishment of the servant and the punishment of the corporation, is sheer nonsense; and only tends to confuse the mind and confound the judgment.

Id. at 223-24. This Court recently referenced Goddard, by way

of acknowledging that Lake Shore’s more restrictive formulation “may have departed from the trend of late 19th century decisions.” American Soc’y of Mech. Eng’rs v. Hydrolevel Corp., 456 U.S. 556, 575 n.14 (1982); see also Smith v. Wade, 461 U.S. 30, 45-46 n.12 (1983). This Court also has adopted the “any agent” rule for purposes of antitrust treble damages, Hydrolevel, 456 U.S. at 575-76, and has held that such a rule in tort cases comports with due process. Haslip, 499 U.S. at 14. It “creates a strong incentive

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for vigilance by those in a position ‘to guard substantially against the evil to be prevented,’” whereas a more limited rule would give an employer “an incentive to minimize oversight of its agents.” Id. (quoting Louis Pizitz Dry Goods, 274 U.S. at 116).

This Court, however, need not revisit the question of “any agent” tort liability here. The jury instructions took the Restatement’s conservative approach, allowing only the acts of Exxon’s chosen managerial employees to be attributed to it. Not only was Captain Hazelwood a “managerial officer” in charge of the ship and its crew, Petrs. Br. 10, but, under Exxon’s practice of “shift[ing] responsibility and authority from the shoreside staff to shipboard teams,” SJA288sa; JA896-98, he was broadly responsible for “the goals, operating parameters, and expense projections” in the vessel’s annual forecast. SJA289sa. He had the authority to keep the supertanker in port and was the person who decided, on Exxon’s behalf, that it was safe to depart on March 23, 1989. Tr. 552. As Exxon’s expert declared, the captain of a supertanker “is a CEO.” Tr. 3866.

b. “[F]ederal common lawmaking in admiralty ... is to be developed, insofar as possible, to harmonize with the enactments of Congress in the field.” American Dredging Co. v. Miller, 510 U.S. 443, 455 (1994); accord Miles, 498 U.S. at 26-27. Relevant federal statutory law, which follows the more liberal “any agent” rule respecting corporate liability for wrongdoing at sea, reinforces the propriety of the conservative managerial agent instructions given to the jury.

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The Oil Pollution Act of 1990, 33 U.S.C. § 2702 et seq., enacted in response to this spill, requires corporations to pay civil penalties into the hundreds of millions of dollars when the gross negligence of any agent – shipboard or not – causes an oil spill. 33 U.S.C. § 2704(c)(1); Pet. App. 104a. Several federal criminal statutes – including three to which Exxon pleaded guilty – likewise impose corporate criminal liability for any agent’s wrongful actions at sea. See, e.g., Pet. App. 173a-174a (Clean Water Act, Refuse Act, Ports and Waterways Safety Act, Dangerous Cargo Act, and Migratory Bird Treaty Act); C.A. 1997 ER121 (government’s statement of factual basis for Exxon’s guilty pleas explaining that Exxon acted negligently “through the actions of its employees” aboard the supertanker); Andrew W. Homer, Red Sky at Morning: The Horizon for Corporations, Crew Members, and Corporate Officers as the United States Continues Aggressive Criminal Prosecution of Intentional Pollution from Ships, 32 TUL. MAR. L.J. 149, 162-66 (2007) (discussing other statutes and prosecutions).

As to criminal liability generally, this Court long ago held that “we see no good reason why corporations may not be held responsible for and charged with the knowledge and purposes of their agents, acting within the authority conferred upon them.” New York Cent. & Hudson River R.R. v. United States, 212 U.S. 481, 494-95 (1909). As with punitive damages, such a rule brings “pressure ... on those who own the entity to see to it that their agents abide by the law.” United States v. A&P Trucking, 358 U.S. 121, 126 (1958). Neither this Court nor any other has suggested that different

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considerations apply to corporate vessel operators vis-à-vis their shipboard agents, much less their shipboard managerial agents.12

3. Contrary to Exxon’s argument (Petrs. Br. 24), there is no reason unique to masters at sea categorically to exempt corporate shipowners from the ordinary common-law and statutory rules applying to managerial agents.

a. For as long as corporations have conducted business in America (and even before), this Court

12 The Transportation Institute incorrectly suggests that the Limitation of Shipowners’ Liability Act and current and former statutes governing shipboard cargo counsel against imputing masters’ acts to corporations. Amicus Br. 13-19. TAPAA rendered the Limitation Act inapplicable to spills of trans-Alaskan oil, and OPA suspended the Act with respect to all future oil spills. See Exxon Cert. Reply 3 (acknowledging TAPAA’s and OPA’s effect). Even when the Limitation Act applies, a corporate owner has privity or knowledge respecting tortious conduct “where the negligence is that of an executive officer, manager or superintendent whose scope of authority includes supervision over the phase of the business out of which the loss or injury occurred.” Coryell v. Phipps, 317 U.S. 406, 410 (1943) (emphasis added); see also Great Lakes Dredge & Dock Co. v. City of Chicago, 3 F.3d 225, 231 (7th Cir. 1993) (limitation denied when “a managerial employee is possessed of ‘privity or knowledge’”), aff’d, 513 U.S. 527 (1995). Accordingly, the master’s “privity and knowledge [i]s that of the corporation” when a corporate owner grants a master “autonomy in the management of the vessel.” Continental Oil Co. v. Bonanza Corp., 706 F.2d 1365, 1377 (5th Cir. 1983) (en banc); see also Holloway Concrete Prods. v. Beltz-Beatty, Inc., 293 F.2d 474, 479 (5th Cir. 1961); Bates v. Merritt Seafood, Inc., 663 F. Supp. 915, 932-33 (D.S.C. 1987). The cargo statutes that the Institute references similarly depend on the shipowner’s proving, among other things, that it exercised due care in selecting and entrusting authority to a competent master – something Exxon could not show. See, e.g., In re Ta Chi Navigation Corp., 513 F. Supp. 148, 157-58 (E.D. La. 1981), aff’d, 728 F.2d 699 (5th Cir. 1984).

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has made clear that “courts of admiralty ... proceed, in cases of tort, upon the same principles as courts of common law, in allowing exemplary damages.” Lake Shore, 147 U.S. at 108; accord Boston Mfg. Co. v. Fiske, 2 Mason 119, 121 (1820) (Story, J.). Accordingly, nothing in The Amiable Nancy purported to rest on any special considerations of admiralty (apart from a focus on the unique nature of privateers). Nor did anything in Lake Shore distinguish agents assigned to seagoing duty from those on land. The reason for this parallel treatment is obvious: for purposes of the policies underlying punitive damages, a master of a ship does not differ materially from the manager of an offsite factory or the director of a remote power plant, refinery, or research station. See CEH, 70 F.3d at 704.

Exxon insists that punishing corporate shipowners for the actions of masters is “unfair” and “potentially counterproductive” because masters must respond “instantly” with “intrepid personal decisions” in “emergencies” at sea. Petrs. Br. 24 (quotations omitted). Yet so must a factory manager facing a life-threatening technological malfunction or a director of a remote facility confronting a violent climatic event. Tort law accommodates these rare events not by categorically excluding managerial agents from the scope of potential employer liability, but by providing that a good-faith split-second decision in a crisis does not constitute reckless behavior. See, e.g., The Genesee Chief, 53 U.S. 443, 461 (1851); The Marion E. Bulley, 94 F.2d 646, 647 (2d Cir. 1938); Robbins v. Trident Marine Corp., 613 F. Supp. 41, 44 (N.D. Ohio 1985); cf. Anderson v. Creighton, 483 U.S. 635, 638-41 (1987) (law

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enforcement officers not liable for reasonable split-second actions). Even in the case Exxon cites, the court found that the master’s conduct at sea was not reckless, noting that he made his judgment call in “good faith.” Fuhrman, 407 F.2d at 1147.

Exxon had every opportunity to argue at trial that Captain Hazelwood faced an emergency in command of the EXXON VALDEZ. But of course it did not. Hazelwood hardly made an “intrepid personal decision” when he lifted his last glass of vodka in port in Valdez, when he chose to set sail despite his incapacitation, or when he decided to go below moments before a crucial maneuver that required his presence on the bridge (not just as the captain but also as the only officer aboard licensed to navigate in the area). He made the first two decisions shore-side, and made the last without any evident pressure: “Visibility was good. The sea was calm.” Petrs. Br. 7. And there was nothing “unusual” about the turn that he should have made to avoid Bligh Reef. Id. At each juncture, a moment’s sober reflection from the EXXON VALDEZ’s “CEO” could have avoided catastrophe.

Any other argument for immunizing shipowners for the reckless acts of masters lacks foundation. One of Exxon’s amici advocates immunity on the ground that shipowners cannot communicate with or control a master at sea. Transp. Inst. Br. 28-29. Exxon itself does not press that point, and for good reason. Whatever relevance this assertion might have had during the Napoleonic era of The Amiable Nancy, when ships were so isolated that a British squadron captured an American vessel several weeks after the end of the War of 1812, PETER B.

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SCHROEDER, CONTACT AT SEA I (1967), modern technology gives a corporation as much control over a master as it has over other managerial agents. See GRANT GILMORE & CHARLES L. BLACK, JR., THE LAW OF ADMIRALTY § 10-24, at 894 (2d ed. 1975) (noting development of “instantaneous” ship-to-shore communication); cf. The Linseed King, 285 U.S. 502, 511-12 (1932) (shipowner’s ability to communicate and consult with masters forecloses limitation). The EXXON VALDEZ itself was “equipped to maintain communications with Exxon Headquarters during its shipping operations,” SJA249sa, and Hazelwood spoke on the phone with an Exxon shoreside executive in San Francisco before his nearly disastrous attempt to dislodge the vessel from the reef. Pet. App. 122a; JA872-76.

The primary reasons for making corporate owners liable in punitive damages for reckless managers – that it will deter “the employment of unfit persons for important positions,” RESTATEMENT (SECOND) OF TORTS § 909 cmt. b; accord Basquall v. The City of Carlisle, 39 Fed. 807, 817 (D. Or. 1889), and encourage employers to monitor their agents, Hydrolevel, 456 U.S. at 573 – have particular force in modern maritime commerce. Massive vessels now routinely transport hazardous substances, ranging from crude oil to nuclear waste. If discharged, these substances can befoul the environment for years, a problem that nineteenth century courts did not confront. See Int’l Maritime Org., IMO and Dangerous Goods at Sea 1-3 (1996).

More generally, “[t]o hold that punitive damages may not be imposed unless there is some participation by the highest corporate executives is

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unrealistic given the size of some corporations whose operations are multi-state or international in character.” 10 WILLIAM M. FLETCHER, CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS § 4906.50, at 552 (perm. ed., rev. vol. 2001); accord Doralee Estates, Inc. v. Cities Serv. Oil Co., 569 F.2d 716, 721-22 (2d Cir. 1977); GMAC v. Froelich, 273 F.2d 92, 94 (D.C. Cir. 1959).

Exxon chides the Ninth Circuit for having paid heed to the attributes of modern American shipping corporations. Petrs. Br. 25. But judge-made law by its nature depends upon “conditions as they now exist.” Funk v. United States, 290 U.S. 371, 382 (1933); see also Jaffee v. Redmond, 518 U.S. 1, 7-8 (1996); United States v. Reliable Transfer Co., 421 U.S. 397, 410-11 (1975) (abrogating admiralty’s divided-damages rule because the “reasons that originally led to the Court’s adoption of the rule have long since disappeared”). Thus, even if Exxon were correct that the common law at one time imputed only top officers’ and directors’ actions to corporations for purposes of imposing punitive damages, this Court should reject its proposal to apply such a rule here. Exxon’s suggestion would deny the law the “appropriate evolution,” CEH, 70 F.3d at 705, of treating the Restatement’s “managerial agent” test as the modern equivalent of a corporate “complicity” or “participation” require-ment. See Laidlaw Transit v. Crouse, 53 P.3d 1093, 1098 n.8 (Alaska 2002); Dahl v. Sittner, 474 N.W.2d 897, 903 (S.D. 1991); Johnson v. Rogers, 763 P.2d 771, 778 (Utah 1988); Briner, 337 N.W.2d at 861. As these states and nearly all others recognize, punitive damages will be meaningful only if corporations can

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be held accountable for the actions of at least their managerial agents.

b. Exxon’s argument that it should be exempted from liability because Captain Hazelwood violated “good faith policies to prevent misconduct” (Petrs. Br. 26) fares no better. No state has adopted any such complete defense as part of its common law. The Restatement takes the position that such policies do not insulate corporations from punitive liability. RESTATEMENT (SECOND) OF AGENCY § 229 cmt. a. And federal law (including maritime law) imposes corporate criminal liability regardless of whether the offending employee acted contrary to a corporate policy. FLETCHER, supra, § 4942, at 640-41. The reasons for this overwhelming consensus are simple: corporations are best positioned to prevent gross misconduct, and it is practically impossible to distinguish between effective policies and mere “window-dressing.” Kimberly D. Krawiec, Organi-zational Misconduct: Beyond the Principal-Agent Model, 32 FLA. ST. U. L. REV. 571, 572-74 (2005).

To be sure, the Federal Sentencing Guidelines that govern criminal pollution (and all other) cases recognize that evidence of a corporation’s consistently enforced policy (as well as an agent’s lower level status) may mitigate the need for punishment. U.S.S.G. §§ 8B2.1, 8C2.5(f). But that is as far as it goes. And Exxon received precisely such a jury instruction here. BIO App. 17a.

This Court’s singular deviation from this general framework in Kolstad rested, as the government has urged elsewhere, on considerations “unique to Title VII.” United States ex rel. Bryant v. Williams Bldg. Corp., 158 F. Supp. 2d 1001, 1008 (D.S.D. 2001).

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That statute precludes punitive damages when a discriminator is subjectively “unaware of the relevant federal prohibition.” Kolstad, 527 U.S. at 536-37. In that unusual liability regime, employers have a “perverse incentive” to refrain from training managers, lest the training provide a factual basis for arguments that the employees understood that they were violating federally-protected rights. Id. at 544-45. Thus, to encourage education consistent with the federal policy of preventing discrimination, this Court felt “compelled to modify” common-law principles to allow an employer to defend against punitive damages by pointing to implementation of policies to encourage statutory compliance. Id. at 545.

Kolstad’s reasoning does not have any relevance here. Tort liability is based on objective standards. Accordingly, this Court need not be concerned that future shipping companies will have a “perverse incentive” to avoid educating their masters as to the dangers of piloting a supertanker while drunk. To the contrary, the prospect of punitive damages will encourage employers to teach their agents to act with due care.

In any event, an employer that did not diligently enforce any relevant policy is not entitled to an opportunity to make out a Kolstad defense. See, e.g., Lowery v. Circuit City Stores, 206 F.3d 431, 446 (4th Cir. 2000). Any suggestion that Exxon was a diligent employer betrayed by a renegade supertanker captain would make a mockery of the evidence. See supra at 4-7. It also would be inconsistent with Exxon’s own arguments to the jury. Although the district court instructed the jury in Phase III that it could consider

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whether Hazelwood’s actions contravened a consistently enforced corporate policy, Exxon discussed only one policy: the requirement that two officers man the bridge when transiting Prince William Sound, Tr. 7400-01, which it enforced inconsistently. JA432-33, 438-39, 448; Tr. 3666-67. In closing, Exxon did not claim diligence in enforcing any policy. JA1321-53. It conceded that it “didn’t have a written detailed policy” to monitor alcoholics returning to duty, JA1344, or to safeguard the public from the threat of a drinking captain, JA1095, 1104, and it acknowledged criticism that the policy of two officers on the bridge “was ambiguous.” JA1346. Exxon had no right to any additional instructions on the point.

B. Exxon’s Own Recklessness Subjected the Corporation to Punitive Liability.

Even if the managerial agent instructions had been flawed, there would be no basis to remand for retrial nearly twenty years after the event. The Court does not consider the effect of an erroneous instruction “in artificial isolation” but views it “in the context of the overall charge,” taking into account that the judgment is “the culmination of a trial which includes testimony of witnesses, argument of counsel, receipt of exhibits in evidence, and instruction of the jury by the judge.” Cupp v. Naughten, 414 U.S. 141, 146-47 (1973); see also Philip Morris, U.S.A. v. Williams, 127 S. Ct. 1057 (2007) (evaluating punitive award based on manner in which parties tried case). If the outcome would not change based on different instructions, the Court will not remand. Jones v. United States, 527 U.S. 373, 391-94 (1999); see also Neder v. United States,

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527 U.S. 1, 18 (1999); id. at 26 (Stevens, J., concurring); Curtis Publ’g Co. v. Butts, 388 U.S. 130, 157 (1967) (plurality opinion) (despite omission of instruction, declining to remand based on “the extended history of the case, the amount of the evidence pointing to serious deficiencies in investigatory procedure, and the severe harm inflicted on Butts”).

These same considerations counsel affirmance here, irrespective of Phase I’s managerial agent instructions. Lake Shore noted that “[i]f a railroad company ... knowingly and wantonly employs a drunken engineer or switchman, or retains one after knowledge of his habits is clearly brought home to the company, or to a superintending agent authorized to employ and discharge him, and injury occurs by reason of such habits, the company may and ought to be amendable to the severest rule of damages.” 147 U.S. at 116 (quotation omitted). Indeed, “the employment of a known drunken driver” is a time-honored basis for imposing punitive damages. 2 THOMAS G. SHEARMAN & AMASA A. REDFIELD, A TREATISE ON THE LAW OF NEGLIGENCE § 749, at 1283 & n.3 (5th ed. 1898) (citing cases); see also Fuhrman, 407 F.2d at 1148 (punitive damages available when “the acts ... were those of an unfit master and the owner was reckless in employing him”).

The Phase III instructions and special verdict form required the jury to base any award against Exxon on a de novo finding – apart from anything it found in Phase I – that punitive damages were necessary to punish and deter Exxon. BIO App. 1a-25a (entire set of Phase III instructions), 26a. The

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district court brought that point home by instructing the jury that its Phase I findings did “not necessarily mean that [Exxon’s conduct] was reprehensible, or that an award of punitive damages should be made.” BIO App. 12a, 17a. It also directed the jury to consider whether the employees that were reckless “had lesser duties or responsibilities within the corporation,” or, conversely, whether Exxon employees “failed to prevent the wrongful conduct and that those employees held positions involving significant duties and responsibilities within the corporation.” BIO App. 18a.

Consistent with these instructions, plaintiffs’ counsel in Phase III discussed only Exxon’s corporate acts and omissions. Plaintiffs never argued that the jury should award punitive damages against Exxon based on Hazelwood’s conduct. JA1291-1320, 1353-67. Exxon’s counsel likewise argued to the jury about Hazelwood’s superiors’ conduct, JA1332-37, claiming that “we tried [to monitor Hazelwood], and we may have made bad mistakes in there and that may be why you found us reckless, but ... we didn’t ignore the risk.” JA1334.

The jury rejected Exxon’s argument. It found that “Exxon gave command of an oil tanker to a man they knew was an alcoholic who had resumed drinking,” and thus that “the corporation, not just [Hazelwood], was reckless.” Pet. App. 83a; accord id. 31a. The subsequent reviews by the district court and the Ninth Circuit confirm that there is no other way to interpret the jury’s $5 billion verdict, for “the highest executives in Exxon Shipping” were well aware of Hazelwood’s relapse. Pet. App. 64a; see also id. 22a, 26a, 121a-122a, 154a-157a. Thus, as the

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Ninth Circuit explained, “Exxon is not in the position of the owners in The Amiable Nancy or Lake Shore of having neither directed ... nor countenanced ... nor ... participated in the slightest degree in the wrong.” Pet. App. 83a (quotation omitted); accord id. 26a.13 At minimum, the Phase III proceedings and instructions bring this case under the First Circuit’s cautious ruling in CEH, upholding a punitive award because there was “some level of culpability” on the shipowner’s part. 70 F.3d at 705. II. Exxon’s Tardy Invocation of the Clean Water

Act Does Not Inhibit Respondents’ Ability to Recover Punitive Damages.

In 1995, more than one year after the verdict, Exxon lodged a motion arguing for the first time that the Clean Water Act (CWA) prohibited respondents from recovering punitive damages. This Court, like the district court, should decline to reach the merits of this argument because Exxon raised it far too late. In any event, nothing in the CWA’s remedial scheme precludes respondents’ punitive recovery.

A. Exxon Irretrievably Waived Its CWA Argument.

In 1989, there were two federal Acts that prescribed liability specifically for spilling oil: the Trans-Alaska Pipeline Authorization Act (TAPAA)

13 Exxon suggests that the Ninth Circuit held that the evidence “‘could have’” supported a finding that Exxon did not know Hazelwood was taking command while drunk. Petrs. Br. 10 (quoting Pet. App. 88a). But the Ninth Circuit’s statement, in the context of its two opinions, explained only that Exxon’s sufficiency-of-the-evidence argument relied on an improper standard of review.

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and the CWA. TAPAA created strict liability up to specified limits and a compensation fund for private harm caused by spills of trans-Alaskan oil. 43 U.S.C. § 1653(c). It also contained a savings clause providing that “[t]he unpaid portion of any claim may be asserted and adjudicated under other applicable Federal or state law.” § 1653(c)(3).14 The CWA, on the other hand, allowed the federal government to recoup its cleanup costs and to impose civil and criminal penalties for public harm caused by discharges of oil and other hazardous substances. 33 U.S.C. §§ 1319, 1321.15

1. Before trial, Exxon moved for partial summary judgment arguing that TAPAA “prescribe[s] a comprehensive remedial scheme for [Trans-Alaska Pipeline] oil spills which leaves no room for punitive damages claims.” JA63. Nothing in the motion suggested that the CWA impaired plaintiffs’ claims. To the contrary, in contending that TAPAA’s savings clause did not preserve respondents’ right to seek punitive damages, Exxon contrasted that clause with “the broader savings clause” in the relevant portion of the CWA, known as the Federal Water Pollution Control Act. JA87 n.9. The district court denied Exxon’s motion, holding that Exxon’s argument would “disregard Congress’ plain language” in TAPAA to preclude private parties from seeking

14 The relevant provisions of TAPAA are reproduced in the appendix to this brief. 15 The only private right created by the CWA is for “citizen suits” against the government or alleged violators to enforce effluent standards or limitations created under the Act. 33 U.S.C. § 1365. That section expressly provides that it does not limit any right to “other relief” “under any statute or common law.” § 1365(e).

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punitive damages in a case involving trans-Alaskan oil. JA103.

Exxon never raised the CWA as a bar to recovery until October 23, 1995, in a motion filed thirteen months after trial asking that the judgment “not include an award of punitive damages.” BIO App. 30a; see Pet. App. 73a. Respondents countered that the filing was untimely. BIO App. 33a. Motions for judgment as a matter of law must be filed under Rule 50(b), see 9B CHARLES A. WRIGHT, ET AL., FEDERAL PRACTICE & PROCEDURE § 2537, at 576 (3d ed. 2008), and the stipulated deadline for filing any motion under that rule had passed many months before. In addition, Exxon never made a Rule 50(a)(2) motion on CWA grounds during trial, which is a prerequisite to a post-trial Rule 50(b) motion. See Canny v. Dr. Pepper/Seven-Up Bottling Group, 439 F.3d 894, 901 (8th Cir. 2006). The district court summarily denied Exxon leave to file its motion. BIO App. 35a.16

When Exxon advanced its CWA argument in the court of appeals, respondents argued that it was waived as untimely. Pltfs. 1997 C.A. Br. 79-80. The Ninth Circuit, however, elected to affirm the district court’s ruling on the ground that Exxon’s CWA argument lacked substantive merit. Pet. App. 73a-74a.

2. Neither of the Ninth Circuit’s proffered rationales gave it authority to reach the merits of this issue. First, the Ninth Circuit stated that Exxon

16 Deluged by motions, the district court imposed a stay on motion practice, requiring the parties to seek leave to file motions. The district court denied Exxon’s request to lift the stay in order to file its CWA motion. See BIO App. 28a, 35a.

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was raising a significant question of law. But regardless of whether a motion raises a meaningful question of law, “an untimely [post-trial] motion, by itself, is not sufficient to preserve an issue for appellate review.” Lyons v. Jefferson Bank & Trust, 994 F.2d 716, 722 (10th Cir. 1993). Indeed, this Court recently reaffirmed that a federal court of appeals is “powerless” to reach an argument for relief from a judgment that was not properly raised under Rule 50. Unitherm Food Sys. Co. v. Swift-Eckrich, Inc., 546 U.S. 394, 405 (2006); accord Cone v. West Va. Pulp & Paper, 330 U.S. 212, 213-14 (1947). Exxon does not dispute that its CWA motion failed to comply with Rule 50’s timing requirements. BIO App. 37a.17

Second, the Ninth Circuit noted that Exxon had “clearly and consistently argued statutory pre-emption” in the district court – albeit under TAPAA, not under the CWA. But a party cannot preserve a preemption-type argument by arguing that an entirely different federal statutory scheme precludes relief that a plaintiff seeks. See, e.g., Sprietsma v. Mercury Marine, 537 U.S. 51, 56 n.4 (2002).

3. Exxon’s assertion that this Court has the power to review any issue “pressed or passed upon,” Cert. Reply 5, cannot erase its waiver problem. This Court recently explained that so long as a plaintiff has 17 Exxon’s citations in the district court and the Ninth Circuit to Rules 49(a) and 58(2), see BIO App. 30a, 37a, accomplish nothing. Rule 49(a) describes how to submit special verdicts to juries, and Rule 58(2) (now recodified as Rule 58(a)(2)(B)) is purely ministerial, directing district courts to “approve the form of the judgment” after the clerk has prepared it. Robles v. Exxon Corp., 862 F.2d 1201, 1204 (5th Cir. 1989). No case suggests that either rule provides a platform for making an untimely substantive motion for judgment as a matter of law.

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objected – as respondents consistently have done – to a defendant’s attempt to evade Rule 50’s filing deadline (which Rule 6(b) says may not be extended) these “inflexible” “claim-processing rules ... assure relief to a party properly raising them.” Eberhart v. United States, 546 U.S. 12, 19 (2006) (emphasis added). Reaching the merits of Exxon’s CWA argument because the Ninth Circuit chose to ignore these binding rules would turn on its head the rules’ “insistent demand for a definite end to proceedings.” Id. Indeed, it would effectively overrule Unitherm and its predecessors, which reversed federal courts of appeals because they reached the merits of arguments not properly raised under Rule 50.

Even if this Court had discretion to reach the merits of Exxon’s defaulted CWA argument, the equities would dictate finding it waived. Like the petitioner in City of Springfield v. Kibbe, 480 U.S. 257, 258 (1987) (per curiam), Exxon “has informed [this Court] of no special circumstance explaining its failure to preserve this question.” Indeed, Exxon’s TAPAA motion showed that it was aware of the CWA and eschewed any argument based on that Act. JA87 n.9.

Moreover, resolving Exxon’s CWA argument will not give guidance for any future cases. Immediately following this oil spill, Congress passed the Oil Pollution Act (OPA) of 1990. The “statutory displacement” question in any future oil spill will not be whether the CWA forecloses private claims for punitive damages but whether OPA does so. See South Port Marine v. Gulf Oil Ltd. P’ship, 234 F.3d 58, 65 (1st Cir. 2000) (while “the general admiralty and maritime law that existed prior to the enactment

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of [OPA] ... permitted the award of punitive damages for reckless behavior” causing oil spills, OPA’s expanded penalties regime does not). Indeed, Exxon has acknowledged that the Ninth Circuit’s holding that the CWA leaves room for punitive damages based on private harm from oil spills can “have no progeny in future cases.” Exxon 1997 C.A. Supp. Br. 3.

B. The CWA Does Not Foreclose Private Claims for Punitive Damages Based on Private Harm.

There is a simple explanation for Exxon’s disinterest in the CWA until its last-ditch effort to avoid entry of judgment: the argument that the CWA precludes punitive damages plainly lacks merit. No court has ever held that the CWA foreclosed punitive damages in a tort action based on private harm from a discharge of any hazardous substance. To the contrary, a leading admiralty treatise written shortly after the CWA’s enactment noted that “[t]here is nothing in the [amendments to the CWA at issue] to suggest that claims for property loss, injury or death under the general maritime law are to be in any way affected” by the CWA. GILMORE & BLACK, supra, § 10-4(b), at 829 (emphasis added).18 Nor has any common-law court ever accepted the more general 18 The only other published opinion besides this case to consider the question agreed that the CWA imposes no barrier to recovering punitive damages for maritime recklessness. Poe v. PPG Indus., 782 So. 2d 1168, 1175-78 (La. App. 2001). Other courts have allowed punitive damages in other kinds of water contamination cases. See, e.g., Johansen v. Combustion Engineering, Inc., 170 F.3d 1320, 1337-39 (11th Cir. 1999) (acid); Knabe v. National Supply Div., 592 F.2d 841, 844-45 (5th Cir. 1979) (industrial waste).

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notion that when statutes provide penalties for certain harm from specified conduct, those statutes preclude private plaintiffs from recovering punitive damages based on entirely different harms from the same conduct.

1. Exxon first argues that the CWA forecloses respondents’ ability to recover punitive damages because it “speaks directly and comprehensively” to the subject of “punishing and deterring maritime oil spills.” Petrs. Br. 33. This argument fails for two independent reasons.

a. Exxon proceeds in this Court from the proposition that the CWA is a “controlling statute.” Petrs. Br. i. But as Exxon acknowledged in the district court, TAPAA, not the CWA, is “the controlling statute with regard to trans-Alaska oil.” In re Glacier Bay, 944 F.2d 577, 583 (9th Cir. 1991); accord In re Tug Allie-B., 273 F.3d 936, 947 (11th Cir. 2001); JA64, 80 (Exxon’s TAPAA motion). TAPAA’s purpose, as explained supra at 39-40, is to “expand[] recovery, not restrict[] recovery.” JA105 (district court order). Furthermore, TAPAA contains a broad savings clause, providing that any portion of a private claim left unpaid by the Act’s enhanced liability regime “may be asserted and adjudicated under other applicable Federal or state law.” 43 U.S.C. § 1653(c)(3). The district court therefore held that TAPAA’s “plain language” allows respondents to recover punitive damages. JA103-08. Because Exxon did not appeal that order, Pet. App. 73a, and does not challenge it here, it is the law of the case.

The district court’s holding also is correct. “TAPAA was designed to supersede any conflicting law.” Glacier Bay, 944 F.2d at 583. And in the

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realm of statutory interpretation, “the specific governs the general.” Morales v. Trans World Airlines, 504 U.S. 374, 384 (1992). If TAPAA, a statute that specifically deals with private remedies and specifically governs trans-Alaskan oil, affirmatively preserves private parties’ right to recover punitive damages for reckless conduct causing oil spills, then the more generic CWA cannot require a different result. It would contravene TAPAA’s text and purpose to prevent those injured by an Alaskan oil spill from seeking remedies otherwise available under traditional maritime law. See Br. of Alaska Legislative Council 14-18.

b. Even if TAPAA’s specific savings clause left room for the possibility that the CWA could displace private parties’ common-law remedies relating to trans-Alaskan oil, it would not matter. Many of the “statutory displacement” cases Exxon cites are really just pre-emption cases. They stand merely for the proposition that a federal statutory scheme forecloses a private tort claim if the plaintiff’s substantive cause of action would interfere, or be incompatible with, the scheme’s operation. Middlesex County Sewage Auth. v. National Sea Clammers Ass’n, 453 U.S. 1, 21-22 (1981) (CWA’s standards for effluent discharges foreclose common-law nuisance action that might impose different standard); City of Milwaukee v. Illinois, 451 U.S. 304, 320 (1981) (same); see also International Paper Co. v. Ouellette, 479 U.S. 481, 491-97 (1987) (applying Sea Clammers and Milwaukee and allowing nuisance claim).

Exxon does not argue that the CWA pre-empts respondents’ substantive cause of action. And for

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good reason: nothing about respondents’ private tort claims risks interference with the CWA’s provisions allowing the federal government to set discharge standards, impose penalties for their violation, and recoup its cleanup costs. Indeed, this Court has made clear that the CWA, by means of its savings clauses, “le[aves] ... room” for tort claims arising from water pollution. Ouellette, 479 U.S. at 492; 33 U.S.C. § 1321(o)(1)-(2); Askew v. American Water-ways Opers., 411 U.S. 325, 329 (1973) (identically worded prior version of § 1321(o) allowed state regulation).

This leaves Exxon only with the contention that even though respondents have legitimate tort claims, they cannot recover punitive damages. This Court’s doctrine, however, is highly skeptical of such contentions. The presumption is that a plaintiff who brings a legitimate common-law cause of action may seek the full panoply of customarily available remedies. Ouellette, 479 U.S. at 499 n.19; see also Yamaha Motor Corp. v. Calhoun, 516 U.S. 199, 215 (1996) (parents bringing common-law tort action for wrongful death of daughter, who died riding jet-ski in territorial waters, could seek punitive damages because “Congress has not prescribed remedies for the wrongful deaths of nonseafarers in territorial waters”); Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255 (1984) (refusing to split punitive remedy from viable tort claim). Only in the rare situation when a statutory scheme prescribes a “compre-hensive tort recovery regime to be uniformly applied” may a plaintiff be deprived of tort remedies beyond what that scheme provides. Yamaha, 516 U.S. at 215. See Dooley v. Korean Air Lines, 524 U.S. 116

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(1998) (DOHSA sets forth exclusive remedies for survival actions arising from deaths on high seas); Miles, 498 U.S. at 31-33 (Jones Act’s remedies for wrongful death actions govern suit for seaman’s wrongful death caused by unseaworthiness); Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978) (DOHSA sets forth exclusive types of recoverable damages for wrongful death actions arising from deaths on high seas).

The court of appeals correctly recognized that the CWA does not prescribe a “comprehensive tort recovery regime” with respect to oil spills. Pet App. 74a-75a, 78a-79a. The CWA’s provisions applicable to oil spills do not concern tort claims at all. They concern only the enforcement of statutory and regulatory requirements respecting “harm[] to the public health or welfare of the United States,” 33 U.S.C. § 1321(b)(4) – in other words, “harm to the environment.” Pet. App. 79a; see also id. 71a-72a; JA1520 (CWA “designed to protect the environ-ment”).

Even then, the CWA does not prescribe any comprehensive regime of punishment and deterrence; the government indicted Exxon for violating four other criminal statutes (and Exxon pleaded guilty to violating two). Pet. App. 173a-174a. Accordingly, “there can be no serious claim” that the government’s CWA prosecution could or did comprehensively address all harm that Exxon’s conduct inflicted, including private harm. Pet. App. 72a.19 19 Exxon has suggested that its criminal CWA fine was based in part on harm to commercial fishermen. Cert. Reply 6 n.3. Not so. The United States Attorney, Alaska’s Attorney General,

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Exxon tries to avoid the court of appeals’ reasoning by asserting that “Congress knows how to provide punitive damages – when it thinks they are necessary.” Petrs. Br. 33. If respondents had brought legislatively created claims for which there were no preexisting remedies, Exxon’s quip might be relevant. But when, as here, plaintiffs’ claim is a maritime-law tort cause of action that traditionally provides a certain remedy, the test is whether Congress has abrogated the common-law remedy “in unambiguous terms.” Robert C. Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297, 302-05 (1959); see also United States v. Texas, 507 U.S. 529, 534 (1993) (Higginbotham and Milwaukee preclude plaintiffs from recovering common-law remedies in maritime suit only when Congress has “‘sp[oken] directly’ to the question”); Brady v. Roosevelt S.S. Co., 317 U.S. 575, 580-81 (1943) (abrogation of common-law relief “should hardly be left to conjecture”). Congress has expressly foreclosed punitive damages in other instances but did not do so here. Compare, e.g., 28 U.S.C. § 2674 (Federal Tort Claims Act); 49 U.S.C. § 44303(b) (air carrier liability for third party claims arising from act of terrorism).

and the district judge all emphasized at Exxon’s criminal sentencing that the only “victim” in the case was “the environment” or “Prince William Sound.” JA1519, 1530-31, 1559; see also JA54-55 (sentence did not provide restitution to private victims). The same was true in the civil context, where the government expressly disclaimed any parens patriae role respecting private harm. Pet. App. 71a-72a; Letter from United States and Alaska to Counsel for Natives and Native Corporations (Oct. 31, 1991) (“[n]either of these [government] settlement agreements impairs or diminishes private claims available to Alaska Native Villages or Corporations”).

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Lest there be any doubt, the savings clause in the CWA’s oil spill section preserves all preexisting legal “obligations” of vessel owners for harm to private property. 33 U.S.C. § 1321(o)(1). Regardless of whether plaintiffs ever have a “right” to punitive damages, see Petrs. Br. 37, defendants have an “obligation” to pay them if a judgment awards them. See Smith v. Wade, 461 U.S. at 52 n.5 (term “redress” in remedial provision does not foreclose punitive damages). The CWA leaves untouched the preexisting full range of private common-law tort remedies for harm to “private economic and quasi-economic resources.” Pet. App. 79a.

Leaving punishment for causing private harm to the private tort system comports not only with tradition but with common sense. At Exxon’s CWA sentencing hearing, the Acting Assistant Attorney General of the Department of Justice’s Environment and Natural Resources Division explained that “environmental enforcement cases ... are different from other cases.” JA1527. “Unlike other economic crimes …, we can’t simply pay interest 20 years down the road to make up for the losses. In environmental cases it is critically important that we address the consequence of the conduct immediately.” JA1527-28; see also JA54-56, 1526. The CWA, therefore, allows the government to impose swift penalties to redress environmental harm.

At the same time, reckless oil spills exact a human toll – one that may take years to measure and thus years to litigate. The CWA wisely leaves any “prosecution” for that harm to the private parties who suffer it. Those parties – whether or not

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properly characterized, as Exxon would have it, as “private attorneys general,” Petrs. Br. 28 (quotation omitted) – occupy the best position, and have the strongest incentive, to bring lawsuits respecting such harm. See Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 493 (1985) (private attorney general lawsuits “are in part designed to fill prosecutorial gaps”). Respondents, as both courts below acknowledged, illuminated and recovered punishment for harm that had not otherwise been accounted for. Pet. App. 72a, 240a.

2. Exxon’s fallback argument is equally unsupportable. Without citing authority, Exxon argues that the simple fact that the CWA provides for “substantial civil and criminal penalties” for oil spills should cause this Court to establish a common-law rule barring additional punishment in the form of punitive damages. Petrs. Br. 41-43.

Exxon’s lack of authority for this argument is telling. As Exxon acknowledges, this Court has “the duty to determine the rules of general maritime law ... in the same way that state courts determine the common law of their states.” Petrs. Br. 43. Yet not one state bars punitive damages on common-law grounds because other statutory provisions already allow the government to impose criminal and civil penalties. Private punitive damages have been allowed under such circumstances since the inception of this Nation. See RESTATEMENT (SECOND) OF TORTS § 908, cmt. a; W. PROSSER, HANDBOOK OF THE LAW OF TORTS § 2, at 11 & n.86 (4th ed. 1971); Assault: Criminal Liability as Barring or Mitigating Recovery of Punitive Damages, 98 A.L.R.3d 870 (1980) (collecting cases); Intoxication of Automobile

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Driver as Basis for Awarding Punitive Damages, 33 A.L.R.5th 303, 345 (1995) (“imposition of criminal sanctions for the offense of driving while intoxicated would not preclude an award of punitive damages”).

The most any defendant can obtain in this setting is a jury instruction stating that criminal liability is “one factor in determining whether an award of punitive damages would serve a meaningful deterrent function.” Hanover Ins. Co. v. Hayward, 464 A.2d 156, 159 (Me. 1983); see also Cook v. Ellis, 6 Hill 466, 469 (N.Y. 1844) (such an instruction “was quite as favorable to the defendant as he could possibly claim”). Exxon received exactly such an instruction here. BIO App. 20a. III. The Size of the Punitive Award Is Permissible.

The facts as the jury, the district court, and the Ninth Circuit have found them – coupled with the extraordinary procedural protections and post-trial reviews Exxon received – demonstrate that the punitive award was predictable, proportionate, and justified. That the award is larger than previous maritime awards simply reflects the unprecedented scope of harm that Exxon’s highly reprehensible conduct inflicted and the unique class proceeding that took place at Exxon’s request.

In light of these facts, this Court need not deviate from the ordinary common-law system of appellate review for abuse of discretion. Even if this Court were to specify bolstered standards, this award would satisfy them.

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A. Maritime Law Follows Traditional Common-Law Review, Which This Award Satisfies.

1. The common law has long accepted that “punitive damages represent the assessment by the jury, as the voice of the community, of the measure of punishment the defendant deserved.” BMW v. Gore, 517 U.S. 559, 600 (1996) (Scalia, J., dissenting); see also Barry v. Edmunds, 116 U.S. 550, 565 (1886) (“[N]othing is better settled than that ... it is the peculiar function of the jury to determine the amount” of punitive damages.); Day v. Woodworth, 54 U.S. (13 How.) 363, 371 (1851) (task of determining amount “has [always been] left to the discretion of the jury”).

Under the traditional common-law approach, the amount of the punitive award is initially determined by a jury instructed to consider the gravity of the wrong and the need to deter similar wrongful conduct. The jury’s deter-mination is then reviewed by trial and appellate courts to ensure that it is reasonable.

Haslip, 499 U.S. at 15. This Court, guided and restrained by the Seventh

Amendment’s Reexamination Clause, has adopted this framework as a matter of federal common law. When “no constitutional issue is raised, the role of the appellate court, at least in the federal system, is merely to review the trial court’s determination [concerning the size of the award] under an abuse-of-discretion standard.” Cooper Indus. v. Leatherman Tool Group, 532 U.S. 424, 433 (2001) (quotations

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omitted); see also Gasperini v. Center for Humanities, 518 U.S. 415, 432-39 (1996); Hardeman v. City of Albuquerque, 377 F.3d 1106, 1121-22 (10th Cir. 2004). When sufficient evidence supports the punitive award and the trial court reasonably has explained why the award satisfies governing standards, appellate review ends – regardless of whether plaintiffs’ claim is based in federal or state law. Haslip, 499 U.S. at 18-25; see also id. at 24-27 (Scalia, J., concurring in the judgment); Gasperini, 518 U.S. at 437-39; TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443, 471 (1993) (Scalia, J., concurring in the judgment).

This Court takes the same approach in the context of criminal punishment, where at least equally weighty interests in uniformity and avoiding undue punishment apply. See Gall v. United States, 128 S. Ct. 586 (2007). “The fact that the appellate court might reasonably have concluded that a different sentence was appropriate is insufficient to justify reversal of the district court.” Id. at 597.

The common-law test is readily satisfied here. The jury was told in Phase III to consider Exxon’s conduct separately from Hazelwood’s and received “unusually detailed punitive damages instructions,” which elaborated “the very same concepts embodied within the BMW guideposts.” Pet. App. 127a, 146a; BIO App. 1a-25a (complete set of instructions). The district court held and the Ninth Circuit confirmed that substantial evidence supported the jury’s decision to impose punitive damages against Exxon. Pet. App. 83a, 88a-90a. And the district court thrice found, in increasingly “penetrating” post-trial inquiries, that $5 billion was a reasonable

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determination of what was necessary to achieve punishment and deterrence. Pet. App. 178a, 221a, 242a-245a.

2. Nothing about maritime torts requires additional analysis. As explained above, it has long been settled that the same principles govern punitive damages in maritime cases as under federal common law generally. See supra at 29-30. Consequently, no court sitting in admiralty of which we are aware has reviewed a maritime punitive award under more stringent standards than any other punitive award. See Robertson, supra, at 88-115, 128-38 (describing maritime decisions upholding punitive damage awards).

To the extent that any interest in protecting maritime commerce could trigger a concern over exposing shipping companies to substantial liability for reckless conduct causing widespread harm, the Limitation of Shipowners’ Liability Act, 46 U.S.C. § 30501 et seq. – as its name implies – already addresses it. The Limitation Act, enacted in 1851, limits a shipowner’s liability to the value of its interest in its vessel and cargo – an amount that does not leave room for any significant punitive award – whenever a seaworthy vessel causes damage “without the owner’s privity or knowledge.” Lewis v. Lewis & Clark Marine, 531 U.S. 438, 446 (2001). The purpose of the Act was “to encourage ship-building and to induce capitalists to invest money in this branch of industry.” Norwich Co. v. Wright, 80 U.S. 104, 121 (1871). Recent commentators ranging from Chief Judge Kozinski to Charles Black have called the Act “a vestige of a time gone by” and verging on “economic obsolescence.” In re Esta Later

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Charters, 875 F.2d 234, 235 (9th Cir. 1989); GILMORE & BLACK, supra, § 10-4, at 822. But the Act remains on the books, providing far-reaching protection to shipowners in all but the most blameworthy circumstances.

Exxon comes to this Court seeking relief only because, for three independent reasons, it could not seek cover under the Limitation Act: (1) Exxon’s knowledge of Hazelwood’s alcohol use – as its own lawyers informed it shortly after the spill – constituted “privity or knowledge,” BIO App. 43a;20 (2) Exxon gave Hazelwood such a high level of responsibility as to make his misconduct that of the corporation, see supra at 27; and (3) Congress suspended the Act in TAPAA, so as to encourage heightened care in shipping trans-Alaskan oil, see Glacier Bay, 944 F.2d at 582-83.

This Court should not upset the balance Congress already has struck. When Congress enacts maritime statutes, it “does not, of course, merely enact general policies. By the terms of a statute, it also indicates its conception of the sphere within which the policy is to have effect.” Miles, 498 U.S. at 24. A statute, in other words, may say “this much and no more.” Id. That is what the Limitation Act does. Indeed, because the Limitation Act is in “derogation of the common law,” this Court held long ago that it could not “limit the right of an injured party to a recovery” except as “necessary to effectuate” the purpose of the 20 For cases supporting Exxon’s lawyers’ assessment, see Boudoin v. Lykes Bros. S.S. Co., 348 U.S. 336, 338-40 (1955) (crewmember’s excessive drinking habits and violent character); Empresa Lineas Maritimas Argentinas S.A. v. United States, 730 F.2d 153, 156-58 (4th Cir. 1984) (master’s asthma and accompanying sleep deprivation).

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Act. The Main v. Williams, 152 U.S. 122, 132-33 (1894). This Court should not immunize a vessel operator such as Exxon from full liability in circumstances in which Congress has refrained from doing so.

B. Even if This Court Were to Create New Maritime-Law “Guideposts,” the Award Would Satisfy Them.

Exxon’s brief avoids proffering any system of maritime excessiveness review that might be generally applied. Instead, Exxon offers only four slogans tailored to make this award look excessive. Petrs. Br. 51-55.

Exxon provides no rational justification for such a result-oriented approach – and none could be advanced. If this Court were to decide to enhance the traditional system of common-law review by adopting a new set of specific maritime guideposts, they should mirror the three that this Court has prescribed as a matter of substantive due process (and which themselves are largely derived from common law), so as to ensure that punitive awards receive consistent review. This award satisfies that test or any variant that might be adopted.

1. Reprehensibility. Although Exxon ignores the “reprehensibility of [its] conduct,” this factor is “[p]erhaps the most important indicium of the reasonableness of a punitive damages award.” BMW, 517 U.S. at 575.

As the district court and the court of appeals have detailed, Exxon’s executives’ decision to “[p]lac[e] a relapsed alcoholic in control of a supertanker was highly reprehensible conduct.” Pet. App. 31a; see

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also id. 22a-31a, 147a-157a. Even apart from Hazelwood’s relapse, Exxon’s Chairman characterized placing Hazelwood in command as a “gross error.” PX2 at 19:40 (Resps’ DVD). But regardless of how one views Exxon’s original decision to reinstate Hazelwood to command in 1985 after he enrolled in (but did not complete) rehabilitation programs, Pet. App. 63a; see Amicus Br. of American Maritime Safety, Inc. 2-7, Exxon had no excuse for keeping him in that position once it learned he had resumed drinking while managing supertankers. Pet. App. 89a-90a, 155a. The district court called this “deliberate[]” decision to keep Hazelwood in command despite awareness of his relapse “the critical factor” in evaluating the nature of Exxon’s wrongdoing. Pet. App. 155a-156a.

Exxon not only “repeatedly allowed Captain Hazelwood to sail into and out of Prince William Sound with a full load of crude oil,” Pet. App. 154a, but it did so knowing that Alaskans who depended on the Sound for their lives and their livelihoods had no way to protect themselves from Exxon’s recklessness. Pet. App. 30a. Equipment sufficient to contain a major oil spill did not exist in Alaska. SJA60sa-62sa. Area residents thus depended on Exxon to transport its toxic cargo through the Sound’s resource-rich waters with the utmost care. Pet. App. 155a.

Exxon’s conduct was especially egregious because the disastrous consequences of its actions were “entirely foreseeable”:

Anyone setting an oil tanker loose on the seas under command of a relapsed alcoholic has to know that he is imposing [a] massive risk.

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Though spilling the oil is an accident, putting the relapsed alcoholic in charge of the tanker is a deliberate act. The massive disruption of lives is entirely predictable when a giant oil tanker goes astray. Thus, Exxon’s reprehend-sibility goes considerably beyond the mere careless imposition of economic harm.

Pet. App. 26a; see also id. 30a-31a; JA1431-94. There is no basis for questioning this conclusion.

Exxon has told this Court that its “maritime-law excessiveness arguments implicate no disputed facts.” Exxon Cert. Reply 8.21 And Exxon’s opening brief does not challenge the Ninth Circuit’s and district court’s reprehensibility analyses.

2. Ratio. The punitive award is just under five times the amount respondents recovered for economic harm. The common law has long allowed (and sometimes required) punitive or enhanced damages at various single-digit ratios to the underlying harm the defendant’s conduct caused. See State Farm Mut. Auto. Ins. v. Campbell, 538 U.S. 408, 425 (2003) (referencing this history); TXO, 509 U.S. at 462 (upholding 10:1 ratio); Haslip, 499 U.S. at 23-24 (upholding 4:1 ratio); Missouri Pac. Ry. v. Humes, 115 U.S. 512, 523 (1885) (“nearly every state of the Union” provides for such damages). Exxon nevertheless suggests that the maximum ratio here is 1:1 because the compensatory damages are substantial. Petrs. Br. 52.

21 In any event, historical findings of fact pertaining to a punitive award are subject only to “clearly erroneous” review, Cooper, 532 U.S. at 435, 440 n.14, and all of the findings below are supported by substantial evidence.

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No court in over 200 years of American jurisprudence has adopted such a common-law rule. Indeed, the only authority Exxon cites for its proposed rule is one sentence of dictum in State Farm, an insurance case involving a 145:1 ratio, stating that “[w]hen compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee.” 538 U.S. at 425. In addition to ignoring the words “perhaps” and “can” in this quotation, Exxon ignores three aspects of this case that would render any such 1:1 guideline inappropriate.

a. The average amount of compensated economic harm per class member was not “substantial”; it averaged less than $15,500. Pet. App. 168a-169a.22 The overall harm figure appears large only because this case, at Exxon’s request, proceeded as a mandatory class action, bringing together the claims of over 32,000 claimants. Pet. App. 126a, 146a-147a.

Aggregating multiple modest individual recover-ies into a large collective injury cannot reduce the permissible ratio of a punitive award. Every federal and state court to consider the issue has held that (legislative) limits on punitive awards apply only on a per plaintiff basis. See EEOC v. W&O, Inc., 213 22 Because some plaintiffs’ harm is accounted for in settlement payments and administrative proceedings instead of the compensatory judgment here, Exxon attempted in the Ninth Circuit to draw a distinction between harm – the term this Court uses for ratio purposes – and the net compensatory damage judgment, arguing that the latter controlled. The Ninth Circuit rejected this argument, Pet. App. 32a-35a, and Exxon does not renew it here. Respondents’ Ninth Circuit brief further explains why Exxon’s argument lacked merit. See Pltfs. 2004 C.A. Br. 38-50.

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F.3d 600, 613-14 (11th Cir. 2000) (Title VII); Hayes Sight & Sound v. Oneok, Inc., 136 P.3d 428, 453 (Ks. 2006) (state-law cap); Rhyne v. K-Mart Corp., 594 S.E.2d 1, 20-21 (N.C. 2004) (same); Bagley v. Shortt, 410 S.E.2d 738, 739 (Ga. 1991) (same). This principle applies especially in the context of a class action, for class certification cannot “abridge, enlarge or modify any substantive right of class members.” Amchem Prods. v. Windsor, 521 U.S. 591, 613 (1997); see also Ala. Code 6-11-21(h) (state-law cap inapplicable to class actions); Mont. Code Ann. 27-1-220(3) (same). Exxon conceded as much in the district court, emphasizing that “certification of a mandatory punitive damages class would not in any way ... prejudice any of the parties.” JA115-16.

b. State Farm’s 1:1 suggestion (as well as its single-digit guidance) assumes a situation in which the monetary value of a plaintiff’s noneconomic harm has been quantified, and “the plaintiff has been made whole for his injuries by compensatory damages.” 538 U.S. at 419, 425. The plaintiffs in State Farm, for example, recovered $500,000 each for eighteen months of emotional distress over whether their insurance claim would be covered. Id. at 426. But when the totality of the plaintiffs’ harm has not been quantified because “‘the injury is hard to detect or the monetary value of noneconomic harm might have been difficult to determine,’” higher ratios are permissible. Id. at 425 (quoting BMW, 517 U.S. at 582).

This principle has special force in the legal regime that governs respondents’ tort claims. “[T]he whole [common-law] doctrine of punitory or exemplary damages has its foundation in a failure to

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recognize as elements upon which compensation may be given many things which ought to be classed as injuries entitling the injured person to compensation.” Stuart v. Western Union Tel. Co., 66 Tex. 580, 586 (1885); see also Cooper, 532 U.S. at 437 n.11 (referencing this history); KENNETH REDDEN, PUNITIVE DAMAGES § 2.2 (1980) (same). Common-law cases are legion in which punitive damages were allowed because the defendant’s conduct caused injuries, most often mental anguish and inexact consequential harm, for which plaintiffs could not recover compensatory damages. See, e.g., Brown v. Swineford, 44 Wis. 282, 286-89 (1878); Fay v. Parker, 53 N.H. 342, 382-84 (1872); McNamara v. King, 7 Ill. 432, 437 (1845).

The mental anguish or consequential harm supporting such damages did not need to be “specially pleaded.” Wise v. Daniel, 190 N.W. 746, 747-48 (Mich. 1922); see also Coryell v. Colbaugh, 1 N.J.L. 77, 77-78 (1791). The operative principle was that in cases involving egregious acts, juries could consider whether “mental suffering and injury to the feelings [we]re natural and proximate in view of the nature of the act.” Wise, 190 N.W. at 748 (quotations omitted). This principle lives on today in pockets of statutory law in which compensatory damages for economic harm may not fully capture the harm that the proscribed conduct causes. See Burlington N. & Santa Fe Ry. v. White, 126 S. Ct. 2405, 2417 (2006) (“Congress amended Title VII in 1991 to permit victims of intentional discrimination to recover compensatory ... and punitive damages, concluding that the additional remedies were necessary to help make victims whole.”) (quotations omitted); Illinois

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Brick Co. v. Illinois, 431 U.S. 720, 746-47 (1977) (treble damages under antitrust laws).

That is the case here. Maritime law, by means of “a pragmatic limitation imposed ... upon the tort doctrine of foreseeability,” forbids recovery for many economic and all emotional injuries. Getty Ref. & Mktg. Co. v. MT FADI B, 766 F.2d 829, 833 (3d Cir. 1985); see also Robins Dry Dock & Repair v. Flint, 275 U.S. 303 (1927); Louisiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019, 1035 (5th Cir. 1985) (Wisdom, J., dissenting) (maritime law restricts reach of “conventional tort principles of foreseeability and proximate cause”). Accordingly, commercial fishermen were unable to recover anything for the spill’s profound emotional impact on them and their families. JA1384-90; see Pet. App. 25a-26a, 150a-151a, 166a-169a; SJA385sa-572sa. Nor were Native class members able to recover for the impact on their subsistence cultures, Pet. App. 123a-124a; JA149-61, even though the spill destroyed their traditional way of life. And maritime law did not allow any compensatory damages for “price diminishment in fisheries that were not oiled, diminished value of limited entry fishing permits or fishing vessels absent a sale of the permit or vessel, damages to unoiled land, [or] diminution of market value owing to fear or stigma.” Exxon Shipping Co. v. Airport Depot Diner, 120 F.3d 166, 167 n.3 (9th Cir. 1997); see Pet. App. 115a-116a; JA118-48, 1155-56, 1368-81; SJA1sa-36sa. The punitive award here properly may reflect these real and foreseeable, but more remote and intangible effects of Exxon’s tort. Pet. App. 24a-26a, 53a (Browning, J., dissenting), 150a-151a, 166a-168a.

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c. Ratio analysis must consider not just the actual harm that the defendant’s tort inflicted but also the potential harm it threatened. State Farm, 538 U.S. at 424-25; TXO, 509 U.S. at 459-62. After consulting with an Exxon executive in San Francisco, Hazelwood tried to rock the EXXON VALDEZ off the reef. Pet. App. 152a-153a; JA223-34, 872-76; SJA295sa. If this maneuver had been successful, the ship “would probably have foundered, risking the loss of the entire cargo and the lives of those aboard.” Pet. App. 122a. Spilling the supertanker’s remaining 42 million gallons of crude alone would have caused “immense” additional harm. Pet. App. 168a.

d. Instead of engaging any of these points, Exxon suggests – by analogy to the minority of state legislatures that have imposed various punitive damages caps – that this Court can make up whatever new limitations it wants because this case involves federal maritime law. Petrs. Br. 52. But a court’s lawmaking authority, as Justice Holmes famously explained, is only “interstitial[]” in nature. Southern Pac. Co. v. Jensen, 244 U.S. 205, 220 (1917) (dissenting opinion). It does not license judges, as a legislature might do, to undertake major reallocations of costs and risks. Indeed, not a single state court has imposed any common-law cap on punitive awards; all twenty-one state monetary caps or maximum ratios are statutory. See Cooper, 532 U.S. at 433 n.6; BMW, 517 U.S. at 614-16 (Ginsburg, J., dissenting). And even among the states with statutory limitations, most do not apply to awards under $100,000 per victim; several others suspend them in cases involving intoxication. See, e.g., Miss. Code Ann. § 11-1-65(3)(d); N.J. Stat. 2A:15-5.14(c);

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N.C. Gen. Stat. § 1D-26. This Court should not legislate new rules that no court has imposed and even most legislatures eschew.

3. Comparable penalties. Comparable statutory penalties – assuming they apply to a system of common-law review, but see Cooper, 532 U.S. at 448 (Ginsburg, J., dissenting) (this guidepost “is not similarly rooted in common law”) – also support the reasonableness of the award. The federal govern-ment indicted Exxon for five federal crimes. Exxon pleaded guilty to three charges in exchange for the government’s dropping the other two. Those three crimes were punishable by a collective fine of over $3 billion; all five would have been punishable by over $5 billion. Pet. App. 173a-175a. In addition, federal and state legislation enacted in response to this disaster would have subjected Exxon to $1.3 billion in civil penalties. Pet. App. 104a ($786 million federal penalty); Alaska Stat. 46.03.759(a)(1), (a)(2), (c)(1) ($500 million state penalty).

Exxon ignores these realities, limiting its attention to civil penalties in place before the spill. Petrs. Br. 51. But this Court has explained that “[c]omparing the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct provides a third indicium of excessiveness.” BMW, 517 U.S. at 583 (emphasis added). Whatever care must be taken when the imposition of criminal sanctions is a “remote possibility,” State Farm, 538 U.S. at 428, does not apply when the defendant pleaded guilty to three crimes punishable by more than the amount of the punitive award. And post-event civil statutes represent “legislative judgments concerning appro-

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priate sanctions for the conduct at issue,” BMW, 517 U.S. at 583 (quotation omitted), just as much as pre-existing ones.

4. Wealth. Contrary to Exxon’s suggestion, evidence regarding wealth, “[w]hen compared to the entire trial, ... was a rather small percentage of the total presentation of evidence.” Pet. App. 238a. And there was nothing wrong with this evidence. It is a “well settled” matter of common-law practice that juries may consider a defendant’s wealth. TXO, 509 U.S. at 462 n.28; see also State Farm, 538 U.S. at 427-28 (informing jury of wealth is not “‘unlawful or inappropriate’”) (quoting BMW, 519 U.S. at 591 (Breyer, J., concurring)); RESTATEMENT (SECOND) OF TORTS § 908(2) (endorsing this practice). Federal statutes respecting punishment for maritime and other crimes require the same. 18 U.S.C. § 3572(a); see also U.S.S.G. §§ 8C2.8, 8C3.3. A defendant’s financial condition obviously bears on any rational determination of the amount necessary to punish and deter.

5. Punishment and deterrence. Finally, Exxon contends that no punitive damages should be awarded because the corporation’s prior penalties and cleanup costs already have “fully punished and deterred” it. Petrs. Br. 48. Exxon made the same argument at trial. Exxon’s Chairman took the stand and went through a chart of all of its fines and expenditures relating to the oil spill and told the jury that punitive damages were not “necessary to punish and deter Exxon.” JA1278-87; SJA331sa. Exxon’s counsel urged the same opinion in closing argument. JA1340-42, 1349-51. The jury, after being expressly instructed that it was free to accept Exxon’s

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argument, BIO App. 20a, decided that Exxon’s prior payments were not enough to “punish[] and deter[]” with respect to private harm. JA1408 (verdict form).

The instruction leaving it to the jury whether to accept Exxon’s argument was correct, see supra at 51-52, and the district court properly held that “substantial evidence” supports the jury’s rejection of the argument. Pet. App. 240a-245a. Exxon’s civil fines and related expenditures were made “quite simply, to clean up Exxon’s mess.” Pet. App. 241a; see also id. 124a. It is unclear why Exxon deserves praise for that, especially when the cleanup response itself was “wholly inadequate” and more a public relations campaign than an environmental effort. See supra at 10.

The only money Exxon has paid above and beyond what an entirely innocent spiller would have paid for this oil spill was the $25 million criminal penalty for harming the environment. And that payment was made before discovery in this case. The district court, speaking through the same judge who had accepted Exxon’s criminal plea agreement, explained later that not only was that fine limited to addressing environmental harms, but it “did not comprehend the enormity of the harm or number of people adversely affected by the spill.” Pet. App. 242a-243a. “It also is possible,” the court later observed, “that, from the testimony of Exxon executives, the jury could have inferred a lack of remorse.” Pet. App. 245a.23 This Court does not

23 Exxon quotes remarks the district court made complimenting Exxon’s integrity when accepting the criminal plea bargain. Petrs. Br. 5-6. The court never made any such comment after presiding over the trial – including observing 57 Exxon

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second-guess such assessments by a jury and district court.

Exxon’s related argument that the punitive award “makes no economic sense” because it should have to do no more than “bear the costs” of the spill, Petrs. Br. 53-54, fares no better. “[D]eterrence is not the only purpose served by punitive damages.” Cooper, 532 U.S. at 439. Thus, it should suffice to respond that just as the Due Process Clause’s punitive damages jurisprudence “does not require [this Court] to adopt the views of the Law and Economics school,” TXO, 509 U.S. at 491 (O’Connor, J., dissenting), neither does the common law. Indeed, even as to deterrence, “[c]itizens and legislators may rightly insist that they are willing to tolerate some loss in economic efficiency in order to deter what they consider morally offensive conduct.” Cooper, 532 U.S. at 439 (quotations and citation omitted).

This case illustrates the point. Exxon had sober captains available to manage the EXXON VALDEZ, SJA117sa, and replacing Hazelwood obviously would have avoided an enormous financial risk. Yet Exxon did not respond to textbook economic incentives. It chose instead to let Hazelwood continue in command and apparently accepted the possibility of liability if he grounded a supertanker in Prince William Sound. Pet. App. 170a, 233a. Whether rooted in a sense of imperviousness or the corporation’s alcoholic culture, Exxon’s “wickedness [was] not greed but rather perverse indifference to another person’s values.” Marc Galanter & David Luban, Poetic Justice: employees (including numerous top executives) through live or videotaped testimony – in this case.

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Punitive Damages and Legal Pluralism, 42 AM. U. L. REV. 1393, 1438 (1993).

In any event, Exxon’s argument fails even on its own terms. A tortfeasor does not bear the full costs of its misconduct unless, at a minimum, it must internalize all economic damage it causes, as well as intangible mental and secondary economic and societal harms. Thomas C. Galligan, Jr., Augmented Awards: The Efficient Evolution of Punitive Damages, 51 LA. L. REV. 3, 48-49 (1990). Yet Exxon urges this Court to create a legal system in which tortfeasors that cause massive economic and attendant mental and consequential injuries will never – no matter how egregious their conduct – have to internalize more than a fraction of the cascading harm.

Such a system would fail to deliver even rudimentary justice. A jury must have the ability to provide punishment commensurate with the defendant’s wantonness and adequate to deter others from similar conduct in the future. The award here serves those crucial functions, while simultaneously serving as a vital reaffirmation of society’s values in the face of a historic – indeed, “notorious,” Locke, 529 U.S. at 96 – wrong.

CONCLUSION The judgment should be affirmed.

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Respectfully submitted, James vanR. Springer David W. Oesting DICKSTEIN SHAPIRO LLP Counsel of Record 1825 Eye Street, N.W. Stephen M. Rummage Washington, DC 20006 David C. Tarshes Jeffrey L. Fisher Brian B. O’Neill DAVIS WRIGHT TREMAINE LLP FAEGRE & BENSON LLP Suite 800 2200 Wells Fargo Center 701 W. Eighth Avenue 90 S. Seventh Street Anchorage, AK 99501 Minneapolis, MN 55402 (907) 257-5300 January 22, 2008

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APPENDIX

Section 204 of the Trans-Alaska Pipeline Authorization Act, codified at 43 U.S.C. § 1653, as in effect in 1989* § 1653. Liability for damages (a) Activities along or in vicinity of pipeline right-of-way; strict liability; limitation on liability; subrogation; emergency subsistence and other aid; exemption for State of Alaska (1) Except when the holder of the pipeline right-of-way granted pursuant to this chapter can prove that damages in connection with or resulting from activities along or in the vicinity of the proposed trans-Alaskan pipeline right-of-way were caused by an act of war or negligence of the United States, other government entity, or the damaged party, such holder shall be strictly liable to all damaged parties, public or private, without regard to fault for such damages, and without regard to ownership of any affected lands, structures, fish, wildlife, or biotic or other natural resources relied upon by Alaska Natives, Native organizations, or others for subsistence or economic purposes. Claims for such injury or damages may be determined by arbitration or judicial proceedings. (2) Liability under paragraph (1) of this subsection shall be limited to $50,000,000 for any one incident, and the holders of the right-of-way or permit shall be

* Sections 204(a) and (b) were modified by the Oil Pollution Act of 1990, Pub. L. No. 101-380, 104 Stat. 484, and Section 204(c) was repealed.

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liable for any claim allowed in proportion to their ownership interest in the right-of-way or permit. Liability of such holders for damages in excess of $50,000,000 shall be in accord with ordinary rules of negligence. (3) In any case where liability without fault is imposed pursuant to this subsection and the damages involved were caused by the negligence of a third party, the rules of subrogation shall apply in accordance with the law of the jurisdiction where the damage occurred. (4) Upon order of the Secretary, the holder of a right-of-way or permit shall provide emergency subsistence and other aid to an affected Alaska Native, Native organization, or other person pending expeditious filing of, and determination of, a claim under this subsection. (5) Where the State of Alaska is the holder of a right-of-way or permit under this chapter, the State shall not be subject to the provisions of this subsection, but the holder of the permit or right-of-way for the trans-Alaska pipeline shall be subject to this subsection with respect to facilities constructed or activities conducted under rights-of-way or permits issued to the State to the extent that such holder engages in the construction, operation, maintenance, and termination of facilities, or in other activities under rights-of-way or permits issued to the State. (b) Control and removal of pollutants at expense of right-of-way holder If any area within or without the right-of-way or permit area granted under this chapter is polluted by

3a

any activities conducted by or on behalf of the holder to whom such right-of-way or permit was granted, and such pollution damages or threatens to damage aquatic life, wildlife, or public or private property, the control and total removal of the pollutant shall be at the expense of such holder, including any administrative and other costs incurred by the Secretary or any other Federal officer or agency. Upon failure of such holder to adequately control and remove such pollutant, the Secretary, in cooperation with other Federal, State, or local agencies, or in cooperation with such holder, or both, shall have the right to accomplish the control and removal at the expense of such holder. (c) Discharges of oil from vessels loaded at terminal facilities of pipeline; strict liability; limitation on liability; apportionment of liability; establishment and operation of Trans-Alaska Pipeline Liability Fund (1) Notwithstanding the provisions of any other law, if oil that has been transported through the trans-Alaska pipeline is loaded on a vessel at the terminal facilities of the pipeline, the owner and operator of the vessel (jointly and severally) and the Trans-Alaska Pipeline Liability fund established by this subsection, shall be strictly liable without regard to fault in accordance with the provisions of this subsection for all damages, including clean-up costs, sustained by any person or entity, public or private, including residents of Canada, as the result of discharges of oil from such vessel. (2) Strict liability shall not be imposed under this subsection if the owner or operator of the vessel, or

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the Fund, can prove that the damages were caused by an act of war or by the negligence of the United States or other governmental agency. Strict liability shall not be imposed under this subsection with respect to the claim of a damaged party if the owner or operator of the vessel, or the Fund, can prove that the damage was caused by the negligence of such party. (3) Strict liability for all claims arising out of any one incident shall not exceed $100,000,000. The owner and operator of the vessel shall be jointly and severally liable for the first $14,000,000 of such claims that are allowed. Financial responsibility for $14,000,000 shall be demonstrated in accordance with the provisions of section 311(p) of the Federal Water Pollution Control act, as amended (33 U.S.C. 1321(p)) before the oil is loaded. The Fund shall be liable for the balance of the claims that are allowed up to $100,000,000. If the total claims allowed exceed $100,000,000, they shall be reduced proportionately. The unpaid portion of any claim may be asserted and adjudicated under other applicable Federal or state law. (4) The Trans-Alaska Pipeline Liability Fund is hereby established as a non-profit corporate entity that may sue and be sued in its own name. The Fund shall be administered by the holders of the trans-Alaska pipeline right-of-way under regulations prescribed by the Secretary. The fund shall be subject to an annual audit by the Comptroller General, and a copy of the audit shall be submitted to the Congress. (5) The operator of the pipeline shall collect from the owner of the oil at the time it is loaded on the vessel

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a fee of five cents per barrel. The collection shall cease when $100,000,000 has been accumulated in the Fund, and it shall be resumed when the accumulation in the Fund falls below $100,000,000. (6) The collections under paragraph (5) shall be delivered to the Fund. Costs of administration shall be paid from the money paid to the fund, and all sums not needed for administration and the satisfaction of claims shall be invested prudently in income-producing securities approved by the Secretary. Income from such securities shall be added to the principal of the Fund. (7) The provisions of this subsection shall apply only to vessels engaged in transportation between the terminal facilities of the pipeline and ports under the jurisdiction of the United States. Strict liability under this subsection shall cease when the oil has first been brought ashore at a port under the jurisdiction of the United States. (8) In any case where liability without regard to fault is imposed pursuant to this subsection and the damages involved were caused by the unseaworthiness of the vessel or by negligence, the owner and operator of the vessel, and the Fund, as the case may be, shall be subrogated under applicable State and Federal laws to the rights under said laws of any person entitled to recovery hereunder. If any subrogee brings an action based on unseaworthiness of the vessel or negligence of its owner or operator, it may recover from any affiliate of the owner or operator, if the respective owner or operator fails to satisfy any claim by the subrogee allowed under this paragraph.

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(9) This subsection shall not be interpreted to preempt the field of strict liability or to preclude any State from imposing additional requirements. (10) If the Fund is unable to satisfy a claim asserted and finally determined under this subsection, the Fund may borrow the money needed to satisfy the claim from any commercial credit source, at the lowest available rate of interest, subject to approval of the Secretary. (11) For purposes of this subsection only, the term “affiliate” includes— (A) Any person owned or effectively controlled by the vessel owner or operator; or (B) Any person that effectively controls or has the power effectively to control the vessel owner or operator by—

(i) stock interest, or (ii) representation on a board of directors or similar body, or (iii) contract or other agreement with other stockholders, or (iv) otherwise; or

(C) Any person which is under common ownership or control with the vessel owner or operator. (12) The term “person” means an individual, a corporation, a partnership, an association, a joint-stock company, a business trust, or an unincorporated organization.

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What If – The Exxon Valdez Had Hit Plymouth Rock

No. 07-219

IN THE

Supreme Court of the United States __________

EXXON SHIPPING COMPANY, ET AL.,

Petitioners, v.

GRANT BAKER, ET AL., Respondents.

__________

On Writ of Certiorari to the United States Court of Appeals

for the Ninth Circuit __________

BRIEF OF THE STATE OF ALASKA

AS AMICUS CURIAE IN SUPPORT OF RESPONDENTS __________

TALIS J. COLBERG Attorney General CRAIG J. TILLERY Deputy Attorney General JOANNE GRACE Chief Assistant Attorney General STATE OF ALASKA DEPARTMENT OF LAW P.O. Box 110300 Juneau, Alaska 99811-0300 (907) 465-2133

DAVID C. FREDERICK Counsel of Record SCOTT H. ANGSTREICH MICHAEL J. BURSTEIN KELLOGG, HUBER, HANSEN, TODD, EVANS & FIGEL, P.L.L.C. 1615 M Street, N.W. Suite 400 Washington, D.C. 20036 (202) 326-7900

Counsel for Amicus State of Alaska

January 29, 2008

TABLE OF CONTENTS Page

TABLE OF AUTHORITIES ...................................... iii INTEREST OF AMICUS CURIAE ............................ 1 STATEMENT.............................................................. 1

A. The spill and cleanup efforts......................... 1 B. Impact of the spill.......................................... 4 C. Lingering effects of the spill.......................... 9 D. The 1991 plea agreement and con-

sent decree ................................................... 10 SUMMARY OF ARGUMENT .................................. 13 ARGUMENT............................................................. 16

I. THE DAMAGES AWARD HERE IS CONSISTENT WITH MARITIME LAW AND POLICY........................................ 16 A. Punitive Damages In Maritime

Law Serve Compensatory, Deter-rence, And Punishment Functions........... 16

B. Maritime Law Holds Employers Liable For Punitive Damages For The Reckless Acts Of Their Mana-gerial Agents ............................................. 19

C. The Punitive Damages Award Should Not Be Further Reduced As Excessive.............................................. 25

ii

II. THE CLEAN WATER ACT DOES NOT PRECLUDE THE PUNITIVE DAMAGES AWARD ...................................... 31 A. The Clean Water Act Does Not

Preempt Private Suits For Dam-ages Against Spillers ................................ 31

B. The Clean Water Act Does Not Codify The Maritime Common Law Of Negligence For Oil Spills..................... 33

CONCLUSION.......................................................... 34 APPENDIX:

Letter from Barry M. Hartman, United States Dep’t of Justice, et al., to Michael D. Hausfeld, et al. (Oct. 31, 1991) ....................... 1a

iii

TABLE OF AUTHORITIES Page

CASES American Soc’y of Mech. Eng’rs, Inc. v.

Hydrolevel Corp., 456 U.S. 556 (1982)................ 22 Ballard Shipping Co. v. Beach Shellfish,

32 F.3d 623 (1st Cir. 1994).................................. 17 Barry v. Edmunds, 116 U.S. 550 (1886) .................. 25 Bell v. Hood, 327 U.S. 678 (1946)............................. 20 BMW of N. Am., Inc. v. Gore, 517 U.S. 559

(1996) ........................................................18, 26, 28 CEH, Inc. v. F/V Seafarer, 70 F.3d 694

(1st Cir. 1995) ...........................................17, 21, 22 Chamberlain v. Chandler, 5 F. Cas. 413

(C.C.D. Mass. 1823) (No. 2,575).......................... 16 City of Milwaukee v. Illinois, 451 U.S. 304

(1981) ........................................................15, 31, 32 Cooper Indus., Inc. v. Leatherman Tool

Group, Inc., 532 U.S. 424 (2001).............13, 16, 17, 25, 26, 27, 29

Day v. Woodworth, 54 U.S. (13 How.) 363 (1852) ................................................................... 25

De Zon v. American President Lines, 318 U.S. 660 (1943) ............................................................ 19

Doe v. Celebrity Cruises, Inc., 394 F.3d 891 (11th Cir. 2004), cert. denied, 126 S. Ct. 548 (2005) ............................................................ 20

Dooley v. Korean Air Lines Co., 524 U.S. 116 (1998) ................................................................... 34

Easley v. Cromartie, 532 U.S. 234 (2001) ................ 26

iv

Exxon Co., U.S.A. v. Sofec, Inc., 517 U.S. 830 (1996) ..............................................................24, 26

Franklin v. Gwinnett County Pub. Sch., 503 U.S. 60 (1992) ............................................... 20

Gaffney v. Riverboat Servs. of Indiana, Inc., 451 F.3d 424 (7th Cir. 2006) ............................... 26

Gaston v. Flowers Transp., 866 F.2d 816 (5th Cir. 1989)...................................................... 17

Honda Motor Co. v. Oberg, 512 U.S. 415 (1994) ................................................................... 26

Kermarec v. Compagnie Generale Trans-atlantique, 358 U.S. 625 (1959) .......................... 20

Kossick v. United Fruit Co., 365 U.S. 731 (1961) ................................................................... 24

Laidlaw Transit, Inc. v. Crouse, 53 P.3d 1093 (Alaska 2002) ....................................................... 24

Lake Shore & M.S. Ry. Co. v. Prentice, 147 U.S. 101 (1893) ............................14, 22, 23, 25

Louisiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019 (5th Cir. 1985) ............................. 17

Middlesex County Sewerage Auth. v. National Sea Clammers Ass’n, 453 U.S. 1 (1981)...15, 31, 32

Miles v. Apex Marine Corp., 498 U.S. 19 (1990) ........................................................15, 31, 34

Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978) ...........................................15, 31, 33, 34

P & E Boat Rentals, Inc. v. Ennia Gen. Ins. Co., 872 F.2d 642 (5th Cir. 1989) ........................ 23

Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991) ...................................16, 17, 22, 24, 25, 26

v

Protectus Alpha Navigation Co. v. North Pac. Grain Growers, Inc., 767 F.2d 1379 (9th Cir. 1985)...................................................... 23

Ralston v. The State Rights, 20 F. Cas. 201 (D.C.E.D. Pa. 1836) (No. 11,540) ............. 16-17, 21

Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927) ..................................13, 17, 27

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) ........................................27, 30

Stoot v. D & D Catering Serv., Inc., 807 F.2d 1197 (5th Cir. 1987)............................................. 20

Sullivan v. Little Hunting Park, Inc., 396 U.S. 229 (1969) ............................................. 20

The Amiable Nancy, 16 U.S. (3 Wheat.) 546 (1818) ........................................................13, 20, 21

The City of Carlisle, 39 F. 807 (D. Or. 1889) ......21, 23 The Yankee v. Gallagher, 30 F. Cas. 781

(C.C.N.D. Cal. 1859) (No. 18,124) ..................17, 26 United States v. Maine, 469 U.S. 504 (1985) ............. 2 United States Steel Corp. v. Fuhrman,

407 F.2d 1143 (6th Cir. 1969) ............................. 23 Waldron v. Moore-McCormack Lines, Inc.,

386 U.S. 724 (1967) ........................................19, 20 Workman v. Mayor of New York, 179 U.S.

552 (1900) ............................................................ 19 Yamaha Motor Corp., U.S.A. v. Calhoun,

516 U.S. 199 (1996) ........................................24, 33

vi

STATUTES Act of Aug. 7, 1789, ch. 9, § 4, 1 Stat. 53, 54.............. 2 Clean Water Act, 33 U.S.C. § 1251 et seq. ........15, 31,

32, 33, 34 § 1321(b)(3) (1988) ............................................... 31 § 1321(b)(4) (1988) ............................................... 31 § 1321(b)(6) .......................................................... 31 § 1321(f ) ............................................................... 32 § 1321(o) ..........................................................32, 33 § 1321(o)(1) .......................................................... 32 Death on the High Seas Act, 46 U.S.C.

§ 30301 et seq. ..................................................... 34 Jones Act, 46 U.S.C. § 30104...............................19, 34 Alaska Stat.: § 08.62.157 ............................................................. 2 § 08.62.185 ............................................................. 2 § 09.17.020(k)....................................................... 24 LEGISLATIVE MATERIALS S. Rep. No. 101-94 (1990), reprinted in 1990

U.S.C.C.A.N. 722 ................................................... 2 ADMINISTRATIVE MATERIALS Alaska Dep’t of Envtl. Conservation, The

Exxon Valdez Oil Spill: Final Report, State of Alaska Response (June 1993) ............. 2, 3,

4, 7, 8, 9

vii

U.S. Census Bureau, Statistical Abstract of the United States: 2008 (Oct. 2007), avail-able at http://www.census.gov/prod/2007 pubs/08statab/pop.pdf ........................................... 8

1 U.S. Coast Guard, Federal On Scene Coor-dinator’s Report: T/V Exxon Valdez Oil Spill (Sept. 1993) ....................................2, 3, 4, 5, 6

U.S. Dep’t of Justice & Alaska Dep’t of Law, Comprehensive Plan for Habitat Restora-tion Projects Pursuant to Reopener for Unknown Injury (June 2006), available at http://www.evostc.state.ak.us/Store/Event_Documents/Comprehensive_Plan_1June 2006FINAL.pdf...................................................... 9

JUDICIAL MATERIALS Agreement and Consent Decree, United

States and Alaska v. Exxon Corp., Nos. A91-082 CIV & A91-083 CIV (D. Alaska filed Oct. 9, 1991)............................................11, 12

Complaint, Alaska v. Exxon Corp., No. A91-083 CIV (D. Alaska filed Mar. 15, 1991) ............ 11

Governments’ Memorandum in Support of Agreement and Consent Decree, United States and Alaska v. Exxon Corp., Nos. A91-082 CIV & A91-083 CIV (D. Alaska filed Oct. 8, 1991)............................................11, 12

Plea Agreement, United States v. BP Explo-ration (Alaska), Inc., No. 07-cr-125 (D. Alaska filed Oct. 25, 2007) .............................. 9, 10

viii

OTHER MATERIALS Richard T. Carson et al., A Contingent

Valuation Study of Lost Passive Use Values Resulting from the Exxon Valdez Oil Spill (Nov. 1992), available at http://www.evostc.state.ak.us/Universal/ Documents/Publications/Economic/Econ_ Passive.pdf ............................................................. 5

Richard T. Carson & W. Michael Hanemann, A Preliminary Economic Analysis of Recreational Fishing Losses Related to the Exxon Valdez Oil Spill (Dec. 1992), available at http://www.evostc.state.ak. us/Universal/Documents/Publications/ Economic/Econ_Fishing.pdf .................................. 7

Exxon Valdez Oil Spill Trustee Council: Exxon Valdez Oil Spill Restoration Pro-

ject Final Report: Information Synthesis and Recovery Recommendations for Re-sources and Services Injured by the Exxon Valdez Oil Spill (Oct. 2006), available at http://www.evostc.state.ak.us/Files.cfm? doc=/Store/FinalReports/2006-060783-Final.pdf......................................................5, 6, 7, 8

Update on Injured Resources and Services 2006 (Nov. 2006), available at http://www. evostc.state.ak.us/Universal/Documents/ Publications/2006IRSUpdate.pdf.................. 5, 6, 8

George Frost, 2nd Spill Settlement Looks Like the 1st; Exxon Agrees to $125 Million Criminal Fine for 1989 Oil Spill, Anchor-age Daily News, Oct. 1, 1991, at A1 .............. 12-13

ix

Grant Gilmore & Charles L. Black, Jr., The Law of Admiralty (2d ed. 1975) ................... 23

Inst. of Social & Econ. Research, Univ. of Alaska Anchorage, Alaska Gross State Product: 1961-1998 (June 1999), avail-able at http://www.iser.uaa.alaska.edu/ publications/client/gsp/GSP992.pdf ...................... 5

2 John C. Kircher & Christine M. Wiseman, Punitive Damages Law & Practice (2d ed. 2005)..................................................................... 24

Wesley Loy, Crews Clean Up Spill on North Slope, Anchorage Daily News, Dec. 18, 2007, at B1........................................................... 10

McDowell Group, An Assessment of the Impact of the Exxon Valdez Oil Spill on the Alaskan Tourism Industry (Aug. 1990), available at http://www.evostc. state.ak.us/Universal/Documents/ Publications/Economic/Econ_Tourism.pdf ........... 7

Restatement (Third) of Agency (2006) ..................... 24 Restatement (Second) of Torts (1979) ...........23, 24, 29 David W. Robertson, Punitive Damages in

American Maritime Law, 28 J. Mar. L. & Com. 73 (1997) ....................................16, 17, 21, 26

Thomas J. Schoenbaum, Admiralty and Maritime Law (4th ed. 2004):

Vol. 1 .................................................................... 17 Vol. 2 .................................................................... 20 Douglas A. Wolfe et al., The Fate of the Oil

Spilled from the Exxon Valdez, 28 Envtl. Sci. & Tech. 561A (1994) ....................................... 4

INTEREST OF AMICUS CURIAE The State of Alaska depends on maritime shipping,

commercial fishing, and the petroleum industry for most of its economic livelihood. Alaska therefore has a significant interest in ensuring that remedies under the general maritime law balance properly the needs of those industries with the need to compen-sate Alaska’s citizens for, and appropriately deter and punish, corporate wrongdoing. For that reason, Alaska has long supported the efforts of its citizens to recover the full spectrum of remedies for their private economic and emotional losses caused by the Exxon Valdez oil spill.

STATEMENT On March 24, 1989, the Exxon Valdez ran aground

in Prince William Sound, causing one of the worst environmental disasters in American history. The 11 million gallons of oil that spilled into the Sound that morning had a profound and lasting impact on Alaska and its citizens. See Pet. App. 64a. In civil and criminal proceedings, the State vindicated its interest in punishment and compensation for damage to Alaska’s natural resources. But Alaska has con-sistently recognized that the enormity of the harm to its citizens goes beyond environmental damage and that the full spectrum of legal remedies should be available to private plaintiffs who, by obtaining punitive damages to punish Exxon for the wrongs in-flicted upon them, complemented the State’s efforts. A. The spill and cleanup efforts

When the Exxon Valdez ran aground, it was under the command of Joseph Hazelwood, a known, relapsed alcoholic who was seen drinking heavily before boarding the ship. See Pet. App. 63a-64a.

2

Hazelwood was the only crew member authorized under Alaska’s pilotage law to navigate through Prince William Sound,1 yet he was not present on the bridge to execute a critical turn that would have avoided the reef. See id. at 63a.

Hazelwood returned to the bridge after the ground-ing. He notified the Port of Valdez traffic control and the Coast Guard about his ship’s distress. See id. at 122a; Supp. JA 80sa; PX92A (Resps. Lodging). He then spoke via satellite phone with his superiors at Exxon Shipping in San Francisco. See JA 354-55, 872-76.

The industry response to the spill – led by Exxon – proved “slow and inadequate”2 and “failed miserably in containing the spill and preventing damage.”3 Exxon took over recovery operations from Alyeska Pipeline Service Company (the manager of the Trans-Alaska Pipeline) in a confusing hand-off of authority. See State Report 13-14; 1 United States Coast Guard, Federal On Scene Coordinator’s Report: T/V Exxon Valdez Oil Spill 104 (Sept. 1993) (“Federal Report”). Exxon then implemented its own recovery plan instead of Alyeska’s state-approved

1 Since the First Congress, the federal government has recog-

nized that States have jurisdiction over pilotage requirements “ ‘in the bays, inlets, rivers, harbors, and ports of the United States.’ ” United States v. Maine, 469 U.S. 504, 513 n.6 (1985) (quoting Act of Aug. 7, 1789, ch. 9, § 4, 1 Stat. 53, 54)). Alaska requires every oil tanker operating in “state water,” Alaska Stat. § 08.62.185, to employ a state-licensed pilot “to safely navigate” through its waters, id. § 08.62.157.

2 Alaska Dep’t of Envtl. Conservation, The Exxon Valdez Oil Spill: Final Report, State of Alaska Response 1 (June 1993) (“State Report”).

3 S. Rep. No. 101-94, at 2 (1990).

3

plan. See State Report 14. Exxon did not provide the State with a copy of its plan, which was not specific to Prince William Sound and which was not approved by any state or federal authority. See id. at 13-14. Problems of coordination and accountability would continue over the next two years of cleanup opera-tions. See id. at 17-20.

Partly as a result of that confused response, a criti-cal window of opportunity to contain and remove floating oil was missed. See Federal Report 35. And Exxon’s early efforts appeared to focus more on ad-dressing the “public relations nightmare” of the spill than effective cleanup. PX722A, at 6:03-10 (Resps. Lodging). As one Exxon official stated, the company did not “care so much whether it’s working or not,” so long as there was “something out there that people can see . . . that looks bright and yellow and like somebody’s doing something.” Id. at 1:45-2:00.

The slowness and ineffectiveness of the immediate response meant that, when an impending storm struck two-and-a-half days after the spill, little if any cleanup or containment had occurred. The storm then made the job much more difficult by transform-ing the “single, compact slick” (State Report 91) that “remained within a few miles of the vessel” (Federal Report 51) into “[b]reakaway patches and thick wind-rows of oil and mousse” that extended more than 40 miles from the vessel and began to hit shorelines (State Report 91). See also PX226 (Resps. Lodging) (depicting spread of Exxon Valdez oil).

After the storm cleared, the citizens and commer-cial fishermen of Cordova and Chenega – towns on Prince William Sound whose economies “depend[ed] almost entirely on commercial fishing,” JA 1442 – took matters into their own hands to save the critical

4

salmon hatchery in Sawmill Bay, which Exxon had not protected at all. See State Report 94-96. For nearly two weeks, and with no help from Exxon, individual fishermen committed their fleets to saving the hatchery, often using nothing more than “five-gallon plastic buckets” to “scoop[] oil from the surface by hand.” Id. at 96.

Although the salmon hatchery survived, see id., significant portions of Alaska’s pristine coastline were damaged. Exxon Valdez oil contaminated 3,245 miles of beach stretching from Prince William Sound all the way to the Alaska Peninsula, with more than 275 miles classified as “heavily oiled.” See Federal Report 123-25 & Table 6.1. As the oil washed ashore, it “pooled” and left “stretches of greasy, brown emul-sion up to and exceeding two feet deep stranded on shorelines.” State Report 62.

After several weeks in which there was “little activity on the shorelines,” Exxon “made one highly publicized, almost desperate effort to do shoreline cleanup with workers literally wiping rocks by hand.” Id. That effort “looked ludicrous” and proved “use-less and impractical.” Id. Shoreline cleanup opera-tions did not end until 1992, some three years after the disaster. See id. at 146-47. Exxon, however, recovered only 14 percent of the spilled oil. See Douglas A. Wolfe et al., The Fate of the Oil Spilled from the Exxon Valdez, 28 Envtl. Sci. & Tech. 561A, 566A, Table 2 (1994). B. Impact of the spill

The oil spill devastated Prince William Sound’s natural resources, economy, and social fabric. The Sound’s natural beauty and abundant resources are valuable not only in their own right – and suffered

5

damages estimated at $2.8 billion4 – but also as the lynchpin of the region’s economy and way of life. Seafood and tourism are two of Alaska’s largest in-dustries and have historically been the largest non-petroleum basic private sector businesses in the State. See Inst. of Social & Econ. Research, Univ. of Alaska Anchorage, Alaska Gross State Product: 1961-1998, at 10 (June 1999). With the loss of these re-sources, the communities’ traditional way of life was devastated.

1. Wildlife in Prince William Sound and western Alaska suffered tremendous losses. See generally EVOSTC, Update on Injured Resources and Services 2006, at 9-34 (Nov. 2006) (“EVOSTC Report”). Those losses affected commercial fishermen, tourism, rec-reation, Native subsistence cultures, and the psyche of the entire region.

In the days immediately following the spill, scores of volunteers on land and sea attempted to rescue and clean sea otters covered in oil. See Federal Report 352-53. Despite these efforts, between 1,000 and 2,650 sea otters died in Prince William Sound alone. See EVOSTC, Exxon Valdez Oil Spill Restora-tion Project Final Report: Information Synthesis and Recovery Recommendations for Resources and Ser-vices Injured by the Exxon Valdez Oil Spill 14-4 (Oct. 2006) (“Information Synthesis”); Federal Report 353. The population of sea otters did not begin to recover until the late 1990s. See EVOSTC Report 6.

Harbor seals in the area “swam in oiled water,” “surfaced in oil slicks to breathe” air containing

4 See Richard T. Carson et al., A Contingent Valuation Study

of Lost Passive Use Values Resulting from the Exxon Valdez Oil Spill 5-123 (Nov. 1992).

6

“volatile hydrocarbon vapors,” and “became heavily coated with oil.” Information Synthesis 15-2. More than 80 percent of the seals observed in central Prince William Sound had oil on them. See id. The harbor seal population did not recover for about 15 years after the spill. See EVOSTC Report 6.

Marine and migratory bird populations were dev-astated. The United States estimated that 260,000 to 580,000 birds died in the spill area, with the “best estimates” ranging from 350,000 to 390,000. Federal Report 354. Even rescued birds “frequently d[ied] in [workers’] hands, the apparent victims of heart failure.” Id. at 351.

Sockeye salmon fisheries were closed in 1989 to avoid putting contaminated fish on the market. That closure created “overescapement,” a situation in which an overabundance of fish creates systemic imbalances in the ecosystem. See EVOSTC Report 32. As a result, the population of sockeye salmon initially declined and did not return to pre-spill levels until 2002. See id. at 32-33. In 1991 and 1992, wild adult pink salmon returns in some parts of the Sound declined by 11 percent. See id. at 28. Pacific herring stocks collapsed in 1993 and have never recovered. See id. at 24-26; Information Synthesis 17-5. “[T]he 1989 year class was one of the smallest cohorts ever to return to spawn.” Information Syn-thesis 11-1.

2. The region suffered tremendous economic losses. Commercial fishing accounts for approxi-mately one-fifth of Alaska’s employment and is the State’s largest private sector source of jobs. See Information Synthesis 17-1. For the remaining nine months of 1989, the State closed commercial fisheries for salmon, crab, shrimp, rockfish, sablefish, and

7

herring in Prince William Sound, Cook Inlet, Kodiak, and the Alaska Peninsula. See id. at 17-2; Supp. JA 228sa-230sa (listing closures in detail). The Prince William Sound salmon and shrimp fisheries remained closed into 1990. Prices for fish in those fisheries that reopened were depressed in part because of fears of contamination, and the value of commercial fishing permits decreased after the spill. See JA 1392-93. The reviewing courts, evaluating the “actual harm” from the spill, estimated the eco-nomic losses at $504 million. See Pet. App. 38a, 160a-163a. That figure likely understates the true harm; the closures had a ripple effect that shuttered local businesses supporting the industry, affected city tax revenues and services, and even drove up utility rates. See State Report 102-03.

Recreation and tourism in Prince William Sound, Cook Inlet, and the Kenai Peninsula declined mark-edly in 1989. The spill left visible oil on a wide swath of beaches, damaged the fauna and flora, and prevented the use of affected waters for tourism, kayaking, and other recreational activities. Sport fishing and hunting in the affected area were closed. See Information Synthesis 19-1 to 19-2. One study estimated a loss of 9,400 visitors and $5.5 million in in-state spending for summer 1989 alone. See McDowell Group, An Assessment of the Impact of the Exxon Valdez Oil Spill on the Alaskan Tourism Industry 6 (Aug. 1990). Another found the lost revenue from recreational fishing to be $31 million. See Richard T. Carson & W. Michael Hanemann, A Preliminary Economic Analysis of Recreational Fishing Losses Related to the Exxon Valdez Oil Spill 9 (Dec. 1992).

8

3. Alaskans’ lives and livelihoods are intimately bound with the water. Approximately 85 percent of Alaskans live in coastal areas. See U.S. Census Bureau, Statistical Abstract of the United States: 2008, at 31, Table 26 (Oct. 2007). The spill caused massive and lasting disruption to residents’ daily lives.

At the time of the spill, the area around Prince William Sound, Cook Inlet, Kodiak, and the Alaska Peninsula was home to 15 native Alaskan communi-ties. See Information Synthesis 18-1. These tradi-tional communities relied on the sea and land around them for subsistence harvests critical to maintaining their traditional way of life; fishing was a central part of their culture.5 See Pet. App. 123a. Those harvests declined by up to 77 percent in the year after the spill. See Information Synthesis 18-2, 18-5. “[T]raditional foods became contaminated with oil,” and native communities’ “confidence in the health of the environment on which they depended was shaken.” Id. at 18-1. “[D]isorientation and fear” turned many away from traditional consumption patterns. State Report 109. The invasion of cleanup crews and equipment created additional stress. See EVOSTC Report 37. Eighty-three percent of native Alaskans surveyed in 2005 stated that the “traditional way of life” – “an amalgamation of . . . intergenerational knowledge transfer, subsistence harvesting, and food sharing” – had been injured by the spill. Information Synthesis 18-15.

5 In addition to the native Alaskans, about 13,000 residents

in the affected areas held subsistence permits. See Information Synthesis 18-1.

9

The broader psychic disruption brought about by the oil spill was significant. As the district court noted, for example, “commercial fishermen not only suffered economic losses but also the emotional distress that comes from having one’s means of making a living destroyed.” Pet. App. 123a. Crime in the city of Seward jumped 100 percent; in Kodiak and Homer, mental health admissions grew by 72 and 177 percent, respectively. See State Report 116. Studies revealed a positive correlation between exposure to the oil spill and increases in drinking and drug abuse, and increased rates of generalized anxiety disorder, post-traumatic stress disorder, and depression. See Supp. JA 444sa-447sa. C. Lingering effects of the spill

Even today, almost 20 years after the spill, Alaska is not fully healed. A comprehensive study in 2001 revealed at least 56 tons of lingering subsurface Exxon Valdez oil in 78 separate locations. Significant surface oil also remained on Prince William Sound beaches. See U.S. Dep’t of Justice & Alaska Dep’t of Law, Comprehensive Plan for Habitat Restoration Projects Pursuant to Reopener for Unknown Injury 2-3 (June 2006).6

The oil industry, moreover, has not changed its behavior. In March 2006, British Petroleum Explo-ration (Alaska) (“BP”) discovered a leak in one of its oil transit lines in Alaska. An estimated 200,000 gal-lons of oil leaked onto the tundra before BP noticed and stopped the leak. See Plea Agreement at 8-9, 14,

6 On August 31, 2006, Alaska and the United States submit-

ted to Exxon a letter demanding $92 million for cleanup of lingering oil under a “reopener” provision in the 1991 consent decree.

10

United States v. BP Exploration (Alaska), Inc., No. 07-cr-125 (D. Alaska filed Oct. 25, 2007) ($20 million criminal fine). BP had deferred for eight years a routine and relatively inexpensive maintenance pro-cedure that would have prevented the spill. See id. at 11. In December 2007, Conoco discovered an ap-parently similar leak that resulted in the discharge of more than 4,200 gallons of oil. See Wesley Loy, Crews Clean Up Spill on North Slope, Anchorage Daily News, Dec. 18, 2007, at B1. Almost 20 years after the Exxon Valdez spill, oil companies operating in Alaska continue to behave negligently (if not reck-lessly) and require the continued close supervision of federal and state law enforcement authorities. D. The 1991 plea agreement and consent

decree Alaska and the United States brought civil and

criminal actions to punish Exxon for harming the environment and to recover the cost of environmental cleanup and restoration. Contrary to Exxon’s sug-gestion, see Pet. Br. 4-6, Alaska did not intend for the settlements of these actions to occupy the field of punishment and deterrence. Given the enormity of the harms catalogued above, Alaska intended that Exxon would be punished for harming the people through private litigation brought by those people.

In October 1991, Exxon pleaded guilty to criminal violations of the Clean Water Act and agreed to pay a fine of $25 million and restitution to Alaska and the United States of $100 million. See Pet. App. 125a. At the plea hearing, the United States made clear that “[t]his oil spill was . . . an environmental crime. The criminal remedy should likewise, in substantial part, be environmental in nature.” JA 1518. And the Attorney General of Alaska consistently focused his

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remarks on the need to remedy pollution harms and “to give pause to those who do not show the proper regard for the Alaska environment.” JA 1532 (emphasis added).

Alaska (and the United States) also sued Exxon “on behalf of itself and as public trustee of natural resources within the State of Alaska” for damages relating to the loss of natural resources resulting from the oil spill. Complaint at 1, Alaska v. Exxon Corp., No. A91-083 CIV (D. Alaska filed Mar. 15, 1991). The suit sought “all costs or expenses incurred by the State of Alaska in the restoration or replacement of natural resources damaged or destroyed as a result of the discharge.” Id. at 10; see also Governments’ Memorandum in Support of Agreement and Consent Decree at 3, United States and Alaska v. Exxon Corp., Nos. A91-082 CIV & A91-083 CIV (D. Alaska filed Oct. 8, 1991) (“Memorandum”).7

Exxon and the governments entered a consent decree to settle those suits. Exxon paid $900 million to help restore damaged natural resources. See Agreement and Consent Decree at 7-8, United States and Alaska v. Exxon Corp., Nos. A91-082 CIV & A91-083 CIV (D. Alaska filed Oct. 9, 1991) (“Consent Decree”). Alaska entered the decree without the benefit of full discovery, which would have shed more light on the full extent of Exxon’s culpability and the amount of damages the State’s environment

7 Alaska also brought suit in state court seeking, inter alia, punitive damages for harm to those natural resource and envi-ronmental interests. Alaska dismissed that suit as part of the global settlement. Although Alaska compromised its punitive damages claim to achieve the federal settlements, that choice had no effect on citizens’ punitive damages claims.

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and natural resources suffered. Instead, the gov-ernments chose to end the litigation to ensure that “the restoration of Prince William Sound . . . [would] not await years of legal battles” (JA 55-56) and prove to be too late. See Memorandum at 21.

The State left recovery and punishment for non-environmental harms to the private litigation. “The Exxon agreement d[id] not purport to settle any private claims.” App., infra, 3a. Indeed, several aspects of the settlement were specifically designed to preserve and enhance the ability of private parties to bring their own suits. As the governments made clear in a letter to native Alaskan plaintiffs, the Consent Decree and a related settlement expressly did not “impair, diminish or compromise the rights of Alaska Native[s] . . . to bring any private claims for injuries resulting from the oil spill.” Id. at 4a; see Consent Decree at 15-16.

Alaska also reached an agreement “to give the private plaintiffs” in this case “access to the scien-tific information gathered by the Governments in their ongoing natural resource damage assessment.” Memorandum at 9. As Alaska argued in urging approval of the Consent Decree, that action was intended “to protect third party interests” (id. at 32) and to “clear the way for more expeditious resolu-tion” of the private claims (id. at 9).

These measures were necessary to quell the public outcry that arose when news of the initial settlement broke in March 1991. Indeed, the original agree-ment’s failure to grant the private plaintiffs access to government scientific data “was one reason the legislature rejected” the original agreement. George Frost, 2nd Spill Settlement Looks Like the 1st; Exxon

13

Agrees to $125 Million Criminal Fine for 1989 Oil Spill, Anchorage Daily News, Oct. 1, 1991, at A1.

SUMMARY OF ARGUMENT I. The punitive damages award in this case is

consistent with maritime law and policy. A. The maritime law of punitive damages has

preserved all three of its traditional purposes – punishment, deterrence, and, in appropriate cases, compensation. Historically, punitive damages were available when particularly outrageous conduct – on land or at sea – gave rise to injuries that were not compensable under the existing tort law. See Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 437 n.11 (2001). As civil law has expanded the range of wrongs for which tort victims may recover compensatory damages, however, maritime law has retained its traditional restrictions on consequential economic and other damages. See Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927). Unlike in land-based cases, then, the award in this case can be justified in part to fill the gaps left by the numerous compensatory damages claims that plaintiffs could not recover solely because the reckless conduct occurred at sea.

B. Maritime law also recognizes that shipowners may be liable for punitive damages for the reckless acts of their masters at sea. Vicarious liability for negligence or recklessness is common throughout the general maritime law, and there is no reason why vicarious liability for punitive damages ought not to apply when a master’s conduct is particularly repre-hensible. This Court did not hold otherwise in The Amiable Nancy, 16 U.S. (3 Wheat.) 546 (1818). At most, the Court suggested in dicta a rule consistent with other contemporaneous maritime cases – that

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the owner had to be blameworthy in some respect to be liable for punitive damages. The modern manage-rial agent rule satisfies that requirement because ships’ masters occupy positions of sufficient respon-sibility that they “represent[] the corporation.” Lake Shore & M.S. Ry. Co. v. Prentice, 147 U.S. 101, 114 (1893). The managerial agent rule – or even full vicarious liability – is the land-based common law norm, and there is no reason why modern seafaring corporations should be treated differently. Indeed, to the extent the states hold owners liable for their masters’ egregious conduct in inland or territorial waters, uniformity favors the managerial agent rule.

C. The size of the award here is supported by the evidence and satisfies the purposes of maritime punitive damages. Exxon’s plea that its cleanup costs, compensatory payments, and civil and criminal settlements were punishment enough has no merit. Compensatory damages alone could not achieve op-timal deterrence because they failed to account for the full costs of Exxon’s wrongful conduct. Public and private punishments are complementary, and there is no reason to restrict the latter solely because of the former. Alaska never intended for its settle-ments with Exxon to preclude further punishment in the form of punitive damages for respondents’ claims. Given that Exxon’s criminal fine of $25 million was the only amount devoted exclusively to punishment, the jury acted within its discretion in deciding that Exxon’s previous payments to clean up the spill or to remediate natural resource damages were not enough to punish and deter. Exxon has not articu-lated any coherent rationale for imposing other limits on the size of the award. The award therefore should stand.

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II. The Clean Water Act (“CWA”) does not preclude this punitive damages award. This case presents neither of the two circumstances in which statutory enactments trump the ordinary presump-tion that all available remedies accompany an estab-lished cause of action.

First, the CWA does not preempt the private suits for damages against oil spillers. Unlike the nuisance actions that the Court held preempted in Middlesex County Sewerage Authority v. National Sea Clam-mers Association, 453 U.S. 1 (1981), and City of Milwaukee v. Illinois, 451 U.S. 304 (1981), this action turns solely on Exxon’s reckless conduct and does not require a court to determine whether the CWA’s effluent standards are inadequate.

Second, unlike the statutes at issue in Miles v. Apex Marine Corp., 498 U.S. 19 (1990), and Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978), there is no indication that Congress intended the CWA to prescribe a comprehensive recovery regime for mari-time torts that involved spilled oil. Congressional imposition of civil punishments cannot, without more, preclude punitive damages in an expressly preserved private action.

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ARGUMENT I. THE DAMAGES AWARD HERE IS CONSIS-

TENT WITH MARITIME LAW AND POLICY A. Punitive Damages In Maritime Law Serve

Compensatory, Deterrence, And Punish-ment Functions

The punitive damages award here vindicates not only the purposes of deterrence and punishment common to land-based and maritime torts, but also the classic maritime law purpose of providing addi-tional, uncompensated remedies to persons harmed by Exxon’s egregious misconduct. All of those rationales justify the award in this case.

1. As this Court has recognized, punitive dam-ages at common law “frequently operated” not only to punish and deter malfeasance, but also “to compen-sate for intangible injuries, compensation which was not otherwise available under the narrow conception of compensatory damages prevalent at the time.” Cooper Indus., 532 U.S. at 437 n.11. In maritime cases in particular, punitive damages “filled th[e] gap[s]” left by the absence of compensation for “pain, humiliation, and other forms of intangible injury.” Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 61 (1991) (O’Connor, J., dissenting); see David W. Robertson, Punitive Damages in American Maritime Law, 28 J. Mar. L. & Com. 73, 86 (1997). Early decisions often awarded additional damages as “punishment” and “compensation” in cases where “wanton injustice” resulted in otherwise uncom-pensable harms like “mental sufferings.” Chamber-lain v. Chandler, 5 F. Cas. 413, 414-15 (Story, Circuit Justice, C.C.D. Mass. 1823) (No. 2,575); see also Ralston v. The State Rights, 20 F. Cas. 201, 209-10

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(D.C.E.D. Pa. 1836) (No. 11,540); Robertson, 28 J. Mar. L. & Com. at 88-95.

Unlike modern civil tort law, maritime law still precludes compensatory damages for many common types of harm. The rule in Robins Dry Dock limited the scope of compensatory damages in maritime cases. See 275 U.S. at 308-09. That rule has “stood against a sea of change in the tort law,” Louisiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019, 1023 (5th Cir. 1985) (en banc), and to this day precludes recov-ery for “purely economic losses arising from a tort, but unaccompanied by physical injury.” Ballard Shipping Co. v. Beach Shellfish, 32 F.3d 623, 625 (1st Cir. 1994). The same rule applies to many claims of emotional distress. See, e.g., Gaston v. Flowers Transp., 866 F.2d 816, 820-21 (5th Cir. 1989). And recovery for loss of society or consortium is limited, at best. See 1 Thomas J. Schoenbaum, Admiralty and Maritime Law § 5-16, at 242-43 (4th ed. 2004).

Because the maritime law maintains anachronistic views about compensatory remedies for harms now commonly perceived to warrant them in the land-based civil law realm, maritime punitive damages continue to serve an important role in “fill[ing] th[e] gap[s]” (Haslip, 499 U.S. at 61 (O’Connor, J., dissent-ing)) for uncompensated “intangible injuries” and other harms (Cooper Indus., 532 U.S. at 437 n.11). Of course, maritime punitive damages are reserved only for conduct that is the most “wanton” (The Yankee v. Gallagher, 30 F. Cas. 781, 784 (C.C.N.D. Cal. 1859) (No. 18,124)) and “reckless” (CEH, Inc. v. F/V Seafarer, 70 F.3d 694, 699 (1st Cir. 1995)). But once authorized by a tortfeasor’s reckless acts, punitive damages may be justified – in part – as additional compensation for those egregious wrongs.

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2. Following the prevailing maritime law com-pensatory damages principles, the district court barred many of the plaintiffs’ compensatory damages claims. Commercial fishermen could not recover for price diminution in fisheries that were not closed altogether or for the lost value of their permits and vessels, absent a sale. See JA 118-26, 127-31. Non-fishing businesses in the City of Cordova that “constitute[d] the entire econom[y] of [the] coastal communit[y]” (JA 142) could not recover for their economic losses unless oil physically damaged their property. See JA 144. Owners of unoiled property, the value of which also plummeted, were denied compensation. See JA 1368-75. Native Alaskans could not recover compensation for the damage done to their culture or subsistence way of life. See JA 149-61. And no plaintiff could recover compensa-tion for the profound emotional distress and dramatic decline in quality of life that the spill caused. See JA 1384-90.

It would therefore be inappropriate for this Court to view the entire $2.5 billion punitive damages award in this case as serving solely the “State’s legitimate interests in punishing unlawful conduct and deterring its repetition.” BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 568 (1996). Based on this record, a substantial portion of the punitive damages award here may be justified as additional compensation for Exxon’s wanton conduct that caused vast harms to the plaintiffs – harms for which Exxon would have had to pay damages if the oil spill had occurred on land.

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B. Maritime Law Holds Employers Liable For Punitive Damages For The Reckless Acts Of Their Managerial Agents

Numerous maritime law principles support the imposition of punitive damages upon shipowners for the reckless acts of masters.8

1. Vicarious liability is a well-established and frequently applied principle of maritime law. As this Court stated more than a century ago, it is “elemen-tary” that, “under the general maritime law, where the relation of master and servant exists, an owner of an offending vessel committing a maritime tort is responsible, under the rule of respondeat superior.” Workman v. Mayor of New York, 179 U.S. 552, 565 (1900).

Today, shipowners are responsible for a wide variety of reckless or negligent acts undertaken by the masters in their employ. Seamen may recover against shipowners for the negligent conduct of a master (or any other crew member) under both statu-tory and general maritime law. The Jones Act, 46 U.S.C. § 30104, allows an injured seaman to bring a negligence action against his employer, including for the negligence of fellow employees like masters. See De Zon v. American President Lines, 318 U.S. 660, 665-69 (1943). Similarly, the doctrine of unsea-worthiness draws no distinction “between the ship’s equipment, on the one hand, and its personnel, on the other,” Waldron v. Moore-McCormack Lines, Inc.,

8 For the reasons stated in respondents’ brief (at 36-39),

Exxon was independently reckless, and the jury was adequately instructed on that independent ground for imposing punitive damages.

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386 U.S. 724, 726 (1967), and holds owners liable for negligent orders of the crew, see id. at 728.

Cruise lines have long been liable for the negligent acts of their crew that result in injury to passengers. See, e.g., Kermarec v. Compagnie Generale Trans-atlantique, 358 U.S. 625, 630 (1959); Doe v. Celebrity Cruises, Inc., 394 F.3d 891, 904-05 (11th Cir. 2004), cert. denied, 126 S. Ct. 548 (2005). When a third party is injured as a result of negligent pilotage of a vessel, the shipowner is vicariously liable if the pilot was an employee, or even if the pilot was an independent contractor that the owner voluntarily took aboard. See 2 Schoenbaum § 13-6, at 80 & n.1. Vicarious liability is thus “well ingrained in the gen-eral maritime law.” Stoot v. D & D Catering Serv., Inc., 807 F.2d 1197, 1199 (5th Cir. 1987).

Given the other remedies imposed against ship-owners who are vicariously liable for the wrongful acts of their masters, there is no basis for excluding punitive damages in cases of egregious conduct, particularly in light of the compensatory role that punitive damages continue to play in maritime cases and the “traditional presumption” that courts may grant “all appropriate relief” when a party has a right of action. Franklin v. Gwinnett County Pub. Sch., 503 U.S. 60, 69 (1992); see Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 239 (1969); Bell v. Hood, 327 U.S. 678, 684 (1946).

2. Maritime law itself has long acknowledged that a shipowner can be held vicariously liable for punitive damages. This Court first acknowledged the possibility of such liability in The Amiable Nancy. In that case, the Court stated in dicta – the plaintiff not having sought punitive damages – that “vindic-tive damages” would not be available because the

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shipowner was “innocent of the demerit of th[e] transaction, having neither directed it, nor coun-tenanced it, nor participated in it in the slightest degree.” 16 U.S. at 559 (emphasis added). Exxon is mistaken when it argues that The Amiable Nancy established a rule that “[p]unitive damages may not be awarded against a shipowner based solely on the conduct of a ship’s master.” Br. 18. Not only is the quoted passage dicta, but it is also specific to policies concerning privateers – state-employed private ves-sels charged with damaging other nations’ ships. See 16 U.S. at 559. The case says nothing about a corpo-ration or a managerial agent.

The better interpretation of The Amiable Nancy is that it required “some level of culpability for the misconduct” on the part of the owner. CEH, 70 F.3d at 705. Many 19th-century decisions following The Amiable Nancy allowed full vicarious liability, thus limiting this Court’s dicta to its facts. See, e.g., The City of Carlisle, 39 F. 807, 817 (D. Or. 1889); Robertson, 28 J. Mar. L. & Com. at 121 & n.269. Some imposed vicarious liability for punitive dam-ages where there was some showing that the owner was blameworthy. In Ralston v. The State Rights, for example, the court granted “exemplary” damages against an owner who was “too inattentive to the manner in which [the master] was using the author-ity [the owner] had committed to him.” 20 F. Cas. at 210.9

9 Exxon mistakenly claims that, in Ralston, the court

“refused vicarious punitive damages.” Br. 19. Ralston allowed vicarious liability for “exemplary” damages for the owner’s “inattent[ion],” but refused further “vindictive” damages. 20 F. Cas. at 210. Although these terms had somewhat different

22

When this Court returned to the subject in Lake Shore, a non-maritime case, it stated that punitive damages “can only be awarded against one who has participated in the offense.” 147 U.S. at 107.10 But the Court did not define the requisite level of “participat[ion].” As the First Circuit more recently observed, those cases indicate that punitive dam-ages may properly be awarded against a corporate defendant for the vicarious acts of its agents when, although “not guilty of direct participation, authori-zation or ratification in his agent’s egregious conduct, nevertheless shares blame for the wrongdoing.” CEH, 70 F.3d at 705 (emphases added).

The jury in this case was authorized to award punitive damages against Exxon for the “reckless act” of a “managerial officer” in “the course and scope of the performance of his duties.” Pet. App. 301a. That managerial agent rule is consistent with the maritime decisions described above.

A ship’s master is no ordinary agent. The record establishes that Hazelwood was not only captain of the Exxon Valdez, but effectively the head of a business unit of Exxon Shipping Corp. See Supp. JA 65sa, 285sa-290sa. Exxon’s expert at trial described the captain of a supertanker as “a CEO.” Tr. 3866. Hazelwood had as much responsibility as the “presi-dent and general manager, or . . . vice president,” that Lake Shore believed “may well be treated as so far representing the corporation” to justify awarding meanings at the time, both were a species of “punitive” damages. See Haslip, 499 U.S. at 16.

10 But cf. American Soc’y of Mech. Eng’rs, Inc. v. Hydrolevel Corp., 456 U.S. 556, 575 n.14 (1982) (acknowledging that Lake Shore “may have departed from the trend of late 19th century decisions”).

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vicarious punitive damages for his wrongful acts. 147 U.S. at 114. In such circumstances, the corpora-tion shares the blame for the acts of those it sees fit to employ as managers. And punitive damages deter “the employment of unfit persons for important positions.” Restatement (Second) of Torts § 909 cmt. b (1979); see also Protectus Alpha Navigation Co. v. North Pac. Grain Growers, Inc., 767 F.2d 1379, 1386-87 (9th Cir. 1985); The City of Carlisle, 39 F. at 817.

Exxon cites (at 20) two appellate court decisions reaching a different result, but neither is persuasive when applied to the facts of this case. In P & E Boat Rentals, Inc. v. Ennia General Insurance Co., 872 F.2d 642 (5th Cir. 1989), the court held only that vicarious liability for punitive damages does not ap-ply “for the wrongful acts of the simple agent or lower echelon employee.” Id. at 652 (emphasis added). And, in United States Steel Corp. v. Fuhrman, 407 F.2d 1143 (6th Cir. 1969), the court found that the master’s conduct was not reckless. Id. at 1147.

The court in Fuhrman (407 F.2d at 1147) and Exxon here (at 24) suggest that the unique position of corporate ship captains, away at sea beyond the supposed reach of their employers, makes it unfair to hold corporations responsible for their decisions. However true that may have been in the 19th century, modern technology has rendered the concern moot and has eliminated most practical distinctions between land-based and seafaring corporations. See Protectus Alpha, 767 F.2d at 1386; Grant Gilmore & Charles L. Black, Jr., The Law of Admiralty § 10-24, at 884, 894 (2d ed. 1975).

Indeed, Hazelwood was in constant contact with his superiors at Exxon. He used the ship’s satellite

24

phone to confer with Exxon officials in San Francisco about whether to attempt to dislodge the ship. See JA 354-55, 872-76. At all relevant times, Exxon was able to communicate with and monitor Hazelwood and the ship. See Supp. JA 249sa.

Finally, the common law also supports the punitive damages award here. See Exxon Co., U.S.A. v. Sofec, Inc., 517 U.S. 830, 839 (1996) (“courts sitting in admiralty may draw guidance from . . . the extensive body of state [tort] law”). In 2003, Alaska adopted the managerial agent rule, see Alaska Stat. § 09.17.020(k), which the Alaska Supreme Court had previously described as a modern “complicity rule.” Laidlaw Transit, Inc. v. Crouse, 53 P.3d 1093, 1098 n.8 (Alaska 2002). Similarly, almost every state that allows punitive damages authorizes their award against a corporation for (at least) the reckless acts of a managerial agent. See 2 John C. Kircher & Chris-tine M. Wiseman, Punitive Damages Law & Practice § 24:5 (2d ed. 2005). Many states go farther and allow punitive damages for the reckless acts of any employee; this Court has held it constitutional to do so. See Haslip, 499 U.S. at 12-15. The Restatements of Torts and Agency also follow the managerial agent rule. See Restatement (Third) of Agency § 7.03 cmt. e (2006); Restatement (Second) of Torts § 909(c).

3. Maritime law’s traditional concern with unifor-mity weighs against excising the managerial agent rule from the general maritime law. See Kossick v. United Fruit Co., 365 U.S. 731, 738-39 (1961). To the extent that state law may provide the rule of decision in maritime tort cases within inland or territorial waters, see, e.g., Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199, 214-15 (1996), most coastal states either follow the managerial agent rule or

25

allow full vicarious liability for punitive damages. A shipowner therefore will be subject to uniform liabil-ity regardless of how far from shore a tort occurs.

Even if state law would not apply in inland or ter-ritorial waters – a decision the Court need not make in this case – Alaska has a deep and abiding interest in ensuring proper punishment and deterrence for companies operating off its shores. Given tidal pat-terns, reckless acts within federal maritime jurisdic-tion can have a devastating impact on coastal states. The Court should uphold a general maritime rule that is consistent with the considered judgments of most coastal states concerning the appropriate scope of liability for corporate wrongdoers.

C. The Punitive Damages Award Should Not Be Further Reduced As Excessive

1. Maritime law utilizes the same legal frame-work to review awards of punitive damages that this Court approved as a matter of due process in Haslip. See Lake Shore, 147 U.S. at 107. In both admiralty and civil cases, “the amount of the punitive award is initially determined by a jury instructed to consider the gravity of the wrong and the need to deter similar wrongful conduct. The jury’s determination is then reviewed by trial and appellate courts to ensure that it is reasonable.” Haslip, 499 U.S. at 15 (emphasis added).

The amount of punitive damages “has been always left to the discretion of the jury.” Day v. Woodworth, 54 U.S. (13 How.) 363, 371 (1852); see Barry v. Edmunds, 116 U.S. 550, 565 (1886). The jury is best suited to express the community’s “moral con-demnation” of conduct that is sufficiently odious to justify punitive damages. Cooper Indus., 532 U.S. at 432; see also Haslip, 499 U.S. at 16-17 (citing early

26

cases); BMW, 517 U.S. at 600 (Scalia, J., dissenting) (“[P]unitive damages represent the assessment by the jury, as the voice of the community, of the meas-ure of punishment the defendant deserved.”).

The trial court reviews the jury’s punitive damages award only to ensure that it is “reasonable in [its] amount and rational in light of [its] purpose” (Haslip, 499 U.S. at 21) and supported by “substantial evi-dence” (Honda Motor Co. v. Oberg, 512 U.S. 415, 429 (1994)). The appellate court’s task is circumscribed further still. “If no constitutional issue is raised, the role of the appellate court, at least in the federal system, is merely to review the trial court’s deter-mination under an abuse-of-discretion standard.” Cooper Indus., 532 U.S. at 433 (internal quotation marks omitted).

Early maritime courts reviewing punitive damages awards followed those procedures. See, e.g., The Yankee, 30 F. Cas. at 785 (upholding award of puni-tive damages because no “injustice has been done in the assessment of damages by the district court”); see also Robertson, 28 J. Mar. L. & Com. at 99-108 (describing early cases). Modern cases are substan-tially in accord. See, e.g., Gaffney v. Riverboat Servs. of Indiana, Inc., 451 F.3d 424, 464-65 (7th Cir. 2006).

2. Under those settled principles, Exxon’s (and its amici’s) attempt to recast the factual record in its favor is inappropriate. “Where an intermediate court reviews, and affirms, a trial court’s factual find-ings, this Court will not lightly overturn the con-current findings of the two lower courts.” Easley v. Cromartie, 532 U.S. 234, 242 (2001) (internal quota-tion marks omitted); see Exxon, 517 U.S. at 840-41 (refusing, in an admiralty case, to reject “concurrent findings of fact by two courts below in the absence

27

of a very obvious and exceptional showing of error”) (internal quotation marks omitted). The lower courts’ conclusions on the sufficiency of the evidence – for example, that Hazelwood was drunk at the time of the accident, see Pet. App. 87a, 255a-257a – therefore should be affirmed.11 See id. at 86a-90a (reviewing sufficiency of evidence).

3. The award of punitive damages in this case is justified by the facts and the purposes of punitive damages under the general maritime law. As an initial matter, the award must be understood in light of the traditional maritime purpose of providing additional compensation for emotional and conse-quential economic harms that result from especially reckless conduct and that might otherwise go un-compensated. See supra pp. 16-17. The plaintiff class members suffered significant economic and emotional harms for which they could not recover pursuant to the Robins Dry Dock rule. These harms were not compensable, but they were punishable. Cf. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003) (noting that “a higher ratio [of compensatory to punitive damages] might be necessary where the injury is hard to detect or the monetary value of noneconomic harm might have been difficult to determine”) (internal quotation marks and emphasis omitted).

Exxon’s primary submission to the contrary is that the civil and criminal fines paid and cleanup costs incurred by Exxon were punishment and deterrence

11 Amici American Petroleum Institute et al. (“API”) assert (at 2), without citation, that courts reviewing punitive damages awards ought to “independently evaluate” the evidence at trial. That assertion is directly contrary to Cooper Industries and has no basis in law.

28

enough. See Br. 47-50. But the jury also had before it substantial evidence to conclude otherwise.

First, Exxon’s conduct was reprehensible. As this Court has noted, “the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct.” BMW, 517 U.S. at 575. The court of appeals found that “Exxon knew Hazelwood was an alcoholic, knew that he had failed to maintain his treatment regimen and had resumed drinking, knew that he was going on board to command its super-tankers after drinking, yet let him continue to com-mand the Exxon Valdez through the icy and treach-erous waters of Prince William Sound.” Pet. App. 22a, 89a. Exxon’s reckless conduct was all the worse because it was fully aware of the risks involved in transporting highly toxic oil across environmentally and economically fragile waters, and was recklessly indifferent in the manner in which it attempted to contain the spill.

Second, Exxon draws upon law and economics lit-erature to suggest that “[t]he obligation to pay com-pensatory damages” provides “sufficient” deterrence. Br. 54; see API Br. 23-27. But that presumes com-pensatory damages are set optimally. That is plainly not the case in maritime law, which precludes a court from awarding compensatory damages for numerous classes of injuries. The sheer volume of uncompen-sated harms in this case means that compensatory damages alone could not force Exxon to internalize the full costs of its wrongdoing and achieve optimal deterrence.

In any event, although Exxon and its amici portray corporations as purely rational profit-maximizers, Exxon did not act rationally in this case to replace

29

Hazelwood with a sober captain “at a small cost when compared to the risk.” Pet. App. 233a & n.11; see id. at 170a. Indeed, the oil industry’s postspill conduct demonstrates that it still is not taking low-cost measures to reduce the risk of oil spills, providing further evidence that economic incentives are not properly aligned merely by the potential cost of cleaning up after oil spills.

Third, Exxon’s and its amici’s focus on deterrence also fails to appreciate that the “imposition of puni-tive damages is an expression of [the jury’s] moral condemnation.” Cooper Indus., 532 U.S. at 432. Exxon’s argument that criminal and civil penalties administered by the state occupy the field of pun-ishment (see Br. 47-50, 51-52) denies this well-established role for civil juries. The civil and crimi-nal justice systems are complementary, and punitive damages are allowed in a wide variety of circum-stances where the tortfeasor may also be criminally liable. See Restatement (Second) of Torts § 908 cmt. a.

In particular, the civil and criminal settlements in this case were addressed only to environmental harms, a small subset of the enormous damage that Exxon caused. The settlement documents co-signed by Alaska and the United States expressed no intent to preclude punitive damages in this litigation. See supra pp. 11-12. As the district court stated, “[t]he criminal penalty did not have the all-inclusive nature of the mandatory punitive damages class and did not comprehend the enormity of the harm or number of people adversely [a]ffected by the spill.” Pet. App. 242a-243a. The record, therefore, contained “substantial evidence” from which the jury could

30

conclude that “the criminal penalty alone did not sufficiently punish Exxon.” Id. at 243a.

Fourth, the sums that Exxon already expended on cleanup and fines do not undermine the punitive damages award here. Exxon has paid only $25 million devoted exclusively to punishment. Exxon’s other payments to the United States and Alaska were for environmental cleanup and restoration, a responsibility of any spiller. The jury could well have found, as the district court did, that those payments were inadequate to punish and deter Exxon fully. Similarly, Exxon’s expenses for cleaning up Alaska’s shoreline – a task Exxon performed poorly – were not punishment but the minimal obligation of a polluter to clean up its mess. And, although Exxon spent significant sums on the cleanup effort, its flawed response to the spill compounded rather than amelio-rated the effects of its recklessness.

Finally, Exxon’s other suggested limitations on the award have no merit. In particular, Exxon’s argu-ment that punitive damages should be limited to the amount of compensatory damages (see Br. 52-53) draws support only from dicta in State Farm, 538 U.S. at 425. Although some states have capped punitive damages at a certain ratio to compensatory damages, no state has enacted a one-to-one limit; more importantly, Exxon has not articulated any rationale for this Court to make such a legislative determination. Particularly in the maritime context, in which punitive damages also serve a compensa-tory role, a higher ratio of punitive to compensatory damages is appropriate.

31

II. THE CLEAN WATER ACT DOES NOT PRE-CLUDE THE PUNITIVE DAMAGES AWARD

If the Court reaches Exxon’s belatedly asserted claim that the general maritime law must yield to the Clean Water Act (“CWA”),12 it should reject that claim. This case presents neither of the circum-stances in which this Court has found that statutory enactments preclude remedies normally available under maritime law: first, when the substantive cause of action interferes with and is effectively pre-empted by a legislative scheme, see, e.g., Middlesex County Sewerage Auth. v. National Sea Clammers Ass’n, 453 U.S. 1 (1981); City of Milwaukee v. Illinois, 451 U.S. 304 (1981); and, second, when Congress has functionally codified the general maritime law and expressed an intent to preclude certain remedies, see, e.g., Miles v. Apex Marine Corp., 498 U.S. 19 (1990); Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978).

A. The Clean Water Act Does Not Pre- empt Private Suits For Damages Against Spillers

In the Clean Water Act in effect at the time of the Exxon Valdez oil spill, Congress put in place an ad-ministrative scheme to penalize “[t]he discharge of oil . . . into or upon the navigable waters of the United States . . . in such quantities” as determined by the President to be “harmful to the public health or welfare.” 33 U.S.C. § 1321(b)(3), (4) (1988). Violators who discharge more oil than is permissible under the CWA are subject to civil fines, see id. § 1321(b)(6), and are required to reimburse the government for

12 See Resp. Br. 39-44 (arguing waiver of Exxon’s CWA

argument).

32

any costs the government might incur in cleaning up an oil spill, see id. § 1321(f ). The CWA expressly preserves private remedies for damages resulting from oil spills. See id. § 1321(o).

Exxon does not contend that the CWA preempts private maritime tort actions sounding in negligence or recklessness. Nor could it. By its terms, the CWA’s savings clause makes clear that it does not “affect or modify in any way the obligations” of a shipowner “under any provision of law for damages to . . . property” as a result of an oil spill. Id. § 1321(o)(1).

The plaintiffs’ action here also does not conflict with the CWA’s administrative scheme, because a determination that Exxon owes compensatory and punitive damages does nothing to interfere with federal oil pollution enforcement. Exxon’s citations to City of Milwaukee and Sea Clammers are therefore beside the point. In those cases, the plaintiffs sought relief on a nuisance theory, claiming that a level of pollution authorized in the CWA nonetheless consti-tuted a common law nuisance. See City of Milwau-kee, 451 U.S. at 310; Sea Clammers, 453 U.S at 4. Because “[f ]ederal courts lack authority to impose more stringent effluent limitations under federal common law than those imposed by the [CWA],” City of Milwaukee, 451 U.S. at 320, the Court held that “the federal common law of nuisance in the area of water pollution [was] entirely pre-empted” by the CWA. Sea Clammers, 453 U.S. at 21-22. This case – sounding in reckless disregard rather than nuisance – does not call upon any court to alter the standards of conduct set forth in the CWA.

33

B. The Clean Water Act Does Not Codify The Maritime Common Law Of Negligence For Oil Spills

Congress also has the power to enact legislation that replaces the general maritime law with a “comprehensive tort recovery regime to be uniformly applied.” Yamaha Motor, 516 U.S. at 215. Such legislation functionally codifies (and modifies) the previously existing maritime law cause of action or creates an entirely new cause of action. In either case, the statute “announces Congress’ considered judgment” on the relevant elements and remedies of the cause of action, such as “the beneficiaries, the limitations period, contributory negligence, survival, and damages.” Mobil Oil, 436 U.S. at 625. The CWA is not such a statute.

The CWA is silent about private actions for reck-lessness. Instead, it addresses only the obligations of polluters to the government for violating the statute. It does not detail the elements of a private maritime tort claim or any other attribute of that potential action. Congress, therefore, did not in the CWA dis-place the common law in any comprehensive fashion.

In fact, § 1321(o)’s savings clause suggests just the opposite. That clause preserves “the obligations of any [ship] owner . . . under any provision of law for damages to . . . property.” 33 U.S.C. § 1321(o) (emphasis added). Exxon argues (at 37-38) that this provision applies only to compensatory damages because punitive damages are not “obligations” or “damages to . . . property.” Regardless of whether a plaintiff has a “right” to a punitive damages award, the defendant has an “obligation” to pay it once awarded as authorized by the law underlying the claim. The general maritime law authorizes punitive

34

damages for torts that involve damage to property. See supra pp. 16-17.

This case, therefore, is nothing like those that Exxon cites in which this Court has found that Con-gress precluded certain types of damages. Whereas the CWA did not create the plaintiffs’ right of action here, the Court held in Mobil Oil that the Death on the High Seas Act (“DOHSA”) “creat[ed]” the cause of action “in admiralty for wrongful deaths.” 436 U.S. at 620. The Court then found that the statute’s authorization of damages only for “pecuniary” losses indicated Congress’s intent to preclude non-pecuniary damages. Id. at 625-26. In Miles, the Court held that the Jones Act’s preclusion of damages for loss of society resulting from a seaman’s negligent death evinced Congress’s intent similarly to preclude such damages in a strict liability regime. See 498 U.S. at 32-33. And, in Dooley v. Korean Air Lines Co., 524 U.S. 116 (1998), the Court turned back an effort to “expand the class of beneficiaries” under DOHSA. Id. at 123. A congressional intent to punish does not preclude further private law punishments absent an express indication to the contrary. The CWA con-tains no such limitations on private remedies.

CONCLUSION The judgment of the court of appeals should be

affirmed.

35

TALIS J. COLBERG Attorney General CRAIG J. TILLERY Deputy Attorney General JOANNE GRACE Chief Assistant Attorney General STATE OF ALASKA DEPARTMENT OF LAW P.O. Box 110300 Juneau, Alaska 99811-0300 (907) 465-2133

Respectfully submitted, DAVID C. FREDERICK Counsel of Record SCOTT H. ANGSTREICH MICHAEL J. BURSTEIN KELLOGG, HUBER, HANSEN, TODD, EVANS & FIGEL, P.L.L.C. 1615 M Street, N.W. Suite 400 Washington, D.C. 20036 (202) 326-7900

Counsel for Amicus State of Alaska

January 29, 2008

APPENDIX

1a

[Seal omitted] U.S. Department of Justice Environment and Natural Resources Division

RJ:mlf 90-5-1-1-3343

Washington, D.C. 20530

October 31, 1991 Michael D. Hausfeld Gary E. Mason COHEN, MILSTEIN, HAUSFELD, & TOLL 1401 New York Avenue, N.W. Washington D.C. 20005

Lloyd Benton Miller SONOSKY, CHAMBERS, SACHSE, MILLER & MUNSON 900 West 5th Avenue, Suite 700 Anchorage, Alaska 99501

Samuel J. Fortier FORTIER & MIKKO, P.C. 2552 Denali Street, Suite 604 Anchorage, Alaska 99503

Kenneth F. McCallion GOODKIND, LABATON & RUDOFF 122 E. 42nd St. New York, New York 10168

RE: United States v. Exxon Corp. et al., State of Alaska v. Exxon Corp. et al., Chenega Bay et al. v. United States and State of Alaska

2a

Dear Counsel: This letter is intended to resolve any confusion or

questions you might have regarding certain provi-sions of the Agreement and Consent Decree settling United States v. Exxon Corp. et al., Civ. Action No. A91-082 CIV; and State of Alaska v. Exxon Corp. et al., Civ. Action No. A91-083 CIV (“Exxon agree-ment”), entered into between the United States, the State of Alaska (“Governments”) and Exxon, and ap-proved on October 8, 1991, and the proposed Consent Decree and Stipulation of Dismissal settling Chenega Bay et al. v. United States and State of Alaska, Case No. A91-454 CIV (“Chenega Bay agreement”) between the Governments and the proposed settle-ment classes of Native entities (“Native Interests”) pending in the United States District Court for the District of Alaska. Neither of these settlement agree-ments impairs or diminishes private claims available to Alaska Native Villages or Corporations for injuries resulting from the Exxon Valdez oil spill, including those private claims based upon injuries to publicly owned or controlled natural resources.

In the proposed Chenega Bay agreement, the Native Interests and the Governments agreed to a division of claims which distinguishes the Govern-ments’ claims on behalf of the public for natural resource damages from the Native Interests’ private damage claims for private harms resulting from the oil spill. The term “natural resources” is defined specifically in the Chenega Bay agreement to mean resources “belonging to, managed by, held in trust by, appertaining to or otherwise controlled” by either or both Governments, and “natural resource dam-ages” is defined to mean any compensatory or remedial relief recoverable by the Governments in

3a

their capacity as trustees on behalf of the public for injury to, destruction of or loss of natural resources. (Chenega Bay agreement, pars. 4(d) and (f )). Thus, the Chenega Bay agreement specifically preserves the rights of the Native Interests to make any additional claims not encompassed by the natural resource damage claims brought by the Governments in their capacity as trustees, i.e., any private claims.

The Exxon agreement settles natural resources damage claims brought by the Government in their capacity as trustees on behalf of the public, and defines those claims in precisely the same way as the Governments’ natural resource damage claims are defined in the Chenega Bay agreement. (See Exxon agreement, pars. 6(c) and (d)). The Exxon agreement does not purport to settle any private claims. In settling with Exxon, the Governments preserved the rights of the Native Interests to bring any private claims for injuries resulting from the oil spill. This is reflected in the language of paragraphs 13(c) and (d) of the Exxon agreement, which corresponds closely to the language in paragraphs 7 and 8 of the Chenega Bay agreement. There is no substantive difference between the private claims preserved in the Chenega Bay agreement and the private claims preserved in the Exxon agreement.

Any difference between language appearing in the Exxon agreement and that of the Chenega Bay agreement should not be construed as limiting the ability of Native Interests to bring any private claims resulting from the oil spill. Indeed, the Exxon agreement could in no way compromise the rights of the Native Interests to bring any available private claims for injuries resulting from the oil spill, even if paragraphs 13(c) and (d) were omitted. The inclusion

4a

of paragraphs 13(c) and (d) in the Exxon agreement merely emphasizes the fact that the Exxon agree-ment does not impair the Native Interests’ rights to bring private claims. Thus, the language of paragraphs 13(c) and (d) neither creates nor limits the private claims that may be available to the Native Interests, and any difference between that language and the language of paragraphs 7 and 8 of the Chenega Bay agreement can have no effect on the Native Interests’ rights.

In sum, the Exxon agreement settles the Govern-ments’ natural resource damage claims. The Exxon agreement does not impair, diminish or compromise the rights of Alaska Native Villages or Corporations to bring any private claims for injuries resulting from the oil spill.

Sincerely,

FOR THE UNITED STATES: /s/ BARRY M. HARTMAN

Barry M. Hartman Acting Assistant Attorney General Environment & Natural Resources Division U.S. Department of Justice

/s/ STUART M. GERSON

Stuart M. Gerson Assistant Attorney General Civil Division U.S. Department of Justice

5a

FOR THE STATE OF ALASKA: /s/ CHARLES E. COLE

Charles E. Cole Attorney General State of Alaska

cc: Edward J. Lynch Patrick Lynch John F. Clough III James F. Neal Robert C. Bundy John R. Rebman

No. 07No. 07No. 07No. 07----219219219219

IIIIN N N N TTTTHEHEHEHE

________________________________________________


Petitioners,

v.


Respondents.

________________________________________________

On Writ of Certiorari to the United States Court of Appeals for the Ninth

Circuit ________________________________________________

BBBBRIEF RIEF RIEF RIEF OF THE ALASKA LEGISLATIVE OF THE ALASKA LEGISLATIVE OF THE ALASKA LEGISLATIVE OF THE ALASKA LEGISLATIVE

COUNCILCOUNCILCOUNCILCOUNCIL,,,, ON BEHALF OF THE ALASKA STATE ON BEHALF OF THE ALASKA STATE ON BEHALF OF THE ALASKA STATE ON BEHALF OF THE ALASKA STATE LEGISLATURELEGISLATURELEGISLATURELEGISLATURE,,,, AND FORMER ALASKA AND FORMER ALASKA AND FORMER ALASKA AND FORMER ALASKA

GOVERNORS GOVERNORS GOVERNORS GOVERNORS WALTER HICKEL,WALTER HICKEL,WALTER HICKEL,WALTER HICKEL, ANTHONY ANTHONY ANTHONY ANTHONY KNOWLESKNOWLESKNOWLESKNOWLES, , , , STEVE COWPER, STEVE COWPER, STEVE COWPER, STEVE COWPER, AND WILLIAM AND WILLIAM AND WILLIAM AND WILLIAM

SHEFFIELDSHEFFIELDSHEFFIELDSHEFFIELD AS AS AS AS AMICIAMICIAMICIAMICI CUR CUR CUR CURIAE IAE IAE IAE IN SUPPORT OFIN SUPPORT OFIN SUPPORT OFIN SUPPORT OF RESPONDENTSRESPONDENTSRESPONDENTSRESPONDENTS

________________________________________________ James E. Fosler FOSLER LAW GROUP, INC. 737 W. 5th Ave., Suite 205 Anchorage, AK 99501 (907) 277-1576

Jared A. Goldstein Counsel of Record

ROGER WILLIAMS UNIVERSITY SCHOOL OF LAW

10 Metacom Ave. Bristol, RI 02809 (401) 254-4594

i

TABLE OF CONTENTSTABLE OF CONTENTSTABLE OF CONTENTSTABLE OF CONTENTS

INTEREST OF AMICI CURIAE ....................................1

INTRODUCTION AND SUMMARY ..............................2

ARGUMENT....................................................................5

I. TAPAA Authorized Construction of the Trans-Alaska Pipeline While Imposing Strict Standards of Care and Liability to Prevent Oil Spills .................... 5

A. Background to TAPAA................................. 6

B. The Oil Industry Repeatedly Promised to Employ the Strictest Possible Controls to Protect Against Oil Spills ......................................... 9

C. TAPAA Authorized the Trans-Alaska Pipeline While Protecting Against Oil Spills by Imposing Strict Standards and Heightened Liability ...................................................... 14

II. TAPAA, Not the Clean Water Act, Governs the EXXON VALDEZ Oil Spill .............. 16

III. TAPAA Preserves Existing Remedies for Oil Spills, Including Punitive Damages Under Federal Common Law................................................................... 19

A. When TAPAA Was Enacted, Punitive Damages Were a Well-Established Remedy Under Federal Maritime Law ............................... 19

B. In Enacting TAPAA, Congress Concluded that Existing Compensatory Damages Provided Inadequate Compensation for Oil Spills Off the Alaska Coast ........................ 20

ii

C. TAPAA Preserves Existing Remedies, Including Punitive Damages Under Federal Maritime Law............................................. 22

IV. The Jury’s Award of Punitive Damages Is Appropriate Because Exxon’s Recklessness Violated the Fundamental Terms of the Social Compact Embodied in TAPAA ........................ 24

Conclusion......................................................................26

Appendix—Selected Provisions of the Trans-Alaska Pipeline Authorization Act of 1973 .............1a

iii

TABLE OF AUTHORITIESTABLE OF AUTHORITIESTABLE OF AUTHORITIESTABLE OF AUTHORITIES

CASESCASESCASESCASES

Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U.S. 104 (1991)................................................... 20

Busic v. United States, 446 U.S. 398 (1980)................ 17

Cannon v. University of Chicago, 441 U.S. 677 (1979) .................................................................. 20

CEH, Inc. v. F/V Seafarer, 70 F.3d 694 (1st Cir. 1995)................................................................... 19

Cleghorn v. Railroady Co., 56 N. Y. 44 (1874)............. 25

FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000)................................................... 17

In re Glacier Bay, 944 F.2d 577 (9th Cir. 1991) ........................................................ 16, 19, 22, 23

In re Tug Allie-B, Inc., 273 F.3d 936 (11th Cir. 2001)................................................................... 16

Lake Shore & M.S.R. Co. v. Prentice, 147 U.S. 101 (1893).......................................................... 25

Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992).......................................................... 17

Muratore v. M/S Scotia Prince, 845 F.2d 347 (1st Cir. 1988)............................................................ 25

Simpson v. United States, 435 U.S. 6 (1978)............... 17

Slaven v. BP America, Inc., 973 F.2d 1468 (9th Cir. 1992) ..................................................... 18, 21

U.S. Steel Corp v. Fuhrman, 407 F.2d 1143 (6th Cir. 1969) ........................................................... 20

United States v. Texas, 507 U.S. 529 (1993) ............... 20

Wilderness Soc'y v. Morton, 479 F.2d 842 (D.C. Cir. 1973) ....................................................... 6, 7

iv

STATUTESSTATUTESSTATUTESSTATUTES

Oil Pollution Act, Pub.L. No. 101-380, 104 Stat. 484, § 8102.......................................................... 2

Trans-Alaska Pipeline Authorization Act of 1973, Pub. L. 93-153, 87 Stat. 584, codified in part at 43 U.S.C. §§ 1651-55 .........................passim

33 U.S.C. § 1321 ........................................................... 17

Alaska Stat. § 24.20.010................................................. 1

OTHER AUTHORITIESOTHER AUTHORITIESOTHER AUTHORITIESOTHER AUTHORITIES

United States Department of the Interior, Final Environmental Impact Statement: Proposed Trans-Alaska Pipeline (1972)......... 7, 10, 11

Oil and Natural Gas Pipeline Rights-of-Way, Hearings Before the Subcomm. on Public Lands of the House Interior and Insular Affairs Comm., 93d Cong., 1st Sess. (1973) .......................................................... 7, 9, 11, 13

Rights-of-Way Across Federal Lands: Transportation of Alaska’s North Slope Oil, Hearings before the Sen. Comm. on Interior and Insular Affairs, 93d Cong., 1st Sess. (1973)....................................................... 7, 9, 12

S. Rep. No. 207, 93d Cong., 1st Sess. (1973) ....... 8, 9, 14

H. Rep. No. 414, 93d Cong., 1st Sess. (1973)................. 8

H. Conf. Rep. 617, 93d Cong., 1st Sess. (1973).............. 8

H. Conf. Rep. 624, 93d Cong., 1st Sess. (1973)........ 8, 18

19 Cong. Rec. 22795-22840 (July 9, 1973) ............passim

19 Cong. Rec. 22978-23019 (July 10, 1973) ................... 8

19 Cong. Rec. 23312-23356 (July 11, 1973) ................... 8

19 Cong. Rec. 23543-23621 (July 12, 1973) ................... 8

v

19 Cong. Rec. 23746-23783, 23801-23801, 23854, 23858-23860, 23863-23864 (July 13, 1973) ............................................................................ 8

19 Cong. Rec. 23873-23894, 23909-23910, 23954-23955 (July 14, 1973)....................................... 8

19 Cong. 24076-24130 (July 16, 1973) ........................... 8

19 Cong. Rec. 24294-24330 (July 17, 1973) ............. 8, 21

19 Cong. Rec. 27625-27720 (Aug. 2, 1973)..................... 8

19 Cong. Rec. 36595-36620 (Nov. 12, 1973)............... 5, 8

19 Cong. Rec. 36808-36820 (Nov. 13, 1973)............. 8, 23

Mary Clay Berry, THE ALASKA PIPELINE (Indiana University Press 1975) .............................. 11

Norman J. Singer, SUTHERLAND STATUTES AND STATUTORY CONSTRUCTION (6th ed. 2000) .......................................................................... 17

1

INTINTINTINTEREST OF EREST OF EREST OF EREST OF AMICIAMICIAMICIAMICI CURIAE CURIAE CURIAE CURIAE 1

The Alaska Legislative Council is a permanent committee of the Alaska State Legislature, composed of the President of the Senate, the Speaker of the House of Representatives, and twelve other Representatives and Senators. The Alaska Legislative Council has authority to act on behalf of the Alaska State Legislature when the legislature is not in session. See Alaska Stat. § 24.20.010. It submits this brief on behalf of the Alaska State Legislature.

Amici include all the living former Governors of the State of Alaska. The Honorable Walter Hickel served as Governor of Alaska from 1966 to 1969 and from 1990 to 1994, and from 1969 to 1970 served as Secretary of the United States Department of the Interior. The Honorable William Sheffield served as Governor of Alaska from 1982 to 1986. The Honorable Steve Cowper served as Governor of Alaska from 1986 to 1990. The Honorable Anthony Knowles served as Alaska Governor from 1994 to 2002.

Amici have a vital interest in this case because it addresses the availability of damages to thousands of Alaska residents as a result of the EXXON VALDEZ oil spill, an unprecedented disaster that occurred in Alaskan waters and greatly disrupted the Alaskan economy. The State of Alaska encouraged the

1 Pursuant to Supreme Court Rule 37.6, amici affirm that no counsel for a party authored this brief in whole or in part and that no person other than amici made a monetary contribution to its preparation or submission. The parties have consented to the filing of this brief, and their letters of consent have been filed with this Court.

2

construction of the Trans-Alaska Pipeline based on repeated assurances by the oil industry that the pipeline would be constructed and operated with the highest possible standards of care in order to protect Alaska’s natural resources, which form the backbone of the regional economy. In essence, the Trans-Alaska Pipeline resulted from a broad agreement between Alaska and the oil industry, under which Alaska agreed to allow the development of its North Slope oil reserves in return for the oil industry’s adherence to the highest possible standards of care to protect Alaska’s resources, most especially its marine resources.

INTRODUCTION AND INTRODUCTION AND INTRODUCTION AND INTRODUCTION AND SUMMARYSUMMARYSUMMARYSUMMARY

The validity of the punitive damages award against Exxon for the EXXON VALDEZ oil spill cannot be resolved without carefully examining the history of the Trans-Alaska Pipeline System (TAPS) and the Trans-Alaska Pipeline Authorization Act of 1973, Pub. L. 93-153, 87 Stat. 584, codified in part at 43 U.S.C. §§ 1651-55 (TAPAA).2 TAPAA specifically addresses the liability of ship owners for spills of oil transported through the Trans-Alaska Pipeline and thereby represents the federal law that specifically governs the EXXON VALDEZ oil spill. Until its partial repeal in 1990, TAPAA imposed strict liability on ship owners for any spills of TAPS oil, while expressly preserving existing remedies under state

2 In 1990, portions of TAPAA, including the provision addressing ship owners’ liability for oil spills, were repealed by the Oil Pollution Act, Pub. L. No. 101-380, 104 Stat. 484, § 8102 (OPA). See historical notes following 43 U.S.C. § 1653. This brief cites TAPAA as it existed at the time of the EXXON VALDEZ oil spill. The relevant provisions of TAPAA are set forth in the Appendix.

3

and federal law. At the time that TAPAA was enacted, punitive damages were a well-recognized remedy under federal maritime law. As a result, TAPAA expressly preserves the availability of punitive damages for spills of TAPS oil.

In its opening brief, Exxon fails to come to terms with the fact that TAPAA establishes the federal law governing the EXXON VALDEZ oil spill. Exxon’s entire discussion of TAPAA is contained in two misleading sentences:

In 1973 Congress passed the Trans-Alaska Pipeline Authorization Act, directing the construction of the Pipeline, 43 U.S.C. §1653(a), and, to deal with the well-known risk of a spill, establishing a special liability regime, the Trans-Alaska Pipeline Liability Fund, to pay prompt and adequate compensation, id. § 1653(c). With the firm support of the State of Alaska, Congress thus made the political judgment that the risks of tanker traffic through Prince William Sound were worth taking, for reasons of national security and national energy policy.

Exxon Br. at 2. Exxon makes no attempt to explain why TAPAA, which specifically addresses spills of oil transported through the Trans-Alaska Pipeline and which preserves existing federal and state remedies, does not control the availability of punitive damages. Indeed, the district court in this case held that TAPAA “expressly preserves other remedies,” including punitive damages claims. JA 103 (emphasis supplied by the district court). Exxon did not appeal that ruling and cannot challenge it here.

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Not only does Exxon neglect to discuss the role that TAPAA should play in resolving the questions it asks this Court to address, Exxon’s meager description of TAPAA is deeply flawed. The State of Alaska and Congress did not support construction of the Trans-Alaska Pipeline simply because they concluded that the risks of tanker traffic were worth taking. On the contrary, the State of Alaska and Congress authorized construction of the pipeline because the oil industry had repeatedly vowed to employ the highest possible standards of care to reduce the risk of oil spills, and the oil companies were willing to be subjected to increased damages if a spill occurred. Indeed, TAPAA effectuated a basic agreement, a social compact as it were, between the State of Alaska and the oil industry. Under this social compact, the oil companies were encouraged to develop North Slope oil reserves and construct the Trans-Alaska Pipeline in exchange for their agreement to adhere to heightened standards of care, the imposition of strict liability, and the preservation of existing state and federal remedies.

The basic terms of the social compact underlying TAPAA were aptly described by Representative Morris Udall, a member of the TAPAA Conference Committee:

[TAPAA] is admittedly forcing a tougher liability standard on Alaskan oil than exists for other oil, but the House has consistently maintained that the environmental risks of transporting this oil were significantly greater. The oil companies have, in turn, consistently promised that both the pipeline and the sea

5

leg were safe. We are doing no more than holding them to this promise.

119 Cong. Rec. 36,606 (Nov. 12, 1973).

By knowingly allowing a relapsed alcoholic to serve as ship master on the EXXON VALDEZ, Exxon violated the social compact it had entered into with the State of Alaska. The catastrophic harm that resulted from Exxon’s recklessness was as bad as expected.3 TAPAA preserves existing state and federal remedies precisely to ensure that damages would be adequate and available for oil spills. Punitive damages are appropriate here because Exxon acted recklessly and violated its solemn vow to the people of Alaska to protect Alaska’s marine ecology and marine-based economy. Exxon should not now be heard to challenge the basic terms of the deal under which it and other oil companies were authorized to construct and operate the Trans-Alaska Pipeline and deliver the oil by tankers.

ARGUMENTARGUMENTARGUMENTARGUMENT

I. TAPAATAPAATAPAATAPAA AuthorizedAuthorizedAuthorizedAuthorized ConstructConstructConstructConstruction ofion ofion ofion of the Trans the Trans the Trans the Trans----Alaska Pipeline Alaska Pipeline Alaska Pipeline Alaska Pipeline While Imposing While Imposing While Imposing While Imposing Strict Standards Strict Standards Strict Standards Strict Standards of Care and Liability of Care and Liability of Care and Liability of Care and Liability to Prevent to Prevent to Prevent to Prevent Oil SpillsOil SpillsOil SpillsOil Spills

The decision to authorize construction of a 789-mile pipeline running from Prudhoe Bay to Valdez involved two competing sets of interests—the interest in developing Alaska’s oil reserves and the interest in protecting Alaska’s natural resources, most prominently its marine resources and the

3 See, e.g., Plaintiffs Exhibit 2 (to be lodged with the Court) (statement of Exxon U.S.A. President Stevens) (stating that the magnitude of harm from the EXXON VALDEZ spill was “pretty well as much as envisioned”).

6

marine-based economy. In the years following the discovery of major oil reserves in Alaska’s North Slope, the State of Alaska and the oil industry supported construction of the Trans-Alaska Pipeline precisely because they agreed that these competing concerns could best be addressed by allowing the oil companies to extract and deliver the oil while imposing strict standards of care to protect the environment to the maximum extent possible. Based on the oil companies’ repeated assurances that they would abide by strict controls in the management of oil and would be subject to heightened liability and increased damages, the people of Alaska, through their elected representatives, agreed to support the pipeline. In enacting TAPAA, Congress blessed this basic agreement.

A. Background Background Background Background to TAPAAto TAPAAto TAPAAto TAPAA

In March 1968, the Atlantic Richfield Company (ARCO) and Humble Oil and Refining Company (a predecessor to Exxon Mobil Corp.) announced the discovery of large petroleum reserves on land owned by the State of Alaska in Prudhoe Bay in Alaska’s North Slope. Later that year, several oil companies, including ARCO, Exxon, and British Petroleum, formed an unincorporated agent, the Trans Alaska Pipeline System (TAPS), later incorporated as the Alyeska Pipeline Service Co., to develop plans to transport the oil to markets in the lower 48 states. Wilderness Soc’y v. Morton, 479 F.2d 842, 848-849 (D.C. Cir. 1973). Alyeska proposed to construct a 48-inch diameter pipeline to extend 789 miles from Prudhoe Bay to the Port of Valdez. Id. at 849. The pipeline would be capable of carrying 2,000,000 barrels of crude oil per day. Oil arriving at Valdez

7

would be loaded onto tankers for shipment to ports in the western United States. Id.

In 1969, Alyeska’s predecessor submitted a request to the Department of the Interior to obtain rights-of-way to construct the pipeline. Id. In May 1972, after numerous hearings and a lengthy investigation, the Secretary of the Interior granted Alyeska’s request. The decision was accompanied by a 9-volume Final Environmental Impact Statement.4 Several environmental groups challenged the Secretary’s decision. In February 1973, the United States Court of Appeals for the D.C. Circuit ruled that the Mineral Leasing Act did not authorize the Secretary of the Interior to grant federal rights-of-way of the size needed for the pipeline. Id., 479 F.2d at 847-848. With the D.C. Circuit’s ruling, the decision whether to authorize the Trans-Alaska Pipeline moved to Congress.

In 1973, the House and Senate Committees on Interior and Insular Affairs held 17 days of hearings on whether to authorize the proposed Trans-Alaska Pipeline.5 The committees heard from 110 witnesses, including over 20 representatives of the oil industry, as well as many witnesses representing the Department of the Interior, the State of Alaska,

4 United States Department of the Interior, Final Environmental Impact Statement: Proposed Trans-Alaska Pipeline [hereinafter “FEIS”]. 5 See Oil and Natural Gas Pipeline Rights-of-Way, Hearings Before the Subcomm. on Public Lands of the House Interior and Insular Affairs Comm., 93d Cong., 1st Sess. (1973) [hereinafter “House Hrg.”]; Rights-of-Way Across Federal Lands: Transportation of Alaska’s North Slope Oil, Hearings Before the Sen. Comm. on Interior and Insular Affairs, 93d Cong., 1st Sess. (1973) [hereinafter “Sen. Hrg.”].

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environmental groups, Native Alaskans, and fishermen. Four committee reports were issued in support of TAPAA.6 TAPAA was debated on the floor of the House and Senate over 10 days.7 The legislative history of TAPAA comprises over 3,500 pages.

In those 3,500 pages of hearings, testimony, committee reports, and floor debates, there is absolutely no suggestion that the oil companies sought protection from punitive damages under federal maritime law or any other source of law. Nor is there the remotest suggestion that Congress intended to offer such protection or even considered it. On the contrary, the history of TAPAA demonstrates that the oil companies agreed to abide by heightened standards of care in the shipping of oil. TAPAA imposed a heightened standard of care to protect against oil spills and created new remedies, while preserving existing remedies. In short, under TAPAA, the expansion of liability for oil spills was the price the oil companies paid for authorization to construct and operate the Trans-Alaska Pipeline.

6 S. Rep. No. 207, 93d Cong., 1st Sess. (1973) [hereinafter “Sen. Comm. Rpt.”]; H. Rep. No. 414, 93d Cong., 1st Sess. (1973) [hereinafter “House Comm. Rpt.”]; H. Conf. Rep. 617, 93d Cong., 1st Sess. (1973); H. Conf. Rep. 624, 93d Cong., 1st Sess. (1973) [hereinafter “Conf. Comm. Rpt.”] 7 See 19 Cong. Rec. 22795-22840 (July 9, 1973); 19 Cong. Rec. 22978-23019 (July 10, 1973); 19 Cong. Rec. 23312-23356 (July 11, 1973); 19 Cong. Rec. 23543-23621 (July 12, 1973); 19 Cong. Rec. 23746-23783, 23801-23801, 23854, 23858-23860, 23863-23864 (July 13, 1973); 19 Cong. Rec. 23873-23894, 23909-23910, 23954-23955 (July 14, 1973); 19 Cong. 24076-24130 (July 16, 1973); 19 Cong. Rec. 24294-24330 (July 17, 1973); 19 Cong. Rec. 27625-27720 (Aug. 2, 1973); 19 Cong. Rec. 36595-36620 (Nov. 12, 1973); 19 Cong. Rec. 36808-36820 (Nov. 13, 1973).

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B. TTTThe Oil Industry Repeatedhe Oil Industry Repeatedhe Oil Industry Repeatedhe Oil Industry Repeatedlylylyly PromisePromisePromisePromised to d to d to d to Employ the Strictest Possible Controls to Employ the Strictest Possible Controls to Employ the Strictest Possible Controls to Employ the Strictest Possible Controls to Protect AgaiProtect AgaiProtect AgaiProtect Against Oil Spillsnst Oil Spillsnst Oil Spillsnst Oil Spills

Concerns about the possibility of a catastrophic oil spill played a central role in the debates over whether to authorize the Trans-Alaska Pipeline. The Senate Interior and Insular Affairs Committee identified oil spills as a “major issue” needing to be addressed to authorize the pipeline.8 Opponents of the pipeline supported an overland route through Canada primarily to avoid the need to have oil transported by supertankers.9

Proponents of the pipeline never denied that a large oil spill would cause devastating environmental and economic harms. Indeed, when Congress authorized construction of the Trans-Alaska Pipeline, it was universally recognized that a large oil spill off the Alaska coast would be devastating to the marine ecology and marine-based economy. As the Department of the Interior declared: “The existing pristine quality of the environment from Valdez through Prince William Sound would be threatened with severe disturbance from the proposed tanker activity. The major threat would come from oil spills which could affect the total biotic

8 Sen. Comm. Rpt., supra note 6, at 18-19. 9 Id. at 19 (proponents of the Canadian pipeline emphasize “the danger of marine pollution stemming from the ocean leg of the oil transportation system”); Sen. Hrg., supra note 5, at 10 (Sen. Mondale) (“[A] trans-Alaskan pipeline would mean massive oil spills resulting from the trans-shipment of oil from Valdez to American ports.”); House Hrg., supra note 5, at 385 (Rep. Aspin) (“The Alaska pipeline crosses a bad zone of earthquakes and necessitates moving oil by tankers . . . enormous ones which, when they run aground there are going to be enormous oil spills.”).

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relationships of the area.”10 Fisheries were especially threatened by oil spills because “[t]he economy of [the Prince William Sound] area depends almost entirely on commercial fishing, the processing of the catch, and related activities.”11 Native Alaskan communities faced even greater risks: “The greatest threat to Native subsistence resources would come from potential oil spillage.”12

It was well understood, moreover, that effective cleanup would be impossible. The Department of the Interior concluded that, due to the remote location of Prince William Sound, less than 20% of oil spilled from a tanker grounding could be recovered.13

The oil companies repeatedly vowed, however, that they would reduce or even eliminate the risk of a catastrophic oil spill by adhering to the highest possible standards of care. Long before the congressional hearings, the oil industry had launched a public relations campaign to assure the American people and their elected representatives that the oil companies would adhere to strict measures to protect the fragile Alaskan environment. In 1970 and 1971, Alyeska placed

10 FEIS Vol. 1 at 150 (1972); see also id., Vol. 2 at 216; id., Vol. 4 at 213, 319; JA 1436-41, 1475-94. 11 FEIS Vol. 3 at 370; see also id., Vol. 2 at 152-153, 400; id., Vol. 3 at 370; id., Vol. 4 at 432-436; JA 1439-43, 1475-82. 12 See FEIS Vol. 1 at 218. 13 FEIS Vol. 1 at 224-225 (“[S]tate-of-the-art equipment and techniques for containing and recovering spilled oil can recover less than 20 percent of oil spilled.”); see also id., Vol. 1 at 174-175; id., Vol. 4 at 303; id., Vol. 4 at 484 (“Large spills in Prince William Sound would be more difficult to contain, clean up, and restore because of the distances from sources of ships and cleanup gear and the generally limited available manpower in the region.”); id., Vol. 4 at 581.

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advertisements in major newspapers touting the pipeline as “[t]he most expensive single project ever undertaken by industry.”14 As one of the ads declared:

What we have learned about the Arctic leads us to believe that there is nothing inherently dangerous to the environment provided the line is designed, built and operated in a manner that is considerate of and responsible to the environment. . . . On this you have our pledge: the environmental disturbances will be avoided where possible, held to a minimum where unavoidable, and restored to the fullest extent.15

Alyeska thus pledged to design, build, and operate the pipeline in the most careful manner possible to protect the Alaskan environment.

In the congressional hearings, witnesses on behalf of Alyeska and the oil industry repeated Alyeska’s vow to exercise the highest degree of care to reduce the risks of oil spills. The president of Alyeska testified that, with the exercise of proper care, “the likelihood of tankers grounding or colliding is remote.”16 The president of ARCO likewise

14 Mary Clay Berry, THE ALASKA PIPELINE 145 (Indiana University Press 1975). 15 Id. at 146. 16 House Hrg., supra note 5, at 1705; see also FEIS Vol. 4 at 294 (quoting Alyeska statement) (“[E]nvironmental requirements dictate that the natural scenic beauty of the area and the high water quality standards, which result in sport and commercial fishing and tourism, be maintained . . . Maintaining them would be a responsibility which Alyeska, the tanker owner companies, the State of Alaska, and various federal agencies would have to bear cooperatively.”).

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testified that “no dollar savings could possibly justify wreaking irretrievable damage on the fragile Alaskan environment. And that is not going to happen. Since the pipeline was originally conceived, its cost has increased by millions of dollars to insure that the stringent challenges of the Alaskan wilderness will be met.”17 Standard Oil Co. submitted a 40-page report, which assured Congress that it had established design standards and imposed standards of care that would “insure that the marine segment of TAPS will have a minimal impact on the environment.”18

The State of Alaska supported the construction of the pipeline based on the oil industry’s repeated promises to employ heightened standards of care to protect the Alaskan environment.19 Alaska was convinced that the project did not threaten the marine ecology and marine-based economy because the oil companies had promised “unprecedented” attention to protecting against oil spills. As Alaska’s Governor William Egan concluded: “The navigational safety aids and procedures planned for the tanker segment of the route proposed for transporting Alaska’s North Slope oil to the nation are extensive and impressive. Careful and detailed planning is going into this part of the planned operation and I am convinced that attention to environmental protection on the tanker route will be

17 Sen. Hrg., supra note 5, at 392. 18 Id. at 215; see also id. at 219. 19 Id. at 125 (“The State of Alaska wants to make absolutely certain that the environmental aspect of the project, from the standpoint of safety and ecology, environmental safety and the ecology of that area, will be a model for the rest of the Nation and the world itself to look at.”).

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unprecedented.”20 As a result of the unprecedented care promised by the oil companies, Alaska expected the oil companies’ practices in Alaska “to be first, not last or average, in world trade in their respect for safety and ecological standards.”21

As with the State of Alaska, the Department of the Interior supported construction of the pipeline based on the oil companies’ assurances “that operation of the maritime leg [would] be safer than any other maritime oil transport system now in operation.”22 As a witness for the U.S. Geological Survey testified, “What we have asked for is something beyond the state of the art, the so called sophisticated stage that can go beyond the state of the art.”23 Alyeska had assured the government that it would meet such high standards.24

Congress accepted the oil companies’ willingness to be subjected to strict standards in transporting the oil. As the Senate Committee on Interior and

20 Gov. William A. Egan, “Alaska’s Oil and Sea – Antipollution Plans,” reprinted in 119 Cong. Rec. 22828 (July 9, 1973). 21 JA 1474 (statement of Gov. Egan to the Dept. of the Interior). 22 House Hrg., supra note 5, at 155 (statement of Secretary of the Interior Rogers C.B. Morton). 23 Id. at 1645. 24 See id. at 1648-1649 (statement of Jack Turner, Bureau of Land Management) (“As far as Alyeska, . . . they have either demonstrated or assured us that they will in fact meet these [environmental requirements].”); id. at 1651 (statement of Jared Carter, Deputy Undersecretary of the Department of the Interior) (“[W]e have insisted at all times that the burden of establishing the safety and environmental acceptability of the pipeline in accordance with the stipulations is on the company, on Alyeska, and in cases where we have dealt with them in dealing with specific problems, we have found a willingness on their part to go out and get independent expert assistance to meet that burden.”).

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Insular Affairs concluded, “the risk of environmental damage from development of North Slope oil and its transportation to markets in the ‘Lower 48’ has been substantially lessened as a result of the stricter environmental stipulations” that the oil companies had accepted as the price for constructing the pipeline.25 As Senator Henry Jackson, the lead sponsor of TAPAA, declared: “Damage to the ocean environment by the discharge of petroleum products and contaminated sea water need not take place. It can be prevented. Insofar as the movement of needed oil from Alaska to the markets in the United States is concerned, any risk of damage will be prevented or minimized. . . .”26 Congress was convinced that, with adherence to the strict safety measures and heightened standards of care promised by the oil companies, “the maritime leg of the Alaskan route will be operated more safely than any other marine transport system functioning to date.”27

C. TAPAA Authorized the TransTAPAA Authorized the TransTAPAA Authorized the TransTAPAA Authorized the Trans----Alaska Alaska Alaska Alaska Pipeline While Protecting Against Oil Pipeline While Protecting Against Oil Pipeline While Protecting Against Oil Pipeline While Protecting Against Oil Spills by Imposing Strict Standards and Spills by Imposing Strict Standards and Spills by Imposing Strict Standards and Spills by Imposing Strict Standards and Heightened Liability Heightened Liability Heightened Liability Heightened Liability

TAPAA embodies a basic agreement to allow the development of Alaska’s North Slope oil while requiring the protection of Alaska’s natural resources, particularly its marine resources. On the one hand, TAPAA specifically directs the Secretary of 25 Sen. Comm. Rpt., supra note 6, at 18. 26 119 Cong. Rec. 22838 (July 9, 1973). 27 119 Cong. Rec. 22810 (July 9, 1973) (Sen. Fannin); see also 119 Cong. Rec. 24296 (July 17, 1973) (Sen. Stevens) (“The trans-Alaska pipeline will be constructed and operated in accordance with the strictest safeguards ever developed for any pipeline.”).

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the Interior to issue all necessary rights-of-ways and any other permits necessary for the construction and operation of the Trans-Alaska Pipeline System. TAPAA § 203(b), 43 U.S.C. § 1652(b). TAPAA also exempts the decision to authorize the pipeline from further review under the National Environmental Policy Act. TAPAA § 203(c), 43 U.S.C. § 1652(c).

On the other hand, TAPAA imposes strong measures to prevent oil spills. TAPAA directs the Secretary of Transportation to adopt standards regarding tanker design and directs the Coast Guard to establish a vessel traffic control system for Prince William Sound. TAPAA §§ 401, 402. TAPAA establishes a new liability scheme applicable only to spills of oil transported through the Trans-Alaska Pipeline. It provides:

Notwithstanding the provisions of any other law, if oil that has been transported through the trans-Alaska pipeline is loaded on a vessel at the terminal facilities of the pipeline, the owner and operator of the vessel (jointly and severally) . . . shall be strictly liable without regard to fault in accordance with this subsection for all damages, including clean-up costs, sustained by any person or entity. . . as the result of discharges of oil from such vessel.

TAPAA § 204(c)(1), 43 U.S.C. § 1653(c)(1). To pay compensation for damage caused by oil spills, TAPAA establishes a liability fund of $100 million, created out of fees on oil transported through the pipeline. TAPAA § 204(c)(3), 43 U.S.C. § 1653(c)(3). Under TAPAA‘s strict liability scheme, the owner of any ship that causes damages through the discharge of oil is strictly liable for the first $14 million of any

16

damages claim, and the liability fund is responsible for additional damages, up to a total of $100 million. Id. For claims exceeding $100 million, TAPAA expressly preserves state and federal remedies: “The unpaid portion of any claim may be asserted and adjudicated under other applicable Federal or state law.” Id. In addition to preserving state and federal remedies for claims exceeding $100 million, TAPAA also expressly preserves existing state authority to impose increased liability for oil spills. TAPAA § 204(c)(9), 43 U.S.C. § 1653(c)(9).

II. TAPAATAPAATAPAATAPAA, Not the Clean Water Act, Governs the , Not the Clean Water Act, Governs the , Not the Clean Water Act, Governs the , Not the Clean Water Act, Governs the EEEEXXON XXON XXON XXON VVVVALDEZALDEZALDEZALDEZ Oil Spill Oil Spill Oil Spill Oil Spill In its brief to this Court, Exxon argues that the

Clean Water Act displaces federal maritime law because it “specifically addresses the problem of both negligent and intentional maritime oil spills.” Exxon Br. 31. That argument can be rejected out of hand because it fails to acknowledge that TAPAA specifically addresses spills of oil transported through the Trans-Alaska Pipeline, and TAPAA expressly preserves existing federal remedies, including punitive damages under federal common law.

As the courts of appeals have agreed, TAPAA establishes “a comprehensive liability scheme applicable to damages resulting from the transportation of trans-Alaska pipeline oil.”28 While it is surely true that the Clean Water Act specifically

28 In re Glacier Bay, 944 F.2d 577, 580-581 (9th Cir. 1991); see also In re Tug Allie-B, Inc., 273 F.3d 936, 947 (11th Cir. 2001) (“TAPAA‘s purpose, in part, was to establish a comprehensive liability scheme applicable to damages to natural resources resulting from the transportation of trans-Alaska pipeline oil.”).

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addresses maritime oil spills, see 33 U.S.C. § 1321, TAPAA even more specifically addresses maritime spills of oil transported on the Trans-Alaska Pipeline.

As this Court has repeatedly recognized, “the specific governs the general.”29 That principle applies most strongly in this context because TAPAA, the more specific statute, is also the more recent statute. As this Court has stated, “a specific policy embodied in a later federal statute should control” over a general policy adopted in an earlier statute.30

TAPAA itself makes it perfectly clear that Congress intended TAPAA, not the Clean Water Act, to govern liability for private harm caused by spills of oil pumped through the Trans-Alaska Pipeline. The two statutes impose different standards of liability for oil spills, and TAPAA‘s standards are plainly higher. The Clean Water Act does not establish a private liability scheme for oil spills like that found in TAPAA, which allows recovery in strict liability up to $100 million and preserves existing state and federal remedies for larger claims. As the Ninth Circuit correctly observed, “Congress

29 Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992); see also Simpson v. United States, 435 U.S. 6, 15 (1978). 30 FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 143 (2000); cf. 2B Norman J. Singer, SUTHERLAND STATUTES AND

STATUTORY CONSTRUCTION § 51.02, at 186-87 (6th ed. 2000). Indeed, a specific statute governs a later-enacted general one. See Busic v. United States, 446 U.S. 398, 406 (1980) (“[A] more specific statute will be given precedence over a more general one, regardless of their temporal sequence.”).

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consciously and purposefully subjected Alaskan oil to tougher liability standards than other oil.”31

The legislative history of TAPAA confirms that Congress specifically intended to impose a stricter liability standard for oil spills of Alaskan oil than oil covered only by the Clean Water Act. As the Conference Committee Report explains, TAPAA “provides, for vessels that transport North Slope oil in the coastal trade, liability standards that are much stricter than those that apply to vessels that transport other oil in the coastal or foreign trade.”32

Moreover, the district court in this case specifically addressed the central role played by TAPAA and Exxon chose not to appeal that ruling. The district court recognized that TAPAA “is certainly a comprehensive, remedial statute.” JA 103. In the district court, Exxon moved to dismiss the punitive damages claim on the ground that TAPAA displaces federal common law remedies. JA 60. The district court rejected Exxon’s motion, ruling that TAPAA “expressly preserves” existing federal remedies, including punitive damages under federal maritime law. JA 103 (emphasis supplied by the district court). Having chosen not to appeal the district court’s ruling that TAPAA is the controlling federal statute and that TAPAA expressly preserves a federal common law punitive damages remedy, Exxon cannot challenge it here. Pet. App. 73a.

31 Slaven v. BP America, Inc., 973 F.2d 1468, 1474 (9th Cir. 1992). 32 Conf. Comm. Rpt., supra note 6, at 28, reprinted in 1973 U.S.C.C.A.N. 2417, 2523, 2530.

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III. TAPAATAPAATAPAATAPAA Preserves Preserves Preserves Preserves Existing RemediesExisting RemediesExisting RemediesExisting Remedies for Oil for Oil for Oil for Oil SpillsSpillsSpillsSpills, Including Punitive Damages, Including Punitive Damages, Including Punitive Damages, Including Punitive Damages Under Under Under Under Federal Common LawFederal Common LawFederal Common LawFederal Common Law While TAPAA establishes the federal statute that

governs the EXXON VALDEZ oil spill, it preserves rather than displaces federal common law remedies, including punitive damages. See TAPAA § 204(c), 43 U.S.C. § 1653(c). As the text and legislative history of TAPAA make clear, Congress intended TAPAA to expand ship owners’ liability for oil spills without in any way limiting that liability. The district court’s unappealed ruling that TAPAA preserves the availability of punitive damages is plainly correct and fatally undermines Exxon’s argument that the Clean Water Act displaces punitive damages.

A. When TAPAAWhen TAPAAWhen TAPAAWhen TAPAA Was Enacted, Punitive Was Enacted, Punitive Was Enacted, Punitive Was Enacted, Punitive Damages Were a WellDamages Were a WellDamages Were a WellDamages Were a Well----Established Remedy Established Remedy Established Remedy Established Remedy Under Federal Maritime LawUnder Federal Maritime LawUnder Federal Maritime LawUnder Federal Maritime Law

When Congress enacted TAPAA in 1973, punitive damages had long been available as a matter of federal maritime law. As the First Circuit has explained, “[a]lthough rarely imposed, punitive damages have long been recognized as an available remedy in general maritime actions where defendant’s intentional or wanton and reckless conduct amounted to a conscious disregard of the rights of others.”33 Punitive damages were plainly available when ship owners recklessly hired incompetent ship masters. As the Sixth Circuit stated in 1969: “Punitive damages also may be recoverable if the acts complained of were those of an unfit master and the owner was reckless in

33 CEH, Inc. v. F/V Seafarer, 70 F.3d 694, 699 (1st Cir. 1995) (listing cases).

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employing him.”34 Congress, of course, must be presumed to know this common law background against which it enacted TAPAA.35

B. In Enacting In Enacting In Enacting In Enacting TAPAATAPAATAPAATAPAA,,,, Congress Congress Congress Congress ConcludedConcludedConcludedConcluded that Existing that Existing that Existing that Existing Compensatory DamagesCompensatory DamagesCompensatory DamagesCompensatory Damages Provided Inadequate Compensation Provided Inadequate Compensation Provided Inadequate Compensation Provided Inadequate Compensation for Oil for Oil for Oil for Oil Spills Off the Alaska CoastSpills Off the Alaska CoastSpills Off the Alaska CoastSpills Off the Alaska Coast

In 3,500 pages of congressional hearings and debates leading to the enactment of TAPAA, there are precisely zero references suggesting that oil companies should be immunized against punitive damages for oil spills under federal maritime law. On the contrary, Congress was gravely concerned about the possibility of oil spills and sought to increase the standard of care applicable to the shipment of oil and to increase liabilities for oil spills. Congress did so by imposing strict liability against oil companies for oil spills, while preserving existing remedies under state and federal law for claims exceeding $100 million. TAPAA § 204(c), 43 U.S.C. § 1653(c).

Congress imposed strict liability for oil spill damages because it concluded that maritime law might not ensure the availability of compensatory damages. As the Conference Report declared: “The 34 U.S. Steel Corp v. Fuhrman, 407 F.2d 1143, 1148 (6th Cir. 1969). 35 Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U.S. 104, 108 (1991) (“Congress is understood to legislate against a background of common-law . . . principles.”); United States v. Texas, 507 U.S. 529, 534 (1993) (“In order to abrogate a common-law principle, the statute must ‘speak directly’ to the question addressed by the common law.”); Cannon v. University of Chicago, 441 U.S. 677, 696-697 (1979) (“It is always appropriate to assume that our elected representatives, like other citizens, know the law.”).

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Conferees concluded that existing maritime law would not provide adequate compensation to all victims . . . in the event of the kind of catastrophe which might occur. Consequently, the Conferees established a rule of strict liability for damages from discharges of the oil transported through the trans-Alaska Pipeline up to $100,000,000.”36 Specifically, Congress was concerned that, under maritime law, compensatory damages might be limited to the value of the ship and its cargo.37 Limitations on compensatory damages might render them insufficient for a catastrophe resulting from an oil tanker spill. As the Conference Committee explained, “Oil discharges from vessels of this size could result in extremely high damages to property and natural resources, including fisheries and amenities, especially if the mishap occurred close to a populated shoreline area.”38

To ensure that sufficient damages would be available for persons injured by oil spills, TAPAA imposes liability without fault for any oil spills involving oil transported on the Trans-Alaska pipeline. TAPAA § 204(c)(1), 43 U.S.C. § 1653(c)(1). That standard is tougher than the common law standard.39 As Congress concluded, the liability

36 Conf. Comm. Rpt., supra note 6, at 28, reprinted in 1973 U.S.C.C.A.N. at 2530. 37 See 119 Cong. Rec. 24296 (July 17, 1973) (Sen. Hathaway) (describing the need “to revise existing laws limiting the liability of the owner of a vessel to the value of the vessel and cargo at the time of the accident”). 38 Conf. Comm. Rpt., supra note 6, at 28, reprinted in 1973 U.S.C.C.A.N. at 2530. 39 See Slaven v. BP America, Inc., 973 F.2d 1468, 1474 (9th Cir. 1992) (“Congress consciously and purposefully subjected Alaskan oil to tougher liability standards than other oil.”); In re

22

regime established by TAPAA, which imposes strict liability with existing federal and state law serving as a backup, “would provide an incentive to the owner or operator to operate the vessel with due care.”40

C. TAPAATAPAATAPAATAPAA Preserves Existing Re Preserves Existing Re Preserves Existing Re Preserves Existing Remedies, medies, medies, medies, Including Punitive Damages Under Including Punitive Damages Under Including Punitive Damages Under Including Punitive Damages Under Federal Maritime LawFederal Maritime LawFederal Maritime LawFederal Maritime Law

By its express terms, TAPAA expands the availability of compensatory damages for oil spills while preserving existing remedies under state and federal law. Section 204(c) provides that claims not paid by the $100 million liability fund “may be asserted and adjudicated under applicable Federal or state law.” TAPAA § 204(c)(3), 43 U.S.C. § 1653 (c). TAPAA further expressly preserves state authority to impose “additional requirements.” Id. § 204(c)(9), 43 U.S.C. § 1653(c)(9).

Notwithstanding the plain language of TAPAA, Exxon argued in the district court that TAPAA establishes a comprehensive regulatory scheme that should be construed to extinguish common law remedies, including punitive damages under federal maritime law. JA 60-93. The district court correctly ruled that the text of TAPAA “expressly preserves,” rather than displaces, the availability of punitive damages under federal maritime law: “TAPAA is not intended to occupy the entire field of trans-Alaskan oil spills. TAPAA is certainly a comprehensive,

Glacier Bay, 944 F.2d 577, 582 (9th Cir. 1991) (“This strict liability provision ensures that trans-Alaska oil spill victims receive prompt compensation without resort to prolonged litigation.”). 40 Conf. Comm. Rpt., supra note 6, at 29.

23

remedial statute. However, TAPAA was intended to provide plaintiffs with a new strict liability remedy.” JA 103 (citations omitted).41

As the district court correctly found, oil spills were a primary environmental concern Congress sought to address in enacting TAPAA. It would make little sense to read TAPAA to preclude existing common law remedies for oil spills, given the clear congressional intent to expand existing. As the district court explained: “Congress, in enacting TAPAA, was expanding recovery, not restricting recovery. . . . Congress dispensed with fault, but Congress did not intend to limit the liability of vessel owners and operators.” JA 105 (citations omitted). The legislative history clearly bears this out.42

Exxon chose not to appeal the district court’s ruling that the plain text of TAPAA preserves punitive damages. Pet. App. 73a. Exxon cannot challenge it here.

41 See also In re Glacier Bay, 741 F. Supp. 800, 804 (D. Alaska 1990), aff’d, 944 F.2d 577 (9th Cir. 1991) (“Congress was concerned with the source of funding for oil spill damage claim compensation, rather than with limiting the liability of vessel owners and operators.”). 42 See, e.g., 119 Cong. Rec. 26821 (Nov. 13, 1973) (Sen. Magnuson) (“Section 204(c) should considerably enhance the availability of compensation to injuries parties without disrupting existing Federal law, State law, or international treaties.”) (emphasis added). TAPAA thus also refutes the claims of certain of Exxon’s amici that congressional maritime policy uniformly favors the limitation of ship owners’ liability. See Brief of Amici Curiae Transportation Institute at 13-19. TAPAA expanded (rather than limited) ship owners’ liability due to the grave threat that oil spills posed to Alaska’s rich marine environment.

24

IV. The JuryThe JuryThe JuryThe Jury’’’’s Award of s Award of s Award of s Award of Punitive Damages Punitive Damages Punitive Damages Punitive Damages Is Is Is Is AppropAppropAppropAppropriate Because riate Because riate Because riate Because ExxonExxonExxonExxon’’’’s Recklessnesss Recklessnesss Recklessnesss Recklessness Violated the Fundamental Terms of the Social Violated the Fundamental Terms of the Social Violated the Fundamental Terms of the Social Violated the Fundamental Terms of the Social Compact Embodied in TAPAACompact Embodied in TAPAACompact Embodied in TAPAACompact Embodied in TAPAA The oil companies gained authority to develop

Alaska’s oil reserves based on their repeated promises to the people of Alaska that they would take every possible precaution to protect against oil spills. Those vows were a central trade-off in the social compact embodied in TAPAA, which expressly preserves existing remedies, including punitive damages.

It is clear that Exxon breached its promise. Far from taking every possible precaution against oil spills, Exxon recklessly gave command of a loaded oil tanker to a known, relapsed alcoholic. As the Ninth Circuit explained:

Here the jury found that the corporation, not just the employee, was reckless. The evidence established that Exxon gave command of an oil tanker to a man they knew was an alcoholic who had resumed drinking after treatment that required permanent abstinence, and had previously taken command in violation of Exxon’s alcohol policies.

Pet. App. 83a. Furthermore:

There was substantial evidence . . . that Exxon knew Hazelwood was an alcoholic, knew that he had failed to maintain his treatment regimen and had resumed drinking, knew that he was going on board to command its supertankers after drinking, yet let him continue to command the Exxon Valdez

25

through the icy and treacherous waters of Prince William Sound.

Pet. App. 89a.43

Punitive damages are appropriate in these circumstances. As has long been established, “punitive damages may be awarded in maritime tort actions where defendant’s actions were intentional, deliberate or so wanton and reckless as to demonstrate a conscious disregard of the rights of others.”44 Punitive damages are warranted against a corporation where harm occurs as a result of its reckless hiring. As the New York Court of Appeals declared well over a century ago:

If a railroad company, for instance, knowingly and wantonly employs a drunken engineer or switchman, or retains one after knowledge of his habits is clearly brought home to the company, or to a superintending agent authorized to employ and discharge him, and injury occurs by reason of such habits, the company may and ought to be amenable to the severest rule of damages.45

This Court quoted that language with approval in Lake Shore & M.S.R. Co. v. Prentice, 147 U.S. 101, 116 (1893), and it remains good law today.

Punitive damages are appropriate here because Exxon recklessly put at risk Alaska’s marine resources and marine-based economy after it and the

43 See also Pet App. 29a, 64a, 121a-122a, 154a-157a. 44 Muratore v. M/S Scotia Prince, 845 F.2d 347, 354 (1st Cir. 1988). 45 Cleghorn v. New York Central & Hudson River R.R. Co., 56 N.Y. 44, 47-48 (1874).

26

other oil companies solemnly vowed to protect them. Having profited from the terms of the social compact underlying TAPAA, Exxon should not be heard to challenge those terms.

CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSION

This Court should affirm the judgment of the court of appeals.

Respectfully submitted,

James E. Fosler FOSLER LAW GROUP, INC. 737 W. 5th Ave., Suite 205 Anchorage, AK 99501 (907) 277-1576

Jared A. Goldstein Counsel of Record

ROGER WILLIAMS UNIVERSITY SCHOOL OF LAW

10 Metacom Ave. Bristol, RI 02809 (401) 254-4594

January 15, 2008

1a

APPENDIXAPPENDIXAPPENDIXAPPENDIX

Selected Provisions of the TransSelected Provisions of the TransSelected Provisions of the TransSelected Provisions of the Trans----Alaska Pipeline Alaska Pipeline Alaska Pipeline Alaska Pipeline Authorization Act of Authorization Act of Authorization Act of Authorization Act of 1973, Pub. L. 931973, Pub. L. 931973, Pub. L. 931973, Pub. L. 93----153, 87153, 87153, 87153, 87 Stat. Stat. Stat. Stat. 584, codified in part in Title 584, codified in part in Title 584, codified in part in Title 584, codified in part in Title 43 43 43 43 of the of the of the of the UUUUnited States nited States nited States nited States

CodeCodeCodeCode

Sec. 202, codified at 43 U.S.C. § 1651Sec. 202, codified at 43 U.S.C. § 1651Sec. 202, codified at 43 U.S.C. § 1651Sec. 202, codified at 43 U.S.C. § 1651 The Congress finds and declares that: (a) The early development and delivery of oil and gas from Alaska’s North Slope to domestic markets is in the national interest because of growing domestic shortages and increasing dependence upon insecure foreign sources. (b) The Department of the Interior and other Federal agencies, have, over a long period of time, conducted extensive studies of the technical aspects and of the environmental, social, and economic impacts of the proposed trans-Alaska oil pipeline, including consideration of a trans-Canada pipeline. (c) The earliest possible construction of a trans-Alaska oil pipeline from the North Slope of Alaska to Port Valdez in that State will make the extensive proven and potential reserves of low-sulfur oil available for domestic use and will best serve the national interest. (d) A supplemental pipeline to connect the North Slope with a trans-Canada pipeline may be needed later and it should be studied now, but it should not be regarded as an alternative for a trans-Alaska pipeline that does not traverse a foreign country.

2a

Section 203, codified at 43 U.S.C. § 1652Section 203, codified at 43 U.S.C. § 1652Section 203, codified at 43 U.S.C. § 1652Section 203, codified at 43 U.S.C. § 1652 (a) Cong Cong Cong Congressional declaration of purposeressional declaration of purposeressional declaration of purposeressional declaration of purpose The purpose of this chapter is to insure that, because of the extensive governmental studies already made of this project and the national interest in early delivery of North Slope oil to domestic markets, the trans-Alaska oil pipeline be constructed promptly without further administrative or judicial delay or impediment. To accomplish this purpose it is the intent of the Congress to exercise its constitutional powers to the fullest extent in the authorizations and directions herein made and in limiting judicial review of the actions taken pursuant thereto. (b) Issuance, administration, and enforcement (b) Issuance, administration, and enforcement (b) Issuance, administration, and enforcement (b) Issuance, administration, and enforcement of rightsof rightsof rightsof rights----ofofofof----way, permits, leases, and other way, permits, leases, and other way, permits, leases, and other way, permits, leases, and other authorizationsauthorizationsauthorizationsauthorizations The Congress hereby authorizes and directs the Secretary of the Interior and other appropriate Federal officers and agencies to issue and take all necessary action to administer and enforce rights-of-way, permits, leases, and other authorizations that are necessary for or related to the construction, operation, and maintenance of the trans-Alaska oil pipeline system, including roads and airstrips, as that system is generally described in the Final Environmental Impact Statement issued by the Department of the Interior on March 20, 1972. The route of the pipeline may be modified by the Secretary to provide during construction greater environmental protection.

* * * Section 204, codified at 43 U.S.C. § 1653, repealed by Section 204, codified at 43 U.S.C. § 1653, repealed by Section 204, codified at 43 U.S.C. § 1653, repealed by Section 204, codified at 43 U.S.C. § 1653, repealed by the Oil Pollution Act of 1990the Oil Pollution Act of 1990the Oil Pollution Act of 1990the Oil Pollution Act of 1990

* * * (c)(1) Notwithstanding the provisions of any other law, if oil that has been transported through

3a

the trans-Alaska pipeline is loaded on a vessel at the terminal facilities of the pipeline, the owner and operator of the vessel (jointly and severally) and the Trans-Alaska Pipeline Liability fund established by this subsection, shall be strictly liable without regard to fault in accordance with the provisions of this subsection for all damages, including clean-up costs, sustained by any person or entity, public or private, including residents of Canada, as the result of discharges of oil from vessel.

(2) Strict liability shall not be imposed under this subsection if the owner or operator of the vessel, or the Fund, can prove that the damages were caused by an act of war or by the negligence of the United States or other governmental agency. Strict liability shall not be imposed under this subsection with respect to the claim of a damaged party if the owner or operator of the vessel, or the Fund, can prove that the damage was caused by the negligence of such party.

(3) Strict liability for all claims arising out of any one incident shall not exceed $100,000,000. The owner and operator of the vessel shall be jointly and severally liable for the first $14,000,000 of such claims that are allowed. Financial responsibility for $14,000,000 shall be demonstrated in accordance with the provisions of section 311(p) of the Federal Water Pollution Control act, as amended (33 U.S.C. 1321(p)) before the oil is loaded. The Fund shall be liable for the balance of the claims that are allowed up to $100,000,000. If the total claims allowed exceed $100,000,000, they shall be reduced proportionately. The unpaid portion of any claim may be asserted and adjudicated under other applicable Federal or state law.

(4) The Trans-Alaska Pipeline Liability Fund is hereby established as a non-profit corporate entity that may sue and be sued in its own name. The Fund shall be administered by the holders of the trans-Alaska pipeline right-of-way under regulations

4a

prescribed by the Secretary. The fund shall be subject to an annual audit by the Comptroller General, and a copy of the audit shall be submitted to the Congress.

(5) The operator of the pipeline shall collect from the owner of the oil at the time it is loaded on the vessel a fee of five cents per barrel. The collection shall cease when $100,000,000 has been accumulated in the Fund, and it shall be resumed when the accumulation in the Fund falls below $100,000,000.

(6) The collections under paragraph (5) shall be delivered to the Fund. Costs of administration shall be paid from the money paid to the fund, and all sums not needed for administration and the satisfaction of claims shall be invested prudently in income-producing securities approved by the Secretary. Income from such securities shall be added to the principal of the Fund.

(7) The provisions of this subsection shall apply only to vessels engaged in transportation between the terminal facilities of the pipeline and ports under the jurisdiction of the United States. Strict liability under this subsection shall cease when the oil has first been brought ashore at a port under the jurisdiction of the United States.

(8) In any case where liability without regard to fault is imposed pursuant to this subsection and the damages involved were caused by the unseaworthiness of the vessel or by negligence, the owner and operator of the vessel, and the Fund, as the case may be, shall be subrogated under applicable State and Federal laws to the rights under said laws of any person entitled to recovery hereunder. If any subrogee brings an action based on unseaworthiness of the vessel or negligence of its owner or operator, it may recover from any affiliate of the owner or operator, if the respective owner or operator fails to satisfy any claim by the subrogee allowed under this paragraph.

5a

(9) This subsection shall not be interpreted to preempt the field of strict liability or to preclude any State from imposing additional requirements.

No. 07-219

IN THE

____________


Petitioners,

v.


Respondents.

____________

On Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

____________

BRIEF AMICUS CURIAE OF UNITED STATES

SENATOR THEODORE F. STEVENS, UNITED STATES

SENATOR LISA MURKOWSKI, AND UNITED STATES

REPRESENTATIVE DON YOUNG

IN SUPPORT OF RESPONDENTS

Theodore F. Stevens

Counsel of Record 522 Hart Senate Office Building

Washington D.C., 20510

(202) 224-3004

LEGAL PRINTERS, Washington DC ! 202-747-2400 ! legalprinters.com

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ....................................... ii

STATEMENT OF INTEREST .................................... 1

SUMMARY OF THE ARGUMENT ............................ 2

ARGUMENT ............................................................... 4

I. The Clean Water Act Does Not Displace Federal

Maritime Common Law Remedies. ....................... 4

A. Neither the Clean Water Act, Nor Its

Legislative History, Indicates Congressional

Intent to Abrogate Punitive Damages. ........... 4

B. The Clean Water Act Does Not Bifurcate

Remedies for Oil Spills. ................................... 8

CONCLUSION .......................................................... 11

ii


CASES

Amiable Nancy, 16 U.S. 546 (1818) ..................... 9, 10

Goodyear Atomic Corp. v. Miller, 486 U.S. 174

(1988) ...................................................................... 6

Int’l Paper Co. v. Ouellette, 479 U.S. 481

(1987) .............................................................. 10, 11

Isbrandtsen Co. v. Johnson, 343 U.S. 779 (1952) ..... 6

McMonagle v. Northeast Women’s Center, Inc., 493

U.S. 901 (1989) (White, J., dissenting) ................. 9

Middlesex County Sewerage Auth. v. Nat’l Sea Clammers Ass’n, 453 U.S. 1 (1981) ....................... 9

Milwaukee v. Ill., 451 U.S. 304 (1981) ...................... 6

Mobil Oil Corp. v. Higginbotham, 436 U.S. 618

(1978) ...................................................................... 6

Moragne v. States Marine Lines, Inc., 398 U.S. 375

(1970) ...................................................................... 8

Silkwood v. Kerr-McGee Corp., 464 U.S. 238

(1984) .................................................................... 11

U.S. v. Tex., 507 U.S. 529 (1993) ............................... 6

STATUTES

33 U.S.C. § 1251(a) ..................................................... 4

33 U.S.C. § 1321 ......................................................... 6

33 U.S.C. § 1321(o)(1) ................................................ 7

33 U.S.C. § 1365(e) ..................................................... 7

33 U.S.C. §§ 1251 et seq. .................................... 4, 6, 9

62 Stat. 1155 .............................................................. 4

86 Stat. 817 ................................................................ 4

iii

OTHER AUTHORITIES

David W. Robertson, Punitive Damages in American Maritime Law, 28 J. Mar. L. & Com. 73 (1997) .... 9

H.R. REP. NO. 95-139 (1977) ...................................... 7

S. REP. NO. 92-414 (1971)........................................... 7

Susan J. Buck, UNDERSTANDING ENVIRONMENTAL

ADMINISTRATION AND LAW (3d ed. 2006) ................ 5

Theodore F. Stevens, Erie R.R. v. Tompkins and the Uniform General Maritime Law, 64 HARV. L. REV.

246 (1950) ............................................................... 8

1

STATEMENT OF INTEREST1

Amici curiae Senator Theodore F. Stevens is

the State of Alaska’s senior member of the United

States Senate and a member of the Bar of this Court;

Senator Lisa Murkowski is the State of Alaska’s

junior member of the United States Senate and the

only member of Congress born in the State of

Alaska; and Representative Don Young is the State

of Alaska’s lone member of the United States House

of Representatives and the only licensed mariner in

Congress. The EXXON VALDEZ oil spill of 1989

directly impacted thousands of Alaskans as it

disrupted the State’s fisheries and other natural

resource industries. Over 20,500 of the claimants in

this case are residents of the State of Alaska.

Having entered the United States Senate in

1968, Senator Stevens was involved with the Clean

Water Act from its earliest stages of development.

He co-sponsored the Magnuson-Stevens Fishery

Conservation and Management Act of 1976, the

primary law governing marine fisheries

management in United States federal waters, and

sponsored the 1996 and 2006 amendments to that

Act. Senator Murkowski, as someone who was born

and raised in Alaskan coastal fishing communities,

and as a member of the Senate Energy and Natural

1 Pursuant to Supreme Court Rule 37.6, no counsel for a party

has authored this brief in whole or in part, and no person other

than the amici made a monetary contribution to its preparation

or submission. The parties have consented to the filing of this

brief.

2

Resources Committee, has a unique interest in

helping to ensure that the adverse impacts of the

EXXON VALDEZ oil spill are adequately and rightly

redressed. Representative Young has served as a

member of the Merchant Marine Fisheries

Committee; Chairman of the House Transportation

and Infrastructure Committee, with jurisdiction over

the Clean Water Act; and is the current Ranking

Member and former Chairman of the House Natural

Resources Committee, with jurisdiction over

domestic and international fishery issues.

Each member of Alaska’s Congressional

delegation has been a champion of commercial and

subsistence fishermen, as well as the coastal

communities in Alaska that depend on marine

resources for their survival. Petitioners’ reading of

the law would jeopardize the interests of Alaskans

and would run contrary to the collective efforts of

Congress in protecting our Nation’s navigable

waters, holding violators accountable for their

actions, and providing redress to those harmed. For

these reasons, amici curiae urge the Court to affirm

the judgment of the court of appeals.

SUMMARY OF THE ARGUMENT

The Clean Water Act (CWA) does not preclude

the federal maritime common law remedy of punitive

damages. In order to preempt long-established

common law principles, a statute must provide clear

intent to do so and speak directly to the question

that the common law addresses. Moreover, when

enacting legislation, Congress is presumed to be

3

aware of and supplementing—not supplanting—

existing damages frameworks.

Punitive damages have been available under

maritime law since the earliest years of admiralty

litigation. Neither the CWA itself, nor its legislative

history, indicates that Congress intended to revoke

Respondents’ access to punitive damages. In fact,

the CWA states that vessel owners and operators

retain all obligations, under any provision of law, to

persons suffering damages from oil spills or

removals. The Senate and House Public Works

Committee Reports reaffirm the notion that the

CWA was intended to build upon, and not

undermine, the preexisting foundation of common

law remedies.

This case, involving a single, reckless oil spill

from a vessel in transit, is distinguishable from cases

where the Court has found that the CWA’s

comprehensive enforcement mechanism for

permitted discharges from point sources preempts

common law claims that would interfere with the

federal effluent standards. Here, Respondents do

not seek to modify federal standards, and likewise

the CWA does not affect Respondents’ right to

punitive damages.

4

ARGUMENT

I. The Clean Water Act Does Not Displace Federal

Maritime Common Law Remedies.

A. Neither the Clean Water Act, Nor Its

Legislative History, Indicates Congressional

Intent to Abrogate Punitive Damages.

Congress began the pursuit of environmental

protection of our Nation’s waterways with the

passage of the Federal Water Pollution Control Act

(FWPCA) in 1948. 62 Stat. 1155. Despite later

efforts to amend the FWPCA to strengthen its

protections and enforcement measures, the

legislation proved inadequate in this regard as

evidenced by the Cuyahoga River fire of 1969. In

response, early in the 92nd Congress, the Senate and

House Public Works Committees conducted a

number of hearings to address the nation’s

continuing water quality problems. These efforts

culminated in the Federal Water Pollution Control

Act Amendments of 1972, 86 Stat. 817, as amended

33 U. S. C. §§1251 et seq., commonly known as the

Clean Water Act (CWA). The CWA was heralded as

the nation’s first comprehensive water pollution

legislation, building upon existing law designed to

reduce pollution before it began, while “restor[ing]

and maintain[ing] the chemical, physical, and

biological integrity of the nation’s waters.” 33 U.S.C.

§ 1251(a). The CWA was one of the linchpins of the

“Environmental Decade,” along with the creation of

the Environmental Protection Agency and the Clean

Air Act amendments. Susan J. Buck,

5

UNDERSTANDING ENVIRONMENTAL ADMINISTRATION

AND LAW 26-27 (3d ed. 2006). The general theme of

this era’s environmental statutes rarely allowed

industry a means of escape from any form of

liability.

Despite the importance of reforming our

Nation’s federal water pollution laws, passage of the

CWA was by no means ensured. Destined to be

vetoed by President Nixon, an environmental statute

as far reaching as the CWA required a supermajority

in Congress. This was a task of enormous

significance, especially for Alaskans. Within its

rivers, lakes, streams, wetlands, and coastal waters,

the State of Alaska possesses a greater overall

amount of water than any other state in the Union.

The CWA had the potential to impact Alaska and

Alaska’s people more than any other state and its

citizens. Consequently, members of Alaska’s

Congressional Delegation worked closely with their

colleagues throughout the legislative process.

The notion that the CWA altered or replaced

common law concepts regarding punitive damages,

as alleged by Petitioners in this case, is not

supported by the record. The statute itself, as well

as the committee reports, evidence this. The simple

truth is there is no record of debate on the CWA

indicating the intent to cancel the rights of injured

parties to seek punitive damages.

Unlike the original 1948 legislation that

provided no federally required goals, objectives,

limits, or even guidelines, the CWA as we know it

6

today has the stated goal of maintaining and

restoring our Nation’s waters, and aspires to achieve

fishable and swimmable status through discharge

regulation and assurance of available federal

cleanup funds. 33 U.S.C. §§ 1251 et seq. Since 1972,

section 1321 of the CWA has operated as the chief

mechanism for establishing liability for oil spill

damages. See 33 U.S.C. § 1321. While this section

carries with it certain maritime law implications, at

no point does Congress indicate any preemption of

maritime or common law remedies, including

punitive damages, for oil spills.

Legislation that implicates the common law or

general maritime law should be read with a

presumption that nothing therein should alter long-

established and familiar principles, except when a

contrary statutory intent is evident. Isbrandtsen Co. v. Johnson, 343 U.S. 779, 783 (1952). For a statute

to abrogate a common-law principle, the statute

must “speak directly” to the question that the

common law addresses. U.S. v. Tex., 507 U.S. 529,

534 (1993) (citing Mobil Oil Corp. v. Higginbotham,

436 U.S. 618, 625 (1978); Milwaukee v. Ill., 451 U.S.

304, 315 (1981)). Particularly in the area of redress,

Congress is presumed to be aware of and not

overriding existing rights to damages relative to the

legislation it enacts. See Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 184-85 (1988).

To avoid the appearance of conflicting liability

regimes, Congress specified in the CWA that vessel

owners and operators would retain all obligations,

under any provision of law, to persons suffering

7

damages from oil spills or removals. 33 U.S.C. §

1321(o)(1). Referring specifically to this provision,

the Senate Public Works Committee noted that the

modifications to existing law merely “add liability for

the clean-up of any hazardous material discharged.”

S. REP. NO. 92-414, at 65 (1971) (emphasis added).

The added cleanup liability established a

contingency fund, the existence of which expressly

does not affect a discharger’s liability for all

resultant damages. H.R. REP. NO. 95-139, at 26

(1977).

Likewise, the CWA’s citizen suit provisions

plainly read that the statute does not restrict any

common law rights or any other relief. 33 U.S.C. §

1365(e). The Senate Committee Report expressly

reinforced this principle:

It should be noted, however, that the

section would specifically preserve any

rights or remedies under any other law.

Thus, if damages could be shown, other

remedies would remain available.

Compliance with requirements under

this Act would not be a defense to a

common law action for pollution

damages.

S. REP. NO. 92-414, at 81 (1971).

The plain reading of the CWA is consistent

with the legislative history. Furthermore, at no

point in the statute, or in the supporting documents

or testimony, are punitive damages so much as given

8

mention, much less eliminated as a remedy.

Congress should not be assumed to have displaced

punitive damages in favor of any CWA provisions.

Congress preserved common law damages,

concurrent with and foundational to the additional

statutory protections.

B. The Clean Water Act Does Not Bifurcate

Remedies for Oil Spills.

Congress undertook the framing of the CWA’s

oil spill provisions with the understanding that

courts would apply the new statute in concert with

existing maritime and common law remedies. “It

has always been the duty of the common-law court to

perceive the impact of major legislative innovations

and to interweave the new legislative policies with

the inherited body of common-law principles . . . .”

Moragne v. States Marine Lines, Inc., 398 U.S. 375,

392 (1970).

Admiralty courts may, in some circumstances,

adopt and enforce rights based on common law and

state statutes, and courts characteristically do so in

a supplementary nature to extend liability where

maritime law is inadequate.2 There is well-

documented controversy over exactly when punitive

damages are available in claims implicating several

areas of maritime, statutory, and common law. See

2 For an extended historical discussion of the relationship

between maritime and common law, see generally Theodore F.

Stevens, Erie R.R. v. Tompkins and the Uniform General Maritime Law, 64 HARV. L. REV. 246 (1950).

9

McMonagle v. Northeast Women’s Center, Inc., 493

U.S. 901, 902 (1989) (White, J., dissenting). In spite

of that controversy, punitive damages have been

recognized as generally available since the beginning

of American admiralty litigation for reckless or

wanton conduct. See Amiable Nancy, 16 U.S. 546,

558 (1818) (indicating the general availability of

punitive damages in maritime law for cases of “gross

and w[a]nton outrage”). Subsequently, courts have

seen fit to award punitive damages in maritime

property damage cases both under general federal

common law and maritime law, indisputably

recognizing the availability of such awards in

appropriate circumstances. David W. Robertson,

Punitive Damages in American Maritime Law, 28 J.

Mar. L. & Com. 73, 160 (1997).

The Court has now specified—and limited—

areas where federal pollution legislation preempts

certain torts. In Middlesex County, a private

nuisance action for the intentional, repeated

discharge of pollutants (mainly sewage from

stationary sources subject to permitting

requirements), was preempted by the FWPCA.

Middlesex County Sewerage Auth. v. Nat’l Sea Clammers Ass’n, 453 U.S. 1 (1981) (citing 33 U.S.C.

§§ 1251 et seq.) In that case, however, the Act’s

elaborate enforcement mechanism directly addressed

the underlying problematic activities. Id. at 13-14.

Essentially dealing with scheduled effluent

discharge, Middlesex County amounted to a

nuisance suit where the Court determined

congressional indicia within FWPCA to be adequate

in providing remedies for such nuisance. Id. at 15.

10

Here, Respondents’ punitive damages suit is

distinguishable due to its contrasting attributes of a

reckless, single incident discharge of oil from a

vessel in transit, for which there are no “effluent

standards” or permits under the CWA.

Furthermore, it would be a gross understatement to

term the EXXON VALDEZ spill a mere nuisance. As

evidenced by the record, Exxon’s action in placing a

known, relapsed alcoholic at the helm of a

supertanker carrying fifty-three million gallons of

crude oil constitutes the willful and wanton

misconduct recognized by this Court in Amiable Nancy, 16 U.S. 546, and its progeny as permitting

the award of punitive damages.

Even under a nuisance claim reading, the

Court has more recently held that the CWA does not

preempt state common law nuisance claims, with the

rare exception of those suits that could require

standards of effluent control that are incompatible

with the federal standards. Int’l Paper Co. v. Ouellette, 479 U.S. 481, 491-97 (1987). In

International Paper, property owners sued a paper

mill operator under Vermont state law for creating

the sustained nuisance of pollutants discharged into

Lake Champlain, for remedies including $100

million in punitive damages. Id. at 484. The Court

declined to bifurcate CWA relief and separate state

punitive damages from state compensatory damages,

finding “no suggestion of such a distinction in either

the Act or the legislative history”. Id. at 499 n.19.

The Court held that unless Congress meant to “split”

a particular remedy for preemption purposes, the

full availability of any cause of action under state

11

law is assumed. 479 U.S. at 499 n.19 (citing

Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255

(1984)). This Court in International Paper agreed

with Congress that the full scope of tort remedies,

including punitive damages, are preserved where, as

in this case, the common law action is not in conflict

with the statutory regime. Id.

In the present case, Respondents did not

pursue Exxon for a violation of the CWA. Rather,

they brought this tort action against Exxon for its

demonstrably reckless and wanton conduct in

spilling over eleven million gallons of crude oil into

Alaska’s pristine waters and directly impacting the

lives and livelihoods of Alaskans. The CWA’s

standards have no effect on the Respondents’ right to

recovery. Here, the CWA expressly allows for full

and concurrent recovery of punitive damages.

CONCLUSION

This Court should affirm the judgment of the

court of appeals.

Theodore F. Stevens

Counsel of Record 522 Hart Senate Office Building

Washington D.C., 20510

(202) 224-3004

No. 07-219 ================================================================

In The Supreme Court of the United States

--------------------------------- ♦ ---------------------------------

EXXON SHIPPING COMPANY, et al.,

Petitioners, v.

GRANT BAKER, et al.,

Respondents. --------------------------------- ♦ ---------------------------------

On Writ Of Certiorari To The United States Court Of Appeals For The Ninth Circuit

--------------------------------- ♦ --------------------------------- BRIEF OF AMICI CURIAE NATIONAL CONGRESS OF

AMERICAN INDIANS, ALASKA FEDERATION OF NATIVES, ALASKA INTER-TRIBAL COUNCIL,

ASSOCIATION OF VILLAGE COUNCIL PRESIDENTS, RURAL ALASKA COMMUNITY ACTION PROGRAM,

NORTH SLOPE BOROUGH, INDIGENOUS PEOPLES COUNCIL FOR MARINE MAMMALS, AND ADDITIONAL ALASKA NATIVE ORGANIZATIONS, CORPORATIONS

AND TRIBES IN SUPPORT OF RESPONDENTS (Full listing of Amici Curiae in Appendix)

--------------------------------- ♦ --------------------------------- RIYAZ KANJI KANJI AND KATZEN, P.L.L.C. 101 North Main St., Suite 555 Ann Arbor, MI 48104 (734) 769-5400

JOHN H. DOSSETT, General Counsel NATIONAL CONGRESS OF AMERICAN INDIANS 1301 Connecticut Ave., NW, 2nd Floor Washington, DC 20036 (503) 248-0783

DAVID S. CASE, P.C. Counsel of Record MATTHEW MEAD LANDYE BENNETT BLUMSTEIN LLP701 West 8th Ave., Suite 1200 Anchorage, AK 99501 (907) 276-5152

RICHARD A. GUEST, Staff Attorney NATIVE AMERICAN RIGHTS FUND1712 N. St., NW Washington, DC 20036-2973 (202) 785-4166

CAROL H. DANIEL ALASKA FEDERATION OF NATIVES, INC. 1577 C St., Suite 300 Anchorage, AK 99501 (907) 274-3611

Counsel for Amici ================================================================

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964 OR CALL COLLECT (402) 342-2831

i

TABLE OF CONTENTS

Page

INTEREST OF AMICI......................................... 1

STATEMENT OF THE CASE.............................. 1

SUMMARY OF ARGUMENT .............................. 2

ARGUMENT........................................................ 4

I. THE EXXON VALDEZ OIL SPILL WAS A TECHNOLOGICAL DISASTER THAT WREAKED INCALCULABLE DAMAGE AND LOSS ON THE ALUTIIQ SUBSIS-TENCE COMMUNITIES IN ITS PATH.... 4

A. The Alutiiq Subsistence Communities... 4

B. The Scope and Significance of Alutiiq Subsistence .......................................... 7

C. The Effect of the Oil Spill on Alutiiq Subsistence .......................................... 12

D. The Effect of the Oil Spill on the Alu-tiiq People............................................ 26

CONCLUSION..................................................... 33

FIG. 1 Pacific Eskimo Villages .................................... 6

TABLE 1 Injured Resources and Services ....................... 21

APPENDIX

Description of Amici.........................................App. 1

ii


Page

CASES

Alaska Native Class v. Exxon Corp., 104 F.3d 1196 (9th Cir. 1997)...................................................2

In re Exxon Valdez, 296 F.Supp.2d 1071 (D. Alaska 2004)........................................................4, 30

Robins Dry Dock & Repair v. Flint, 275 U.S. 303 (1927) ..............................................................1, 2

Union Oil v. Oppen, 501 F.2d 558 (9th Cir. 1974) ..........................................................................2

STATUTES

16 U.S.C. § 1371(b) .....................................................11

16 U.S.C. § 3113............................................................8

25 U.S.C. §§ 479a, 479a-1.............................................7

ALASKA STATUTES § 16.05.094 .......................................8

ALASKA STATUTES § 16.05.940(33).................................8

OTHER AUTHORITIES

72 Fed. Reg. 13648, 13651-13652 (March 22, 2007) .........7

Berger, T., Village Journey, Hill and Wang, New York (1985) ........................................................7

Cohen’s Handbook of Federal Indian Law, LEXIS-NEXIS Matthew Bender, NJ (2005) ............7

Davidson, A., In the Wake of the Exxon Valdez, Serria Club Books, San Francisco (1990) ....13, 31, 32

iii

TABLE OF AUTHORITIES – Continued

Page

Exxon Valdez Oil Spill Trustee Council, Exxon Valdez Exxon Restoration Plan – Update on Injured Resources 2006, November 2006 http://www.evostc.state.ak.us/Policies/restplan. htm (2008) ...................................................20, 24, 25

Fall, James A., Exxon Valdez Oil Spill Restora-tion Project Final Report – Update of the Status of Subsistence Uses in Exxon Valdez Oil Spill Communities, Alaska Department of Fish and Game – Division of Subsistence” (August 2006) ..................................................passim

Fall, James, Affidavit, Paragraph 17, Plain-tiff ’s Opposition to Motion for Summary Judgment on Economic Damages May 9, 1994, Docket #A89-095-CV (HRH)...........................9

Gill, D.A.P., and Picou, J.S., The Day the Water Died; Cultural Impacts of the Exxon Valdez Oil Spill, in the Exxon Valdez Disaster; Read-ings on a Modern Social Problem (J. Steven Picou, ed., 1997) ................................................16, 17

Impact Assessment, Inc., Exxon Valdez Oil Spill, Clean-up and Litigation: a Collection of So-cial-Impacts Information and Analysis, Final Report Volume II: Final Analysis of Social Factor by Social Factor Basis, U.S. Depart-ment of the Interior Minerals Management Service, Environmental Studies Section, An-chorage, Alaska (August 2001).............8, 9, 26, 29, 30

iv


Page

Impact Assessment, Inc., Exxon Valdez Oil Spill, Clean-up and Litigation: a Collection of Social-Impacts Information and Analysis, Final Report Volume I: Final Analysis of Social Factor by Social Factor Basis, U.S. Depart-ment of the Interior Minerals Management Service, Environmental Studies Section, An-chorage, Alaska (August 2001) .........................17, 28

U.S. Census Bureau – American Indian and Alaska Native Area, and Alaska Native Re-gional Corporation; GCT-P16; Alaska Native Village Statistical Area, Total Population, Data Set: Census 2000 Summary File 4 (SF 4) Sample Data..........................................................3

Palinkas, L.A., Community Patterns of Psychi-atric Disorders After the Exxon Valdez Oil Spill, Am. J. Psychiatry 1993; 150:1517-1523 .......28

Smithsonian, 5 Handbook of North American Indians, Sturtevand, ed., Smithsonian Insti-tution (1984)......................................................5, 6, 8

Thorne, R.E., & Thomas, G., Herring and the “Exxon Valdez” Oil Spill: an Investigation into Historical Data Conflicts, ICES Journal of Marine Science, 65:44-50 (2008)...................24, 25

Webster’s Third New International Dictionary, Unabridged, Merriam-Webster, 2002. http:// unabridged.merriam-webster.com (24 Jan. 2008) ..........................................................................7

v


Page

Wolfe, R., and Ellanna, L., Resource Use and Socioeconomic Systems: Case Studies of Fish-ing and Hunting in Alaskan Communities, ADF&G Division of Subsistence (March 1983) ........................................................................10

1

INTEREST OF AMICI

Amici National Congress of American Indians, Alaska Federation of Natives, Alaska Inter-Tribal Council, Rural Alaska Community Action Program, North Slope Borough, Association of Village Council Presidents, Indigenous Peoples Council for Marine Mammals, and several other Alaska Native Tribes, Corporations and Marine Mammal Commissions submit this brief to describe the centuries-old subsis-tence way of life that prevails across rural Alaska and to highlight the enormous impact the Exxon Valdez disaster had on that way of life. Amici support the punitive damages recovery below in light of the deep but uncompensated injury to the subsistence way of life suffered by thousands of Alaska Native people. The Amici are described in greater detail in the attached Appendix.1

--------------------------------- ♦ ---------------------------------

STATEMENT OF THE CASE

This Court has held that in maritime settings a party must suffer direct physical harm in order to recover for economic losses arising out of a maritime tort. Robins Dry Dock & Repair v. Flint, 275 U.S. 303

1 No counsel for a party authored this brief in whole or in part, and no counsel or party made a monetary contribution intended to fund the preparation or submission of this brief. No person other than amici curiae, their members, or their counsel made a monetary contribution to its preparation or submission. The parties have consented to the filing of this brief.

2

(1927). The appellate courts have recognized a limited exception to the Robins Dry Dock requirements for commercial fisherman who may recover economic damages without a showing of actual physical harm. Union Oil v. Oppen, 501 F.2d 558 (9th Cir. 1974). The lower courts concluded in this case that the Alaska Native Class fit within the Oppen exception because:

[W]here commercial fisherman survive by catching an aquatic resource and selling it, native subsistence harvesters survive by catching an aquatic resource and eating it.

Order 222 J. A. at 7. Alaska Native Class v. Exxon Corp., 104 F.3d 1196 (9th Cir. 1997).

Under the Oppen exception, the Alaska Native Class was able to obtain compensation only for the commodity value of the fish and game that its mem-bers would have taken absent the spill. The class members did not recover any compensation for the dire consequences of the oil spill on their cultures, communities and unique way of life. This brief de-scribes those consequences in detail.

--------------------------------- ♦ ---------------------------------

SUMMARY OF ARGUMENT

Some 69,000 Alaska Natives live in more than 200 villages along the remote and sinuous coasts of

3

Alaska’s oceans and rivers.2 They are the largest intact population of traditional, aboriginal cultures in the United States and perhaps the world. Despite modern changes, they live largely off the sea and the land in still-unique cultures whose world view attrib-utes an animistic spirit to all life. Their communities are literally knit together by a reverence for the lives of the animals that sustain them and the reciprocal responsibilities, borne out of time immemorial, to share the lives of animals taken or harvested with their extended families and others in the village. These villages are federally recognized tribes whose subsistence rights are supported by long-standing federal policies in Alaska. Those subsistence rights remain as important today to the village members as the air they breathe.

Petitioners repeatedly assert that the punitive damages class members were fully compensated for the injuries they suffered as a result of the wholly avoidable wreck of the Exxon Valdez. Pet. Br. at 17, 41, 47 et seq. This is a remarkably shallow, and callous, claim. Based on its intimate familiarity with the facts, the district court found that: “The huge oil spill obviously caused harm beyond the purely economic . . . [including] a chronic pattern of economic loss, social conflict, cultural disruption and psychological stress.” Pet.

2 U.S. Census Bureau – American Indian and Alaska Native Area, and Alaska Native Regional Corporation; GCT-P16; Alaska Native Village Statistical Area, Total Population, Data Set: Census 2000 Summary File 4 (SF 4) Sample Data.

4

App. 150a-151a, In re Exxon Valdez, 296 F.Supp.2d 1071 at 1094 (D. Alaska 2004). The Alaska Native Class has not been compensated for any of that loss.

This brief describes the “non-economic” (but devas-tating) injuries suffered by Alaska’s Native subsistence communities as a result of the Exxon Valdez oil spill. Properly acknowledged, those injuries underscore the egregiousness of Exxon’s actions and the corresponding appropriateness of the punitive damages award in this case. They further underscore the need for deterrence embodied in the award. Another marine disaster like the Exxon Valdez anywhere on Alaska’s vast coast will cause further devastating, non-compensable damage to Alaska’s unique Native subsistence communities. No award can fully reflect the searing nature of the harm that Petitioners have inflicted on the Alaska Natives’ subsistence way of life, but this award is certainly an appropriate step in that direction.

--------------------------------- ♦ ---------------------------------

ARGUMENT

I. THE EXXON VALDEZ OIL SPILL WAS A TECHNOLOGICAL DISASTER THAT WREAKED INCALCULABLE DAMAGE AND LOSS ON THE ALUTIIQ SUBSIS-TENCE COMMUNITIES IN ITS PATH.

A. The Alutiiq Subsistence Communities

Anthropologists document some 58 historic, Alutiiq (formally called “Pacific Eskimo”) villages that at the end of the 19th century clung to Kodiak Island

5

and Alaska’s North Pacific Coast.3 By 1980, following an all-too-familiar history of disease and exploitation, 15 occupied villages remained, stretching from Tatitlek located in Prince William Sound just outside the Port of Valdez to Ivanof Bay, some 600 miles to the southwest on the Alaska Peninsula.4 The Alutiiq are the “southernmost village Eskimo” and are lo-cated in four distinct geographic areas, running northeast to southwest from Prince William Sound (Tatitlek and Chenega Bay), to the southern Kenai Peninsula (Port Graham and English Bay),5 to the Kodiak Island archipelago, known today as the “Koniag” region (Ouzinkie, Port Lions, Larsen Bay, Old Harbor, Karluk, Akhiok) and finally the western Alaska Peninsula villages (Chignik, Chignik Lagoon, Chignik Lake, Perryville and Ivanof Bay).6 All 15 of

3 Smithsonian, 5 Handbook of North American Indians, Sturtevand, ed., Smithsonian Institution (1984) at 198-199. 4 Id. See Map at Figure 1 enlarged and adapted from 5 Handbook of North American Indians at 198. 5 Id. English Bay is now called by its traditional Alutiiq name “Nanwalek.” Chenega is shown at Figure 1 in its old location and is now located a little further south at Chenega Bay. The 1964, Good Friday earthquake and Tsunami destroyed the original Chenega village site. The village was reconstructed at Chenga Bay in 1984, just five years prior to the Good Friday grounding of the Exxon Valdez. 6 Natives from all of the villages may also be found in the larger south central Alaska towns of Anchorage, Valdez, Cor-dova, Seward and Kodiak City. 5 Handbook of North American Indians at 199.

6

Fig. 1. Pacific Eskimo villages.

Source: 5 Handbook on North American Indians at 198 (1984).

7

these villages are governed in some respect by tribal governments duly recognized by the United States Department of the Interior.7

B. The Scope and Significance of Alutiiq

Subsistence

Alutiiq communities and culture are centered on the cluster of activities collectively called “subsistence.” To many people, “subsistence” connotes the bare eking out of an existence.8 To the Alutiiq and all other Alaska Natives living off the water and land, “subsis-tence” is an entire way of life, a rich way of living. It defines not only an economy, but also the identity of the people in the community and their relationships to one another.9

The Alaska Department of Fish and Game (“ADF&G”) has a “Division of Subsistence” created by

7 See 72 Fed. Reg. 13648, 13651-13652 (March 22, 2007), listing tribes as required under the Federally Recognized Tribal List Act of 1994, 25 U.S.C. §§ 479a, 479a-1. 8 “Subsist” 1 a: to have existence : be or remain alive. 2 archaic: to exist in a particular way or condition or have a particu-lar form. 3: to be maintained with food and clothing : have the necessities of life. Webster’s Third New International Dictionary, Unabridged, Merriam-Webster (2002). http://unabridged.merriam-webster.com (January 24, 2008). 9 See generally T. Berger, Village Journey, Hill and Wang, New York (1985) at 48-72 (“Subsistence More Then Survival, A Way of Life”). See also Cohen’s Handbook of Federal Indian Law, LEXIS-NEXIS Matthew Bender, NJ (2005), at § 4.07[3][c] “Native Hunting and Fishing Rights.”

8

statute in 1978.10 Its broad mandate is to compile existing data and to gather information on all aspects of the role of subsistence in the life of the state’s residents. Both Title VIII of the Alaska National Interest Lands Conservation Act (“ANILCA”) and Alaska law define subsistence in substantially the same terms as:

the customary and traditional uses by rural Alaska residents of wild, renewable re-sources for direct personal or family con-sumption as food, shelter, fuel, clothing, tools, or transportation; for the making and selling of handicrafts articles out of nonedi-ble byproducts of fish and wildlife resources taken for personal or family consumption; for barter, or sharing for personal or family con-sumption; and for customary trade.

16 U.S.C. § 3113; ALASKA STATUTES § 16.05.940(33).

Beyond these statutory definitions lie the realities of subsistence for these 15 Alutiiq villages. The first is their isolation. They are not connected by roads to cities and grocery stores and of necessity depend on the sea and land for their food.11 Prior to the wreck of the Exxon Valdez, it was well established that virtually all of the residents of the 15 Native communities affected by the spill participated in extensive subsistence activities.12

10 ALASKA STATUTES 16.05.094. 11 5 Handbook of North American Indians at 198. 12 Impact Assessment, Inc., Exxon Valdez Oil Spill, Clean-up and Litigation: a Collection of Social-Impacts Information

(Continued on following page)

9

Unlike sport hunting and fishing familiar to mainstream Americans, subsistence is not an indi-vidual activity. Nor is it a question of “fair chase” or “fun,” or even of providing food to just one’s own family. Rather “sharing” is the most common word used by Natives to describe their participation in subsistence. Hence, it is typical of the Native subsis-tence community that:

Subsistence harvests in these communities are characterized by intricate and extensive kinship-based methods of production, distri-bution and sharing. While the vast majority of households participate in subsistence har-vest, the majority of the harvest is accom-plished by a relatively small group of very productive households. Fish and game prod-ucts are distributed and exchanged by these “super households” community-wide, supply-ing subsistence food to the elderly and others unable to provide for themselves.13

The word “sharing” is not really adequate to the task of describing what this means. Dr. Robert Wolfe,

and Analysis, Final Report Volume II: Final Analysis of Social Factor by Social Factor Basis, U.S. Department of the Interior Minerals Management Service, Environmental Studies Section, Anchorage, Alaska (August 2001) at Section 4.3. (Hereinafter “MMS, Vol. II”). 13 James Fall Affidavit, Paragraph 19, Plaintiff ’s Opposi-tion to Motion for Summary Judgment on Economic Damages May 9, 1994, Docket #A89-095-CV (HRH).

10

then the Director of Research for the ADF&G Subsis-tence Division, explained it this way:

Subsistence uses appear to be elements of a socio-economic system that is larger than the individual participant. The cases show that in subsistence-based economic systems fishing and hunting commonly occur within coopera-tive and extended kinship groups linking sev-eral households. Fish and game products are distributed and exchanged along community-wide, non-market networks. The community is dependant socially and economically on the productive activities in the non-market fishing and hunting sector. These traditional and customary modes of production, distri-bution, and exchange provide the social and economic integration of entire communities.14

The human reality behind such academic phases as “subsistence-based economic systems” and “co-operative and extended kinship groups linking sev-eral households” is that whole households in extended families (“super households” in Dr. Fall’s terms)15 are

14 R. Wolfe and L. Ellanna, Resource Use and Socioeconomic Systems: Case Studies of Fishing and Hunting in Alaskan Communities, ADF&G Division of Subsistence (March 1983) at 3-4; Exhibit F. Plaintiff ’s Opposition to Motion for Summary Judgment on Economic Damages May 9, 1994, Docket #A89-095-CV (HRH). 15 James A. Fall, Exxon Valdez Oil Spill Restoration Project Final Report – Update of the Status of Subsistence Uses in Exxon Valdez Oil Spill Communities, Alaska Department of Fish and


11

working together to provide for themselves and the entire community. These collective efforts are a source of individual identity as well as of community prosperity. That is the real significance of the Alaska Native, and specifically here the Alutiiq, subsistence culture.16

The composition of subsistence resource harvests varies by region, but the subsistence way of life in coastal villages universally depends on the health of the water and the resources found therein. In gen-eral, Alutiiq communities rely on salmon, halibut, cod, rockfish, herring, herring roe, shrimp, octopus, clams, mussels, harbor seals, sea lions, deer, and moose. In Chenega Bay, prior to the spill (1985/86), the subsistence harvest consisted of 21.1% salmon, 16.6% other fish, 37.5% marine mammals, 1.9%

Game – Division of Subsistence (August 2006) at Chapter IV – “Tatitlek” (hereinafter, “Fall 2006”). 16 Congress has long recognized the importance of Alaska Native subsistence rights. In a variety of statutes it has ac-corded significant protection to those rights. As one example, the Marine Mammal Protection Act (“MMPA”) generally prohibits the taking of marine mammals. Under the Act, however, unless a marine mammal species or stock is listed as endangered or threatened under the Endangered Species Act, Alaska Natives enjoy the exclusive right to the unregulated taking of these mammals for subsistence purposes, including the manufacture, trade and barter of traditional clothing, arts and crafts, and food. 16 U.S.C. § 1371(b).

12

marine invertebrates, 20.9% land mammals, 1.3% wild plants, and 0.8% birds and eggs.17

C. The Effect of the Oil Spill on Alutiiq

Subsistence

The Exxon Valdez spill wreaked havoc on the subsistence culture of the Alutiiq, triggering a severe decline in the availability of subsistence resources that persists to this day. After first explaining the delight of the typical traditional spring harvest, Walter Meganack, Sr., the Chief of the Village of Port Graham at the time of the spill, described the damage in poignant terms:

When the days get longer, we get ready. Boots and boats and nets and gear are pre-pared for the fishing time. The winter beaches are not lonely anymore, because our children and grownups visit the beaches in the springtime and gather the abundance of the sea: the shellfish, the snails, the chitons. When the first salmon is caught, our whole village is excited. It is an annual ritual of mouth-watering delight. When our bellies are filled with the fresh new life, then we put up the food for the winter. We dry and smoke and can hundreds of fish to feed each family.

But when the Exxon Valdez grounded on Good Friday 1989:

17 Fall 2006 – Chapter II: “Chenega Bay” at 21-41.

13

It was the early springtime. No fish yet. No snails yet. But the signs were with us. The green was starting. Some birds were flying and singing. The excitement of the season had just begun. And then we heard the news. Oil in the water – lots of oil, killing lots of water. It’s too shocking to understand. Never had we thought it possible for the water to die. But it is true. We walk our beaches. And the snails and the barnacles and the chitons are falling off the rocks. Dead. Dead water.

We caught our first fish – the annual first fish, the traditional delight of all – but it got sent to the state to be tested for oil. No first fish this year. We walk our beaches, but instead of gathering life, we gather death. Dead birds. Dead otters. Dead seaweed.18

In the aftermath of the devastation, the Alutiiq communities suffered enormous declines in their subsistence harvesting. For example, the village of Tatitlek harvested 644 pounds of subsistence re-sources per capita in 1988, but saw harvests drop by two-thirds to 215 pounds in 1989 and to 153 pounds in 1990. There was an increase to 346 pounds in 1991

18 Chief Walter Meganack, Sr., quoted in A. Davidson, In the Wake of the Exxon Valdez (1990) at 288-289 (hereinafter “David-son”). See photos of the dead on following pages.

14

Alaska. Valdez. Volunteers try to save oil coated birds (dead Loon) following the Exxon Valdez oil spill. Photographed at one of the many beaches of Prince William Sound. © (April) 1989 Ken Graham

15

Casualty – A dead sea otter found by cleanup workers in 1989. Photo downloaded from the Exxon Valdez Oil Spill Trustee Council Website – http://www.evostc.state. ak.us/Universal/Images/GalleryImages/spill/downloadable %20.jpgs/WLO_015.jpg (2008)

16

but harvests receded to 270 pounds in 1993 with the crash of the herring fishery.19

The decline in subsistence resources of Tatitlek was matched elsewhere. In Chenega Bay, for exam-ple, harvests of subsistence resources dropped by more than half from 374 pounds per person in 1985 (the year the village was last surveyed prior to the spill) to 148 pounds in 1989 and to 139 pounds in 1990. There was an increase in 1991 and 1992, but, as with Tatitlek, harvests fell again in 1993.20 Cor-dova also experienced a steady decline in the harvest of subsistence resources, with a drop from 233.8 pounds per person in 1988 to 189.2 in 1991, 163.5 in 1992, and 127.8 in 1993.21 Data from a sample of Alaska Natives in Cordova revealed that in 1991 over half of all respondents could no longer obtain subsis-tence foods they had previously consumed.22 Almost

19 The herring run in 1993 was about half of what it was expected to be, and village residents observed abnormal behav-ior and physical deformities in the herring that spurred even greater fears about the safety of food and the health of the ecosystem. D.A.P. Gill and J.S. Picou, The Day the Water Died; Cultural Impacts of the Exxon Valdez Oil Spill, in the Exxon Valdez Disaster; Readings on a Modern Social Problem (J. Steven Picou, ed., 1997), at 176, available at: http://www.jomiller. com/exxonvaldez/articles/picougill1.html (hereinafter “Gill and Picou”). The concern was particularly acute because herring is a keystone species that affects the health of many other resource populations. Fall 2006 at 385. 20 Gill and Picou at 176. 21 Fall 2006, at 61. 22 Gill and Picou at 178.

17

75 percent reported engaging in fewer subsistence pursuits than they had prior to the oil spill.23

Further south, the Alutiiq communities on Ko-diak Island likewise endured sharp declines in the harvest of subsistence resources from the sea. The oil reached Kodiak Island about 7 weeks after the spill, and the Natives of Larsen Bay struggled vainly to save their shellfish beaches with kitchen utensils and paper towels, all they had available for the purpose.24 In Ouzinkie, salmon harvests plummeted from 1986 levels of 192.7 pounds per person to 29.4 in 1989, 75.5 in 1990-91, and 88.5 in 1991-92. Marine mammal consumption dropped from 30.0 pounds per person in 1986 to 8.6 in 1989-90, 10.4 in 1990-91 and 6.9 in 1991-92.25 Ouzinkie’s 1989 overall subsistence harvest was 76.6% less than its average in previous study years.26 Karluk saw marine mammal harvests drop 78% from 25.4 pounds per person in 1986 to 5.6

23 Id. 24 See photos of Larsen Bay “clean-up” on following pages. 25 Fall 2006 at 245. 26 Impact Assessment, Inc., Exxon Valdez Oil Spill, Clean-up and Litigation: a Collection of Social-Impacts Information and Analysis, Final Report Volume I: Final Analysis of Social Factor by Social Factor Basis, U.S. Department of the Interior Minerals Management Service, Environmental Studies Section, Anchorage, Alaska (August 2001) at Section 3.2.1.6. (Hereinafter “MMS, Vol. I”).

18

May 14, 1989. On Mother’s Day the villagers of Larsen Bay tried to clean up the crude oil that had washed up on their shellfish beaches. ©1989 Natalie Fobes, www.fobesphoto.com

19

Villagers of Larsen Bay used spoons, paper towels and shovels in an attempt to remove the oil from their shellfish beaches. ©1989 Natalie Fobes, www. fobesphoto.com

20

in 1989, 5.3 in 1990, and to a mere 0.9 pounds in 1991.27

Nearly two decades later, the damage persists. While some subsistence resources have shown signs of recovery, the overall availability and safety of subsistence resources for the Alutiiq still falls far short of pre-wreck levels. The reports of the Exxon Valdez Oil Spill Trustee Council (“EVOS Council” or “Trustee Council”) confirm this fact in considerable detail. The Trustee Council, which is a Division of Alaska’s Department of Fish and Game, consists of three state and three federal trustees (or their desig-nees). It is responsible for monitoring recovery from the spill, using funds from the state and federal civil settlement, and is advised by members of the public and the scientific community. Beginning in 1994, the EVOS Council adopted an official “List” of animal resources and human services injured by the spill to monitor as part of its Restoration Plan.28

27 Fall 2006 at 170. 28 Exxon Valdez Oil Spill Trustee Council, Exxon Valdez Exxon Restoration Plan – Update on Injured Resources 2006 (November 2006), website at http://www.evostc.state.ak.us/Policies/ restplan.htm (2008) (hereinafter “Trustee Council 2006”). Although the fish and wildlife resources that appear on the List experi-enced chronic injury from the spill, not every species that suffered some degree of injury was included. For example, carcasses of about 90 different species of oiled birds were recovered in 1989, but only 10 species of birds were included on the List.

23

In 1996, the bald eagle was the only species that the Trustee Council deemed to have “recovered” from the spill. In March 1999, species that it classified as “not recovering” included killer whales, harbor seals, harlequin ducks, the common loon, cormorants, and pigeon guillemots. The only “recovered” species were bald eagles and river otters. In 2002, the Trustee Council deemed 6 species to have recovered from the effects of the oil spill; 14 species had not yet recov-ered; and the recovery of 5 species was considered unknown. By 2006, a full 17 years after the spill, the EVOS Council deemed only 9 species to have recov-ered. Eight species were still designated as recover-ing, but pigeon guillemots and herring are not recovering at all. The recovery of 5 species is still unknown. See EVOS Council Table 1, supra.

The Trustee Council has also studied the recov-ery of 4 “human services”: commercial fishing, passive use, recreation and tourism, and subsistence. In 2006, the Council did not find any of these “services” to have yet recovered – like many of the resources in the Sound, they are still suffering from the dreadful damage inflicted by the Valdez spill. See EVOS Coun-cil Table 1, supra.

The status of subsistence resources and activities in Prince William Sound and adjacent waters is well exemplified by the Pacific herring. As noted above, herring are a critical ecological and commercial species in the Sound ecosystem. “They are central to the ma-rine food web, providing food to marine mammals, birds, invertebrates and other fish. Herring are also

24

commercially fished for food, bait, sac-roe and spawn on kelp.”29 Prior to the spill, herring populations in the Sound were increasing as recorded by record harvests in the late 1980s.30 However, in 1993, a near-total collapse of the fishery occurred, as herring born in 1989 proved to be one of the smallest cohorts on record to return as spawning adults.

Recent data suggests that the oil spill was the primary catalyst for the collapse of the Pacific herring in Prince William Sound and that the oil spill had an even broader and more profound impact than previ-ously realized.31 Researchers have concluded that the herring were “highly vulnerable” to surface toxins from the oil spill and that this likely led to the pre-mature hatching, low larval weights, reduced growth, and elevated morphological and genetic abnormalities observed in Prince William Sound in the years after 1989.32 The exposure to surface oil in herrings’ gills leading to mechanical suffocation could have caused an even greater number of fish to die than the effects of oil toxicity itself.33 The study also found a “notable similarity” between the pattern of sea lion decline and the herring disappearance between 1989-1994

29 Trustee Council 2006 at 25. 30 Id. 31 R. E. Thorne and G. Thomas, Herring and the “Exxon Valdez” Oil Spill: an Investigation into Historical Data Conflicts, ICES Journal of Marine Science, 65:44-50 (2008). 32 Id. at 48. 33 Id.

25

and a highly detrimental effect on many marine birds because of the herring decline.34 The herring popula-tion has never recovered. As a result, the herring fishery in the Sound has been closed for 11 of the 17 years since the spill, including every year since 1999. No signs of recovery have been observed.35

The spill severely injured many other subsistence resources, including clams, mussels, and various species of marine mammals, that continue to evidence significant ill effects today. As the Trustee Council concluded in November 2006: “For these reasons, subsistence continues to recover from the effects of the oil spill, but has not yet recovered.”36 A well-respected researcher concluded to similar effect in 2003:

In the Alaska coastal ecosystem, unexpected persistence of toxic subsurface oil and chronic exposures, even at sublethal levels, have continued to affect wildlife . . . Oil persisted beyond a decade in surprising amounts and in toxic forms, was sufficiently bioavailable to induce chronic biological ex-posures, and had long-term impacts at the population level.37

34 Id. 35 Trustee Council 2006 at 25. 36 Id. at 38. 37 Fall 2006 at 384, citing Peterson, Charles H., Stanley D. Rice, Jeffrey W. Short, Daniel Esler, James L. Bodkin, Brenda E. Ballachey, and David B. Irons. 2003. Long-Term Ecosystem


26

The science is clear: the entirely avoidable grounding of the Exxon Valdez wreaked massive havoc on Alutiiq subsistence from which the Alutiiq way of life still suffers nearly twenty years later.38

D. The Effect of the Oil Spill on the Alu-

tiiq People

The experts and the courts below all uniformly acknowledge that the wreck of the Exxon Valdez had long term, painful sociological consequences for the Alutiiq communities.39 Household surveys reflected a 48% increase in drinking problems, a 40% increase in drug problems and a 49% increase in domestic vio-lence for those highly exposed to the spill and rela-tively high numbers even for individuals who were

Response to the Exxon Valdez Oil Spill. Science 302:2082-2086. Peterson et al. (2003:2082). 38 See EVOS Council Table 1, noting that clams and other intertidal species are still recovering. See EVOS Photo “Linger-ing Oil,” infra. 39 This is, sadly, not uncommon in a technological disaster. The essential reality of a technological disaster is that it is human caused. It raises issues of blame and responsibility for what is often, as in this case, an entirely preventable event. As in the case of the Exxon Valdez, a technological disaster often causes a release of toxic substances and engenders debilitating sociological consequences. Social scientists identify 14 such consequences characteristic of technological disasters that are described as some form of “alienation.” As discussed infra, the Alutiiq communities suffered most of these consequences. See MMS, Vol. II at § 2.2.2.

27

Lingering Oil – A worker’s hand reveals the persistent nature of oil contamination on a beach (circa 2000). Photo downloaded from the Exxon Valdez Oil Spill Trustee Council Website – http://www.evostc.state.ak.us/ Universal/Images/GalleryImages/spill/downloadable %20.jpgs/CLE_190.jpg (2008)

28

not as directly exposed to the spill’s effects.40 A psy-chological study conducted one year after the wreck of 599 men and women found that members of the high-exposure group were 3.6 times more likely than those not exposed to have generalized anxiety disorder, 2.9 times more likely to have posttraumatic stress disor-der and 2.1 times more likely to have depressive symptoms.41 The study also concluded that Alaska Natives were particularly vulnerable to depressive symptoms despite no significant difference in levels of exposure to the effects of the spill.42

The federal Minerals Management Service (“MMS”) used the term “alienation” to define this complex of issues, concluding that: “[T]he process of

40 MMS Vol. I at § 5.4.2. 41 L. A. Palinkas, Community Patterns of Psychiatric Disorders After the Exxon Valdez Oil Spill, Am. J. Psychiatry 1993; 150:1517-1523. Level of exposure was assessed on the basis of responses to 6 different questions: 1) Did you or anyone in your household use, before the spill, areas along the coast that were affected by the spill? 2) Did you work on any of the shoreline or water cleanup activities of the oil spill? 3) Are there any other ways that you came into contact with the oil spill or cleanup activities, such as during recreation, hunting, fishing, or gathering activities? 4) Did you have any property that was lost or damaged because of the oil spill or cleanup? 5) Did the oil spill cause any damage to the areas where you or other household members fish commercially? 6) Has the oil spill directly affected the hunting, fishing, or gathering activities of any members of this household? 42 Id.

29

alienation organizes many of the disrupted relation-ships experienced by Native communities” as a result of the Exxon Valdez oil spill.43

According to MMS:

Individuals were alienated from meaningful social activities such as subsistence harvest-ing and the sharing of subsistence resources, which forms a basis for social integration in these communities. Individuals were also alienated from meaningful cultural values about respect for nature and the continuity between subsistence practices and a Native identity. Furthermore, the social activities and practices such as harvesting resources, engag-ing children in subsistence as a way of life, sharing harvested resources and consuming preferred foods were alienated from cultural values about the meaningfulness and signifi-cance of wild foods in Native ways of life.44

MMS concluded that:

Alienation of any one of these connections could be socially significant. But, when indi-viduals perceive an alienation of themselves from their culture and social activities; and, simultaneously cultural values are alienated from the social activities, then the combined effect is potentially traumatic and disruptive. This trauma itself exists within the context

43 MMS Vol. II at § 4.0. 44 Id. (Citations omitted).

30

of the culture, which has experienced other “cultural traumas” in their dealings with non-Native societies. Indeed, the [Exxon Val-dez oil spill], for many Natives, becomes another assault from non-Natives on the cul-tural integrity of their communities.45

The federal district court put it more directly:

The social fabric of Prince William Sound and lower Cook Inlet was torn apart. “[R]esearch on the community impacts of the Exxon Valdez Oil Spill clearly delineate a chronic pattern of economic loss, social con-flict, cultural disruption and psychological stress.” Communities affected by the spill “reported increased incidences of alcohol and drug abuse, domestic violence, mental health problems and occupation related problems.” Also, several studies found that a high per-centage of the affected fisherman suffered from severe depression, posttraumatic stress disorder, generalized anxiety disorder, or a combination of all three. The spilling of 11 million gallons of crude oil in Prince William Sound and Lower Cook Inlet disrupted the lives (and livelihood) of thousands of claim-ants and their families for years.

Pet. App. 150a-151a. In re Exxon Valdez, 296 F.Supp.2d at 1094 (citations omitted; emphases added).

45 Id.

31

One observer writing contemporaneously to the oil spill noted that: “Kodiak’s mental health workers reported a 700% increase in emotional problems in the months after the spill.”46 Dolly Reft, a Native leader from Kodiak explained why:

If people don’t have authority over their en-vironment or themselves, their spirit and their will to live get weaker and they are more vulnerable to things they can normally handle. We are experiencing a high rate of alcoholism and suicide. This summer we have had eight suicides in six weeks.

Reft also noted that:

The village people need their environment. Without it they cannot exist, can’t be who they are. When you pick up these dead carcasses day after day after day, you go through a mourning process. It’s not only death in your environment, but in a sense it is a death of yourself, because you are part of that envi-ronment.

When Exxon offered to fly fish into the villages, Reft observed:

The outside world still needs to be educated on what subsistence is. When you send fish into a village, what you’ve done is taken the people’s spirit away because they don’t have that joy of going out and providing for their families and

46 Davidson at 291.

32

getting the food. It’d be like me taking your job away with you having five children to feed. You’d have to go to a welfare system, and that would destroy your self-confidence.47

In sum, the Exxon Valdez disaster wreaked extended and continuing havoc on the vulnerable Alutiiq villages that lay in the path of Exxon’s 11,000,000 gallon flood of crude oil. The punitive damages award in this case can never provide full redress to these Alutiiq villages for the damages they have suffered and continue to suffer, but it does appropriately reflect the egregious nature of the harm Exxon inflicted. It will also serve as an appropriate deterrent to future dereliction of the kind that led to such disastrous consequences here.

--------------------------------- ♦ ---------------------------------

47 Id. Quoting Reft.

33

CONCLUSION

The judgment of the court of appeals should be affirmed.


RIYAZ KANJI KANJI AND KATZEN, P.L.L.C. 101 North Main St., Suite 555 Ann Arbor, MI 48104 (734) 769-5400

JOHN H. DOSSETT, General Counsel NATIONAL CONGRESS OF AMERICAN INDIANS 1301 Connecticut Ave., NW, 2nd Floor Washington, DC 20036 (503) 248-0783

DAVID S. CASE, P.C. Counsel of Record MATTHEW MEAD LANDYE BENNETT BLUMSTEIN

LLP 701 West 8th Ave., Suite 1200Anchorage, AK 99501 (907) 276-5152

RICHARD A. GUEST, Staff Attorney NATIVE AMERICAN RIGHTS FUND 1712 N. St., NW Washington, DC 20036-2973 (202) 785-4166

CAROL H. DANIEL ALASKA FEDERATION OF NATIVES, INC. 1577 C St., Suite 300 Anchorage, AK 99501 (907) 274-3611

Counsel for Amici

App. 1

APPENDIX

Descriptions of the Alaska Native and Native American Entities joining Amici Curiae

Brief in Support of Respondents

The National Congress of American Indians (“NCAI”) is the Nation’s oldest and largest national organization formed to advocate for the protection of American Indian and Alaska Native interests, includ-ing the protection of the Alaska Native subsistence way of life. NCAI was formed in 1944 and has a membership of over 250 federally recognized tribes situated in Alaska and over 30 other States.

The Alaska Federation of Natives (“AFN”), the Rural Alaska Community Action Program, Inc. (“RurAl CAP”) and the Alaska Inter-Tribal Council (“AI-TC”) are statewide Alaska Native organizations committed to educational activities and to advocacy before regulatory agencies, Congress and the courts to protect the integrity and continuation of the subsis-tence way of life in all Alaska Native communities. AFN was formed in the 1960s to advocate for passage of the Alaska Native Claims Settlement Act, 43 U.S.C. §1601 et seq. (“ANCSA”). Today, its member-ship includes over 200 villages, both federally-recognized tribes and ANCSA village corporations, the 13 regional Alaska Native corporations formed under ANCSA, and the 12 regional nonprofit and tribal consortiums that contract and run federal and state social service programs.

App. 2

AI-TC, a voluntary association of 180 Alaska Native tribes, was formed in significant part to ad-vance and protect the subsistence interests of Alaska Native tribes and their members. Most of AI-TC’s member tribes are located on Alaska’s extensive coastline or along major rivers, reflecting the fact that over sixty percent of their subsistence diet is from fish and other aquatic resources.

The Rural Alaska Community Action Program (“RurAl CAP”) is one of over 1,000 “Community Action Agencies” in the United States, but the only one in Alaska. Its goal is to promote maximum par-ticipation by people in overcoming all forms of pov-erty. RurAl CAP follows the belief that rural Alaskan communities have the right to maintain their cultural heritage and close relationship to the land while promoting their economic and human potential. RurAl CAP also provides information to the public about the vital importance of subsistence hunting, fishing and gathering to the nutritional, economic, spiritual and cultural lives of Alaska’s indigenous peoples.

The Indigenous Peoples Council for Marine Mammals (“IPCoMM”) is a statewide consortium of 16 regional and statewide Native marine mammal organizations representing Alaska Native interests in marine mammal conservation and co-management of subsistence uses. IPCoMM was formed in 1992 to advocate for full and equal participation by Alaska Natives in decisions affecting the subsistence uses of marine mammals.

App. 3

The North Slope Borough is the Nation’s largest and northern-most state chartered local government. It encompasses eight Inupiaq Native villages that depend upon pristine marine waters to continue their centuries-old subsistence-based traditions, including the hunting and sharing of whale and other marine mammals.

Sealaska Corporation and Koniag, Inc. are two of the regional corporations formed under ANCSA. Koniag owns lands throughout the Kodiak Island archipelago and Sealaska owns lands throughout southeast Alaska. The lands and adjacent waters owned by the corporations, like the lands and adja-cent waters of most other regional corporations formed under ANCSA, provide critical habitat sus-taining the subsistence way of life upon which their villages and member shareholders depend.

The Association of Village Council Presidents (“AVCP”) is one of 12 regional Native nonprofit corpo-rations in Alaska. Located in the Yukon-Kukokwim Delta, in the South Western region of Alaska, AVCP provides social services to 56 federally recognized Alaska Native tribes and approximately 6,000 Alaska Native residents of the region.

The Alaska Eskimo Whaling Commission, Aleut Marine Mammal Commission, Alaska Native Harbor Seal Commission, the Ice Seal Committee, the Sitka Marine Mammal Commission and the Alaska Sea Otter and Steller Sea Lion Commission, are Alaska Native commissions formed for the express purpose of

App. 4

preserving particular species of marine mammals that form the backbone of the subsistence way of life for most coastal Alaska Native communities.

The Aleut Community of St. George Island is a federally recognized tribe situated in the Bering Sea amidst one of the world’s richest fishing grounds and home to fur seal, sea lion and other marine mammals critical to the subsistence way of life.

C:\Documents and Settings\Sherry\Desktop\Briefs Ready to Print\Amodes\20356cv01.doc Last saved by Shelley Last printed: 1/26/08 6:17 AM Attorney: Amodio

No. 07-219

================================================================

In The

Supreme Court of the United States --------------------------------- ♦ ---------------------------------


Petitioners,

v.


Respondents.

--------------------------------- ♦ ---------------------------------

On Writ Of Certiorari To The United States Court Of Appeals

For The Ninth Circuit

--------------------------------- ♦ ---------------------------------

BRIEF OF AMICUS CURIAE PRINCE WILLIAM SOUND REGIONAL CITIZENS’ ADVISORY COUNCIL AND COOK INLET REGIONAL CITIZENS’ ADVISORY

COUNCIL IN SUPPORT OF RESPONDENTS

--------------------------------- ♦ ---------------------------------

WILLIAM M. WALKER Counsel of Record DEBRA J. FITZGERALD WALKER & LEVESQUE, LLC 731 N Street Anchorage, Alaska 99501 (907) 278-7000

================================================================ COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

i

TABLE OF CONTENTS

Page

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INTRODUCTION AND INTEREST OF AMICUS CURIAE............................................................ 1

SUMMARY OF ARGUMENT .............................. 9

ARGUMENT........................................................ 10

I. Punitive Damages Are Necessary and Appropriate Here to Ensure that the Corporate Complacency and Recklessness that Resulted in the Exxon Valdez Oil Spill Do Not Recur..................................... 10

A. A Catastrophic Spill Such as the Exxon Valdez Oil Spill Continues to Affect and Harm the Region and Its Resources Long After the Spill Has Occurred ......... 12

B. Punitive Damages as a Deterrent Are Vital to Protect Prince William Sound, Cook Inlet and the Kodiak Archipelago Against the Occurrence of Another Catastrophic Oil Spill such as the Exxon Valdez ............................................ 19

CONCLUSION..................................................... 29

ii

TABLE OF CONTENTS – Continued

Page


APPENDICES

PWSRCAC Annual Report 2006-2007 ..........App. 01

PWSRCAC Then and Now Report 1989-1999 .......................................................App. 38

Map – Path of Oil Spilled from the Exxon Valdez ......................................................App. 40

Map – PWS Tanker Escort Zones ..............App. 48

Nuka Report...................................................App. 76

iii


Page


CASES

Askew v. American Waterways Operators, Inc., 411 U.S. 325, 93 S. Ct. 1590, 36 L. Ed. 2d 280 (1973) .......................................................................14

City of Carlisle, 39 F. 807 (D. Or. 1889) .....................20

Lake Shore & M. S. Ry. Co. v. Prentice, 147 U.S. 101 (1893)........................................................20

United States v. Locke, 529 U.S. 89 (2000) ..........11, 14

STATUTES

Oil Pollution Act, Pub.L. No. 101-380, 104 Stat. 484, § 4114, § 5002 ......................................3, 4, 5, 25

46 U.S.C. § 3703a .......................................................21

46 U.S.C. § 8104(n).....................................................25

REGULATIONS

33 C.F.R. § 168.40(a)...................................................27

46 C.F.R. § 4.06-3 (2006).............................................24

46 C.F.R. § 4.06 (former).............................................24

OTHER AUTHORITIES

Exxon Valdez Oil Spill Restoration Plan, Up-date on Injured Resources and Services 2006 (Exxon Valdez Oil Spill Trustee Council, No-vember 2006) (EVOS 2006 Update) ...........15, 18, 19

iv


Page


Fine and Probation: Attempt was Made to Cover Incident Up, ANCHORAGE D.N., October 24, 2007 (Fine and Probation) ................................25

Gill, D., Technological Disaster, Resource Loss and Long-Term Social Change in a Subartic Community: Exxon Valdez Oil Spill Social Impacts on Alaska Natives and Commercial Fishermen in Cordova, Alaska – 2001-2006 (Miss. State U. Soc. Sci. Res. Center 2007)............17

Hemmingsson, T., et al., Alcoholism in Social Classes and Occupations in Sweden 26 Int’l J. Epidem. (Int’l Epidem. Ass’n 1997) ....................22

Hitz, D., Drunken Sailors and Others, 34 Quart. J. Stud. Alc. 496 (1973) ...............................22

Mandell, W., et al., Alcoholism and Occupa-tions: A Review and Analysis of 104 Occupa-tions 16 Alcohol. Clin. Exp. Res. 734-746 (July/Aug. 1992) ......................................................22

Moore, W.H., et al., Improving the Management of Human and Organization Errors (HOE) in Tanker Operations, Ship Structures Sympo-sium at 2 (November 16-17, 1993) ...................26, 27

NRC, Double-Hull Tanker Legislation: An Assessment of the Oil Pollution Act of 1990 (Nat’l Acad. Press 1998)..........................................21

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Page


Prosser, W., The Law of Torts § 2 at 9 (4th ed. 1971) ........................................................................20

Ritz-Timme, S., et al., What shall we do with the drunken sailor? Effects of alcohol on the performance of ship operators, 156 Forensic Sci. Int’l 16-22 (2006) ........................................22, 23

Robertson, D., Punitive Damages in American Maritime Law, 28 J. Mar. L. & Com. 73, 163 (1997) .................................................................19, 20

Rose, H.K. and M.M. Glatt, A Study of Alcohol-ism As An Occupational Hazard of Merchant Seamen 107 J. Mental Sci. (Brit. J. Psych. January 1961) .........................................................22

Short, Jeffrey W., et al., Slightly Weathered Exxon Valdez Oil Persists in Gulf of Alaska Beach Sediments after 16 Years, 41 Environ. Sci. Tech. 1245 (2007) .............................................17

The Human Factor: Why Another Exxon Valdez Could Happen, Seattle P.I., March 23, 2005 (The Human Factor) .............................24, 25, 26, 28

1

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BRIEF OF AMICUS CURIAE PRINCE WILLIAM SOUND REGIONAL CITIZENS’ ADVISORY COUNCIL AND COOK INLET

REGIONAL CITIZENS’ ADVISORY COUNCIL IN SUPPORT OF RESPONDENTS

The Prince William Sound Regional Citizens’ Advisory Council (PWSRCAC) and the Cook Inlet Regional Citizens’ Advisory Council (CIRCAC) re-spectfully submit this brief as amicus curiae in sup-port of Respondents.1

INTRODUCTION AND

INTEREST OF AMICUS CURIAE

PWSRCAC is an independent non-profit corpora-tion organized under the laws of the State of Alaska and incorporated on December 26, 1989. It was created in the months following the Exxon Valdez oil spill, after representatives of Prince William Sound commercial fishing interests approached Alyeska Pipeline Service Company (Alyeska) and persuaded it of the need for citizen oversight of the Valdez oil terminal and the tanker operations within Prince

1 Petitioners and respondents each have filed a blanket consent with the Clerk. Pursuant to S. Ct. R. 37.6, PWSRCAC and CIRCAC state that no counsel for a party authored this brief in whole or in part, no counsel or party made a monetary contribution intended to fund the preparation or submission of this brief, and no person other than amicus curiae, their mem-bers, or their counsel made a monetary contribution to its preparation or submission.

2


William Sound. Alyeska is the operator of the Trans-Alaska Pipeline as well as the Marine Terminal located in Valdez, Alaska (Marine Terminal), from which North Slope crude oil is loaded onto tankers for transport mostly to refineries outside of Alaska. It is a corporation primarily owned by several major oil companies producing and shipping oil from Alaska’s North Slope, in the following percentages: BP Pipe-lines (Alaska) Inc., 46.93%; ConocoPhillips Transpor-tation Alaska, Inc., 28.29%; ExxonMobil Pipeline Co., 20.34%; Unocal Pipeline Co., 1.36%; and Koch Alaska Pipeline Co. LLC, 3.08%. PWSRCAC is dedicated to the mission of citizens promoting the environmentally safe operation of the Marine Terminal in Valdez and the oil tankers that use it. Initially, PWSRCAC was comprised of representatives from the municipalities that were affected by the oil spill, as well as represen-tatives from environmental, Alaska Native, and com-mercial fishing organizations. Today, PWSRCAC is made up of 18 member organizations, including repre-sentatives from communities, aquaculture, commercial fishing, environmental, Alaska Native, recreation, and tourism groups.2 They include communities and

2 PWSRCAC’s current membership consists of two classes – voting members and ex-officio, non-voting members. Its voting members are representatives nominated by the following organizations and municipal governments: The Alaska State Chamber of Commerce, Alaska Wilderness Recreation and Tourism Association, Chugach Alaska Corporation, City of Cordova, City of Homer, City of Kodiak, City of Seldovia, City of Seward, City of Valdez, City of Whittier, Community of Chenega, Com-munity of Tatitlek, Cordova District Fishermen United, Kenai


3


interest groups in a region stretching from the Sound itself to Kodiak Island to the lower Cook Inlet – all areas that were touched by oil from the Exxon Valdez spill.

On February 8, 1990, PWSRCAC and Alyeska entered into a contract, which will remain in effect as long as oil continues to flow through the Trans-Alaska Pipeline. Under the contract, Alyeska annu-ally funds PWSRCAC to carry out certain contractual responsibilities for the benefit of Alyeska and the public. The contractual obligations include monitor-ing oil tanker operations in Prince William Sound, providing local and regional input into the design of mitigation measures for oil spills, reviewing oil spill response and prevention plans and the capabilities of the terminal and tankers to comply with those plans, undertaking studies relating to spill prevention and

Peninsula Borough, Kodiak Island Borough, Kodiak Village Mayors Association, Prince William Sound Aquaculture Corpo-ration, and the Oil Spill Region Environmental Coalition. The following organizations have designated an individual to act as an ex-officio, non-voting member of PWSRCAC: The United States Environmental Protection Agency (EPA), the United States Coast Guard (USCG), the United States National Oceanic and Atmospheric Administration (NOAA), the United States Department of the Interior, the United States Forest Service (USFS), the Bureau of Land Management (BLM), the Alaska Department of Environmental Conservation (ADEC), the Alaska Department of Fish and Game, the Alaska Department of Natural Resources (DNR), the Alaska Division of Homeland Security and Emergency Management (HSEM), the Department of Military and Veterans Affairs and the Oil Spill Recovery Institute. See the Oil Pollution Act of 1990 § 5002(d)(2).

4


mitigation of environmental impacts of terminal and tanker operations, and increasing public awareness of the actual and potential environmental impacts of terminal and tanker operations.

Congress later mandated the existence of PWSRCAC and CIRCAC (collectively the RCACs). Immediately after the catastrophic oil spill in March 1989, Congress began work on legislation aimed at preventing such spills from occurring again. The result was the Oil Pollution Act of 1990 (OPA 90).3 Section 5002 of OPA 90 requires the establishment of Oil Terminal and Oil Tanker Oversight and Monitoring Demonstration Programs for Prince William Sound and Cook Inlet. The programs were designed to provide a model for overcoming “mistrust and confrontation” by promoting partnership and cooperation among local citizens, industry and government and by providing citizen oversight of environmental compliance by oil terminals and tankers.4 Significantly, Congress

3 Public Law 101-380 (August 18, 1990). 4 CIRCAC supports and joins in this amicus brief to the Court. Like PWSRCAC, CIRCAC was established under Section 5002 of OPA 90 to provide citizen oversight for oil industry operations, but in the Cook Inlet region rather than the Prince William Sound area. CIRCAC meets its mission to “represent the citizens of Cook Inlet in promoting environmentally safe marine transportation and oil facility operations in Cook Inlet” through its 13-member Board of Directors appointed by bor-oughs, cities and municipalities in the Cook Inlet region, as well as Alaska Native, commercial fishing, aquaculture, Alaska State Chamber of Commerce, recreational, and environmental interest groups. OPA 90 also requires CIRCAC to establish committees to


5


identified complacency on the part of the oil indus-try and government regulators as one of the con-tributing factors of the Exxon Valdez oil spill. OPA 90 § 5002(2)(B).

Section 5002(d) of OPA allows an alternative, pre-existing organization to fulfill the requirement for a citizens’ council if the President annually certifies that the citizens’ advisory committee “fosters the general goals and purposes of this section” and is broadly representative of the communities and inter-ests in its geographic area. Each year since the en-actment of OPA 90, PWSRCAC has been certified as the citizens’ oversight and monitoring program for the Sound.

Funding of the regional citizens’ advisory coun-cils under Section 5002(o) is provided by the oil companies whose activities impact each region. Thus, Alyeska must fund PWSRCAC annually as long as the Trans-Alaska Pipeline is operational, and the owners or operators of terminal facilities, offshore

accomplish its mandates, which provides additional opportuni-ties for citizen involvement by allowing public members to participate on each of the main working committees: the Envi-ronmental Monitoring Committee and the Prevention, Response, Operations, and Safety Committee. The following organizations have designated an individual to act as an ex-officio, non-voting member of CIRCAC: EPA, USCG, USFS, NOAA, BLM, ADEC, DNR, and HSEM. See OPA 90 § 5002(d)(2).

6


facilities, or crude oil tankers operating in Cook Inlet must fund CIRCAC each year.5

Although it works closely with and is primarily funded by Alyeska, PWSRCAC is an independent advisory group. PWSRCAC’s contract with Alyeska is explicit: “Alyeska shall have no right . . . to any degree of control over the formation or operation of the [PWSRCAC].” PWSRCAC 2006-07 Annual Report (Annual Report), App. 8.

Since its formation in 1989, PWSRCAC has been a leader in the area of tanker monitoring and oil spill prevention. PWSRCAC closely monitors the opera-tions of the Marine Terminal as well as the operations of tankers while in transit through Prince William Sound and while berthed at the Terminal. PWSRCAC reviews and comments on the oil spill contingency plans prepared by both Alyeska, as the operator of the Marine Terminal, and the tankers that transit Prince William Sound. Jointly with the industry it has conducted major studies relating to tanker opera-tions in Prince William Sound.

More recently, the PWSRCAC has been involved in a variety of projects, ranging from participating in oil spill response drills, commenting on draft permits from regulatory agencies, participating in oil spill prevention and response plans, and studying the

5 Current charter funding members are ConocoPhillips, Cook Inlet Pipeline Co., Forest Oil Corp., Marathon Oil Co., Tesoro Alaska Petroleum, Chevron Corp., and XTO Energy.

7


problem of non-indigenous species that result from tanker transportation of oil. See Annual Report, App. 12, 13-14, 16-17 and 25-27. One of PWSRCAC’s specific responsibilities is to increase public aware-ness of issues relating to the Marine Terminal and oil tanker operation. See id., App. 19-20. Accordingly, PWSRCAC has financed a variety of studies, includ-ing a guidebook explaining how communities can deal with “technological disasters,” and an oral history of the Exxon Valdez oil spill. PWSRCAC, Then and Now – Changes in Oil Transportation Since the Exxon Valdez Spill (1989-1999) (Then and Now), App. 67-68.

In the last several years, PWSRCAC has taken an active role in urging the oil companies that own and/or operate the oil tankers to continue to maintain and use the fleet of tugs that escort the tankers through Prince William Sound. Id., App. 46-49. PWSRCAC also has successfully advocated for the installation of upgrades to the ballast water treat-ment facility at the Alyeska terminal to eliminate hazardous air pollution. Id., App. 69-71. PWSRCAC has been described as an “anti-complacency” organi-zation, and as a “corporate conscience” financed by the oil industry.6 Through PWSRCAC the people with the most to lose from oil pollution have been given a voice in decisions that potentially put their liveli-hoods at risk.

6 See, e.g., PWSRCAC website, http://www.pwsrcac.org/faq. html at 3.

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In sum, the RCACs are “the third leg of a tripod supporting safer oil transportation, the other two being industry and government.” Then and Now, App. 73. “Industry must balance the need for environ-mental protection against the pressure for profits, while government agencies are . . . subject to political pressure to promote economic development and minimize the regulatory burden on industry.” Id., App. 74. In contrast, the RCACs are “unique in having no mission except promoting safety and informing the public about it. . . .” Id., App. 73.

The RCACs believe that punitive damages are appropriate – in fact, necessary – in maritime cases, such as this one. Punitive damages serve a vital purpose in deterring reckless acts that profoundly affect not only the environment, but also the social well-being and livelihood of the many people who use, enjoy and rely upon areas such as Prince William Sound, Cook Inlet and the Kodiak Archipelago. Be-cause of their unique position as citizens’ advisory and monitoring organizations, the RCACs bring to this discussion the outlook of the residents of Alaska who have seen first hand the tragic consequences of a calamitous oil spill. The RCACs believe that the world of shipping has changed dramatically, espe-cially within the last 50 years. They further believe that while citizen oversight councils such as them-selves provide an important safeguard against the complacency that led to the Exxon Valdez oil spill, punitive damages also are an essential deterrent

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against the reckless conduct that could cause another such disaster.

--------------------------------- ♦ ---------------------------------

SUMMARY OF ARGUMENT

Nearly 19 years after the Exxon Valdez oil spill, its effects on Prince William Sound, Lower Cook Inlet, and the Kodiak Archipelago still are being felt. The oil spill did immeasurable damage to the region, its resources, and its inhabitants. The oil spill dam-aged the very social and economic fabric of the region, affecting people’s lives, their livelihood, recreational opportunities and subsistence. Although punitive damages cannot repair the socio-economic fabric of the region, they can help to protect it from future spills by deterring the conduct that led to the oil spill.

In this brief, PWSRCAC and CIRCAC present their view that punitive damages are essential here as a means of deterring Exxon and other oil compa-nies, by letting them know that the complacency and reckless behavior that led to the grounding of the Exxon Valdez and the most devastating oil spill in North America will not be tolerated. PWSRCAC and CIRCAC have a unique voice in this litigation, in part because they were born out of the Exxon Valdez oil spill itself and in part because they speak for the enduring interests of Prince William Sound, Cook Inlet, the Kodiak Archipelago and their inhabitants. Despite advances in vessel monitoring, marine safety and communications, and spill prevention, several

10


recent incidents suggest that without the threat of punitive damages, the conduct that led to the Exxon Valdez oil spill and its result could occur again. The RCACs believe that punitive damages are necessary to deter Exxon and others from engaging in the conduct that led to the Exxon Valdez oil spill and could lead to future oil spills.

--------------------------------- ♦ ---------------------------------

ARGUMENT

I. Punitive Damages Are Necessary And Appropriate here to Ensure that the Cor-porate Complacency and Recklessness that Resulted in the Exxon Valdez Oil Spill Do Not Recur.

Two unforgettable disasters have occurred in Alaska since it became a state in 1959. The first one was the 1964 earthquake, the largest recorded quake in the history of North America, larger even than the infamous San Francisco earthquake of 1906.7 The earthquake struck without warning at 5:36 p.m. on Good Friday, March 27, 1964 – it was inescapable and unavoidable. The earthquake left its indelible mark on many areas in the State, including several com-munities, such as Valdez, which were devastated by the ensuing tsunami.

7 According to the U.S. Geological Survey, the 1964 Earthquake had a magnitude of 9.2. See USGS website, http://earthquake. usgs.gov/regional/states/events/1964_03_28.php.

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The second one also struck, coincidentally, on Good Friday, March 24, 1989. The Exxon Valdez oil spill was not a natural disaster at all, but an all-too-human one, a disaster that devastated the natural resources of Prince William Sound, Lower Cook Inlet and the Kodiak Archipelago. To this day, the Exxon Valdez is the most disastrous oil spill to have occurred in North America. This Court has recognized it as “[t]he most notorious oil spill in recent times,” which “released more than 11 million gallons of crude oil and . . . caused public officials intense concern over the threat of a spill.” United States v. Locke, 529 U.S. 89, 96 (2000).8 In contrast to the earthquake, the oil spill was entirely avoidable and preventable. Whereas the earthquake was an Act of God, the spill was entirely an act of man. A misadventure of alcohol, exhaustion, and personal and corporate recklessness, the oil spill affected, and continues to affect, the lives and livelihood of thousands of persons with ties to Prince William Sound, Lower Cook Inlet, and the Kodiak Archipelago.

PWSRCAC and CIRCAC have been tasked with, among other things, assuring that a catastrophe such as the Exxon Valdez spill does not happen again. In furtherance of this goal, the RCACs believe that it is critical that oil companies are held accountable for egregious conduct, which has the potential for such

8 For the path that the spilled oil took, see Then and Now, App. 40.

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long-lasting, far-reaching and catastrophic conse-quences.

A. A Catastrophic Spill Such as the Exxon

Valdez Oil Spill Continues to Affect and Harm the Region and Its Resources Long After the Spill Has Occurred.

Nearly 19 years after the oil spill, the continuing harm to the socio-economic fabric of Prince William Sound, Lower Cook Inlet and the Kodiak Archipelago is well documented. Punitive damages are appropri-ate to help prevent against future catastrophic spills, the effects of which would likely be immeasurable.

What is the area comprising Prince William Sound, Lower Cook Inlet, and the Kodiak Archipel-ago? To its inhabitants it is a place of remarkable beauty and abundance. To commercial fishermen and women, it is the source of their livelihood. To Alaska Natives, its resources provide them with a rich sub-sistence lifestyle. To visitors and recreational users, it is a place of unparalleled majesty and abundant wildlife. To the large corporations that move the oil, it is primarily a body of water, a thing to be traversed to bring the bounty of the North Slope oil fields to market. To too many people, Prince William Sound is known principally as the place where the Exxon Valdez grounded on Bligh Reef and spilled its oil.

Located in Southcentral Alaska, Prince William Sound is bounded to the north, east and west by the Chugach Mountains, the second highest range of

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coastal mountains in the world (after the Andes).9 The Sound was formed by millions of years of glacial activity, which has left it marked with deep fjords, bays, and passageways along its more than 3,000 miles of shoreline. Id. The Sound is home to more than 20 towering tidewater glaciers and countless smaller glaciers, many of which descend from its several ice fields, including Bagley Icefield, the larg-est subpolar icefield in North America. Id.

Prince William Sound’s inhabitants are scattered throughout an area larger than Massachusetts, Connecticut and Rhode Island combined. Id. Most of its inhabitants reside in the towns of Valdez, Cor-dova, and Whittier, and in the two Native villages of Chenega and Tatitlek. Id. No roads connect these communities, and only Valdez and Whittier can be reached by car – Whittier by the same one-lane tunnels used by locomotives. Many of its inhabitants derive their livelihood from the fish, natural re-sources, and recreational opportunities that are found in abundance throughout the Sound.

In the 1970’s, one of the Sound’s communities, Valdez, became the southern terminus of the Trans-Alaska Pipeline. Tankers began transporting the oil being pumped from Prudhoe Bay across the Sound, taking the oil to markets in California and other

9 Prince William Sound Natural History, http://www.alaska. net/~awss/pws.html (Alaskan Wilderness Sailing and Kayak-ing).

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ports in the western United States. These tankers are cavernous modern ships capable of transporting enormous quantities of oil across the open seas. This Court has recognized this development in oil trans-portation:

The bulk of oil transported on water is found in tankers, vessels which consist of a group of tanks contained in a ship-shaped hull, propelled by an isolated machinery plant at the stern. The Court described the increase in size . . . of these ships close to three dec-ades ago in Askew v. American Waterways Operators, Inc., 411 U.S. 325, 335, 93 S. Ct. 1590, 36 L. Ed. 2d 280 (1973), noting that the average vessel size increased from 16,000 tons during World War II to 76,000 tons in 1966. . . . By December 1973, 366 tankers in the world tanker fleet were in excess of 175,000 tons. . . .

United States v. Locke, 529 U.S. at 96 (citation omit-ted). As the Locke Court concluded, “[t]he size of these vessels, the frequency of tanker operations, and the vast amount of oil transported by vessels with but one or two layers of metal between the cargo and the water present serious risks. . . .” Id. See also Askew v. American Waterways, 411 U.S. at 324-25 (oil spillage was “an insidious form of pollution of vast concern to every coastal city or port and to all the estuaries on which the life of the ocean and the lives of the coastal people are greatly dependent[,]” a concern heightened by “the risk of ever-increasing damage by reason of the size of modern tankers[,]” among other things).

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The vast amounts of oil being transported by these vessels can result in catastrophic oil spills like the Exxon Valdez.

Although we must be prepared to respond to any spills that occur, prevention of future spills is critical. “History shows that oil, once spilled on the sea, is never fully contained and recovered.” Then and Now, App. 44. Despite “improvements in containment and cleanup technology,” it is virtually impossible to “recover all the oil from a major spill. . . .” Id. Further, bad weather “can defeat even a good plan.” Id. In other words, a spill that never occurs is one that never requires cleaning up, has no impact on the lives and livelihoods of the inhabitants of the area, and leaves the area as pristine as before. The Exxon Valdez spill itself illustrates this. Even now its effects are still found – and felt – throughout Prince William Sound, Lower Cook Inlet, and the Kodiak Archipel-ago, not only on the area’s beaches and natural re-sources, but also on its socio-economic fabric. See Exxon Valdez Oil Spill Restoration Plan, Update on Injured Resources and Services 2006 (Exxon Valdez Oil Spill Trustee Council, November 2006) (EVOS 2006 Update), infra. Prevention, therefore, must be “the first line of defense,” Then and Now, App. 44, the foundation on which spill response is built.10

10 Since prevention efforts cannot guarantee that no spills will occur, however, “the industry, regulatory agencies and the public must [also] be prepared to respond to spills that do occur.” Then and Now, App. 56.

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More than 17 years after the oil spill, Prince William Sound is still recovering from its effects. EVOS 2006 Update at 6. In addition to the damages to the environment, which are not at issue here, the spill did incalculable, unquantifiable damage to the socio-economic fabric of life in and around Prince William Sound and Lower Cook Inlet. See, e.g., Pet. App. 150-151a, 166a-167a, and SJA386sa-572sa. The effects of the Exxon Valdez oil spill were not “purely economic. The social fabric of Prince William Sound and Lower Cook Inlet was torn apart,” as the district court aptly noted. JA150a. Community impacts included “ ‘a chronic pattern of economic loss, social conflict, cultural disruption and psychological stress.’ ” JA150a-151a, quoting J. Steven Picou, et al., Community Recovery from the Exxon Valdez Oil Spill: Mitigating Chronic Social Impacts at 6-7. The com-munities affected by the spill “ ‘reported increased incidences of alcohol and drug abuse, domestic vio-lence, mental health problems, and occupation re-lated problems.’ ” JA151a, quoting Duane A. Gill, Environmental Disaster and Fishery Co-Management in a Natural Resources Community: Impact of the Exxon Valdez Oil Spill, in Folk Management in the World’s Fisheries, 227 (Dyer & McGoodwin, eds., 1994). Several studies found that “a high percentage of affected fishermen suffered from severe depression, post-traumatic stress disorder, generalized anxiety disorder or a combination of all three.” JA151a (cita-tion omitted). The oil spill’s disruption of “the lives and livelihood of thousands of claimants and their families” could not be “quantified.” JA167a.

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Oil from the Exxon Valdez spill continues to persist, and contaminate the Sound and its beaches. In fact, a recent study indicated that, “at some locations, re-maining subsurface oil may persist for decades with little change.” Jeffrey W. Short, et al., Slightly Weath-ered Exxon Valdez Oil Persists in Gulf of Alaska Beach Sediments after 16 Years, 41 Environ. Sci. Tech. 1245 (2007). The same study determined that “physical dispersion rates” of the oil have slowed since 2001. Id. at 1248. The study concluded that “the remaining subsurface oil may persist with little change for decades, even in sediments that are not anoxic [oxygen-depleted].” Id. at 1249. Such persis-tence will, understandably, continue to pose problems for the Sound and its inhabitants:

Such persistence can pose a contact hazard to intertidally foraging sea otters, sea ducks, and shorebirds . . . , create a chronic source of low-level contamination . . . , discourage subsistence in a region where use is heavy . . . , and degrade the wilderness character of protected lands.

Id. Like the lingering effects of the oil, “mental health problems” continued to “linger a decade” after the Spill, Then and Now, App. 67, and still linger today, see D. Gill, Technological Disaster, Resource Loss and Long-Term Social Change in a Subartic Community: Exxon Valdez Oil Spill Social Impacts on Alaska Natives and Commercial Fishermen in Cordova,

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Alaska – 2001-2006 (Miss. State U. Soc. Sci. Res. Center 2007).11

As of November 2006, not one of the “Human Service” categories identified by the EVOS Trustee Council had recovered. EVOS 2006 Update at 34-38, and at 6, Table 1. The four categories that the Trustee Council identified were commercial fishing, subsis-tence, recreation and tourism and passive use. Id. Commercial fishing was injured “as a result of the spill’s direct impacts to commercial fish species. . . .” Id. at 34. Oil from the spill also “disrupted subsis-tence activities” for the 2,200 people of 15 Alaskan Native communities and about “13,000 other subsis-tence permit holders in the area.” Id. at 37. Recrea-tion and tourism in areas affected by the spill “dramatically declined in 1989 in Prince William Sound, Cook Inlet and the Kenai Peninsula.” Id. at 36. Finally, injuries to “passive use,” the “service provided by natural resources to people that will likely not visit, contact or otherwise use the re-source,” are tied “to public perceptions of injured resources.” Id. at 35.

Each of these categories of “Human Service” was “negatively indirectly impacted by the spill due to its connection with impacted natural resources.” Id. at

11 Gill’s final report was submitted to the National Science Foundation, Office of Polar Research, Washington, D.C. (NSF #0082405).

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34-38, and at 6. Each is still struggling with the after-effects of the spill, id., aftershocks that are longer-lasting than those from the ’64 quake. Although puni-tive damages cannot repair the socio-economic fabric of the region, or restore it to pre-oil spill days, punitive damages can help protect the region from future spills by deterring the conduct that led to the spill.

B. Punitive Damages as a Deterrent Are

Vital to Protect Prince William Sound, Cook Inlet and the Kodiak Archipelago Against the Occurrence of Another Catastrophic Oil Spill such as the Exxon Valdez.

Punitive damages are an important tool to help deter future oil spills by punishing the conduct that causes them and the corporate climate in which they occur. It is vital today to continue to discourage the conduct and climate that led to the Exxon Valdez spill – the lack of vigilance, tolerance of serious errors, and corporate recklessness. If the award of punitive damages here prevents a single, serious oil spill, even one far less catastrophic than Exxon Valdez, their purpose will have been well served.

Punitive damages are meant “as a threat to discourage egregious misconduct.” D. Robertson, Punitive Damages in American Maritime Law, 28 J. Mar. L. & Com. 73, 163 (1997) (hereafter “Punitive Damages”). When the “threat” operates properly, “such damages should not have to be actually awarded very often.” Id. Further, punitive damages

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are “a well-settled part of American maritime law and have been since the early 1800s. . . .” Id. at 162. See Lake Shore & M. S. Ry. Co. v. Prentice, 147 U.S. 101, 108 (1893) ([C]ourts of admiralty . . . proceed, in cases of tort, upon the same principles as courts of common law, in allowing exemplary damages . . . ”). As a federal court observed more than a century ago, “[I]f owners do not wish to be mulct [sic] in damages for such misconduct, they should be careful to select men worthy to command their vessels.” City of Carlisle, 39 F. 807, 817 (D. Or. 1889), quoted in Punitive Dam-ages, 28 J. Mar. L. & Com. at 121. Similarly, this Court has observed that punitive damages are appro-priate if an employer knew that its employee was “an unsuitable person,” or if the employer “participated in, approved, or ratified” the employee’s tort. Lake Shore, 147 U.S. at 117. See also Punitive Damages, 28 J. Mar. L. & Com. at 121-22.

Punitive damages also serve the three-fold goal of “ ‘punishing the defendant, of teaching him not to do it again, and of deterring others from following his example.’ ” Punitive Damages, 28 J. Mar. L. & Com. at 75, quoting W. Prosser, The Law of Torts § 2 at 9 (4th ed. 1971). Punitive damages are particularly impor-tant here to discourage and deter others from engag-ing in similar conduct in the future.

The checks in place today to prevent another catastrophic oil spill in Prince William Sound are better than they were at the time of the Exxon Valdez spill. They include, among other things, the requirement that by 2010 all tankers in the fleet transporting oil from

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Valdez will be double hulled;12 changes to and im-provements in the tug escort system;13 and improved oil spill contingency plans and oil spill drills.14

Furthermore, the checks also include the RCACs themselves. OPA 90 mandated PWSRCAC and CIR-CAC as a means of giving the people most directly affected by the Exxon Valdez oil spill a voice in deci-sions relating to oil and its transportation in the region. As described in the Statement of Interest, supra, during the last 18 years, PWSRCAC has developed an expertise in oil spill prevention and spill response, as evidenced by its many public outreach programs, studies, and participation in national and international activities regarding these topics.

Regardless of the additional checks in place today and the RCACs’ involvement, however, there is no “guarantee that the complacency [that resulted in the Exxon Valdez oil spill] will not set in again. . . .” Then and Now, App. 74. Simply stated, human factors never can be removed: “The U.S. Coast Guard estimates that

12 Federal law calls for the phase out of all single-hulled oil tankers trading in U.S. ports by 2010, and the phase out of older double-bottomed vessels by 2015. 46 U.S.C. § 3703a. A 1998 study by the National Research Council (NRC) confirmed that advances in vessel technology, such as double hulls and redun-dant systems, however, do not erase the need for additional prevention measures. Nuka, PWS Escort System, App. 84, citing NRC, Double-Hull Tanker Legislation: An Assessment of the Oil Pollution Act of 1990 (Nat’l Acad. Press 1998). 13 Then and Now, App. 46-49. 14 Then and Now, App. 57-61.

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nearly 85% of oil spills and marine accidents can be attributed to human factors – either individual errors or organizational failures.” Nuka Research and Planning Group, LLC, “Importance of Maintaining the Prince William Sound Escort System for Double-Hulled Tankers” (December 3, 2004) (Nuka, PWS Escort System), App. 82-83.15 Significantly, many of the same human factors that caused the Exxon Valdez oil spill remain today. We believe that unless the punitive damages award is affirmed, sending a clear message to the industry that such behavior will not be countenanced, the number of oil spills will increase again, and much of what we and others have accom-plished over the last nearly 20 years will be lost.

Numerous studies document the prevalence of alcohol abuse among seamen.16 Unquestionably, alcohol consumption affects performance. A 2004 study found the effects of alcohol on the performance of ship operators to be “striking.” S. Ritz-Timme, et al., What shall we do with the drunken sailor? Effects of alcohol

15 The Nuka PWS Escort System report was citing USCG 1998. Safety: We are the enemy. Safety Alert, http://www.uscg. mil/hq/g-m/moa/docs/sa0998.htm. See App. 82-83. 16 See, e.g., T. Hemmingsson et al., Alcoholism in Social Classes and Occupations in Sweden 26 Int’l J. Epidem. (Int’l Epidem. Ass’n 1997); W. Mandell et al., Alcoholism and Occupa-tions: A Review and Analysis of 104 Occupations 16 Alcohol. Clin. Exp. Res. 734-746 (July/Aug. 1992); D. Hitz, Drunken Sailors and Others, 34 Quart. J. Stud. Alc. 496 (1973); H.K. Rose and M.M. Glatt, A Study of Alcoholism As An Occupational Hazard of Merchant Seamen 107 J. Mental Sci. (Brit. J. Psych. January 1961).

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on the performance of ship operators, 156 Forensic Sci. Int’l 16-22 (2006). According to the study, “[t]he complex categories [of performance] were most af-fected, namely the analysis of situations, foresight, concentration, navigation, risk disposition and accu-rateness . . . ” Id. at 20-21. Further, the authors noted that even among the captains who compensated for their alcohol impairment by concentrating almost exclusively on the primary task, performance would be “seriously impaired in case of an emergency or other circumstances of increased workload.” Id. at 21.17

Sadly, the problem of “drunk driving” among ship operators that led to the grounding of the Exxon Valdez continues today. On August 4, 2007, a Polish sea captain with a blood alcohol level two and a half times the limit first crashed his ship into an un-manned gas platform in the North Sea, then behaved bizarrely during the rescue and finally, began to drink vodka while the crew boarded a life raft. “What shall we do with the drunken sailor? Clap him in irons and jail him for a year.”18 Closer to home, in March 2005, the Seattle Post-Intelligencer briefly reported on a lawsuit that had been filed by a galley worker who had worked aboard the Polar California,

17 The facts in this case are proof enough of the deleterious effects of alcohol on the performance of a ship’s operator. See, e.g., Plaintiff ’s Brief at 5-8. 18 Ebsco Publishing, http://web.ebscohost.com/ehost/detail? vid=15&hid=21&sid=240b4742-dc5f-4388-9a6a-6. . . .

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one of ConocoPhillips’ tankers which transports Alaskan oil out of Valdez to the West Coast of the United States and Hawaii. The lawsuit, which settled out of court, alleged that ConocoPhillips had con-structively terminated the galley worker in retalia-tion for her reporting alcohol use by the tanker’s captain and crew. The newspaper article further reported that Port Angeles, Washington, which sits along the Strait of Juan de Fuca, had become a popular “watering hole” among tanker crews and had become “a de facto hole in the system meant to keep alcohol away from these dangerous ships.” The Hu-man Factor: Why Another Exxon Valdez Could Hap-pen, SEATTLE P.I., March 23, 2005 (The Human Factor).

Most recently, the seriousness and prevalence of alcohol consumption among mariners is evidenced by the 2006 change in the U.S. Coast Guard’s require-ments for alcohol testing after serious marine inci-dents (SMI). Before June 20, 2006, the Coast Guard required marine employers to try to have each person employed on the vessel in commercial service who was directly involved in an SMI chemically tested for evidence of drug and alcohol use. See former 46 C.F.R. § 4.06. The regulations did not specify a time re-quirement following the SMI for collecting specimens or completing the tests to determine the use of alcohol or dangerous drugs. Now, however, Coast Guard regulations require alcohol testing to be conducted within two hours of an SMI and require most com-mercial vessels to have alcohol-testing devices on board. 46 C.F.R. § 4.06-3 (2006), published in 70 Fed.

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Reg. 75954 (2005). In addition, the rule adds a 32-hour time limit for the collection of specimens for drug testing following a serious marine incident. In sum, the 2006 Coast Guard rule change shows that “drunk driving” continues to be a problem among ship operators.

Likewise, crew fatigue, which was identified as one factor in the Exxon Valdez oil spill, see Pet. App. 254a-255a, occurs today, notwithstanding the federal law limiting work hours on tankers. OPA 90 § 4114, amending 46 U.S.C. § 8104(n). A March 2006 news-paper story investigated an unreported oil spill by the Polar Discovery in January 2004. The Human Factor, SEATTLE P.I. supra. The Polar Discovery is one of ConocoPhillips’ double-hulled supertankers in the Valdez fleet. Waste oil from the engine room flowed for a half hour through a valve carelessly left open onto the deck of the tanker and into the scupper holes that drain to the ocean. The Polar Discovery’s captain failed to report the spill. Worse yet, he falsified re-cords to cover it up. Fine and Probation: Attempt was Made to Cover Incident Up, ANCHORAGE D.N., October 24, 2007 (Fine and Probation). More than four months after the spill, a whistleblower finally re-ported it to the Coast Guard.19 According to one

19 In October 2007, ConocoPhillips pleaded guilty to a criminal pollution violation for failing to report the spill and falsifying records to cover it up. Fine and Probation, ANCHORAGE D.N., supra. ConocoPhillips agreed to pay a fine and penalties totaling $2.5 million and was placed on probation for three years. As part of the plea agreement, U.S. prosecutors agreed


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newspaper account, the spill occurred through a series of human errors due to having a tired and overworked crew and a cost-cutting corporate culture that ignored reported misconduct and retaliated against whistleblowers. The Human Factor, SEATTLE P.I. supra. Clearly, despite improvements since 1989, the conditions and corporate climate that led to the Exxon Valdez oil spill still persist today.

Organizational complacency and inertia, like alcohol consumption and crew fatigue, continue to affect oil spill prevention and response efforts. There are three primary “players” in high-consequence marine accidents: humans, physical elements (such as the weather) and organizations. W.H. Moore, et al., Improving the Management of Human and Organization Errors (HOE) in Tanker Operations, Ship Structures Symposium at 2 (November 16-17, 1993). Organizational pathologies20 often are “over-riding influences” in such accidents, and are the most difficult to correct:

not to seek criminal prosecution against the company for alleged violations aboard two other tankers, the Polar Alaskan and the Polar Endeavour. Id. 20 The organizational pathologies identified were: “corporate ‘cultures’ focused on production at the expense of quality, ineffective and stifled communications, ineffective commitment and resources provided to achieve quality, excessive time and profit pressures, conflicting corporate objectives, and counter-quality and integrity incentives.” Moore, Improving the Man-agement of HOE in Tanker Operations at 2.

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[h]uman and organization errors . . . account for the vast majority of unanticipated signifi-cant problems associated with the design, construction, and operation of ships. Ap-proximately 80% of the problems are due to [human and organization errors], and ap-proximately 80% of these can be traced to operations.

Id. (emphasis added).

The RCACs believe that the oil companies’ com-placency is due in no small part to the inherent tension between their profit-making imperative and legally-mandated oil spill prevention and response measures, which often require spending money to implement. Safety is sacrificed for the bottom line. The following example illustrates this point. Federal law now requires laden single-hulled tankers to be escorted by two tugs as they transit Prince William Sound. 33 C.F.R. § 168.40(a). Currently, double-hulled tankers laden with oil also are escorted through the Sound by two tugs. However, the law requiring the two-tug escort for the laden single-hulled tankers may become moot when the single-hulled tankers are phased out, perhaps as soon as the end of 2008. Thereafter, the use of double tug escorts will depend on voluntary compliance by the oil companies. Annual Report, App. 9. In the absence of a law requiring the use of double tug escorts, it is possible, if not prob-able, that the oil companies will try to cut back on the

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use of tug escorts in Prince William Sound, as they have in other port areas.21 Though the escort tugs unquestionably have contributed to the overall safety of tanker traffic in Prince William Sound, it should come as no surprise that the oil companies would prefer to eliminate this expense. The tension between safety and cost is intrinsic, and unavoidable.

In light of the RCACs’ nearly 20 years of experi-ence in the aftermath of the Exxon Valdez oil spill, and, particularly, their substantial experience dealing with the oil industry, they are convinced that, despite the many safeguards in place today against another oil spill, the elements of human error – indeed reck-lessness – and the corporate profit-making impera-tive remain substantially the same. The RCACs believe that one important reason Prince William Sound, Cook Inlet and the Kodiak Archipelago have been spared large oil spills in the last 18 years is that the oil companies and their employees are wary of the threat of financially-significant sanctions that may be assessed as punitive damages. Moreover, the threat of punitive damages encourages the oil companies to continue making the right choices, choosing safety and self-policing over the bottom line. In short,

21 Tug escorts already have been eliminated for the new double-hulled tankers in San Francisco Bay. The Human Factor, SEATTLE P.I. at 5. Further, in 2004, at the behest of the oil companies, Washington state commissioned a study that con-cluded with a recommendation to eliminate tug escorts for the tankers there. Id.

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PWSRCAC and CIRCAC urge the Court to retain punitive damages as one effective means of deterring individual and corporate recklessness.

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CONCLUSION

PWSRCAC and CIRCAC therefore respectfully request the Court to affirm the judgment of the Ninth Circuit.


WILLIAM M. WALKER Counsel of Record DEBRA J. FITZGERALD WALKER & LEVESQUE, LLC 731 N Street Anchorage, Alaska 99501 (907) 278-7000

January 29, 2008

App. 1

C:\Documents and Settings\Sherry\Desktop\Briefs Ready to Print\Amodes\20356aa03.doc Last saved by Shelley Last printed: 1/26/08 6:13 AM Attorney: Amodio

Letter from the President and the Executive Director

[All Pictures Omitted In Printing]

CONTENTS

Mission and Responsibilities........................................3

Oil Spill Prevention ......................................................5

Oil Spill Preparedness and Response..........................7

Environmental Protection and Science .....................13

Outreach .....................................................................21

Board of Directors.......................................................25

Committees .................................................................27

Papers, Presentations, Reports, and Media Releases...................................................................29

Staff and Offices .........................................................30

Note: This report covers the period from July 2006 through June 2007.

Our council has had a productive year. Our relations with the oil industry are on perhaps the best footing we’ve seen in a decade. Some old issues have been satisfactorily resolved, and, on balance, the new ones seem less contentious.

And we’re happy to note that interest in citizen oversight continues around the world.

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Here are some highlights of the past year:

• We started an oral history of the Exxon Valdez oil spill, featuring interviews with people directly in-volved in the spill and its aftermath. We expect to publish their memories in book form by March 2009, the 20th anniversary of the spill.

• We remain active on the threat that non-indigenous species from tanker ballast water pose to Alaska’s maritime environment, especially its com-mercial, sport, and subsistence resources. With Congressional interest in this issue growing, we are pressing federal lawmakers to make sure any legisla-tion on the subject requires ballast-water exchange, which is the best practice presently available for deterring invasions by non-indigenous species. In February 2007, we organized a successful film festi-val with a major focus on invasive species as part of the Alaska Forum on the Environment in Anchorage. We also initiated an annual science night to commu-nicate our research efforts to our constituents and other researchers in our region.

• Our last two annual reports noted our continuing concerns over the future of the escort tugs that ac-company loaded oil tankers through Prince William Sound. Those concerns were partly resolved over the past year when the tanker companies agreed to maintain the present fleet of ten tugs, at least for now. However, another question remains: what will happen to the tug fleet as federal escort requirements end with the transition to double-hull tankers? As

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discussed elsewhere in this report, the council in May 2007 called for continuing and strengthening the double-escort requirement.

• We produced “Where Do I Go From Here,” a half-hour film aimed primarily at high-school students. It focuses on jobs in the marine sciences and seafaring. We hope it will help students find careers that let them work in their home communities.

• In fall 2006, as Congress investigated a partial shutdown of the Prudhoe Bay oilfield caused by pipeline corrosion, we were invited to provide infor-mation on how citizen oversight might work on Alaska’s North Slope. We developed a whitepaper on the subject that was added to the Congressional record by Sen. Lisa Murkowski.

In May 2007, the council’s executive director traveled at the invitation of the U.S. State Department to Finland and Estonia to discuss citizen involvement in oil spill prevention and response. Interest was in-tense; the executive director gave four major speeches and approximately 15 news interviews.

• This year saw an agreement that we believe will solve a long-running problem at Alyeska Pipeline Service Co.’s tanker terminal in Valdez: hazardous air pollution from the facility that cleans oily residue from tanker ballast water. After lengthy discussions among ourselves, Alyeska, and its oil-company owners, the owners committed to upgrades that should eliminate virtually all of this pollution by the end of 2008. In response, we published newspaper advertisements in

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Valdez and Anchorage commending the owners for their commitment, and we pledged to continue work-ing with them to see the upgrades completed.

• We settled a dispute with Alyeska over the coun-cil’s right to investigate the profitability of oil compa-nies operating on Alaska’s North Slope. Alyeska dropped its claim that the council may not use Aly-eska contract funds for such investigations, and paid half our legal expenses.

• Over a period of years, we participated with Alyeska and the Alaska Department of Environ-mental Conservation in a remarkably cooperative workgroup process to develop an updated oil spill contingency plan for the tanker terminal. The process was such a model of effective interaction among citizens, industry, and regulators that we nominated Alyeska and the environmental conservation depart-ment for recognition from the Pacific States/British Columbia Oil Spill Task Force.

We saw the other side of this coin in a highly unsatis-factory contingency-planning process conducted by the companies that operate oil tankers. Their plan was prepared in private, without citizen participation, and was so deficient when first submitted that it was summarily rejected by the state. The tanker compa-nies returned to the drawing board, set up a highly compressed workgroup process, and invited us to participate. The revised contingency plan for oil tank-ers was approved by the state for public comment, and

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we hope the final version will be comparable in quality to Alyeska’s terminal plan.

• In spring 2006, the council received whistleblower allegations of unsafe welds on some storage tanks at the Valdez tanker terminal. The council began an investigation that, while still in progress, has satis-factorily resolved all but two of 23 issues raised during the inquiry. Those two issues are now being investigated jointly by Alyeska and the council.

The federal Oil Pollution Act of 1990 called on citi-zens, industry and regulators to work as partners to prevent a return to the complacency that led up to the Exxon Valdez oil spill. We believe the accom-plishments of the past year prove that process is working, and we commit to continue it in the coming year.

Mission and Responsibilities

Citizens Promoting Environmentally Safe Operation of the Alyeska Terminal and Associated Tankers

The Prince William Sound Regional Citizens’ Advi-sory Council is an independent non-profit corporation guided by its mission: promoting environmentally safe operation of the Alyeska terminal in Valdez and the oil tankers that use it.

The council’s 18 member organizations are communi-ties in the region affected by the 1989 Exxon Valdez

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oil spill, as well as Alaska Native, aquaculture, com-mercial fishing, environmental, recreation, and tourism groups.

Consistent with its mission, the council’s structure and responsibilities stem from two documents. The first is a contract with Alyeska, which operates the trans-Alaska pipeline as well as the Valdez terminal. Most of the council’s operating funds come from this contract.

The second guiding document, enacted after the council was created, is the Oil Pollution Act, which required citizen oversight councils for Prince William Sound and Cook Inlet. Their purpose is to promote partnership and cooperation among local citizens, industry and government, to build trust, and to provide citizen oversight of environmental compliance by oil terminals and tankers.

The Act allows an alternative, pre-existing organiza-tion to fulfill the requirement for citizen oversight and our council has done so for Prince William Sound since 1991. Each year, the U.S. Coast Guard certifies that the council fosters the general goals and pur-poses of the Oil Pollution Act and is broadly represen-tative of the communities and interests as envisioned in the Act.

The council’s contract with Alyeska pre-dates the Oil Pollution Act, but the similarities in the powers and duties given the council in the two documents are not

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coincidental. Many people involved in the establish-ment of the council also promoted citizen involvement requirements in the federal law.

In accordance with the provisions of the two docu-ments, the council performs a variety of functions aimed at reducing pollution from crude oil transpor-tation through Prince William Sound and the Gulf of Alaska:

• Monitor, review and comment on oil spill response and prevention plans prepared by Alyeska and by operators of oil tankers.

• Monitor, review and comment on the environ-mental protection capabilities of Alyeska and the tanker operators, as well as on the environmental, social and economic impacts of their activities.

• Review and make recommendations on govern-ment policies, permits, and regulations relating to the oil terminal and tankers.

As part of these undertakings, the council regularly retains experts in various fields to conduct independ-ent research and technical analysis on issues related to oil transportation safety.

The Alyeska contract also calls for the council to increase public awareness of the company’s oil spill response, spill prevention and environmental protec-tion capabilities, as well as the actual and potential environmental impacts of terminal and tanker opera-tions.

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The contract states that the council may work on other related issues not specifically identified when the contract was written.

The council was initially funded at $2 million a year. The funding is renegotiated every three years; cur-rent Alyeska funding is approximately $3 million a year. The council’s total annual budget is about $3.7 million.

Although the council works closely with and is funded chiefly by Alyeska, the council is an independent advisory group. The contract is explicit: “Alyeska shall have no right . . . to have any degree of control over the formation or operation of the corporation.”

Oil Spill Prevention

To ensure a maximum level of safety, the council reviews all aspects of the oil transportation system in Prince William Sound. These include operations of oil tankers and the Valdez Marine terminal, oil spills and other incidents, and the adequacy and maintenance of the Coast Guard’s Vessel Traffic Service.

TANKER SAFETY

Escort System

The heart of the system for preventing oil spills in Prince William Sound is the fleet of rescue and re-sponse tugs that accompany loaded tankers out into

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the Gulf of Alaska. Thanks to years of study and analysis, and considerable investment by the ship-ping industry, this system is widely considered the best in the world. This fleet, operated by Alyeska’s Ship Escort Response Vessel System, includes five state-of-the-art 10,000-horsepower tugs that have proved their capabilities in actual incidents, as well as in sea trials observed and reviewed by the council.

Federal law now requires that loaded single-hull oil tankers be escorted by two tugs in Prince William Sound, and current practice is for double-hull tankers to have double escorts as well. However, it’s unclear what will happen as the tanker fleet completes the transition to double-hull vessels, which is expected to happen by the end of 2008, and the federal require-ment becomes moot. After that, the use of double escorts will hinge on voluntary compliance and on state-level requirements, and the council is concerned that the tanker companies may propose to reduce the escort and response system.

As a result, the council in May 2007 adopted a new position on the escort system. It calls for preserving the double-escort requirement, and for strengthening the system with a new requirement regarding the tug kept on station at Hinchinbrook Entrance, where tankers pass from the Sound into the Gulf of Alaska and where they face some of the most extreme sea and weather conditions. That tug would be required to be one of Alyeska’s high-performance Preven-tion/Response Tugs, also known as PRTs, rather than

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a conventional tug as is allowed now during mainte-nance rotations.

Automatic Identification System

In an effort to increase the security and safety of large vessels in U.S. ports, the United States Coast Guard recently required the use of Automatic Identi-fication Systems, or AIS, on all such ships. This system reports the ship’s position and navigational status to the Coast Guard and to all AIS-equipped vessels and ground stations nearby.

The council uses an AIS in its Valdez office to com-pile a data archive describing with great accuracy virtually all tug and tanker traffic in Prince William Sound since early 2006, when our system began operating. Besides providing historical data, we believe, the AIS will increase our ability to monitor the response in real time if a serious oil spill should occur in the Sound.

Iceberg Detection and Avoidance

Icebergs have proved to be one of the greatest haz-ards to tanker navigation in Prince William Sound. In 1989, the Exxon Valdez left the tanker traffic lanes to avoid icebergs, leading to the worst oil spill in North American history. In 1994, the tanker Overseas Ohio collided with an iceberg while coming into Port Val-dez and sustained significant damage to its hull.

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Fortunately, the Ohio was empty and no spill re-sulted.

Council-sponsored research has determined that ice from Columbia Glacier will continue flowing into the tanker lanes for the foreseeable future. After investi-gating several ice detection and reporting technolo-gies, the council, along with several partners, launched a major project to use radar to reduce the navigational risk posed by ice.

A VHF (very high frequency) radar system was installed on Reef Island, near Bligh Reef, scene of the Exxon Valdez disaster. This system began operation in 2002 and continues to operate successfully today. It is linked to Alyeska’s escort system facility and to the Coast Guard’s Vessel Traffic Service, both in Valdez, enabling oil shippers, coastal pilots, escorts, and the Coast Guard to make informed decisions about ship-ping schedules and other ice avoidance measures.

Oil Spill Preparedness & Response

The council has devoted significant resources to prevent-ing oil spills, but the risk cannot be eliminated entirely. We must be prepared to respond quickly and effectively in case prevention measures fail. Two council programs address this need: Oil Spill Prevention and Response Planning, and Oil Spill Prevention and Response Operations.

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OIL SPILL PREVENTION AND RESPONSE PLANNING

State and federal laws require the operators of oil tank-ers, the Valdez Marine Terminal, and the trans-Alaska pipeline to prepare detailed plans showing how they will respond to oil spills should prevention measures fail. The council devotes much time and attention to oversight of these all-important plans.

In many cases, the council participates with govern-ment and industry on the working groups that de-velop these plans, known as contingency plans. The council also conducts independent reviews and sub-mits comments and recommendations.

The council promotes compliance, enforcement, and funding for state and federal regulations and over-sight, and also supports the Alaska Coastal Manage-ment Program. Along with local communities, the council encourages the incorporation of local knowl-edge of sensitive areas into contingency planning.

During the past year, the council reviewed applica-tions for new contingency plans for oil tankers and for the Valdez terminal.

Valdez Marine Terminal Contingency Plan

As discussed at the beginning of this report, the council participated from the earliest stages in devel-oping an updated oil spill contingency plan for Aly-eska’s tanker terminal in Valdez. For several years, a workgroup has met regularly to improve the plan.

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The council participated in this workgroup with the state-federal Joint Pipeline Office, the Coast Guard, Alyeska, and the Alaska Department of Environ-mental Conservation.

Issues tackled by this workgroup included training, storage tank status and inspections, and new contin-gency plan regulations adopted by the state of Alaska in December 2006. The plan is expected to be com-pleted and approved by March 2008.

We consider this one of the most successful such processes we have seen. In recognition, we nominated Alyeska for the Pacific States/British Columbia Oil Spill Task Force 2007 Legacy Award and recom-mended the Alaska Department of Environmental Conservation for honorable mention. (As a member of the Task Force, it is not eligible for the Legacy Award).

Oil Tanker Contingency Plans

As also discussed earlier, a new oil spill contingency plan for tankers in Prince William Sound was sub-mitted to the state of Alaska in February 2007. It had been prepared by the tanker industry in private, without citizen input, and was so deficient that the state declined to put it out for public review and comment. Instead, the tanker companies were di-rected to rework and re-submit it. At that point, the companies did invite citizen involvement, and the council subsequently participated in several work-groups in an effort to improve and clarify the plan.

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Nine areas of concern were addressed, including escort tugs, non-mechanical response tactics such as dispersing or burning floating oil, and Geographic Response Strategies.

In our view, the handling of the oil tanker contin-gency plan – especially in contrast with the develop-ment of the updated plan for the Valdez oil terminal – is a strong illustration of the need for, and value of, transparency and citizen involvement in such proc-esses, as envisioned in the Oil Pollution Act.

Geographic Response Strategies

These are oil spill response mini-plans specific to sensitive areas and resources, such as salmon streams and clamming beaches. The council has long worked to have them included in oil spill contingency plans for Prince William Sound and the Gulf of Alaska.

As this report went to press, a total of 238 Geographic Response Strategies had been completed and another 20 are expected to be completed in the coming year.

Weather and Sea Current Data Collection

Weather conditions and sea currents affect nearly every aspect of oil transportation safety. They can play a role, sometimes the determining role, in efforts to prevent or to clean up oil spills. Consequently, the council promotes constant improvements in the

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system for collecting weather and current information for Prince William Sound.

We are partners with the Cordova-based Oil Spill Recovery Institute in a project to install weather stations in the Sound, many of which incorporate web cameras in addition to data-gathering equipment. Fifteen of the stations are now set up or scheduled to be installed in the near future. Web camera images from many of them are available at http://ak.aoos.org/ pws/web_cams.php on the Internet.

The council is working to deploy gauges to collect data on wave height and frequency in Valdez Arm, where very little such information is available at present.

ShoreZone Mapping

The council has been involved in ShoreZone mapping in Prince William Sound since 2004. ShoreZone mapping involves shooting aerial video of shorelines during the lowest tides of the year. Biologists and geologists aboard the aircraft provide commentary on the video sound tracks during the overflight. Their information is used to create detailed maps and databases of the shorelines that were videotaped; in addition, the video itself becomes part of the Shore-Zone information bank.

The council’s primary goal in ShoreZone mapping is to have this detailed information available for use in oil spill response planning (including the preparation

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of Geographic Response Strategies) and in actual responses. However, the information has other uses as well, including education and research unrelated to oil spills.

To date, the council has funded or co-funded mapping of approximately 1,680 miles of shoreline in the Sound, including 745 miles in the past year. When work in the Sound funded by other organizations is completed in the coming year, there will be a continu-ous set of habitat mapping data stretching from Southeast Alaska to Kodiak.

ShoreZone mapping data – including aerial video imagery – is available to the public at www. CoastAlaska.net on the Internet.

OIL SPILL PREVENTION AND RESPONSE OPERATIONS

It takes more than volumes of carefully written and reviewed contingency plans to effectively respond to an oil spill or to an emergency that could cause one. It also takes equipment, trained people, and a manage-ment system to implement the plan. And it takes practice, practice, practice. The council’s oil spill prevention and response operations program is tasked with monitoring the operational readiness of Alyeska’s Ship Escort Response Vessel System and the tanker companies, and with making sure the council itself is prepared to respond to oil spills and other emergencies.

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Council staff members, volunteers, and contractors monitor and report on spill response drills, exercises, and training throughout the region to provide citi-zens, regulators, and responders with information about the state of readiness and to make recommen-dations for improvement. Most of the monitoring work is done by council staffers, who present annual reports summarizing each year’s activities, lessons learned, recommendations, and outstanding issues.

In the past year, two major multi-day drills were conducted in Valdez. Both of these – one by Exxon-Mobil’s SeaRiver Maritime in September 2006 and another by BP in May 2007 – included over one hundred participants and focused on a process called “transition.” This occurs when the oil company re-sponsible for a spill takes over response management from the Ship Escort Response Vessel System, or SERVS, which manages the initial response.

Alyeska keeps a large fleet of fishing vessels under contract to help with the cleanup in the event of another big oil spill, and the council works to make sure the crews of these vessels have the training and resources they need to be effective.

In March 2007, the council hosted a Fishing Vessel Workshop in Anchorage. The purpose was to provide vessel owners in the program a forum to discuss training and other issues of concern. Officials of the Alaska Department of Environmental Conservation attended, as did a representative from SERVS.

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The Response Gap

The council has long been concerned about the ‘response gap’ – the fact that loaded tankers are allowed to sail through Prince William Sound in weather so harsh that oil recovery would not be possible in the event of a spill.

To address this problem, the council hired a consult-ing firm to analyze the response gap and examine what could be done about it. The consultant con-cluded the gap may be ‘open’ – meaning oil recovery is not possible – as much as two-thirds of the time during the winter, and about one-sixth of the time even in summer. On a year-round basis, the consult-ant estimated, oil recovery in some areas of the Sound is impossible 38.5 percent of the time, or 140 days a year.

The consultant recommended that an effort be started to find ways to improve response capability so as to reduce the response gap. The consultant also recommended additional research into the problem, and the council has taken the first steps to implement those recommendations. The report, Response Gap Estimates for Two Operating Areas in Prince William Sound, is available at www.pwsrcac.org/docs/d0034200. pdf on the council’s website.

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Environmental Protection & Science

The Oil Pollution Act directs our council to review, monitor and comment on Alyeska’s environmental protection capabilities, as well as the actual and potential environmental impacts of terminal and tanker operations. The Act also calls on us to develop recommendations on environmental policies and permits. The council carries out this work through two major programs: Terminal Operations and Environ-mental Monitoring. Under the leadership of the Scien-tific Advisory Committee and the Terminal Operations and Environmental Monitoring Committee, the coun-cil commissions scientific studies to determine actual or potential risks, to document levels of pollution and biological effects, and to better understand new tech-nologies and the environmental costs or benefits that might be associated with their use.

TERMINAL OPERATIONS

Besides posing the risk of a major oil spill caused by earthquake or accident, Alyeska’s Valdez tanker terminal produces ongoing pollution from routine operations, as allowed by its permits from regulatory agencies. The council oversees terminal operations in an effort to minimize the risk of spills, as well as to make sure that pollution is within regulatory limits and that those limits are set at the lowest feasible levels.

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The council has monitored oil loadings at the termi-nal since January 2002. At that time, about 968,000 barrels of North Slope crude moved through the terminal and onto tankers every day. Since then, oil flow has dropped steadily, reaching an average of about 692,000 barrels a day by May of 2007. That’s barely more than a third of what the trans-Alaska pipeline carried to Valdez at its peak of about 2 million barrels a day in the early 1990s.

However, the value of the oil moving through the terminal has gone up, not down, because crude oil prices have risen so sharply. In 2002, the oil moving through Valdez was worth about $8.4 billion; in 2006, the value was $15.8 billion.

Even at a shore facility like the oil terminal, Prince William Sound weather can cause problems. Unusu-ally windy conditions during the winter of 2006-2007 sent waves breaking over the booms placed around tankers at the terminal to contain spills during loading. This required a shutdown of loading opera-tions at a time when Alyeska had taken four of its 18 large oil storage tanks out of service. As a result, the 14 tanks still in service became so full that North Slope oil production and trans-Alaska pipeline opera-tions were affected.

Situations like this are why the council pays such close attention to oil flow and tank levels at the terminal, and to the actions that Alyeska and regu-lators take to manage high inventory levels in the storage tanks. Alyeska has reported that it is

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seriously considering returning another tank to service, which would give a total of 15.

Air and Water Quality

The terminal is a major source of volatile organic compounds and other air pollutants, primarily because of hydrocarbon vapors released at the Ballast Water Treatment Facility. Some of these emissions are known carcinogens and may be affecting health or the quality of life in Valdez. The council is working to reduce concentrations of hazardous air pollutants in Valdez and at the terminal.

The vapors are released because some tankers arrive in Valdez with significant quantities of oily ballast water carried in cargo tanks to provide navigational stability during the trip north.

This water is cleaned at the ballast water facility, where concentrations of specified pollutants in the water are reduced to permitted levels of a few parts per million before it is discharged into Port Valdez. These discharges occur under a National Pollutant Discharge Elimination System permit issued by EPA and a separate permit issued by the Alaska Depart-ment of Environmental Conservation. The council reviews the permit applications during the renewal process, which last occurred in January 2005.

Until recently, the system included almost no effort to control the hydrocarbon vapors released during the three-stage treatment process. The council worked

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with Alyeska and, for the first time, the oil companies that own it to get a commitment from the owners to reduce these vapor emissions. The efforts were largely successful, as recognized by the council in a series of newspaper advertisements in late 2006.

Since then, the council has collaborated with Alyeska on development of vapor controls for the ballast water facility, and work is well under way on fixes for the first two stages of the three-stage process.

However, Alyeska has experienced considerable difficulty in finding a suitable replacement for the third stage. It consists of two large open-air pools where bacteria eat some of the hydrocarbons still in the ballast water while other hydrocarbons are given off as vapors. Alyeska has been active in prototyping and testing processes that offer promise for control-ling these third-stage vapors.

Terminal Integrity Issues

Since 2006, the council has been investigating con-cerns raised by whistleblowers about faulty welds, incorrect welding procedures, and regulatory indiffer-ence during work that occurred in 2002 on four tanks that store crude oil, ballast water, or diesel fuel at the terminal. While it appears that some welding irregu-larities may have occurred, Alyeska maintains that all welds are safe. As this report goes to press, Aly-eska and the council have joined forces to retain an independent tank welding expert to review the mat-ter.

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Earthquake Risks

Alyeska’s Valdez tanker terminal was designed to withstand earthquakes as strong as the Good Friday earthquake that devastated Valdez and many other Alaska coastal areas in 1964.

However, the Good Friday earthquake is now believed to have been more severe than originally thought, so the council is concerned that the terminal might suffer serious or catastrophic damage in another such event.

The council retained experts to review seismic safety at the terminal. While their report is not final, one preliminary finding is that major earthquakes in the area may be more frequent than previously thought. It had been estimated that a Good Friday-scale earthquake could occur every 2,500 years, but the experts concluded from landslide evidence that an-other large earthquake occurred in the area only 1,000 years ago.

ENVIRONMENTAL MONITORING

Chemical Dispersants

Chemical dispersants are substances that, when applied to spilled oil, are claimed to do as their name suggests: they disperse it into the water column, rather than leaving it floating on top in a slick. The council promotes research and testing to in-crease knowledge about chemical dispersants and

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the environmental consequences of their use on oil spills in Alaska waters.

The council has voiced concerns about efficacy, toxic-ity, resurfacing, and other dispersant issues for years, urging regulatory agencies to take a conservative approach towards their use. Because outstanding questions have not been answered and research has not demonstrated that dispersants would even work in the waters of Prince William Sound, these concerns remain largely unaddressed and the council continues its advocacy for research into the many questions about dispersant use in cold seawater.

The council’s formal position on dispersants, adopted in May 2006, is as follows:

After years of observing dispersant trials, dis-persant effectiveness monitoring, advising and sponsoring independent research regarding chemical dispersant use, it is the position of the Prince William Sound Regional Citizens’ Advisory Council (the Council) that dispersants should not be used on Alaska North Slope crude oil spills in the waters of our region. Until such time as chemical dispersant effectiveness is demonstrated in our region and shown to minimize adverse ef-fects on the environment, the Council does not support dispersant use as an oil spill response op-tion. Mechanical recovery and containment of crude oil spilled at sea should remain the primary methodology employed in our region.

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Aquatic Nuisance Species

Not all ballast water discharged in Port Valdez re-quires treatment to remove oil. Some tankers employ segregated ballast tanks where “clean” sea water is used for stability. This “clean” ballast is filled with living organisms that are discharged with it into Prince William Sound and Port Valdez as tankers approach the Alyeska terminal for loading. Because of the potential for invasions by harmful species, the council has made this issue a high priority since 1996.

In partnership with the U.S. Fish and Wildlife Ser-vice, NOAA’s Sea Grant program, Alyeska, and the University of Alaska Fairbanks, the council has co-sponsored a series of scientific studies conducted by the Smithsonian Environmental Research Center since 1997. At present, our financial partners are the U.S. Fish and Wildlife Service and the National Park Service.

The Smithsonian researchers were involved in two major efforts for the council this past year. The first was a pilot project to monitor for the presence of non-native tunicates, or sea squirts, because they can grow in high densities and cause problems for other marine species. The council staff helped by setting up monitoring stations at the Valdez Marine Terminal in the summer of 2006 and following up with another Port Valdez monitoring station in 2007. The 2006 monitoring in our region did not turn up harmful

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invasive tunicates. The 2007 monitoring is part of a global monitoring effort.

The Smithsonian researchers submitted a draft report forecasting the northward spread of four invasive species to Alaska waters. The report con-cludes that all four species – an invasive barnacle, the European green crab, the club tunicate, and the Atlantic periwinkle – could find suitable environ-ments in Alaska waters to survive and could be indicative of other invasive species spreading to Alaska:

“Our analyses indicate that Alaskan coastal wa-ters are at risk of invasion by nonindigenous spe-cies now present in western North America. . . . conditions exist in Alaska and other uncolonized regions that could support populations of all four species examined. More broadly, these results suggest that many nonindigenous species along the west coast may have the capacity for north-ward spread to Alaska.”

The council continues to stay active in an effort to establish a state-wide invasive species group that we hope will foster proactive management strategies, among other things. Other participants in this group include regulators, academia, and other non-governmental organizations.

In addition, we hold seats on the national Invasive Species Advisory Committee, the Western Regional Panel of the National Aquatic Nuisance Species Task

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Force, and the West Coast Ballast Outreach Project Advisory Committee.

For many years, the council has sponsored a trapping effort in Port Valdez for the European green crab, which has traveled up the West Coast from San Francisco Bay at an alarming rate. Although it has not been reported in Alaska, it is of concern because ballast water is a known pathway for this crab. We have expanded the green crab monitoring network by working with organizations and students in our region. We expect the expansion to continue in the upcoming year and to be supported in other regions through a network being established by the Kache-mak Bay Research Reserve. This will provide consis-tency in monitoring across the state.

The council organized a successful film festival with a major focus on invasive species as part of the Alaska Forum on the Environment held in February 2007. This was a great opportunity to provide important invasive species information in an entertaining fashion to a larger environmental community in Alaska.

More information on the council’s invasive species program can be found at www.pwsrcac.org/projects/ NIS on the Internet.

Regional Environmental Monitoring

In 1993, the council established a Long-Term Envi-ronmental Monitoring Program, called LTEMP, that

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continues today. It is designed to assess the status of hydrocarbon levels in our region, as well as long-term trends and any new developments that could have an effect on the levels.

Samples are collected at 10 intertidal sites in Prince William Sound and the Gulf of Alaska. Mussel tissues and sediments from the sites are analyzed in a labo-ratory to determine whether hydrocarbons are accu-mulating and, if so, their source. The result is the largest chronological set of data for hydrocarbons in Prince William Sound ever compiled. This data set is available for use by other researchers.

In the coming year, data from 1993 to 2005 will be analyzed by an independent contractor to evaluate how well the project is meeting its objectives and to help the council coordinate future environmental monitoring efforts.

A related project is investigating whether local fish species can accumulate hydrocarbons in their bodies by eating contaminated food from the marine envi-ronment.

Many LTEMP reports, along with additional informa-tion on the program, are available at www.pwsrcac. org/projects/EnvMonitor/ltemp.html on the council website.

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Outreach

MEMBER RELATIONS

The council has a full-time staff position, called Outreach Coordinator, to maintain productive rela-tions with the 18 communities and interest groups that make up its membership. The coordinator visits communities in the region, attends member group functions, gives presentations, coordinates special events involving the council and its member groups and generally encourages citizen involvement in the council’s work.

Outreach activities in the past year included partici-pation at events in such council communities as Homer, Seldovia, Valdez, Kodiak, Cordova, Seward, Tatitlek, and Chenega Bay. The council’s information booth was also set up at numerous conferences and meetings in places ranging from Anchorage to Seattle to Montreal to Edmonton.

The council has produced a film on educational and career opportunities in the areas of marine science and seafaring, and is developing a 30-minute film history of the Exxon Valdez oil spill. It will include personal interviews and footage of the spill, and will help commemorate the 20th anniversary of the spill in the spring of 2009.

The council has also updated and posted on its web-site an oil spill curriculum for use in schools, and has

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brought out the fourth edition of its coloring book for children.

CITIZEN OVERSIGHT AROUND THE WORLD

The Oil Pollution Act designates the Alaska citizens’ councils as demonstration programs. In the years since our birth, we have seen the citizen oversight movement spread worldwide, and we have increas-ingly become a resource for citizens elsewhere who hope to establish their own programs.

In the fall of 2006, the council provided information to Congress on the question of a citizen oversight group for Alaska’s North Slope. Interest in such a group rose after BP experienced pipeline leaks that eventually led to the shutdown of about half the Prudhoe Bay oil-field. Some of the council information was added to the Congressional record by Sen. Lisa Murkowski, but, so far, no such group has been formed.

In May 2007, the council’s executive director traveled to Finland and Estonia at the request of the U.S. State Department to discuss oil spill prevention and response strategies with citizens of those countries. We stand ready to continue sharing the lessons we’ve learned since 1989 about the value of citizen over-sight, and how to make it work.

PUBLICATIONS

The council increases public awareness on a wide range of issues pertaining to crude oil transportation through printed and electronic publications.

App. 31


The Observer, a free quarterly newsletter, is distrib-uted throughout Prince William Sound, the northern Gulf of Alaska, lower Cook Inlet and the Kodiak Archipelago. The Observer is also sent on request to interested citizens elsewhere, as well as to regulators and industry. In addition, it is posted on the council website, www.pwsrcac.org.

The Observer covers council activities, developments in the oil transportation industry and news about policy and operational issues related to marine oil transportation. Major oil spill drills are covered, and Alyeska is invited to submit a column for each issue. In the course of preparing articles for The Observer, the council frequently invites feedback from appro-priate industry and regulatory personnel.

We publish a concise monthly email newsletter, The Sound Approach, which includes such regular de-partments as “Council News,” “Reading Room,” and “Featured Links.” It also offers interesting tidbits about our region, oil transportation, and related topics.

The council maintains an extensive, award-winning website, www.pwsrcac.org, which provides informa-tion about our work, membership, mission, and projects. The council makes available a 14-minute video about its origins, mission and activities. This video, titled “A Noble Experiment: The Story of the Prince William Sound Regional Citizens’ Advisory Council,” is shown at conferences and other events attended by the council, and is distributed free to

App. 32


member entities for use in informing their constitu-ents about the council. It can be viewed at video. google.com/videoplay?docid=39275729294009273 on the Internet. The council also places public service an-nouncements about its work, mission, and concerns on radio stations in the Exxon Valdez oil spill region. Many of these announcements feature council volun-teers telling about their own lives and why they decided to donate their time and energy to the coun-cil’s work. These announcements are available for playback at www.pwsrcac.org/newsroom/radio.html on the council website.

And, once a year, the council summarizes its work in an annual report such as this one.

STATE GOVERNMENT RELATIONS

The council monitors state actions, legislation and regulations that relate to terminal or tanker opera-tions, or to oil spill prevention or response. To track developments in the state capital, the council retains a monitor under contract during the legislative session. This area of council activity is coordinated by a Legislative Affairs Committee made up of members of the council board. During the legislative sessions of 2007, the committee focused its efforts on securing adequate long-term funding for the Alaska Depart-ment of Environmental Conservation’s Division of Spill Prevention and Response.

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FEDERAL GOVERNMENT RELATIONS

The council monitors federal government actions and issues through contract representatives in Washing-ton, D.C. During the past year, we have increasingly focused on legislation to address the problem of aquatic nuisance species. In particular, we have monitored and been active on the issue of requiring domestic oil tankers bound for Valdez to exchange their ballast water at sea to reduce the threat of Alaska waters being invaded by non-indigenous species.

RECERTIFICATION

The Coast Guard certifies the council as the federally approved citizens’ advisory group for Prince William Sound, pursuant to the Oil Pollution Act. The council has been the certified group since 1991.

Under the annual recertification process, the Coast Guard assesses whether the council fosters the gen-eral goals and purposes of the Act and is broadly representative of the communities and interests as envisioned in the Act.

As part of its recertification process, the Coast Guard considers comments from industry, interest groups, and citizens. The council fulfills the requirement for an industry-funded citizens advisory group, but it was established before the law was enacted.

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Board of Directors

WHO WE ARE

The council is an organization of organizations. Our members include state-chartered cities and boroughs, tiny Alaska Native villages with tribal governments, Native corporations, commercial fishing organiza-tions, an environmental consortium, and groups representing the tourism industry.

Each member entity chooses one representative to our board. The lone exception is Valdez. It has two repre-sentatives, giving our board a total of 19 members. The board meets three times a year. The January meeting is in Anchorage, the May meeting is in Valdez, and the September meeting rotates among other member communities in the oil spill region.

Who serves on the board?

The names and faces change, but current and recent board members have included commercial fishermen, a schoolteacher, the chief executive of a regional Native corporation, tour-boat operators, an oilfield engineer, and a village mayor.

* * *

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Committees

As of June 30, 2007

Four standing committees advise the Board of Direc-tors and the council staff on projects and activities. Committee volunteers also assist the staff on individ-ual projects. The advisory committees are made up of interested citizens, technical experts, and members of the council board. Committee volunteers are selected through an annual application process. They are appointed to two-year terms and may serve consecu-tive terms.

Papers, Presentations, Reports,

and Media Releases

An Assessment of the Role of Human Factors in Oil Spills from Vessels. Nuka Research, 8/1/2006. 852.431.060801.NukaHumanFac.pdf

Contingency Plan Considerations for the Prince William Sound Tanker Escort System. Harvey Consulting and Nuka Research, 8/14/2006. 801.431.060814.CPConsideratn.pdf

Review of The Status of Fire Protection Facili-ties and Fire Team Readiness at Alyeska’s Val-dez Marine Terminal. Loss Control Associates, 8/23/2006. 554.431.060823.LCAvmtRpt.pdf

Report on the Non-Mechanical Response for the T/V Exxon Valdez Oil Spill. Citizens’ council, 8/30/2006. 955.431.060830.EVOSresponse.doc

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Briefing Paper on the Role of Statutorily Estab-lished Citizen Oversight Councils in the Conduct of Oversight of Oil Transportation Operations, Facilities and Procedures. Citizens’ council, 9/1/2006. 270.107.060901.RCACBackgrnd.doc

2004-2005 Long Term Environmental Monitor-ing Report. James R. Payne, William B. Driskell, Jeffrey W. Short, and Marie L. Larsen, 11/1/2006, 951.431.061101.AnnualLT2005.pdf

Biological Invasions in Alaska’s Coastal Marine Ecosystems: Establishing a Baseline. Smithsonian Environmental Research Center, 11/1/2006. 952.431. 061101.BioInvasions.pdf

Corrosion Crisis Shows Need for Citizen Over-sight at Prudhoe Bay. Guest editorial opinion by John Devens, 11/9/2006.

Prince William Sound Escort and Response System and Policies. Nuka Research and Planning Group, LLC., 12/1/2006. 801.431.061201.IssuesPolicy. pdf

Response Gap Estimates for Two Operating Areas in Prince William Sound. Nuka Research and Planning Group, LLC., 12/22/2006. 756.431.061222. NukaRGFnlRpt.pdf

VMT System Integrity Issues Summary of Find-ings of Facts, Allegations and Recommendations. Harvey Consulting, 4/5/2007. 505.431.070405.HrvyTank Find.pdf

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White Paper: The Imperative to Protect Alaska Waters from Aquatic Invasive Species. Citizens’ council, 6/1/2007. 952.107.070601.AquInvasSpec.pdf

Different Outcomes on Oil Spill Plans Show Value of Citizen Involvement. Guest editorial opinion by John Devens, 5/14/2007.

These are just a few of the many reports, papers, presentations, and media releases produced by the council in the past year. For further information, or to obtain copies, visit the council website or contact either council office (see facing page).

* * *

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C:\Documents and Settings\Sherry\Desktop\Briefs Ready to Print\Amodes\20356ab01.doc Last saved by Amy Last printed: 1/26/08 6:26 AM Attorney: Amodio

THEN AND NOW – CHANGES IN OIL TRANS-PORTATION SINCE THE EXXON VALDEZ SPILL

1989-1999

Prince William Sound Regional Citizens’ Advisory Council

[Pictures Omitted In Printing]

TABLE OF CONTENTS

Introduction ............................................................ 2

I. Prevention – Reducing The Size And Fre-quency Of Oil Spills ..................................... 4

II. Response – Reducing The Harm From Oil Spills............................................................. 14

III. Operational Pollution – Protecting The Environment When There’s Not A Spill...... 22

Conclusion: Citizen Involvement ........................... 26

Cover Photos:

Fishing vessel towing boom: Randy Brandon.

Cook Inlet Setnetters: Oil Spill Public Information Center.

Cleaning oiled beach: Oil Spill Public Information Center.

Background photo of tanker with tethered tug: Patrick C. Welch

Page 6 background photo: © Dennis Remick

App. 39


The Prince William Sound Regional Citizens’ Advisory Council is an independent, non-profit corporation formed after the 1989 Exxon Valdez oil spill to mini-mize the environmental impacts of the trans-Alaska pipeline terminal and tanker fleet. The council has 18 member organizations, including communities af-fected by the Exxon Valdez oil spill and groups repre-senting Alaska Native, aquaculture, environmental, commercial fishing, recreation and tourism interests in the spill region. The council is certified under the federal Oil Pollution Act of 1990 as the citizens’ advi-sory group for Prince William Sound, and operates under a contract with Alyeska Pipeline Service Co. The contract, which is in effect as long as oil flows through the pipeline, guarantees the council’s inde-pendence, provides annual funding, and ensures the council the same access to terminal facilities as state and federal regulatory agencies.

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INTRODUCTION – THEN & NOW

The Exxon Valdez oil spill was not simply a freak accident. While Exxon Corp. was immediately re-sponsible, other factors were also at work. The oil industry, government agencies, elected officials and the citizens of Alaska share responsibility for the complacency that allowed the spill to occur and failed to ensure a prompt, effective cleanup.

The oil industry failed to maintain adequate systems for preventing and responding to oil spills.

Regulatory agencies failed to protect public re-sources because of ineffective or inadequate oversight.

State and federal elected officials failed to pass laws strong enough to protect the environment and give regulatory agencies the funds they needed to protect public resources.

Except for a few outspoken local citizens, most Alaskans simply failed to pay attention.

The result was a spill on March 24, 1989, of about 11 million gallons* of North Slope crude oil into Prince William Sound less than 30 miles from Valdez, the city for which the tanker had been named. The ship ran aground on Bligh Reef after leaving the

* Oil volumes are stated in gallons in this report for the convenience of the general reader. The oil industry, however, measures oil in barrels of 42 gallons. The Exxon Valdez spill was about 260,000 barrels.

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designated tanker lanes because of earlier reports of icebergs in the area.

The Exxon spill could have been averted by stronger prevention practices and more vigilant government oversight. Better response planning in advance could have lessened the impacts of the spill.

Birds, beaches and otters were oiled and people in the region suffered psychological and economic harm. In some cases, the ill effects of the spill linger today.

This publication explores how factors that led to the nation’s worst oil spill have been addressed in the decade since. Much has been done. New and revised federal and state laws and regulations are in place, and the oil industry operates with a heightened awareness of the consequences of a catastrophic spill.

Are the resources and communities of Prince William Sound and the Gulf of Alaska safer from a major oil spill than they were in 1989? Can Alaskans now relax?

The Prince William Sound Regional Citizens’ Advisory Council, which produced this report, be-lieves Alaska waters and the communities affected by the Exxon spill are, in fact, safer today. But we can never relax. Continued vigilance is essential to en-sure that protections are not diluted and gains are not lost as memories of the spill fade.

Indeed, as this report goes to press, oil prices are in one of their periodic slumps and the industry is announcing cutbacks in several areas of its operations. Much to the council’s concern, some of these cutbacks

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– such as layoffs of spill-response personnel and delays in the construction of double-hull tankers – have the potential to affect safety. In the council’s view, safety is a fixed cost of transporting oil and should not be subject to the vagaries of the oil market.

The council is an independent non-profit organi-zation formed after the Exxon Valdez oil spill to promote environmentally safe operation of the crude oil terminal in Valdez and the tankers it serves.

Under a contract with Alyeska Pipeline Service Co., we monitor and advise Alyeska on terminal operations, spill prevention, response planning, and other environmental issues. We conduct independent research, monitor regulatory activity and advise tanker owners and operators, regulatory agencies and the public on issues related to oil transportation and its environmental impacts.

Our 18 member organizations include communi-ties affected by the Exxon Valdez oil spill and interest groups with a stake in the affected region.

The federal Oil Pollution Act of 1990 requires an industry-funded citizens’ advisory group for Prince William Sound; we are certified as meeting that requirement.

The views expressed here are ours, and we are solely responsible for the content of this report.

– Prince William Sound Regional Citizens’ Advisory Council

March 24, 1999

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I. PREVENTION – REDUCING THE SIZE AND FREQUENCY OF OIL SPILLS

History shows that oil, once spilled on the sea, is never fully contained and recovered. Despite im-provements in containment and cleanup technology, it has proven impossible to recover all the oil from a major spill even under the best of conditions. Indeed, the best-laid response plans in the world are no guarantee that any spilled oil will be recovered from the water since severe weather can defeat even a good plan.

The first line of defense must be prevention.

VESSEL TRAFFIC AND NAVIGATION

The U.S. Coast Guard’s Vessel Traffic Service functions as the waterway manager for major ship-ping including tankers traveling to and from Alyeska Pipeline’s Valdez Marine Terminal. The traffic service includes the Coast Guard’s control center in Valdez, a system of designated lanes for separating inbound and outbound tankers, and electronic equipment for determining and displaying the positions of tankers in or near Prince William Sound.

Numerous improvements have been made to the traffic service since 1989. These changes enhance the traffic center’s ability to monitor inbound and out-bound tankers and to provide them with traffic advisories.

App. 45


Ten years ago, radar coverage was limited, failing to detect the Exxon Valdez as it grounded on Bligh Reef less than 30 miles from the Coast Guard traffic center in Valdez. Today, the system has been up-graded to provide better resolution in varying weather conditions and at an extended range. The integration of satellite positioning data allows track-ing of all tankers from the Valdez terminal through Hinchinbrook Entrance, where Prince William Sound opens into the Gulf of Alaska.

Coast Guard personnel now track tankers con-tinuously in the Valdez Narrows and as often as once a minute in the rest of the Sound and out into the Gulf of Alaska.

In 1989, only two people were on duty in the Vessel Traffic Center when the Exxon Valdez ran aground. Today, a third person, the watch supervisor, is present to oversee the radar and radio watch standers. Qualifications and training for watch standers have also been upgraded and expanded.

Reporting and communications have been up-graded by the industry. New repeater towers installed by Alyeska Pipeline allow better communication between tankers and the Valdez Marine Terminal.

App. 46


TANKER OPERATIONS AND ESCORT SYSTEM

The Exxon Valdez was traveling without an escort vessel at about 14 mph* when it approached icebergs northwest of Bligh Reef and deviated from the established tanker lanes to avoid the ice.

Today, loaded tankers in Prince William Sound are subject to speed limits, are under constant escort, and normally must remain in the tanker lanes at all times.

The Coast Guard has always required loaded tankers to have a tug escort through the Valdez Narrows. Now, a system of close escorts and vessels on station covers the tanker route from the berths at Valdez to the Gulf of Alaska at Hinchinbrook En-trance.

Each loaded tanker has at least two escorts; in Valdez Narrows, one of the escorts must actually be tethered to the tanker’s stern. Another special restric-tion in Valdez Narrows: In times of high winds, three escorts are required.

At the north end of the Sound (from the Valdez terminal to Bligh Reef) and at the south end, where tankers enter the Gulf of Alaska via Hinchinbrook

* In 1998, oil shippers and Alyeska began using the “Protec-tor,” a class of tractor tugs more powerful and maneuverable than the conventional tugs that had been used. The Protector tugs are being replaced by new and even more powerful tugs. (See Page 7.) Photo courtesy Crowley Maritime, Inc.

App. 47


Entrance, all escorts must stay within a quarter-mile of the tanker.

However, in the central part of the Sound – from Bligh Reef to Hinchinbrook Entrance – there is more sea room and only one of the escorts is required to stay within a quarter mile of the tanker. The other escort – called a “Sentinel” – may be stationed a few miles away at one of three points along the route, where it remains under way for quick response.

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After a tanker leaves Prince William Sound, a rescue tug must stay on station near Hinchinbrook Entrance until the tanker is at least 17 miles out to sea.

Escort vessels have several important functions: to watch for and report any sign of problems with a tanker, to assist if a tanker encounters trouble, and to provide the first response should a spill occur, as described in Section II.

At least one of the escorts is equipped with containment boom, oil skimmers, a work boat to deploy boom, storage capacity and a trained response crew.

Within the Sound, tankers are subject to various speed limits. The highest speed limit, 12 mph, applies in Port Valdez and Valdez Arm. The lowest, 6 mph, applies in Valdez Narrows.

In central Prince William Sound there is, techni-cally speaking, no speed limit. However, the tankers can’t outpace their escort vessels, creating an effec-tive speed limit of about 12 mph.

TANKER CREWS

Until 1989, signs of alcohol use did not prevent tanker crews from returning to their vessels through the terminal. Now, under alcohol screening proce-dures instituted by Alyeska Pipeline, all tanker captains are given breath tests an hour before sailing. Crew members suspected of consuming alcohol are

App. 50


tested; any with blood alcohol content of 0.04 percent or greater are denied access to the terminal and their vessel.

In 1989, a state-certified ship’s pilot was required to be aboard loaded tankers only until they reached Rocky Point, about 20 miles out from the terminal. Now the pilot remains aboard as far as Bligh Reef.

In all parts of Prince William Sound, two of the ship’s licensed deck officers must be on the bridge at all times. A federally licensed pilot is also required; that role is normally filled by one of the deck officers. (A pilot is a licensed mariner familiar with local waters who is required to be aboard ship to assist the crew in prescribed areas.)

Today, unlike in 1989, federal law limits the number of hours crew members may work, to reduce the risk of fatigue-induced accidents.

In addition, tanker crews – as well as tugboat officers and state coastal pilots – receive bridge simulator training under conditions reproducing tug and tanker interactions in Prince William Sound.

Also, on-water rescue training has been in-creased for tugboat and tanker officers.

TANKER INSPECTIONS

The structural integrity of the tanker Exxon Valdez was not an issue in its grounding. However, in 1988, a report issued by the Coast Guard identified

App. 51


the Valdez fleet as disproportionately affected by structural failures. The problem was underscored in January 1989, when the tanker Thompson Pass spilled 71,000 gallons of crude oil at the terminal because of cracks in its hull. The Coast Guard and the state of Alaska now require more stringent in-spections of tankers vulnerable to structural failure.

In addition, all tankers docked at the Valdez Marine Terminal are now surrounded with contain-ment boom while oil is transferred.

WEATHER CONSIDERATIONS

Weather restrictions on tanker traffic were insti-tuted after the Exxon Valdez oil spill.

The Valdez Narrows are now closed to large tankers when the wind exceeds 35 mph; when it exceeds 46 mph, smaller tankers are banned, too.

In addition, Hinchinbrook Entrance is closed to tankers if the wind exceeds 52 mph or the seas exceed 15 feet.

In the past, lack of information about weather and sea conditions in Prince William Sound and Hinchinbrook Entrance was a problem. Because of wind patterns and local topography, readings from the wind measuring station at Potato Point are not always a reliable gauge of actual conditions. The lack of other reporting stations in the Sound meant that frequently the only information available about wind and sea conditions was from a vessel already under

App. 52


way, or from a weather station at Middleton Island, in the Gulf of Alaska more than 100 miles from Valdez.

In 1995, that changed when weather equipment was installed at Potato Point, at Bligh Reef, in the center of Prince William Sound and at Hinchinbrook Entrance. The new equipment reports wind speed and direction, barometric pressure, temperatures, and wave action.

Thanks to the efforts of the citizens’ council, the oil industry and regulators, Congress appropriated $500,000 to pay for the buoys. In 1998, weather equipment was installed on Middle Rock so that wind speeds in the Valdez Narrows would be more accu-rately reported.

MONITORING AND OVERSIGHT BY REGULA-TORY AGENCIES

The Alaska Department of Environmental Con-servation and the U.S. Coast Guard are the agencies most directly responsible for oversight and monitor-ing of the Valdez Marine Terminal and oil tanker traffic. After the Exxon Valdez oil spill, both agencies were criticized for failing to either implement or enforce adequate prevention measures.

Changes have been made in both agencies.

At the state level, the Exxon Valdez oil spill focused public and political attention on the need for the Department of Environmental Conservation to

App. 53


have the authority and funding to monitor and over-see terminal and tanker operations, programs which had been under-funded through the late 1970s and ’80s.

After 1989, state funding increased significantly for spill drills, facility and vessel inspections, and review of the voluminous oil spill contingency plans prepared by Alyeska Pipeline and the oil shipping companies.

Oil-related functions were consolidated into one division, called Spill Prevention and Response. State legislation passed in 1990 provided the authority, resources and funding that the Department of Envi-ronmental Conservation needed to monitor and oversee industry operations and implement spill prevention and response programs. New regulations implemented in 1998 require the industry to employ the best available technology in oil spill prevention and response.

The Department of Environmental Conservation now has the authority, which it didn’t have before, to require and enforce prevention measures as a condi-tion for approval of oil spill contingency plans. Those measures include more training, more equipment, more inspection and maintenance of equipment, better record-keeping and specific requirements for loaded tankers.

The Coast Guard is the federal agency most affected by the Exxon Valdez. As a result of the prob-lems that emerged from the spill, the Coast Guard

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has a more direct role in spill prevention and re-sponse and much greater regulatory oversight of the oil transportation industry. It is responsible for implementing most of the new prevention measures required by the Oil Pollution Act of 1990 and by other federal regulations passed later.

ICE STUDIES

According to a 1995 study co-sponsored by the citizens’ council, the oil industry, and regulators, one of the most serious remaining risks to tankers in Prince William Sound is posed by icebergs from Columbia Glacier.

This glacier has been disintegrating and retreat-ing rapidly since 1980. Each year, it calves thousands of icebergs into Columbia Bay, about 25 miles south-west of Valdez. Some of these icebergs drift into the tanker lanes.

Besides playing a role in the Exxon Valdez grounding, ice from Columbia Glacier caused another major accident in 1994, when the empty tanker Overseas Ohio struck a berg and suffered more than $1 million in damage to its bow.

The citizens’ council is funding research to find ways to predict when icebergs are likeliest to enter the tanker lanes, and technology to detect them in the water.

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DOUBLE HULLS

One of the most important steps taken to prevent and reduce oil spills like the Exxon Valdez is the federal requirement that all oil tankers in U.S. wa-ters have double hulls by 2015. Double hulls are to be phased in, with existing vessels in the Valdez trade to be converted or replaced on a schedule that depends on size and age.

Double hulls are important because studies indicate they can eliminate or dramatically reduce the size of oil spills. In the case of the Exxon Valdez, a Coast Guard study said a double hull could have cut the size of the spill by 60 to 80 percent.

Double-hulled vessels existed long before 1989, and more have been built since then. As this report was being prepared in early 1999, ARCO had three new double-hulled vessels under construction for the Prince William Sound trade.

However, only three double-hull tankers – all under charter to BP – were in actual service in the Sound. Some other tankers had double bottoms and some operators were leaving outer tanks partly empty to reduce oil loss in the event of a hull punc-ture.

Most of the tankers calling at the terminal in Valdez were built in the 1970s and the age of the fleet is becoming a concern to the citizens’ council.

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In addition, the council is concerned about possi-ble slowdowns to the phaseout schedule in the Oil Pollution Act.

Until 1998, an ambiguity in the act permitted single-hull tankers to be remeasured – a process where their cargo capacity was reduced – in order to extend how long they could stay in service. Four such vessels that operate in Prince William Sound were remeasured before Congress eliminated the ambigu-ity in 1998. The council will be vigilant against other provisions that would permit single-hull tankers to remain in service past their original retirement dates.

The Coast Guard is currently considering a request from the oil industry to allow single-hulled tankers to extend their retirement dates by being retrofitted with double bottoms or double sides. The council is opposing this proposal, supporting a strict interpretation of the Oil Pollution Act that would take aging single-hull tankers out of service on the origi-nal schedule.

II. RESPONSE – REDUCING THE HARM FROM

OIL SPILLS

Prevention measures can reduce the size and frequency of oil spills. But prevention efforts will never become fail-safe, so the industry, regulatory agencies and the public must be prepared to respond to spills that do occur. It is incumbent upon those who handle and carry crude oil, as well as regulatory agencies and the public, to make sure that spilled oil

App. 57


is contained and recovered to the greatest extent humanly possible.

The speed and effectiveness of the response to an oil spill depend on the availability of equipment, resources and trained personnel, on planning and preparation and, ultimately, on favorable weather.

CONTINGENCY PLANS

Anyone who handles or transports crude oil or refined products as cargo must have a government-approved contingency plan for preventing and re-sponding to spills. What must be in the plan and what must be provided in the way of drills, training, acquisition of equipment, etc., are determined by state and federal laws and regulations. The require-ments depend on the type of vessel or facility, the location, and the amount and type of cargo involved.

Alyeska Pipeline was required to have a contin-gency plan before the Exxon Valdez spill, but it was not well implemented. Spill-response duties were assigned to personnel with other day-to-day opera-tional tasks and equipment was not adequately maintained. The initial response in March 1989 was slow, ineffective and poorly coordinated.

Since then, state and federal agencies have expanded plan requirements and changed some of the assumptions. The federal Oil Pollution Act of 1990 and Alaska state laws passed after the Exxon Valdez

App. 58


spill led to the first regulations requiring contingency plans for individual tankers.

Those who must have contingency plans to operate must provide greater assurances that per-sonnel are being trained, that equipment and re-sources are available to be mobilized quickly, and that all players have practiced their roles in preparation for an actual spill.

The size of spill assumed in a response plan makes a tremendous difference in the resources and equipment that must be available. Alyeska Pipeline’s 1987 contingency plan, approved by the state, said a spill of 8.4 million gallons (three-quarters the size of the Exxon Valdez spill) was highly unlikely and reasoned that “Catastrophic events of this nature are further reduced because the majority of tankers calling on Port Valdez are of American registry and all of these are piloted by licensed masters or pilots.”

Both state and federal law now require planning for larger potential spills than in the past, and re-quire more spill response equipment to be immedi-ately available.

Plan holders must have enough equipment immediately available to deal with a spill of 12.6 million gallons of oil (slightly larger than the Exxon Valdez spill) within 72 hours.

They must also plan for spills of almost 40 mil-lion gallons, but may rely more on equipment to be

App. 59


brought in from outside the Prince William Sound area for these larger spills.

As the consortium that operates the trans-Alaska pipeline and terminal for its seven owner companies, Alyeska Pipeline holds the contingency plans for spills on the pipeline and at the Valdez tanker termi-nal.

In Prince William Sound, the tanker owners and operators must have their own approved contingency plans, although they contract with Alyeska Pipeline to provide the initial response described in the plans.

Under these contracts, Alyeska Pipeline manages the spill response for up to the first 72 hours after a spill. After that, it may transfer management of the response to the spiller, so long as the U.S. Coast Guard and the Alaska Department of Environmental Conservation agree that the spiller or its representa-tive is ready to take over.

EQUIPMENT READY

The first three days after the Exxon Valdez oil spill afforded nearly ideal weather for oil recovery. Seas and winds were calm. But the equipment wasn’t ready. Seventeen hours after the grounding, neither the leading edge of the spill nor the grounded tanker had been boomed and the few skimmers on-scene were operating ineffectively. Skimming soon halted because there was no more room to store the recov-ered oil-water mixture.

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Throughout the first few days, debate raged about use of dispersants. Exxon argued for wide-spread dispersant use, but didn’t have enough dis-persant or the equipment to do the job and never received regulatory approval.

The situation now is quite different. Prince William Sound is home to Alyeska Pipeline’s Ship Escort/Response Vessel System, or SERVS, one of the top oil spill response forces in the world.

SERVS has several functions. It helps tankers navigate safely through Prince William Sound and responds to a tanker problem or a spill. SERVS also responds to spills on the southern portion of the trans-Alaska pipeline and at the Valdez tanker ter-minal.

SERVS employs approximately 200 trained personnel; another 60 people comprise Alyeska Pipe-line’s crisis management team in the event of a spill.

The SERVS escort/response vessels are equipped to tow or otherwise assist tankers. Also, some carry spill response equipment and can contain, recover and – to a limited extent – store oil.

At least one escort vessel is always within a half-mile of each loaded tanker and in radio communica-tion with the tanker’s bridge until it reaches Seal Rocks, outside Hinchinbrook Entrance. After that, a rescue tug stands by until the tanker is 17 miles into the Gulf of Alaska.

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Trained Alyeska Pipeline response crews are on duty around the clock and the response fleet is on standby alert whenever a loaded tanker is traveling in the Sound.

SERVS’ response resources include 35 miles of containment boom (versus less than five miles in 1989), 37 high-volume skimming systems, barges to receive recovered oil and water mixture, and equip-ment to pump and transfer oil-water mix. SERVS also has 3,600 feet of fire boom with helicopter-carried igniter systems. Equipment is tested in drills and exercises, to reduce the chances of confusion and surprises in an actual incident.

Four open-water task forces, each with a trained crew and a large barge with three skimming systems on-board, are stationed in Prince William Sound. Two are in Port Valdez – the body of water where the city of Valdez and the Alyeska tanker terminal are lo-cated. The other two task forces are located elsewhere in the Sound, along the tanker route to Hinchinbrook Entrance.

Today, Alyeska Pipeline has at its disposal more than 60 skimming systems with a combined recovery capacity of over 12 million gallons of oil-water mix-ture in 72 hours. In 1989, only 13 systems were available; their combined capacity was about 1.2 million gallons in 72 hours.

Dispersants are now stockpiled in Anchorage, Valdez and outside Alaska, along with equipment to deliver them from ships, airplanes and helicopters.

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Current state and federal laws and regulations hold that dispersants should be used only if it is clear that mechanical cleanup methods such as booming and skimming won’t work. The citizens’ council supports these laws and opposes efforts to loosen these restrictions.

Among the council’s concerns is the scarcity of reliable scientific data about the efficiency, toxicity and persistence of dispersants and dispersed oil in actual Prince William Sound/Gulf of Alaska condi-tions. The council is participating in design of a study to resolve these questions.

More generally, the council is concerned that the oil industry may not be able to import spill-response equipment from outside the Prince William Sound region with the rapidity and in the quantities called for in the contingency plans. In a September 1998 drill, BP demonstrated it could import and deploy limited quantities of equipment from outside the region, but the council will continue to press govern-ment regulators to ensure the industry can perform on the scale required in this area.

NEARSHORE RESPONSE

Some of the changes since 1989 put more empha-sis on shoreline protection, identification of sensitive areas such as hatcheries, and wildlife protection. A new term was coined – Nearshore Response – to describe the effort to protect shorelines threatened by spilled oil that has escaped initial containment.

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Nearshore response is a major component of spill response, in which local personnel, knowledge and resources can be used to protect critical resources and shorelines. Industry groups, the citizens’ council and regulatory agencies have worked cooperatively to develop nearshore response plans.

Local fishing vessels are part of Alyeska Pipe-line’s planned nearshore response. They are used, among other things, to transport response equipment, deploy and tend boom, and mobilize pre-staged equipment to protect fish hatcheries. Alyeska Pipe-line has provided response training to over 300 fish-ing boats and their crews. The fishing vessels, based in communities in Prince William Sound, the Kenai Peninsula and Kodiak Island, are under contract with Alyeska Pipeline to respond to spills if willing and available at the time of an incident.

The oil industry has stockpiled spill containment and removal equipment at five fish hatcheries in Prince William Sound and at five community re-sponse centers that have been established in the Sound. They are at Chenega, Cordova, Tatitlek, Whittier and Valdez.

Two similarly equipped centers have been set up outside Prince William Sound. They are in Kodiak and Seldovia, and were established by the communi-ties and the state of Alaska.

Each center provides manpower, equipment, and coordination of emergency responses. Response training for fishing vessel operators is provided by

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the industry, the state of Alaska, the Coast Guard and the communities themselves.

Storage capacity for recovered oil was a problem in the 1989 recovery effort, when only a single barge with room for 500,000 gallons of oil was available. Boats would pick up the emulsified oil, only to find there was nowhere to put it. Alyeska Pipeline now maintains storage capacity, much of it on barges, for over 34 million gallons of recovered oil and water mixture. However, the availability of adequate stor-age for recovered oil is still an outstanding question. The citizens’ council has requested demonstrations to verify that lack of storage won’t hinder nearshore oil recovery operations.

The oil industry is much better prepared today for nearshore response than it was a decade ago, but there is still room for improvement. The council believes the latest versions of the plans aren’t specific enough about where boats and other equipment for nearshore response will come from. In particular, the council believes the full implementation of the near-shore plans as written would require the use of more commercial fishing vessels than are likely to be available at one time.

DRILLS, MANAGEMENT AND OTHER ASPECTS OF RESPONSE

Spill drills enable response personnel to become knowledgeable and proficient in the strengths and weaknesses of equipment and procedures. Before

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1989, there were no major oil spill drills; today, major drills are conducted once a year, with frequent smaller drills. The major drills include state and federal agencies, fishing vessels, tanker owners and operators and the citizens’ council.

An important aspect of spill response imple-mented since 1989 is use of the National Interagency Incident Management System, an incident command system first developed by fire fighters in California to coordinate management, resources and roles during an emergency response.

In Alaska, this approach integrates the party responsible for the spill, the state and the Coast Guard in a unified command structure that expands according to need. It also establishes a pre-determined decision-making process and a common language that significantly reduces confusion and misunderstandings among personnel from different organizations. This structure has been adapted by industry and government agencies to define and coordinate their roles and responsibilities in the event of a spill. The Incident Command System has been tested and practiced extensively in drills.

The Incident Command System’s need for quick, wide-ranging communications is supported by a radio repeater system installed to cover Prince William Sound, Cook Inlet and parts of the Gulf of Alaska.

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STATE FUNDING FOR SPILL RESPONSE

After the Exxon Valdez oil spill, an existing spill response fund was expanded to ensure that reserves would be available for a major oil spill and to provide a long-term funding source for the state of Alaska’s spill prevention and response programs. The money for this expanded role comes from a 5-cent conserva-tion surcharge on every barrel of oil produced in Alaska. The surcharge drops to 3 cents when the reserve set aside for oil-spill response reaches $50 million; if the reserve is drawn down in an actual response, the surcharge rises to 5 cents again until the reserve is replenished.

FEDERAL FUNDING FOR SPILL RESPONSE

To ensure that money will be available to pay for responding to and cleaning up major spills nation-wide, the federal Oil Pollution Act required estab-lishment of a $1 billion oil spill liability trust fund, funded by the oil industry.

The Oil Pollution Act strengthened federal au-thority to order spill cleanup action and requires the Coast Guard to direct spill response actions when any spill poses a risk to public health or safety. It also provides tougher criminal penalties and higher civil penalties for the spiller.

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COMMUNITY IMPACTS

Technological disasters, such as the Exxon Valdez spill, disrupt communities in many ways.

The most obvious and tangible disruptions occur to the ordinary flow of goods, services, and jobs. For example, the spill created thousands of high-paid jobs in cleanup work. As a result, ordinary employers in communities – village stores, Native corporations and city governments – lost workers and found it even harder to function normally during the crisis.

These kinds of disruptions are highly visible and usually straightforward to remedy. But disasters also damage communities in ways that are less obvious and longer-lasting.

For example, studies of Prince William Sound communities indicate that mental health problems caused by the Exxon spill still linger a decade after the event.

In 1989, there was no plan for helping communi-ties deal with such problems.

Today, the citizens’ council is applying the results of several years of socio-economic research to produce a guidebook explaining how communities can deal with technological disasters. Some strategies: a newspaper education program; training for commu-nity professionals such as school teachers, clergy, police and mental-health counselors; and even train-ing so that community members can provide basic mental-health counseling to each other.

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With the guidebook’s assistance, the council hopes communities and individuals will be able to understand what a technological disaster is, how it differs from a natural disaster, what to expect during the disaster, and how to find help. The guidebook will be available in 1999.

III. OPERATIONAL POLLUTION – PROTECT-

ING THE ENVIRONMENT WHEN THERE’S NOT A SPILL

While it was the Exxon Valdez accident that focused world attention on Prince William Sound 10 years ago, a catastrophic spill is not the only risk posed by the crude oil trade. The Sound and its residents are also at risk of pollution from routine operations – such things as small spills of crude oil or refined products by tankers and other vessels at the Valdez terminal, leaks or permitted discharges from the terminal itself, air pollution, and even the inva-sion of Prince William Sound by non-native sea life.

LONG-TERM ENVIRONMENTAL MONITORING

In 1993, the citizens’ council started long-term environmental monitoring at nine sites in Prince William Sound and the Gulf of Alaska. The sites are monitored for hydrocarbons in the water and sedi-ment. Samples are collected in summer and late winter. Results are presented in an annual report.

This information provides a benchmark for assess-ing the ongoing impacts of routine tanker and terminal

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operations. In addition, it will permit a better before-and-after assessment of the impacts if there is an-other catastrophic spill.

BALLAST WATER TREATMENT

Tankers arriving in Valdez carry ballast water in the same tanks used to haul crude oil south. This water, which picks up oil from the residue in the tanks, has to be off-loaded before the ships can take on a new cargo of crude oil.

A facility at Alyeska’s tanker terminal receives this oily seawater, treats it, and discharges it into Prince William Sound at the rate of 16 million gallons a day.

The environmental effects of this wastewater, which carries traces of oil even after treatment, has been a concern for local citizens since oil first flowed through the Trans-Alaska Pipeline.

In the decade since 1989, the treatment plant has been improved, meaning less oil in the treated water going into the Sound. The levels of the most harmful compounds in the treated ballast water have fallen dramatically.

Still, the news is not all good. Oil is present in bottom sediments near the treatment facility, and in some “hot spots,” organisms that live in those sedi-ments are dropping in number and variety. And the facility continues to release petroleum vapors into the

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air, including cancer-causing benzene, from its basins and tanks.

In early 1999, Alyeska was working with the citizens’ council and regulators to map the zone of contaminated mud. And the company agreed to put a device on the treatment plant’s outlet pipe to continu-ously monitor the amount of petroleum hydrocarbons being discharged into public waters.

VAPOR CONTROLS

When tankers load crude oil at Alyeska Pipeline’s Valdez terminal, thousands of tons of oily vapors containing the potent cancer-causing chemical ben-zene are forced out of their tanks. For two decades after oil first flowed through the trans-Alaska pipe-line in 1977, those vapors were vented to the air, creating a health hazard for workers at the terminal and nearby residents.

In early 1998, Alyeska Pipeline activated equip-ment that captures those vapors and either burns them or pumps them into the crude oil storage tanks at the tanker terminal.

The citizens’ council was a long-time advocate of vapor controls, and was pleased with the federal government’s decision to require them at two of the terminal’s four tanker berths.

However, the state of Alaska’s official projections of future North Slope oil production have increased since the vapor control project began. The council now

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believes that oil production may exceed the handling capacity of the two berths equipped with vapor con-trols.

Accordingly, the council has called on Alyeska Pipeline to install vapor controls at a third berth. As of early 1999, the company was still analyzing the need for the third control system.

ALIEN INVADERS

Some ports, including the Great Lakes and San Francisco Bay, have been invaded by species not indigenous to the area. These non-indigenous species can compete with native species and cause severe ecological and economic damage. One example is the zebra mussel, a fresh-water species blamed for clog-ging intake pipes and displacing native species in many parts of the Lower 48.

The citizens’ council has an ongoing project to study whether Prince William Sound is at risk of being colonized by non-indigenous species arriving in the ballast water of oil tankers.

Such invaders often arrive in the ballast water carried from one waterway to another by tankers and other large ships, raising concerns that the millions of tons of ballast water flushed from oil tankers could result in similar problems in Prince William Sound.

In 1997, the citizens’ council and several co-sponsors began a study of the invasion risk in Prince William Sound. The council’s pilot study showed that

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plankton are abundant and diverse in the arriving ballast water and that some are not indigenous to Prince William Sound. The consultants doing the study concluded the Sound is at risk of invasion as a result, and the study was extended into 1999.

This effort includes further investigation into the content and management of ballast water as well as collection and analysis of samples from the Sound to see what non-indigenous species have already become established.

Further, the American Petroleum Institute contributed money to study whether exchanging ballast water at sea is a practical way of keeping non-indigenous species out of the Sound, and tanker companies have supported the effort with test ex-changes during their trips north. This technique is of interest because mid-ocean waters typically carry fewer organisms than coastal waters, and mid-ocean species tend not to thrive if discharged near shore.

CONCLUSION:

CITIZEN INVOLVEMENT – A NEW TOOL FOR COMBATTING COMPLACENCY

Perhaps the most radical innovation to come out of the Exxon Valdez oil spill was the establishment of permanent, industry-funded citizens’ councils to oversee both the oil transportation industry and its government regulators.

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Before 1989, there was no mechanism, other than public hearings by regulatory agencies, for citizens to advise the oil industry or otherwise speak directly on operations affecting their communities and liveli-hoods. Earlier attempts by Prince William Sound residents to give their input to oil industry represen-tatives were generally met with negative responses.

That began to change in the summer of 1989, when then-Alyeska Pipeline President James Hermil-ler actively supported formation of the Prince William Sound Regional Citizens’ Advisory Council with Alyeska funding.

The citizens’-council concept was written into federal law in 1990, when Congress identified com-placency on the part of the oil industry and govern-ment regulators as a root cause of the Exxon Valdez spill. In the Oil Pollution Act of that year, Congress mandated citizens’ councils for Cook Inlet and Prince William Sound as a tool to prevent that complacency from re-emerging as memories of the spill faded.

The citizens’ councils are the third leg of a tripod supporting safer oil transportation, the other two being industry and government.

While each of the three legs has an interest in environmental safety, the citizens’ councils are unique in having no mission except promoting safety and informing the public about it, while industry and government must manage competing missions.

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Industry must balance the need for environ-mental protection against the pressure for profits, while government agencies are always subject to political pressure to promote economic development and minimize the regulatory burden on industry.

The citizens’ councils, by contrast, are relatively free from political and financial pressure.

For the Prince William Sound citizens’ council, our long-term contract with Alyeska provides a fairly stable base of funding. At the same time, our advisory role and our diverse, community-based board largely insulates us from direct lobbying and the other usual forms of political pressure. We are immediately accountable to those we represent, the people and groups with the most to lose from another catastro-phic oil spill in Prince William Sound. They include communities and interest groups in a region stretch-ing from the Sound itself to Kodiak Island to lower Cook Inlet – all areas that were touched by oil from the Exxon Valdez spill.

Our influence depends on the quality of our analytical work on oil transportation safety, not on regulatory powers or political connections.

None of this can guarantee that complacency will not set in again, but we do serve as an early warning system to alert industry, government and the public of problem areas.

We monitor terminal and tanker operations, we conduct independent research and we advise industry

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and government on ways to prevent oil spills and respond effectively if spills do occur.

One of our jobs is to monitor the adequacy of spill response, so we participate in drills and actual re-sponses in several ways. Our representatives convey local concerns, advice and observations to the officials managing the response. They also help communicate developments in the response effort to local communi-ties.

By 1995, the safeguards adopted after the Exxon Valdez spill had reduced the likelihood of another such accident by 75 percent, according to a risk assessment study of tanker operations in the Sound.

Many risks remain and there is still room for improvement, of course, but this should not obscure the very substantial overall progress made by indus-try, regulatory agencies and the citizens we represent.

We at the Prince William Sound Regional Citi-zens’ Advisory Council believe Alaska’s people and environment are better protected from marine oil spills today than they were in 1989. We intend to do all in our power to make sure this is still true on March 24, 2009, the 20th anniversary of the Exxon Valdez tragedy.

* * *

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C:\Documents and Settings\Sherry\Desktop\Briefs Ready to Print\Amodes\20356ac01.doc Last saved by Amy Last printed: 1/26/08 6:15 AM Attorney: Amodio

Importance of Maintaining the Prince William Sound Escort System for Double-Hulled Tankers

Report to Prince William Sound Regional Citizens’ Advisory Council

[All Pictures And Maps Omitted In Printing]

December 3, 2004

Prepared by: Nuka Research and Planning Group, LLC

[LOGO] P.O. Box 175 Seldovia, Alaska 99663 tel 907.234.7821 fax 509.278.4406 [email protected]

Table of Contents

Introduction .................................................................5

Issue Summary .........................................................5

Discussion .....................................................................6

Description of PWS Escort System ..........................6

Escort System Protects Against Spills Caused by Human Factors ....................................................7

Escort System Provides National Security Benefit .....................................................................10

Conclusions .................................................................10

Ensuring Continued Operation of the PWS Escort System .........................................................10

Recommendations for PWSRCAC Position ...............10

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Importance of Maintaining the Prince William Sound Escort System for Double-Hulled Tank-ers

Report to the Prince William Sound Regional Citizens’ Advisory Council December 3, 2004

Introduction

The Prince William Sound tanker escort system is one of the most significant prevention pro-grams in place to prevent oil spills from laden tankers transiting Prince William Sound (PWS). Laden oil tankers are escorted by two high-powered tugs, in varying configurations, from the time they leave the dock at the Valdez Marine Terminal (VMT) until the tanker has transited safely into the Gulf of Alaska.

The Oil Pollution Act of 1990 (OPA 90) mandates that “single hulled tankers over 5,000 gross tons transporting oil in bulk shall be escorted by at least two towing vessels” as they travel through areas of PWS.1 U.S. Coast Guard regulations at 33 CFR 168 implement this requirement by out-lining the responsibilities of tanker operators, de-fining the specific geographic bounds of the escort system, and establishing operational standards and performance requirements for laden tankers and escort tugs.

1 P.L. 101-380, Section 4116(c).

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The Vessel Escort and Response Plan (VERP), which was developed by the PWS tanker owners, has been approved by the Coast Guard as the plan of operations for the PWS escort vessels. The introduction to the VERP states that the plan is “designed as a port specific plan to pro-vide information regarding the capabilities of the Prince William Sound Escort vessels and operat-ing procedures for the effective use of these es-corts in the event of an equipment failure aboard the tanker.”2

Issue Summary

The federal statutes and regulations that require the operation of the PWS tanker escort system specify that escort tugs are required for single-hulled, laden tankers only.3 However, the intro-duction to the VERP implies that the escort sys-tem shall be utilized by all laden tankers, regardless of hull configuration: “These proce-dures apply to all tankers operating in Prince William Sound.”4

Federal law calls for the phase out of all single-hulled oil tankers trading at US ports by 2010, and the phase out of older double-bottomed ves-sels by 2015.5 According to industry estimates, the Trans-Alaska Pipeline Service (TAPS) tanker fleet will be comprised of 100% double-hulled

2 Vessel Escort and Response Plan, Alyeska-SERVS, 2001. 3 33 CFR 168.20 and P.L. 101-380, Section 4116(c). 4 Vessel Escort and Response Plan, Alyeska-SERVS, 2001. 5 46 USC Sec. 3703a.

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vessels by as early as 2007, and many of these vessels will have redundant safety and operating systems. At that point, the disposition of the fed-eral requirement for the PWS escort system is unclear. The VERP language suggests that the system is intended for operation beyond single hull phase out, but there is no clear regulatory guidance. As the system currently operates, the same escort configuration is applied for all laden tankers, even the newer double-hulled, redun-dant tankers. PWSRCAC appreciates and com-mends the TAPS shippers for adhering to the existing PWS escort system for double-hulled tankers by recognizing that two escort vessels as-signed to each laden tanker (single or double hull) is a best practice.

Because of this ambiguity regarding the long-term operation of the PWS tanker escort system, which is such a critical safety and prevention measure, Prince William Sound Regional Citi-zens’ Advisory Council (PWSRCAC) has devel-oped this report to confirm its strong support for the continued operation of the escort system in its present configuration and to recommend po-tential avenues for ensuring its continued opera-tion.

Discussion

Description of PWS Escort System

Escort vessels are typically high-powered tugs that are assigned to a specific tanker during its transit through a specific water body. The Prince William Sound escort vessels have several

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important functions. They watch for and report any sign of problems with a tanker and are available to assist if a tanker encounters trouble. They also provide the first response should a spill occur. The escort vessel system is further strengthened by safety measures that include speed limits and weather restrictions.

The 2001 VERP describes the operation of the PWS escort system for laden and ballasted tank-ers. Several different types of escort vessels are described.

• An escort vessel is any vessel that is assigned and dedicated to a tanker dur-ing escort transit and is fendered and outfitted with towing gear.

• An escorting response vessel is a ves-sel fitted with skimming and onboard storage capabilities practicable for the initial oil recovery planned for a cleanup operation.

• An enhanced tractor tug (ETT) refers to the Prince William Sound class tugs.

• A Hinchinbrook tug is a vessel capa-ble of ocean escort and rescue service. The vessel is stationed in the vicinity of Hinchinbrook Entrance (HE) to provide assistance as a sentinel escort for tank-ers in ballast transiting HE, and laden tankers transiting into or out of the Gulf of Alaska to 17 miles off Cape Hinchin-brook. This vessel may also be utilized

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as a close escort for laden tankers tran-siting through HE.

• A primary escort is a PWS class (ETT) or Prevention and Response class tug (PRT). A Protector class tug may be the primary escort for tankers 90,000 DWT or less, provided an escorting response vessel is also assigned to the transit.

• A sentinel escort is a vessel stationed in Northern Sound, Central Sound, or HE to provide assistance to tankers.

The PWS escort system operates on the basis of several different zones that require different es-cort vessel configurations and capabilities based on navigational considerations and other risk fac-tors (Figure 1). The normal escort procedures for laden tankers (inbound or outbound) specify that at least two escort vessels must be assigned to each laden tanker transiting the Sound. As de-scribed above, the primary escort must be an ETT or PRT, in most cases. An escort vessel that is fitted with skimming and onboard storage ca-pability must either be part of the escort convoy or be pre-positioned on sentinel duty during the transit.

In the Northern Prince William Sound zone, two escort vessels must maintain close escort (within 1/4 nm of the tanker), except when one of the es-corts is also serving as an ice scout. The primary escort must be tethered to the laden tanker as it transits Valdez Narrows.

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In the Central Prince William Sound zone, the primary escort must maintain close continuous contact (within 1/4 nm of the tanker), while the second escort may be a sentinel vessel stationed underway off Bligh Reef or east of Naked Island, or off Montague Point, based on the tanker’s loca-tion in the Sound.

At Hinchinbrook Entrance, outbound laden tank-ers must maintain two close (within 1/4 nm of the tanker) escorts. The Hinchinbrook tug may serve as one of these escorts. Inbound laden tankers must have two vessels in close escort beginning before they cross the line between Cape Hinchin-brook Light and Seal Rocks.

Once an outbound laden tanker reaches Hinchin-brook Entrance, a sentinel escort is stationed un-derway between Cape Hinchinbrook and Seal Rocks until the tanker reaches a point 17 miles seaward of Cape Hinchinbrook.

Escort System Protects Against Spills Caused by Human Factors

The U.S. Coast Guard estimates that nearly 85% of oil spills and marine accidents can be attrib-uted to human factors – either individual errors or organizational failures.6 Technological im-provements such as double hulls can reduce the severity of an oil spill caused by grounding, colli-sion, or allision, but they cannot interrupt the

6 USCG. 1998. Safety: We are the enemy. Safety Alert. http://www.uscg.mil/hq/g-m/moa/docs/sa0998.htm accessed 9/14/04.

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chain of events that may cause the accident to oc-cur in the first place. Redundant steering or pro-pulsion systems increase the chances of recovering from certain navigational emergencies before they can lead to a serious incident, but these systems are only as good as the people that operate them. As new technologies come online, they create the need for new training and job aids to ensure that human operators put the technology to use properly. In coming years as double-hulled oil tankers are phased in, the hu-man element will continue to be a significant risk factor.

In a recently published article, the Coast Guard historian writes, “Technology has eliminated or greatly reduced many of the other variables that have historically created the circumstances for shipwrecks and maritime disasters.” Yet, despite these advances, “casualties caused by human er-ror such as the Feb 4, 1999 grounding of the Panamanian-flagged bulk carrier New Carissa will continue.”7 This sentiment, that advances in technology and engineering cannot overcome the proclivity for human error, is repeated in count-less publications about marine accidents in gen-eral, and oil spills in particular.

The significant role of human and organizational error as an oil spill cause is directly relevant to the issue of maintaining the PWS tanker escort

7 Browning, R.M. Jr. “Ship Ashore: An Overview of Marine Vessel Casualties” Proceedings of the Marine Safety and Security Council of the U.S. Coast Guard Vol 61, No. 1, Spring 2004.

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system. As more and more double-hulled, redun-dant tankers are phased into the vessel fleet, it is possible that the Prince William Sound shippers may suggest that the prevention gains realized through these mechanical and technological im-provements somehow justify a reduction in the configuration of the PWS escort system. This would amount to a major step backward in spill prevention.

A 1998 study by the National Research Council (NRC) confirmed that advances in vessel technol-ogy, such as double hulls and redundant systems, do not erase the need for additional prevention measures.8 The NRC report considered the re-sults of outflow analyses, which attempt to measure the prevention value of double hulls by assessing how oil outflow might be reduced or avoided in an incident involving a double-hulled vessel as compared to a single hull. These outflow analyses showed that four out of every five oil spills attributable to collisions and groundings would be eliminated, and a two-thirds reduction would be realized in the total volume of oil spilled from collisions and groundings. These predictions validate the popular belief that double hulls have a significant and positive effect on reducing the

8 NRC, 1998. Double Hull Tanker Legislation: An Assess-ment of The Oil Pollution Act of 1990. National Academy Press, Washington, D.C. See a full analysis of the human factors issue in DeCola, “In Search of the Double Hull Mariner: Assessing the Contribution of Human Factors to Oil Spills from Vessels and Measuring the Effectiveness of Prevention Programs,” report to PWSRCAC, November 2004.

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risk and the severity of oil spills, however they also show that double hulls are not a perfect pre-vention measure, thus enforcing the need to con-tinue with other prevention programs.

The PWS tanker escort system is currently util-ized by double-hulled, redundant tankers that trade at the Valdez Marine Terminal. Since the escort system has been in place, there have been no major oil spills from PWS tankers, and 2003 was the first spill-free year for PWS tankers since the pipeline was built, with not a single drop of crude oil spilled in the Sound by the TAPS tanker trade. The escort system certainly contributed to this success, and there is no rea-sonable justification for removing or reducing such an effective, proven prevention program.

Escort System Provides National Security Benefit

As national attention is increasingly focused on issues of port security, it is important to recog-nize the value of the PWS tanker escort system as a security measure. By facilitating the safe passage of laden tankers through the Sound, the escort system protects against the potential for accidents caused by a number of factors, includ-ing acts of war or terrorism. The escort tugs have rescue and assist capabilities that may save a vessel, her crew, and cargo in the event of a secu-rity incident.

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Conclusions

Ensuring Continued Operation of the PWS Escort System

The only way to ensure the continued operation of the PWS escort system is through a legal or regulatory imperative. It is essential that such a directive specify that the system continues to op-erate in its current state where two escort vessels are assigned to each laden tanker in varying con-figurations depending upon location in PWS.

There are several potential mechanisms for cre-ating this imperative. The U.S. Coast Guard could develop new regulations or amend existing regulations at 33 CFR 168 to specify that the two escort system in PWS applies to double-hulled and redundant tankers as well as single-hulled vessels. The State of Alaska could also develop such a requirement through the rulemaking au-thority of the Department of Environmental Con-servation. A states’ right to regulate escort vessels in well-defined geographic areas based on special considerations is borne out in U.S. case law through United States v. Locke, 529 U.S. 89 (2000) and Ray v. Atlantic Richfield Co., 435 U.S. 151 (1978).

Until a regulatory solution is implemented, the Coast Guard Captain of the Port (COTP) in PWS could use his authority to implement a Regulated Navigation Area that requires the escort system to operate in its current configuration, or he could develop a COTP directive that requires each individual tanker operator to continue to

App. 87


comply with the escort system as currently con-figured.

Recommendations for PWSRCAC Position

In order to express support for the continued op-eration of the PWS tanker escort system in its current configuration, PWSRCAC should con-sider adopting the following position.

“Maintaining a strong and reliable escort fleet and preserving the practice of requiring two escorts for laden tanker transits is es-sential to the safe transportation of oil in Prince William Sound. As the TAPS tanker fleet composition moves toward full compli-ance with the Oil Prevention Act of 1990 double hull requirements, the risk of another major tanker spill to the waters of Prince William Sound will decrease. But it would be dangerous and imprudent to allow these im-provements in vessel engineering to replace proven prevention programs that have been implemented in the years since the Exxon Valdez spill.

The Prince William Sound tanker escort sys-tem safeguards against oil spills caused by navigational errors, severe weather, and human or organizational failure. The Prince William Sound Regional Citizens’ Advisory Council, as part of its mission to promote the environmentally safe operation of the Aly-eska Pipeline marine terminal in Valdez and the oil tankers that use it, supports the con-tinued operation of the PWS tanker escort

App. 88


program in the configuration described in the 2001 Vessel Escort and Response Plan, whereby: two escorts stay in close configura-tion through Northern Prince William Sound with the primary escort tethered through Valdez Narrows; one close escort and a sen-tinel are assigned through Central Prince William Sound; two close escorts are main-tained through Hinchinbrook Entrance; and a sentinel is stationed until a laden tanker reaches a distance of 17 miles seaward of Cape Hinchinbrook.”

No. 07-219

IN THE

Supreme Court of the United States __________

EXXON SHIPPING COMPANY, ET AL., Petitioners,

v.

GRANT BAKER, ET AL., Respondents. __________


for the Ninth Circuit __________ BRIEF OF STATE OF MARYLAND

AND 33 OTHER STATES AS AMICI CURIAE IN SUPPORT OF RESPONDENTS __________

DOUGLAS F. GANSLER ATTORNEY GENERAL JOHN B. HOWARD, JR. DEPUTY ATTORNEY GENERAL STEVEN M. SULLIVAN* SOLICITOR GENERAL 200 Saint Paul Place Baltimore, Maryland 21202 Telephone: (410) 576-6300 COUNSEL FOR AMICI CURIAE

*Counsel of Record

Dustin McDaniel Attorney General of Arkansas 200 Tower Bldg. 323 Center Street Little Rock, AR 72201-2610 Edmund G. Brown, Jr. Attorney General of California 1300 I Street, Suite 1740 Sacramento, CA 95814 Richard Blumenthal Attorney General of Connecticut 55 Elm Street Hartford, CT 06141-0120 Joseph R. Biden III Attorney General of Delaware Carvel State Office Bldg. 820 N. French Street Wilmington, DE 19801 Thurbert E. Baker Attorney General of Georgia 40 Capitol Square, SW Atlanta, GA 30334-1300 Mark J. Bennett Attorney General of Hawaii 425 Queen Street Honolulu, HI 96813 Lawrence Wasden Attorney General of Idaho Statehouse Boise, ID 83720-1000

Lisa Madigan Attorney General of Illinois James R. Thompson Ctr. 100 W. Randolph St. Chicago, IL 60601 Tom Miller Attorney General of Iowa Hoover State Office Bldg. 1305 East Walnut Des Moines, IA 50319 Jack Conway Attorney General of Kentucky 700 Capitol Avenue Capitol Bldg., Suite 118 Frankfort, KY 40601 James D. Caldwell Attorney General of Louisiana P. O. Box 94095 Baton Rouge, LA 70804-4095 G. Steven Rowe Attorney General of Maine State House Station 6 Augusta, ME 04333 Douglas F. Gansler Attorney General of Maryland 200 St. Paul Place Baltimore, MD 21202-2202

Lori Swanson Attorney General of Minnesota State Capitol, Suite 102 St. Paul MN 55155 Jim Hood Attorney General of Missis-sippi Department of Justice P. O. Box 220 Jackson, MD 37205-0220 Jeremiah W. Nixon Attorney General of Missouri Supreme Court Bldg. 207 W. High Street Jefferson City, MO 65101 Mike McGrath Attorney General of Montana Justice Bldg. 215 N. Sanders Helena, MT 59620-1401 Jon Bruning Attorney General of Nebraska State Capitol P. O. Box 98920 Lincoln, NE 68509-8920 Catherine Cortez Masto Attorney General of Nevada Old Supreme Court Bldg. 100 N. Carson Street Carson City, NV 89701

Kelly Ayotte Attorney General of New Hampshire State House Annex 33 Capitol Street Concord, NH 03301-6397 Anne Milgram Attorney General of New Jersey Richard J. Hughes Justice Complex 25 Market Street, CN 080 Trenton, NJ 08625 Gary King Attorney General of New Mexico P. O. Drawer 1508 Sante Fe, NM 87504-1508 Andrew Cuomo Attorney General of New York Dept. of Law - The Capitol 2nd Floor Albany, NY 12224 Roy Cooper Attorney General of North Carolina Dept. of Justice P.O. Box 629 Raleigh, NC 27602-0629

Wayne Stenehjem Attorney General of North Dakota State Capitol 600 E. Boulevard Avenue Bismarck, ND 58505-0040 Marc Dann Attorney General of Ohio State Office Tower 30 E. Broad Street Columbus, OH 43266-0410 Hardy Myers Attorney General of Oregon Justice Bldg. 1162 Court Street, NE Salem, OR 97301 Patrick Lynch Attorney General of Rhode Island 150 S. Main Street Providence, RI 02903 Henry McMaster Attorney General of South Carolina Rembert C. Dennis Office Building P. O. Box 11549 Columbia, SC 29211-1549

Larry Long Attorney General of South Dakota 1302 East Highway 14 Suite 1 Pierre, SD 57501-8501 Robert E. Cooper Attorney General of Tennessee 500 Charlotte Avenue Nashville, TN 37243 Mark Shurtleff Attorney General of Utah State Capitol, Room 236 Salt Lake City, UT 84114-0810 Rob McKenna Attorney General of Washington 1125 Washington St, SE P.O. Box 40100 Olympia, WA 98504-0100 Darrell V. McGraw, Jr. Attorney General of West Virginia State Capitol 1900 Kanawha Blvd., E. Charleston, WV 25305

i TABLE OF CONTENTS

INTEREST OF AMICI CURIAE.................................... 1

STATEMENT .............................................................. 4

SUMMARY OF ARGUMENT .................................... 6

ARGUMENT............................................................... 8

I. The Court Should Be Guided By Widely Accepted State Common Law Principles Of Vicarious Liability For Punitive Damages And Reject Exxon’s Test..................................... 8

II. The Clean Water Act Does Not Preclude The Common Law Remedy Of Punitive Damages As Relief For A Claim That The Clean Water Act Indisputably Permits............... 17

CONCLUSION .......................................................... 21

ii


Page(s) CASES

Albuquerque Concrete Coring Co. v. Pan Am World Servs., 879 P.2d 772 (N.M. 1994) .......................... 14

Allen v. Camden & Philadelphia Steamboat Ferry Co., 46 N.J.L. 198 (N.J. 1884) ..................................... 10

American Export Lines, Inc. v. Alvez, 446 U.S. 274 (1980)................................................9

American Soc’y of Mech. Eng’rs v. Hydrolevel Corp., 456 U.S. 556 (1982)................................................9

Askew v. American Waterways Operators, Inc., 411 U.S. 325 (1973)...................................18, 19, 21

BMW of N. Am. v. Gore, 517 U.S. 559 (1996)........................................ 11, 12

CEH, Inc. v. F/V Seafarer, 70 F.3d 694 (1st Cir. 1995) ..........................................8

City of Milwaukee v. Illinois, 451 U.S. 304 (1981).............................................. 17

Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001).............................................. 12

Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256 (1970)................................................9

iii Exxon Co. U.S.A. v. Sofec, Inc.,

517 U.S. 830 (1996)................................................9

General Motors Acceptance Corp. v. Froelich, 273 F.2d 92 (D.C. Cir. 1959) ................................ 15

Herman & MacLean v. Huddleston, 459 U.S. 375 (1983).............................................. 20

In re Glacier Bay, 944 F.2d 577 (9th Cir. 1991) ................................. 17

International Paper Co. v. Ouellette, 479 U.S. 481 (1987)........................................ 18, 19

Juno Marine Agency, Inc. v. Taibl, 761 So. 2d 373 (Fla Ct. App. 2000) ....................... 10

Kolstad v. American Dental Association, 527 U.S. 526, 545-46 (1999)............................. 10-11

Lake Shore & M.S. Ry. Co. v. Prentice, 147 U.S. 101 (1893)................................................8

Middlesex County Sewage Auth. v. National Sea Clammers Ass’n, 453 U.S. 1 (1981) ......................... 17

Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991) ........................................... 11, 14

People v. McFarland, 765 P.2d 493 (Cal. 1989) ...................................... 20

Philip Morris USA v. Williams, 127 S.Ct. 1057 (2007) ........................................... 13

Roshak v. Leathers, 277 Ore. 207 (1977)......................................... 20-21

iv Saratoga Fishing Co. v. J. M. Martinac & Co.,

520 U.S. 875 (1997) (Scalia, J., dissenting) ..............9

Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984).............................................. 20

Sosa v. Alvarez-Machain, 542 U.S. 692 (2004)................................................9

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003).............................................. 12

TXO Prods. Corp. v. Alliance Res. Corp., 509 U.S. 443 (1993).............................................. 12

Union Oil Co. v. Oppen, 501 F.2d 558 (9th Cir. 1974) ................................. 16

United States v. Alexander, 938 F.2d 942 (9th Cir. 1991) ...................................4

Wagner v. Gibbs, 80 Miss. 53 (1902) ................................................ 21

Yamaha Motor Corp. v. Calhoun, 516 U.S. 199 (1996).............................................. 12

STATUTES

33 U.S.C. § 1321.................................................. 18, 19

33 U.S.C. § 1321(o).................................................... 18

33 U.S.C. § 1365(a) ................................................... 19

33 U.S.C. § 2718........................................................ 19

43 U.S.C. §§ 1651-1656.............................................. 17

v OTHER AUTHORITIES

Assault: Criminal Liability as Barring or Mitigating Recovery of Punitive Damages, 98 A.L.R.3d 870 (1980) .................................................................. 20

Christopher R. Green, Punishing Corporations: The Food-Chain Schizophrenia in Punitive Damages and Criminal Law, 87 Neb. L. Rev. __ (2008), available at http://ssrn.com/abstract=1007337 ...... 13

Dr. Vernon R. Leeworthy, Nat’l Survey on Recreation and the Env’t, Nat’l Oceanic and Atmospheric Admin., NOAA Oceans and Coasts, Special Projects Office (May 15, 2001), available at http://marineeconomics.noaa.gov/NSRE/NSRE_V1-6_May.pdf (last visited Jan. 27, 2008) .........2

Kristen M. Crossett, et al., Population Trends Along the Coastal United States: 1980-2008, Nat’l Oceanic and Atmospheric Admin., Nat’l Ocean Serv., Special Projects Office (September 2004), available at http://oceanservice.noaa.gov/programs/mb/supp_cstl_population.html (last visited Jan. 27, 2008). ....................................................................2

Leon E. Panetta, PEW Oceans Comm’n, America’s Living Oceans 64-65 (2003).......................................3

Mark Palmer, Satellite Communications: Bringing the Vessel at Sea Closer to the Shore, Lloyd’s List, Dec. 21, 2001, at 1 .............................................................16

vi Nat’l Marine Fisheries Serv., Office of Science and

Tech., Fisheries of the United States (2004), available at http://www.st.nmfs.noaa.gov/st1/fus/fus04/02_commercial2004.pdf (last visited Jan. 27, 2008) .....................................................................2

R.J. Eassom et al., HF Transmitters and Receivers for Naval Radio Int’l Conference on 100 Years of Radio 62....................................................................16

Restatement (Second) of Agency § 217(c) (1958) ........ 10

Restatement (Second) of Torts § 909 (1979) .......... 10, 15

Restatement (Third) of Agency § 7.03, cmt. e (2006) .............................................................. 8, 15

S. Rep. No. 101-94 (1989), reprinted in 1990 U.S.C.C.A.N. 722................................................ 19

Sandra Speares, Inmarsat 20 Successful Years: A Revolution in Marine Communications, Lloyd’s List, Nov. 17, 1999, at 17 ..................................................16

The Hon. Franklin L. Lavin, Under Sec’y for Int’l Trade, U.S. Dep’t of Commerce, Test. Before Senate Commerce Committee’s Subcomm. on Trade, Tourism, and Econ. Dev. (June 22, 2006), available at http://commerce.senate.gov/public/_files/Lavin062206.pdf (last visited Jan. 27, 2008) ..................2

vii U.S. Army Corp of Eng’rs, Waterborne Commerce of

the United States – Calendar Year 2005, available at http://www.iwr.usace.army.mil/ndc/wcsc/wcsc.htm (last visited Jan. 27, 2008)............................1

William Meade Fletcher, Cyclopedia of the Law of Private Corporations § 4942, at 640-41 (2002 rev. vol.) ..................................................................... 10

1

INTEREST OF AMICI CURIAE

The Amici States have vital interests in the substantive rule of tort law that this Court will adopt to govern corporate liability for punitive damages in maritime law. Exxon’s assertion that the availability of punitive damages in maritime law implicates no issues of federalism or state sovereignty, Petrs. Br. 27, pays little heed to the States’ strong interest in deterring misconduct that could result in massive toxic spills, with potentially catastrophic effects to our coastlines, lakes, and rivers, and the economies that depend on those waters. Nineteen of the States that have signed this brief have coastal shorelines, either on the Pacific, Gulf, or Atlantic coasts, or on the Great Lakes. Many others have navigable rivers and lakes. The threat of a major oil spill looms large for all.1 Excluding Alaska, coastal States constitute 17% of the Nation’s land area, but contain 53% of its population. Maritime law also applies to the many waterways in the noncoastal Amici States. The Amici States, therefore, have a critical interest in ensuring that the common law and overall regulatory scheme governing toxic spills allow for punitive damages in appropriate cases, in order to deter and punish reckless maritime conduct to the same degree that common law deters and punishes land-based reckless conduct.

1 In 2005, 1.1 billion tons of petroleum products and 175 million tons of toxic materials passed through U.S. coastal waters, a 20% increase since the Valdez catastrophe. U.S. Army Corp of Eng’rs, Waterborne Commerce of the United States – Calendar Year 2005, available at http://www.iwr.usace.army.mil/ndc/wcsc/wcsc.htm (last visited Jan. 27, 2008).

2

As the facts of this case illustrate, a large-scale maritime accident can have ruinous effects not only on the environment, but on public and private interests in large economic sectors such as the tourism2 and fishing industries,3 and the businesses surrounding fast-growing coastal areas and lakes and rivers.4 In many instances, a region’s culture, and the lives and livelihoods of its people, depend almost entirely on the health of our territorial waters, our coastlines, and our rivers and lakes. A single catastrophic maritime accident can cause far-reaching economic harms to citizens of many States. The EXXON VALDEZ spill, once spread by wind and water, extended over 600 linear miles, roughly the distance from 2 Tourism is the Nation’s largest employment sector and contributes $1 trillion to Gross Domestic Product. The Hon. Franklin L. Lavin, Under Sec’y for Int’l Trade, U.S. Dep’t of Commerce, Test. Before Senate Commerce Committee’s Subcomm. on Trade, Tourism, and Econ. Dev. (June 22, 2006), available at http://commerce.senate.gov/public/_files/Lavin062206.pdf (last visited Jan. 27, 2008). Coastal states receive 85% of U.S. tourism revenues and attract more than 89.3 million visitors annually. Dr. Vernon R. Leeworthy, Nat’l Oceanic and Atmospheric Admin., Nat’l Survey on Recreation and the Env’t (May 15, 2001), available at http://marineeconomics.noaa.gov/NSRE/NSRE_V1-6_May.pdf (last visited Jan. 27, 2008). 3 In 2004, U.S. commercial fishing revenues were $3.6 billion, and recreational anglers caught 35 million metric tons of fish within three miles of the United States coast. Nat’l Marine Fisheries Serv., Office of Science and Tech., Fisheries of the United States (2004), available at http://www.st.nmfs.noaa.gov/st1/fus/fus04/02_commercial2004.pdf (last visited Jan. 27, 2008). 4 In the years since the EXXON VALDEZ spill in 1989, the population of coastal counties has increased 16.5% to 150 million Americans. Kristen M. Crossett, et al., Population Trends Along the Coastal United States: 1980-2008, Nat’l Oceanic and Atmospheric Admin., Nat’l Ocean Serv., Special Projects Office (September 2004), available at http://oceanservice.noaa.gov/programs/mb/supp_cstl_population.html (last visited Jan. 27, 2008).

3

Cape Cod, Massachusetts, to Cape Lookout, North Carolina, and over 10,000 square miles of the surrounding marine ecosystem. Apart from a spill’s geographic reach, citizens of other States can be directly affected by the harms a spill causes. In fact, citizens of our States have been harmed by the EXXON VALDEZ oil spill itself. More than a third of the class members—over 11,000 people—reside for part of the year outside Alaska. Toxic spills also cause changes in the environment that can have persistent, lingering effects on water resources. See Leon E. Panetta, PEW Oceans Comm’n, America’s Living Oceans 64-65 (2003). Furthermore, the Amici States bear a large measure of the burdens associated with cleaning up hazardous chemicals, burdens which are typically borne by entities such as state port authorities. The availability of punitive damages under federal maritime law serves to deter conduct that can impose these harms and costs on the States. Adoption of the unduly restrictive punitive damages regime that Exxon advocates, or a holding that the Clean Water Act precludes punitive damages altogether, would interfere with the Amici States’ ability to protect our waterways from toxic spills through appropriate state regulations and common law. The Amici States have a strong interest in a rule of vicarious liability for federal maritime cases that harmonizes with the approach that the state courts have developed under state common law.

4

STATEMENT

The salient facts concerning Exxon’s reckless misconduct and its devastating effect on the Prince William Sound region bring into sharp focus the threat that toxic spills pose to the economic viability of our States’ industries, businesses, and citizens that depend on our waterways. These facts vividly demonstrate why States need the protection of a federal rule of vicarious liability for punitive damages that would deter and punish the kind of devastating recklessness on display here.5 For decades, Exxon has shipped oil on supertankers through the “icy and treacherous” waters of Prince William Sound and southward, Pet. App. 22a. The “economy of [the Prince William Sound] area depends almost entirely on commercial fishing, the processing of the catch, and related activities,” and thousands of Native Alaskans in the area live a subsistence way of life that goes back centuries. JA1442; see also Pet. App. 41a, 155a; JA1439, 1475-81; United States v. Alexander, 938 F.2d 942, 945 (9th Cir. 1991) (“If [Alaska Natives’] right to fish is destroyed, so too is their traditional way of life.”). From the time Exxon began shipping oil through the Sound, it knew that “[a] major spill in the Valdez area would cause [an] incurable disaster to the rich fisheries.” JA1488; see also Pet. App. 122a, 232a; JA213-14, 1437-41, 1475-94. Despite this knowledge, Exxon put in command of a supertanker, the EXXON VALDEZ, a man Exxon whom knew to be an active, relapsed alcoholic and to be drinking while captaining the supertanker: Captain Joseph

5 The facts summarized here are those set forth in, inter alia, the opinions of the district court and the Ninth Circuit on de novo review, Pet. App. 22a-31a, 120a-124a, 147a-157a, which exhaustively reviewed and summarized the evidence presented at trial.

5

Hazelwood. JA1033-34; SJA135sa-36sa. In 1985, while employed by Exxon, Hazelwood attended a 28-day alcohol treatment program, but dropped out of the ensuing aftercare program and relapsed after returning to duty as captain. Pet. App. 63a-64a, 121a; JA306. Hazelwood’s supervisors promptly began receiving reports that he “had fallen off the wagon.” Pet. App. 63a, 154a-155a; JA409-26, 849. The first report was relayed to the President of Exxon Shipping, who was told that Hazelwood was acting “kind of crazy or kind of strange.” JA960-61. Hazelwood’s relapse was known throughout Exxon Shipping, and it was common knowledge in the Valdez area that supertanker crews drank excessively on ship and in ports, routinely violating unenforced policies against drinking on board and against returning to duty within four hours of drinking. JA226-37, 306-08, 314-15, 331-38, 379-80, 423-24, 445-47, 499, 562-71, 639-40, 649, 750-54; SJA118sa-29sa. Between the time of his relapse until less than two weeks before the disaster, “the highest executives in Exxon Shipping” were receiving reports of Hazelwood’s alcoholic conduct. Pet. App. 29a, 64a, 83a, 121a-122a, 153a-157a. As the Ninth Circuit held, “[t]he evidence established that Exxon gave command of an oil tanker to a man they knew was an alcoholic who had resumed drinking after treatment that required permanent abstinence, and had previously taken command in violation of Exxon’s alcohol policies.” Pet. App. 83a. This was the state of Exxon’s knowledge of the risk that Hazelwood’s active alcoholism posed as of March 23, 1989. That night, Exxon entrusted Hazelwood with command of an Exxon supertanker carrying 53 million gallons of crude oil through Prince William Sound. Indeed, Hazelwood was the only officer aboard licensed to navigate through portions of the Sound. And he was drunk. His blood alcohol level upon leaving port was later determined to be .241. Pet. App. 64a, 87a, 256a.

6

After setting off, he moved the EXXON VALDEZ out of a shipping lane to avoid ice, and pointed the ship towards a known hazard, Bligh Reef. Then, because “his judgment was impaired by alcohol,” Pet. App. 63a, he made a series of poor decisions. Pet. App. 63a-64a, 87a; JA460-84, 776. As a result, the ship hit Bligh Reef, and 11 million gallons of crude oil spilled from its ruptured hull into Prince William Sound. The oil spill “disrupted the lives (and livelihood) of thousands of [people in the Prince William Sound area] for years,” Pet. App. 24a, damaging approximately 1,300 miles of shoreline and destroying the subsistence livelihoods of Native Alaskans, “for whom subsistence fishing is not merely a way to feed their families but an important part of their culture.” Pet. App. 123a. With the economy in ruins, “the social fabric of Prince William Sound and Lower Cook Inlet was torn apart,” producing a high incidence of severe depression, post-traumatic stress disorder, and generalized anxiety disorder among those whose lives depended on harvesting the resources of the Sound. Pet. App. 150a-151a, 166a-167a; SJA386sa-572sa. In sum, the case against Exxon for punitive damages was straightforward. As the district court put it:

For approximately three years, Exxon’s management knew that Captain Hazelwood had resumed drinking, knew that he was drinking on board their ships, and knew that he was drinking and driving. Over and over again, Exxon did nothing to prevent Captain Hazelwood from drinking and driving.

Pet. App. 154a; see also Pet. App. 29a, 64a, 83a, 89a-91a, 121a-122a, 153a-157a.

SUMMARY OF ARGUMENT

The Court should reject both Exxon’s test for vicarious liability for punitive damages, and Exxon’s argument that

7

the federal Clean Water Act implicitly preempts federal maritime law from providing for punitive damages in common law tort actions.

Federal courts in maritime cases tend to follow the general state common law of tort when there is no uniquely maritime aspect of the case. Nearly all of the 48 States that allow punitive damages follow one of two approaches to vicarious liability for punitive damages; Exxon’s proposed test differs markedly from both approaches, is substantially narrower than either, and is in substance a rule of corporate immunity that would threaten to undermine the States’ ability to deter and punish reckless misconduct through incremental common law-making.

Under Exxon’s proposed test, the corporation must direct, countenance, or participate in the act. The proposed test is not only overly restrictive, but would also generate a host of difficult and confusing issues concerning whose “complicity” suffices to establish corporate ratification or approval of another managerial agent’s misconduct. No corporate officer with the authority to ratify or approve corporate conduct would do so if the mere refusal to approve gross misconduct would immunize the corporation from punitive damages. Moreover, the proposed test is premised on nineteenth-century notions that a captain at sea is beyond the reach of a shipowner. With today’s modern communication and navigational technologies, the relationship between a ship captain and shipowner is no different from that between a corporate officer at headquarters and one in a field office.

Exxon’s Clean Water Act preemption argument should be rejected not only because it was not preserved and differs materially from the argument Exxon did make below, but also because there is no reason to conclude that Congress intended for the Clean Water Act to preempt the availability of punitive damages in private tort actions under federal maritime law.

8

ARGUMENT

I. The Court Should Be Guided By Widely Accepted

State Common Law Principles Of Vicarious Liability For Punitive Damages And Reject Exxon’s Test.

Almost all of the forty-eight States that allow for

punitive damages have adopted one of two approaches to vicarious liability for such damages: 1) liability based on the misconduct of any agent or 2) liability based on the misconduct of a managerial agent. The states are nearly evenly balanced between these approaches, with a slight majority following the any-agent rule. Restatement (Third) of Agency § 7.03, cmt. e (2006). Exxon’s test is more restrictive than either of the approaches that the States have adopted. Under Exxon’s test, “the jury [is required] to find that the shipowner directed, countenanced, or participated in the conduct.” Petrs. Br. 15. Someone at a high level in management must ratify or authorize the reckless misconduct, even, apparently, when the reckless misconduct was that of someone else at a high level in management. This unduly restrictive test would effectively immunize corporate maritime defendants, and only corporate maritime defendants, from liability for the same types of reckless misconduct that would warrant an award of punitive damages against land-based defendants. This disparate treatment makes no sense: there is “no reason . . . why vicarious liability should be treated differently on sea than on land.” See CEH, Inc. v. F/V Seafarer, 70 F.3d 694, 704 (1st Cir. 1995).

1. This Court has long looked to state common law to inform its development of federal maritime law. See Lake Shore & M.S. Ry. Co. v. Prentice, 147 U.S. 101 (1893) (“[C]ourts of admiralty . . . proceed, in cases of tort, upon the same principles as courts of common law, in allowing

9

exemplary damages.”). When the Court has considered what substantive tort law to apply in maritime cases that do not involve uniquely maritime concerns, the extensive experience of state courts in evolving tort principles has provided guidance. See Exxon Co. U.S.A. v. Sofec, Inc., 517 U.S. 830, 838-39 (1996) (“In ruling upon whether a defendant's blameworthy act was sufficiently related to the resulting harm to warrant imposing liability for that harm on the defendant, admiralty courts may draw guidance from, inter alia, the extensive body of state law applying proximate causation requirements . . . .”); see also American Export Lines, Inc. v. Alvez, 446 U.S. 274, 284-85 n.11 (1980) (adopting rule of “clear majority of States”); Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256, 260 (1970) (adopting general Restatement test).

The Court’s traditional consideration of state common law to inform maritime tort law makes sense, since state courts have particular expertise in developing tort law through the common law method, whereas the role of federal courts in making common law has “largely withdr[awn] to havens of specialty, some of them defined by express congressional authorization to devise a body of law directly [and others involving] interstitial areas of particular federal interest.” Sosa v. Alvarez-Machain, 542 U.S. 692, 726 (2004); see Saratoga Fishing Co. v. J. M. Martinac & Co., 520 U.S. 875, 886 (1997) (Scalia, J., dissenting) (“[U]nlike state courts, we have little first-hand experience in the development of new common-law rules of tort . . . .”).

In the context of vicarious liability for punitive damages, state common law has evolved workable rules that the States have found to be effective in deterring and punishing reckless misconduct. The majority “any-agent” rule rests on a familiar, straightforward respondeat superior theory. See American Soc’y of Mech. Eng’rs v. Hydrolevel Corp., 456 U.S. 556, 575 n.14 (1982). The more restrictive

10

minority rule, which the Ninth Circuit applied here, is based on the Restatement (Second) of Agency § 217(c) (1958) and the Restatement (Second) of Torts § 909 (1979), and provides corporations with an additional level of protection: a corporation is subject to punitive damages when one of its managerial agents acts recklessly in the scope of employment.6 State courts have applied these principles to waterborne, as well as land-based, torts. See, e.g., Juno Marine Agency, Inc. v. Taibl, 761 So. 2d 373, 374-75 (Fla Ct. App. 2000) (upholding punitive damages award against shipowner for wrongful death of person who died trying to rescue a crew member from the hold of shipowner’s vessel); Allen v. Camden & Philadelphia Steamboat Ferry Co., 46 N.J.L. 198, 199 (N.J. 1884) (allowing passenger to seek punitive damages against a ferryboat company for the forcible ejection of passenger by the company’s agent). These rules of vicarious punitive liability typically apply regardless of whether the agent’s action violated some corporate policy. See William Meade Fletcher, Cyclopedia of the Law of Private Corporations § 4942, at 640-41 (2002 rev. vol.).7 6 Section 909 of the Restatement (Second) of Torts provides:

Punitive damages can properly be awarded against a master or other principal because of an act by an agent, if but only if, (a) the principal or a managerial agent authorized the doing

and the manner of the act, or (b) the agent was unfit and the principal or a managerial agent

was reckless in employing or retaining him, or (c) the agent was employed in a managerial capacity and was acting

in the scope of employment, or (d) the principal or a managerial agent of the principal ratified

or approved the act. (Emphasis added.)

7 In Kolstad v. American Dental Association, the Court held that an employer may not be vicariously liable for punitive damages based on discriminatory employment actions of managerial agents that are contrary to the employer’s “good-faith efforts” to comply with the

11

Exxon’s test, on the other hand, would effectively immunize the reckless misconduct of even managerial agents by requiring the corporation to ratify or authorize the misconduct. Moreover, it is far from apparent whose ratification is necessary: presumably some other high-level executive, or perhaps a board of directors, would have to approve the misconduct. The incoherence of Exxon’s test contrasts with the relatively clear lines of accountability established in the rules that the States have adopted.

Taken together, the any-agent and managerial-agent rules reflect a collective judgment of the state courts, developed incrementally in countless factual contexts, that that the imposition of punitive damages on corporations, at least when a managerial agent engages in the reckless misconduct, best serves the States’ interests in deterrence and punishment of reckless corporate misconduct. See BMW of N. Am. v. Gore, 517 U.S. 559, 568 (1996) (“Punitive damages may properly be imposed to further a State’s legitimate interests in punishing unlawful conduct and deterring its repetition.”); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 14 (1991) (imposing punitive liability for acts of any agent provides “strong incentive for vigilance”).8 The adoption of Exxon’s test, on the other hand, would undermine the States’ ability to calibrate, through the application of substantive tort law, the

nondiscrimination laws. 527 U.S. 526, 545-46 (1999). The Court’s decision in Kolstad reflected considerations unique to federal civil rights policy, namely, the concern about creating a disincentive for employers to educate employees about nondiscrimination laws. Id. at 544-45. But, as discussed below, the imposition of punitive damages under the managerial agent test creates proper incentives in the maritime industry. 8 Notably, the Court in Haslip did not question the constitutional propriety of Alabama’s imputation of any corporate agent’s misconduct to the company for purposes of establishing corporate liability for punitive damages. 499 U.S. at 14.

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appropriate measure of deterrence and punishment that governs reckless misconduct directly threatening their very substantial economic interests in tourism, commercial and recreational fishing industries, and coastal development.

The States have compelling and wholly legitimate interests in a punitive damages regime that provides for a consistent measure of deterrence and punishment on land and on water.9 The imposition of a separate standard for punitive damages under maritime law would impinge on the States’ legitimate need to protect their citizens and economic interests from dangerous conduct on the waters, contrary to maritime law’s traditional respect for States’ interests in this regard. See Yamaha Motor Corp. v. Calhoun, 516 U.S. 199, 215 n.13 (1996) (“Federal maritime law has long accommodated the States’ interest in regulating maritime affairs within their territorial waters.”). In this regard, an unduly restrictive rule of federal maritime law here may underdeter reckless misconduct that States, as a policy matter, have chosen to deter through their common 9 The generalized interest in restraining “punitive damages that ‘run wild,’” Haslip, 499 U.S. at 18 (internal citation omitted), is more properly effectuated not through a substantive rule of vicarious liability for punitive damages in maritime law, but through this Court’s continuing development of standards guiding courts and juries. See TXO Prods. Corp. v. Alliance Res. Corp., 509 U.S. 443, 458 (1993) (plurality) (due process places limits on “grossly excessive” punitive damages, but does not require a bright-line test); BMW of N. Am. Inc. v. Gore, 517 U.S. 559, 574-75 (1996) (identifying “guideposts” of reprehensibility, ratio, and comparison to civil penalties in comparable cases); Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 436 (2001) (“[C]ourts of appeals should apply a de novo standard of review when passing on district courts' determinations of the constitutionality of punitive damages awards.”); State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) (elaborating on BMW v. Gore guideposts); Philip Morris USA v. Williams, 127 S.Ct. 1057, 1063 (2007) (“Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent . . . .”).

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law rules. Cf. Philip Morris USA v. Williams, 127 S. Ct. 1057, 1062 (2007) (punitive damages regimes may “impose one State’s (or one jury’s) ‘policy choice,’ say as to the conditions under which (or even whether) certain products can be sold, upon ‘neighboring States’ with different public policies.”) (quoting Gore, 517 U.S. at 571–572).

2. Quite apart from the anomalies created by applying Exxon’s test on waters adjacent to land where different rules apply, Exxon’s test is unwise and unworkable. It is hard to imagine that any corporate actor would ever ratify or approve conduct that could give rise to punitive damages, when the simple act of disclaiming responsibility for the wrongdoer – or worse, intentionally avoiding contact and oversight – would shield the corporation from punitive liability. Aside from the fanciful notion that any such “ratification” or “approval” could ever be shown to have occurred, Exxon’s test generates a host of uncertainties about where corporate responsibility ultimately lies. Whose complicity is necessary for a corporation to ratify or approve reckless misconduct? If the wrongdoer is a high-level manager, is it necessary for a higher-level manager to ratify or approve the misconduct? If the chief executive officer is the wrongdoer, must the board of directors ratify or approve the misconduct? What conduct must be ratified or approved? If the conduct requiring approval was the specific act of recklessness that caused harm, what corporate executive would ratify such an act? Why would any corporation ratify an act of misconduct, knowing that it could escape punitive damages -- no matter how high-level an agent the wrongdoer may have been -- merely by disassociating itself from the wrongdoer? Under Exxon’s test, responsibility for corporate misconduct vanishes in an endless regression. See Christopher R. Green, Punishing Corporations: The Food-Chain Schizophrenia in Punitive Damages and Criminal Law, 87 Neb. L. Rev. __ (2008),

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available at http://ssrn.com/abstract=1007337 (discussing the theoretical impossibility of determining whose ratification is required if the wrongful act occurs at high levels of corporate authority).

The confusion that such a rule would generate is evident in this very case. On the one hand, Exxon’s own expert testified that a supertanker captain, such as Hazelwood, “is a CEO.” Tr. 3866:6-22. On the other hand, Exxon argues that it should not be liable “solely” for Hazelwood’s misconduct.10 Exxon, however, asks to be excused for Hazelwood’s misconduct because no one else at Exxon subsequently approved of his disastrous, drunken decisions. It is nonsensical to adopt a rule that would tie Exxon’s liability for punitive damages to a finding that Exxon executives ratified or authorized the specific recklessness Hazelwood engaged in on March 23, 1989. Such a rule would create a perverse incentive for corporations to minimize oversight of their agents. Haslip, 499 U.S. at 14.

In effect, Exxon’s test would reward with immunity a corporate governance scheme that avoids accountability: “[L]arge corporations that routinely delegate managerial authority to shape corporate policy by making important corporate decisions could unfairly escape liability for punitive damages by virtue of their size.” Albuquerque Concrete Coring Co. v. Pan Am World Servs., 879 P.2d 772, 778 (N.M. 1994). The proposed test “would permit punitive damages against smaller concerns, . . . but not against a large corporation whose size and ramifications

10 In fact, the record shows that Exxon’s liability here does not rest “solely” on Hazelwood’s misconduct on the night of March 23, 1989, whether as a “CEO” or otherwise. It rests on the misconduct of other high-level Exxon executives, who knew that Hazelwood was drinking again, captaining a supertanker through Prince William Sound, and creating an intolerable but foreseeable risk of catastrophic environmental, economic, and human harm.

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make express authorization by the top executives of tortious acts of its working-level agents highly unlikely.” General Motors Acceptance Corp. v. Froelich, 273 F.2d 92, 94 (D.C. Cir. 1959). A rule of vicarious liability that generates such disparate and unfair results based upon the organizational form of the offender must be avoided.

In contrast, the Restatement rule quite sensibly locates corporate responsibility in the “employment of unfit persons for important positions.” Restatement (Second) of Torts § 909 cmt. b. The threat of vicarious punitive liability provides a “mechanism to focus attention at an organizational level on how to best exercise control over employees and other agents to reduce the risk of harm that their activities pose to third parties.” Restatement (Third) of Agency § 7.03 cmt. e. The Amici States’ experience with regulating corporations (both civilly and criminally) suggests that the managerial agent test, or something even broader, promotes careful selection of employees and accountability.

3. Exxon’s test is not only out of step with state tort law and ill-conceived on its own terms, but is also untethered from the reality of the relationship between a shipowner and ship captain today. The fact is that, with the advent of modern ship-to-shore communication technologies, a corporate shipowner is functionally indistinguishable from any other corporate common carrier or, indeed, any other corporation with field offices or employees who work offsite. Modern communication and navigational technologies have transformed the relationship between a ship captain and shipowner, thereby undermining the operative premise of nineteenth century maritime law: that once a ship set sail, the captain was on his own at sea, out of touch with the shipowner.

The “ship master at sea” concept remained a reality no later than the late nineteenth century, when basic wireless communication using Morse code first enabled land-based

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owners or managers to communicate with ships at sea. See R.J. Eassom et al., HF Transmitters and Receivers for Naval Radio, 1995 Int’l Conference on 100 Years of Radio 62. Today, however, “the ship master at sea” can readily communicate with other corporate managers, by telephone, e-mail, fax, and other means. See Mark Palmer, Satellite Communications: Bringing the Vessel at Sea Closer to the Shore, Lloyd’s List, Dec. 21, 2001, at 1. Indeed, shoreside personnel simply lifted a phone and spoke with Captain Hazelwood after he grounded the EXXON VALDEZ. JA872-76. Not only can those on board the vessel readily contact their corporate colleagues and superiors on land, but satellite communications enable shore-based personnel to guide and direct captains on a regular basis, rather than only during times of crisis, as in the past. See Sandra Speares, Inmarsat 20 Successful Years: A Revolution in Marine Communications, Lloyd’s List, Nov. 17, 1999, at 17. Moreover, sophisticated vessel management systems, not unlike air traffic control systems, have been developed to guide ship movement.

In sum, because there is no real difference between a ship captain and other corporate managerial agents, there is no justification for a distinct maritime rule of vicarious liability.11 At the same time, there would be no principled basis to deny non-maritime corporations the same protection from liability for punitive damages. 11 Exxon’s plea that special vicarious liability rules are needed to protect maritime commerce hardly aids its cause. “[T]he fishing industry is clearly part of traditional maritime activity; and to assert otherwise would amount to a repudiation of much of maritime history.” Union Oil Co. v. Oppen, 501 F.2d 558, 561 (9th Cir. 1974). Yet Exxon’s reprehensible conduct put hundreds of maritime businesses into bankruptcy or in dire financial straits. Exxon, by contrast, has assured the district court that paying even the $5 billion jury verdict “would not have a material impact on the corporation.” SJA334sa.

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II. The Clean Water Act Does Not Preclude The Common Law Remedy Of Punitive Damages As Relief For A Claim That The Clean Water Act Indisputably Permits.

Exxon argues that the Clean Water Act occupies the field of regulation of oil spills in United States navigable waters and thus displaces punitive damages under federal common law. There is no merit whatsoever to this argument. First, as explained in Respondents’ Brief, the argument was not preserved. Exxon contended unsuccessfully below that the Trans-Alaska Pipeline Authorization Act (TAPAA), 43 U.S.C. §§ 1651-1656, preempted the negligence claim. TAPAA, not the Clean Water Act, was “the controlling statute with regard to trans-Alaska oil,” In re Glacier Bay, 944 F.2d 577, 583 (9th Cir. 1991) (emphasis in original), and the lower courts held that TAPAA did not preempt Respondents’ claims. Even if the Clean Water Act were at issue, the cases on which Exxon relies would not support its sweeping argument that the Clean Water Act occupies the field of oil spill regulation. See Middlesex County Sewage Auth. v. National Sea Clammers Ass’n, 453 U.S. 1, 21-22 (1981); City of Milwaukee v. Illinois, 451 U.S. 304, 320 (1981). Milwaukee and Sea Clammers held that the Clean Water Act forecloses nuisance actions for effluent discharges under federal common law. In both cases, the Court was concerned that a federal common law cause of action for nuisance would interfere with the regulation of detailed effluent standards provided in the Clean Water Act. And, in both cases, the Court held that the underlying actions could, in effect, alter the effluent standards that would otherwise apply, and therefore directly interfere with the statutory scheme. Here, by contrast, the Respondents’ negligence claim poses no threat to the Clean Water Act’s regulatory

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scheme for oil spills. See 33 U.S.C. § 1321. Nowhere does the Clean Water Act limit available remedies provided under private tort claims arising from oil spills. In fact, the Clean Water Act expressly preserves obligations arising from damage to private property. 33 U.S.C. § 1321(o). Exxon gives no good reason why Congress would preserve a cause of action for negligence, but limit the common law remedies available under that cause of action. The Respondents’ position is supported by this Court’s Clean Water Act precedents. See International Paper Co. v. Ouellette, 479 U.S. 481 (1987); Askew v. American Waterways Operators, Inc., 411 U.S. 325 (1973). In Ouellette, the Court assessed whether the Clean Water Act preempted Vermont common law to the extent the law imposes liability on a New York point source. 479 U.S. at 491. The Court held that the state law action at issue was precluded because a “serious interference” would result “if affected States were allowed to impose separate discharge standards on a single point source.” Id. at 493. But the Court then expressly limited its holding by specifying that it “preclud[es] only those suits that may require standards of effluent control that are incompatible with those established by the procedures set forth in the Act.” Id. at 497. The Court further explained that the Clean Water Act’s savings clause specifically preserves other state actions and that aggrieved individuals can bring a nuisance claim pursuant to the law of the source State. Id. Thus, the plaintiffs had a claim with the full panoply of remedies. Likewise, in Askew, the Court examined the preclusive effect of the Clean Water Act’s oil spill liability provisions to determine if they precluded Florida’s state regulation of oil spills. 411 U.S. at 328-37. The Court concluded that the Clean Water Act was directed at recouping federal cleanup costs while leaving room for state action in cleaning up waters of a State and recouping the State cleanup costs. Id. at 332. The Court remarked that the

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state and federal regulations were “harmonious parts of an integrated whole.” Id. at 331.12 Here, there is no threat of “serious interference” with Congressional standards because the Clean Water Act’s oil spill provisions do not create any standards that could be altered by a punitive award, and because those provisions do not limit the available remedies for private tort claims. Cf. Ouellette, 479 U.S. at 493. These provisions are directed at prohibiting the discharge of oil (as opposed to creating a permit system), and -- should a discharge occur -- collecting federal government clean-up costs and civil penalties. See 33 U.S.C. § 1321. Likewise, the Clean Water Act’s citizen suit provision does not preclude the punitive damages award under the private tort action here because it allows individuals to sue only for injunctions to enforce the statute. 33 U.S.C. § 1365(a). Respondents’ tort action arises from the private harm from an oil spill, while the Clean Water Act addresses the public harm. Along with state regulation, such private actions are “harmonious parts of an integrated whole.” See Askew, 411 U.S. at 331.

12 Pursuant to Askew, many States have regulations governing toxic spills. At the time of the passage of the Oil Pollution Act of 1990, 24 states had oil spill liability and compensation laws, and 17 of them had liability without specified limits. Congress has recognized the importance of preserving the overlapping system of oil spill laws by taking care that federal statutes governing oil spills do not preempt state oil liability laws. The Oil Pollution Act of 1990 does not preempt state law and instead explicitly provides that states may impose additional requirements and liabilities. 33 U.S.C. § 2718. And as a Senate report explains, “[m]ore stringent State laws are specifically preserved in both the Clean Water Act (for cleanup of spills of oil) and in the Deepwater Port Act and title III of the Outer Continental Lands Act Amendments of 1978 (for cleanup and damages caused by spills of oil).” S. Rep. No. 101-94, at 6 (1989), reprinted in 1990 U.S.C.C.A.N. 722, 727.

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At bottom, Exxon’s entire displacement argument proceeds from the same faulty premise: that the very existence of the Clean Water Act’s statutory penalties for oil spills means that the Clean Water Act “fully addresse[s]” the public interest in punishing the reckless discharge of oil. Petrs. Br. 38. Contrary to Exxon’s argument, penalty schemes under federal statutes do not manifest a legislative intent to leave no room for remedies available under traditional maritime law, nor do they conflict with punitive damages available under maritime law. As this Court has held:

Paying both federal fines and state-imposed punitive damages for the same incident would not appear to be physically impossible. Nor does exposure to punitive damages frustrate any purpose of the federal remedial scheme.

Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 257 (1984) (holding that a civil suit for punitive damages “does not conflict” with a federal remedial scheme that imposed civil penalties); see also Herman & MacLean v. Huddleston, 459 U.S. 375, 382-83 (1983) (holding that an express civil remedy under the 1933 Securities Act does not preclude a cause of action for fraud under Section 10(b) of the 1934 Act). The reality is that it is commonplace for the law to impose multiple punishments for the same conduct in order to address different harms. See People v. McFarland, 765 P.2d 493, 495 (Cal. 1989) (noting that multiple punishment is permissible when a single act of violence harms multiple victims). For example, recovery of punitive damages for assault and battery is not precluded merely because the defendant has been punished criminally for the same offense. See Assault: Criminal Liability as Barring or Mitigating Recovery of Punitive Damages, 98 A.L.R.3d 870 (1980). See, e.g., Roshak v. Leathers, 277

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Ore. 207 (1977); Wagner v. Gibbs, 80 Miss. 53 (1902). Imposing multiple punishments for the same conduct in order to address different harms is all that the Clean Water Act, other federal statutes, and maritime law jointly accomplish here. State laws directed at oil spills appropriately protect state interests in avoiding harm from oil spills. Even several decades ago, the Court recognized the “damage to state interests already caused by oil spills, the increase in the number of oil spills, and the risk of ever-increasing damage by reason of the size of modern tankers.” Askew, 411 U.S. at 335. As the Court noted, oil spillage is “an insidious form of pollution of vast concern to every coastal city or port and to all the estuaries on which the life of the ocean and the lives of the coastal people are greatly dependent.” Askew, 411 U.S. at 328-29. In sum, there is no merit to Exxon’s contention that the Clean Water Act precludes the recovery of punitive damages here.

CONCLUSION

The Amici States ask the Court to affirm the judgment of the courts below.

35 States Supporting Respondents In Exxon v. Baker

States Supporting Respondents

No. 07-219

IN THE

____________

EXXON SHIPPING CO. AND EXXON MOBIL CORP.,

Petitioners, v.


____________


____________

BRIEF OF JEAN-MICHEL COUSTEAU AND OTHER NATURAL AND SOCIAL SCIENTISTS

AS AMICI CURIAE IN SUPPORT OF RESPONDENTS

____________

GERSON H. SMOGER, Counsel of Record STEVEN BRONSON SMOGER & ASSOCIATES, P.C. 3175 Monterey Blvd Suite 3 Oakland, CA (510) 531-4529 Counsel for Amicus Curiae

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TABLE OF CONTENTS

INTEREST OF AMICI CURIAE ....................................1 SUMMARY OF ARGUMENT.........................................3 INTRODUCTION............................................................5 ARGUMENT....................................................................7 I. The Continuing Devastation Makes it

Clear That Exxon Has Not Yet Fully Paid for the Harm Which it Caused.....................7

II. EVOS Has Had a Devastating Long-term Effect Not Only on Critical Fish Populations but Throughout the Entire Food Chain ..........................................................14 A. Short and Long-term

Consequences for Pink Salmon ...............16 B. Long-term Consequences for

Herring .....................................................20 C. Long-term Consequences for Sea

Otters........................................................22 D. Long-term Consequences for

Harlequin Ducks ......................................24 E. Long-term Consequences for

Other Intertidal Predators ......................26 F. Long-term Consequences for

Killer Whales............................................27 G. Long-term Consequences for

Harbor Seals.............................................29 III. Contrary to Exxon’s Representations

Regarding its Clean-up Efforts, Those Efforts Were Not Only Often Ineffectual but at Times Harmful.........................................30

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IV. The Public Purpose of Punitive Damages Is Demonstrated by Exxon’s Failure to this Day to Acknowledge Both the Near- and Long-Term Effects Caused by its Oil Spill........................................ 33

CONCLUSION.............................................................. 37 APPENDIX A - AMICI BIOGRAPHIES

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Cases

BMW of North America, Inc. v. Gore, 517 U. S. 559 (1996) ........................................................ 4, 36

Other Authorities

Costanza R., et al. The value of the world's ecosystem services and natural capital, NATURE 387(15) (1997)........................................ 34

Daily, G., NATURE'S SERVICES: SOCIETAL DEPENDENCE ON NATURAL ECOSYSTEMS, Island Press, Washington, DC (1997) ................ 34

Lubchenco, “Lessons from the Land for Protection in the Sea: The Need for a New Ocean Ethic,” in OPEN SPACES (2007) ................ 33

National Research Council, OIL IN THE SEA III: INPUTS, FATES, AND EFFECTS (2003).................... 15

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INTEREST OF AMICI CURIAE

Amici are a combination of natural and social scientists who have studied and devoted much of our professional careers to the understanding of how oceanic ecosystems function and the necessity for their preservation1: Jean-Michel Cousteau is president of the Ocean Futures Society; Peter Auster, Ph.D., holds the position of Science Director for the National Undersea Research Center; John Avise, Ph.D., is Distinguished Professor of Ecology and Evolutionary Biology at the School of Biological Sciences, University of California at Davis; Donald F. Boesch, Ph.D., is President of the University of Maryland Center for Environmental Science; Benjamin Cuker, Ph.D., is Professor of Marine and Environmental Studies at Hampton University; Dan Esler, Ph.D., is a Research Scientist at the Centre for Wildlife Ecology at Simon Fraser University, in British Columbia.; Michael Fry, Ph.D., is the Director of Conservation Advocacy; Gregory Golet, Ph.D., is a senior ecologist for the Nature Conservancy; Roger Green, Ph.D., is Professor Emeritus at the University of Western Ontario; Burr Heneman is a co-founder and the current

1 Letters of consent to the filing of this brief

from all parties have been filed with the Clerk. Pursuant to Rule 37.6, amici state that no counsel for a party authored any part of this brief, nor did any person or entity other than amici or its counsel make a monetary contribution to its preparation or submission. The views of any signer to this brief do not necessarily reflect the views of that signer's organization unless specifically stated.

2

Ocean Policy Director of Commonweal; Richard Kocan, Ph.D., is Professor Emeritus at the School of Aquatic and Fishery Sciences at the University of Washington; Jane Lubchenco, Ph.D., is the Wayne and Gladys Valley Professor of Marine Biology & Distinguished Professor of Zoology at Oregon State University; Craig Matkin, M.S., is a founding member and director of the North Gulf Oceanic Society; John Ogden, Ph.D., is the Director of the Florida Institute of Oceanography; Thomas Okey, Ph.D., is the founder and current science director for the Conservation Science Institute; Daniel Pauly, Ph.D., is the Director of the Fisheries Centre of the University of British Columbia, Vancouver; Charles “Pete” Peterson, Ph.D., is Alumni Distinguished Professor in the Department of Marine Sciences at University of North Carolina - Chapel Hill; and John Teal, Ph.D., is currently Scientist Emeritus for the Woods Hole Oceanographic Institution.2

As professionals who have devoted our careers to understanding the interdependent nature of

2 See Appendix “A” for biographical summaries of each amicus curiae. Amici Curiae Charles “Pete” Peterson, Ph.D., and Richard Kocan, Ph.D., served as expert witnesses on behalf of the Plaintiffs at the time of trial after having prepared expert reports which summarized their research prepared for the joint state-federal Exxon Valdez Oil Spill Council. Roger Green, Ph.D., and Michael Fry, Ph.D., prepared similar expert reports but did not testify at the trial. In the thirteen years since that trial, none of these four amici has received any compensation from Plaintiffs or Plaintiffs’ counsel. Nor are any of these four amici being compensated in any way for their appearance or participation in this brief.

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oceanic ecosystems, as well as man’s participation in those ecosystems, we believe that we are in a unique position to evaluate and describe the effects that the Exxon Valdez Oil Spill (“EVOS”) has had on the North Alaskan ecosystem surrounding Prince William Sound. Indeed, Amici are convinced that it is only with the benefit of the scientific information currently available that courts and other policy makers may understand the real costs of massive oil and toxic chemical spills, and most particularly the devastating effects caused by the Exxon Valdez Oil Spill. It is as a result of our understanding of these very real costs that we feel compelled to submit this brief urging this Court to affirm the verdict below.

SUMMARY OF ARGUMENT

There is no question that the spillage by the Exxon Valdez of 43 million liters (11 million gallons) of Alaska North Slope crude oil into Prince William Sound was a catastrophic event. It had an immediate impact not only directly and adversely on the salmon and herring on which commercial fishers in the region rely and the much larger group of animals on which Native Alaskans subsist, but also on the entire interdependent ecosystem. Furthermore, government studies over the past two decades belie comments Exxon has made in its briefing to this Court about the total long-term impact of this tragedy or Exxon’s efforts to restore Prince William Sound to its native condition. These studies have consistently demonstrated the breadth of the incredible immediate devastation caused by the spill. They further show that the injury to the entire ecosystem and to the humans whose lives and livelihood have depended upon that ecosystem has

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been far greater than it was possible to discern at either the time of the spill or even at the time of trial in 1994.

To this day, residual oil remains a destructive force to the entire ecosystem. Diverse interdependent animal populations – clams, mussels, fishes, birds, sea otters, and killer whales – have continued to suffer in ways which were not appreciated at the time of the spill or its immediate aftermath. Moreover, after causing the spill, Exxon substantially compounded the harm by the massive pressure washing of beaches, a process which disrupted the naturally protective physical structure of those beaches and by itself resulted in the destruction of intertidal habitats for decades to come.

Exxon claims that it has already paid dearly for what is widely considered the number one spill worldwide in terms of damage to the environment and the communities that depended on it. But Exxon certainly has not paid for the full impact of the destruction it has caused in the oil spill region of Prince William Sound and beyond. Science shows us almost twenty years later that complete recovery is at minimum decades away, if ever. This scientific research demonstrates that the need for deterrence is even greater now than initially would have been thought. To the extent that punitive damage awards are meant to provide deterrence or compensation where “the injury is hard to detect or the monetary value of non-economic harm might have been difficult to determine,” BMW of North America, Inc. v. Gore, 517 U. S. 559, 582 (1996), this is undoubtedly one such example.

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INTRODUCTION

The coastal or nearshore ecosystem of the Pacific Northwest is one of the most biologically productive on the planet, comparable to tropical rainforests and the most highly managed and fertilized terrestrial agricultural systems. This high production has for millennia reached upwards through the food web to support diverse and abundant populations of fishes, seabirds, and marine mammals. Quite simply, the coastal region of the northern Gulf of Alaska has been a spectacular treasure trove of the bounty of the sea, recognized worldwide in its wealth of economically and culturally important fish and shellfish and its simultaneous showcase of spectacular wildlife.

As part of this system, before the 1989 spill, Prince William Sound was a pristine environment with abundant and diverse fish and wildlife. The abundance of fish and wildlife inhabiting the region and concentrating in the coastal habitats for reproduction and intense feeding just at the late spring-to-summer period (at the very time of the spill) was a testament to the natural productivity and integrity of the ecosystem and the near universal absence of toxic contaminants in the supportive environment. In fact, that environment was able to support an economy nearly wholly dependent upon the natural resources it provided. Although small in population, Cordova was one of the top 10 U.S. ports when ranked by value of its commercial fishery landings. Subsistence harvest was a dominant way of life and a cultural heritage for Native Alaskans in Prince William Sound and in neighboring areas of Kodiak Island and both the Kenai and Alaskan Peninsulas.

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The spillage by the Exxon Valdez of 43 million liters of Alaska North Slope crude oil into this pristine environment has proven to be a devastating, massive experiment in ecotoxicology. Due to its magnitude, the spill has become the most studied environmental disaster in history. Unfortunately for the environment, these studies, ongoing to this day, have consistently demonstrated the magnitude, broad scope, and long temporal duration of the disaster.3 Far from causing only acute injury to the ecosystem, considerable evidence demonstrates that EVOS has caused long-term, chronic, direct, indirect and delayed effects that even now will likely take

3 In very large part the scientific research

upon which this brief is based was prepared for the EVOS Trustee Council in cooperation with federal and state government scientists as part of one of more of the following projects: 00090, 00454, 00459, 00476, 030012, 030423, 030585, 040159, 040574, 040708, 050751, 94166, 95074, 98012, 98191, 99025, 99328, 99379. Reports for those projects are publicly available through the Council and on the Council’s website at http://www.evostc.state.ak.us/ or separately at the Alaska Resources Library and Information Service http://www.arlis.org. The Trustee Council was formed shortly after the spill and is composed of representatives of the United States Department of the Interior, the United States Department of Agriculture, and the National Oceanic and Atmospheric Administration, as well as the Alaska Departments of Fish and Game, Environmental Conservation, and the Department of Law. The Trustee Council requested and oversaw most of the science discussed in this brief.

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decades to recover from. Below we discuss a number of these effects.

ARGUMENT

I. The Continuing Devastation Makes it Clear That Exxon Has Not Yet Fully Paid for the Harm Which it Caused

“The spill was immediately known. There was no possibility of hiding it, even for a few minutes. Exxon made no profit, and had no prospect of profit, from any of the activities that plaintiffs point to as wrongful. If Exxon made mistakes, it has paid dearly for them. But that does not change the grounding into a situation economically appropriate for punitive damages. The rules of maritime law, designed to protect maritime commerce, ought to be shaped by this Court to fit economic reality.”

Petitioners’ Brief at 54-55

This statement, made by Exxon itself, raises the question of precisely what Exxon “paid for.” Exxon certainly did not pay to return this pristine environment to anything approaching what these areas were like before the spill. While it is true that shoreline clean-up assessment teams initially estimated that by 1993 the extent of oiled shoreline had decreased from 783 km to 10 km and that most of the oil remained on the surface in the upper intertidal zones, Exxon incorrectly took the position that the remaining oil spilled on the relatively high-energy beaches of Prince William Sound would soon diminish to negligible amounts and have no residual effect on the plants, wildlife or other natural

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resources of the Sound. Exxon’s assessment is, and was, incorrect. Both the oil from Exxon’s spill and adverse affects caused by that spill to the ecosystem of Prince William Sound and the neighboring areas of Kodiak Island and both the Kenai and Alaskan Peninsulas have continued to this very day.

We in the scientific community understood even in 1994 that the assumption which was the basis for Exxon’s cleanup effort was not valid. At the trial, Plaintiffs’ expert James Bush correctly demonstrated that there was likely substantial, mostly subsurface, oil still remaining (Trial Trans. 4376-4385). Moreover, the jury members, as a result of an Exxon motion for a “jury view,” had the opportunity to observe for themselves that even in assertedly pristine beaches, a little digging showed substantial residual oil. (Clerk’s Docket 5743).

What was not understood was that to this day reservoirs of oil would still persist buried at shallow depths in the intertidal shores of many coastlines. This oil has not been degraded because it is protected from light, physical disturbance, oxygen, and microbes that would otherwise promote degradation of hydrocarbons. As a result, we now understand that its toxicity will likely persist for decades, causing a cascade of effects: (i) chronic persistence of oil in shallow sedimentary reservoirs, leading to biological exposures, then sub-lethal and lethal impacts to vertebrates using these intertidal sediments for reproduction and foraging; (ii) delayed population impacts of exposure as a consequence of impaired survival or reproduction of individuals with compromised health or suppressed growth; (iii) indirect effects of trophic and other interaction cascades, such as through losses of keystone species

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and individuals important to critical social organization functions; and (iv) delayed impacts, including habitat degradation, prey declines, trophic cascades, and other indirect effects of ecosystem perturbation from the spilled oil and the clean-up interventions.

Since the oil spill, substantial research has revealed the persistence of ecologically significant amounts of still toxic Exxon Valdez oil in shallow subsurface reservoirs throughout the intertidal zone of many oiled beaches. In 1997, eight years after the spill, researchers encountered significant residual oil. The largest quantities with the least weathering occurred at depths of 25-50+ cm under the protective cover of a well-sorted cobble/boulder armor on intermittently exposed, coarse-grained gravel beaches within Prince William Sound. Researchers found that a stable armor had developed over the upper and lower platforms of these more exposed, coarser-grained gravel beaches. Once such armoring is achieved, only extreme erosional events will mobilize the coarse armor. In the absence of such events, little to no change in degree of weathering of the oil had occurred at these sites since earlier measurements made in 1994.

In 2001, 12 years after the spill, researchers from the National Oceanic and Atmospheric Administration (“NOAA”) conducted extensive surveys in Prince William Sound to assess both the volume of oil remaining in and on the beaches and the area of beach still contaminated by the spill to determine whether the spilled oil still was a long-term reservoir of toxic hydrocarbons. Surface and subsurface oil was measured in nearly 6000 pits, which were randomly located along shorelines

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previously identified as heavily oiled. The study found Exxon Valdez oil on 58 of 91 beaches randomly selected according to their oiling history, suggesting that the area of oiled beach had probably changed very little since 1992. Although the researchers concluded that their study likely underestimated (by 30%) the volume of oil remaining, the conservative estimate totaled nearly 60,000 kilograms of Exxon Valdez oil still remaining, or more than twice what had been estimated back in 1993.

Prior to this 2001 survey, the hypothesis presented by Exxon – that oil persisted only in the upper intertidal zone – was based on the conjecture that oil would adhere better to rock surfaces in the drier upper intertidal areas, where it would form biologically inert asphalts. The most disturbing revelation from NOAA’s study in 2001 was that most of the subsurface oil was located much lower in the intertidal zone than expected and that it persisted in liquid state with minimal weathering, typical of what would occur in only a week or two of exposure. Furthermore, its presence only about 10 cm below the sediment surface in the mid and lower intertidal zone, where key invertebrate prey like clams and mussels are abundant, poses a much greater risk to the food chain and especially vertebrate consumers that forage by excavating intertidal invertebrates. Analysis of the oil by chemical fingerprinting indicated that over 90% of the surface oil and all of the subsurface oil was from the Exxon Valdez.

This research provided evidence that EVOS oil was having a material impact on many nearshore and intertidal dependent wildlife, and was contributing to their documented slow recovery in some parts of Prince William Sound. Because the

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remaining oil is buried and not exposed to elements like light, oxygen, physical disturbance, and oil-degrading microbes that could degrade it, this persistent oil could remain hazardous to wildlife for decades to come.

To assess the extent of that ongoing risk to the ecosystem, a similarly composed team of NOAA researchers examined 32 shorelines selected at random in 2003 from oiled shores in Herring Bay, Lower Pass, and Bay of Isles in Prince William Sound. They evaluated the vertical distribution of oil remaining from the 1989 Exxon Valdez oil spill and then estimated the probability that key wildlife such as sea otters and sea ducks, which depend on foraging in the intertidal zone, would encounter oil while foraging. The study involved 662 randomly dug, shallow pits along 32 stretches of shoreline. The researchers encountered Exxon Valdez-fingerprinted oil at 14 of 32 sites, more than half of which were in the biologically rich, lower intertidal zone, where predators may encounter it while disturbing sediments in search of prey. Calculating the probability that foraging wildlife would encounter subsurface oil based on the amount of oil remaining led the researchers to conclude that sea otters and diving ducks that routinely excavate sediments while foraging within the intertidal zone would likely encounter subsurface Exxon Valdez oil repeatedly during the course of a year. The researchers estimated that a sea otter might dig 1000 pits per year while foraging, sufficient to cause a high likelihood of intermittent encounter and exposure to oil. The substantial probability of encountering oil in the lower intertidal is particularly relevant biologically because the availability of molluscan prey of sea otters, diving

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ducks, and shorebirds increases in the intertidal zone as tidal elevation falls.

In 2005 members of the same NOAA team returned again to Prince William Sound and the Gulf of Alaska shorelines to focus on the rate of removal and the processes which were contributing to the persistence of relatively unweathered oil from the spill. They found that oil stranded by the 1989 Exxon Valdez spill had persisted in subsurface sediments of exposed shores now for 16 years. They calculated that annual loss rates had slowed down from about 68% in the first years down to less than 3-4% after 2001. The conclusion was that the persistence of the most toxic polycyclic aromatic hydrocarbons (PAHs)4 is prolonged by burial for decades with little change. The trends that they had documented since 2001 indicate that there will be ever slower loss rates for the subsurface oil which has remained. Such persistence of only partially weathered oil: i) creates a persistent source of chronic low-level contamination to intertidal and nearshore dependent species; ii) poses a contact hazard to intertidally foraging sea otters, sea ducks, and shorebirds; iii) discourages subsistence in a region where traditional subsistence harvest along rocky shores has been intense and important; and iv) degrades the wilderness character of protected lands.

These NOAA studies of the long-term persistence of oil in intertidal sediments have been

4 The multi-ringed, higher molecular weight polycyclic aromatic hydrocarbons or “PAHs” are among the most toxic family of compounds found in petroleum products. These can become air or waterborne and be ingested by living creatures.

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complemented and validated by other studies of oil persistence and its causes. A 2006 study showed that Exxon Valdez oil persisted for a decade as subsurface mousse along the high-energy coast of the Alaska Peninsula under conditions where boulder armoring protected the underlying sediments from physical disturbance. This oil was also maintained for 10 years in a largely unweathered condition, compositionally similar to 11-day old oil.

Exxon Valdez oil has also been shown to persist for long periods of time in another intertidal environment likewise physically protected from disturbance and weathering. Intertidal mussels often form extensive beds, which blanket the underlying sediments. Oil has seeped deeply into and under these beds on heavily oiled shores of Prince William Sound. Because mussels represent such important prey organisms for shorebirds, diving ducks, sea otters and many invertebrates and are valued as subsistence, oil mussel beds were left undisturbed during clean-up operations during the summers of 1989-1991 in the hope that natural processes would cleanse them. Later studies have shown, however, that these beds have become a source of chronic contamination and exposure to oyster-catchers and likely other vertebrates. Repeated sampling of many of these oiled mussel beds has provided evidence that the oil will persist for 30 years or more. Consequently, the very locus of dense and preferred prey for many predatory vertebrates is also a hotspot of prolonged contamination – an unfortunate conjunction likely dooming these shoreline predators to long-term contamination and subsequent harm.

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The studies of Prince William Sound complement research from petroleum spill sites on the East Coast performed by researchers at Woods Hole Oceanographic Institute which shows persistent toxicologically active hydrocarbons 30 and 40 years after a spill into the protected environment of coastal salt marshes. The explanation for why oil has persisted for so long in salt marsh sediments is consistent with what researchers have concluded from studying EVOS oil in intertidal sediments: wherever oil can become buried in physically protected environments, degradation can become inhibited and persistence occur.

This continued persistence of subsurface Exxon Valdez oil, often only minimally or moderately weathered, means that to this day a reservoir of biologically available polycyclic aromatic hydrocarbons (PAHs) remains on beaches impacted by the spill. Furthermore, its extension into the more biologically productive middle and lower intertidal zones has created the potential for long-term biological effects on beaches most heavily impacted by the spill as well as to those plants, fish, and wildlife that use these beaches for foraging and reproduction.

II. EVOS Has Had a Devastating Long-term Effect Not Only on Critical Fish Populations but Throughout the Entire Food Chain

“The spill did not cause a fish kill ....”

Petitioners’ Brief at 6

With these few words, Exxon cavalierly and inaccurately dismisses the devastating impact that

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EVOS has had on fish in the marine environment and, as a result, on the commercial fishers and subsistence users who rely on its resources. Truncated descriptions of short-term acute mortality ignore the very real short-term and long-term consequences of exposure of marine ecosystems to Exxon’s petroleum hydrocarbons. In fact, population impacts from chronic exposures have occurred at extraordinarily low pollutant concentrations. (See National Research Council, OIL IN THE SEA III: INPUTS, FATES, AND EFFECTS (2003) at 123 et seq.)

At trial, the jury heard testimony about the injuries to commercial fisheries and awarded several hundred million dollars in damages to fishermen for the fish killed and not caught. However, the extent of the harm has proven to be immeasurably greater than was believed at that time. Important commercial fish have continued to suffer because for crucial early life stages of keystone fish species in this ecosystem, the multi-ringed, polycyclic aromatic hydrocarbons (PAHs) in Exxon’s crude oil has proven to be not only the most toxic component, but also the most persistent. This is particularly problematic for fish like salmon, sand lance, and capelin that deposit eggs to incubate in sediments, but also impacted herring. The resulting chronic exposure to Exxon’s oil even at very low concentrations (a few parts per billion), has resulted in substantial fish population losses through lowered survival and reproductive success.

The losses in susceptible fish have cascaded through the ecosystem to cause long-lasting declines in predatory vertebrates dependent upon them. Moreover, because oil has often persisted in intertidal sediments for many years without

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degrading, foraging seaducks and sea otters have themselves continued to be exposed to contamination that has enhanced mortality and prevents population recovery. Smooth-skinned marine mammals like killer whales have experienced mortality and, even more significantly, losses to their populations grew more serious over time as their social structures degraded. In sum, the EVOS has had a significant effect on populations of commercial pink salmon and herring, as well as sea otters, harlequin ducks, Barrow’s goldeneyes, pigeon guillemots, killer whales, harbor seals and many other interdependent species.

A. Short and Long-term Consequences for Pink Salmon

Wild pink salmon are a major component of the Prince William Sound ecosystem and, along with hatchery-raised pink salmon, are the dominant contributor to the region’s commercial fisheries. Juvenile salmon are also a source of prey for certain nearshore predators and once adults have returned to spawn, their carcasses serve to enrich the spawning areas along streams where they die.

At the time of the spill, at trial, and in its briefing here, Exxon’s claims that fish would not be killed by spilled oil have been based largely on testing acute toxicity in short-term laboratory exposures. After the Exxon Valdez oil spill, however, research on the toxicology of weathered crude oil on fish embryos and larvae has clearly shown that chronic exposures cause substantial mortality of exposed eggs and larvae and resulting population losses.

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In fact, the life cycle of pink salmon has made them especially at risk. Nearly all pink salmon of Prince William Sound are intertidal spawners, spawning in freshwater reaches of streams at low tide. Spawning occurs from mid-July through September, not long after the spilled oil was heavily deposited there, forming what has been described as the “oil bathtub ring” located at the tide line. Eggs deposited into the intertidal gravels hatch between late October and December, and alevins continue to incubate in gravel until about April, giving them 8-9 months of total potential exposure to the sediments and any sediment contaminants. Following emergence from the gravel, pink salmon juveniles migrate immediately to potentially oiled estuaries for an additional 3 to 4 months of initial feeding and growth in nearshore waters before they migrate to open ocean.

By the time of trial of this matter, scientists knew that through 1993 salmon eggs in oiled streams exhibited higher mortality rates than those deposited in unoiled streams. Because these results were disputed by Exxon-funded investigators, a government team from NOAA’s National Marine Fisheries Service conducted laboratory studies to test the impact to salmon embryos exposed to very low concentrations of weathered oil under controlled conditions similar to field exposures. The results showed unequivocally the damage to eggs and larvae of pink salmon as a consequence of chronic exposure to low concentrations of weathered crude oil. PAH concentrations as low at 1 ppb of weathered Exxon Valdez crude oil killed directly, and indirectly through reduction in fitness, a large fraction of pink salmon embryos exposed to the same type of

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persistent stranded oil located alongside salmon streams.

Pink salmon, exposed as embryos to low concentrations of spilled oil PAHs in water percolated through the spawning gravel, have been shown to have suffered a significant decrease in marine survival when compared to unexposed salmon. This has been attributed to delayed growth in those juveniles that survived the embryonic exposures and lower fitness of the smaller salmon in the marine phase of their life. These long-term adverse effects of exposure to weathered oil during the development of pink salmon suggest that recovery of salmon breeding habitats may be even slower than ever assumed. The effects of even low concentrations of weathered PAHs on incubating salmon include not only egg mortality and sublethal effects of slower growth of survivors, but also reduced survival during the marine phase as a combined consequence of predation, disease, and perhaps food competition. In other words, smaller size at the time of departure from the natal stream implies lower fitness such that sublethal effects on growth transform into population effects later in the life history of pink salmon, before they can return to spawn.

Synthesizing all these consequences of exposure to persistent oil, it has been estimated that the survival reduction across all life stages of the pink salmon caused by chronic oil exposure reduces the numbers of mature adults returning to spawn by half. These definitive experiments conform with a growing scientific understanding of how exposure to toxins at sensitive early stages in vertebrate development can lead to enhanced mortality and

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reproductive impairment later in life through endocrine disruption and developmental abnormalities.

Historical pink salmon data were analyzed and population modeling was conducted for the purpose of addressing how observed decreases in survival caused by chronic contamination could influence equilibrium population size. This analysis concluded that the equilibrium size of a simulated pink salmon population diminished with increasing contamination of their spawning and rearing habitat, even leading to increased risk of local extinction from the anadromous stream. Exposed populations can recover if the contamination is removed, but if the equilibrium population falls far enough because of chronic contamination over many generations, that population faces an appreciable risk of extinction from naturally fluctuating environmental factors.

Consideration of the studies showing long-term persistence of significant reservoirs of Exxon Valdez oil in intertidal sediments and those showing persistence of exposure in spawning habitat leads to the conclusion that the toxicity of oil spilled into this coastal environment may have adverse effects on pink salmon for many more years than previously assumed. The pockets of persistent oil serve as toxic PAH reservoirs that sit waiting for environmental perturbations, such as storms, to release the oil into the nearshore ecosystem where it again will induce long-term, delayed effects on eggs and larvae of pink salmon that may, in turn, produce population declines over generations.

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B. Long-term Consequences for Herring

Herring also play crucial roles in the ecosystem by sustaining both a commercial fishery and by serving as a universal prey species for a large number of predators in the coastal zones – marine mammals, seabirds, and other larger fishes. Thus, spill-related impacts to the herring population have had significant repercussions economically, culturally, and ecologically.

The timing of the Exxon Valdez oil spill matched the spring season of adult return, spawning, larval and post-larval development of Pacific herring. Studies have shown that newly hatched larvae exposed to oil had many structural and genetic abnormalities, which challenge their ultimate survival. Lower viability of larvae exposed to oil was confirmed by other studies demonstrating much higher rates of larval mortality in oiled areas as well as lower growth rates when compared to larvae from unoiled areas. The results of field studies have been verified by laboratory experiments in which exposure to an Exxon Valdez type of crude oil causes genetic damage, physical deformities, lower hatch weights, and premature hatching.

Later laboratory studies have shown that these lethal and sublethal abnormalities occur at extremely low exposures. A study of herring eggs exposed to oil of similar composition and at similar concentrations to those prevailing at the time of the spill has found significant dose-related sub-lethal effects, including malformations, reduced swimming ability, and genetic damage, which all led to consequent higher mortality to herring embryos after

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exposure to PAHs at a few parts per billion. Again, these sublethal effects matched those documented in the field after the spill in 1989.

By analyzing herring egg deposition counts on oiled and unoiled shores and applying the observed differential in larval mortality rates, it has been estimated that 40-50% of the eggs deposited in 1989 were exposed to oil and 99% of expected herring survivors were killed on the oiled shores. As calculated, this loss would lead to reduction of over 40% in the expected total production of the 1989 year class of herring from Prince William Sound. In fact, when adults derived from this 1989 year class returned to spawn in 1993, the 1989 year class was one of the smallest on record despite the high spawn deposition reported by the annual survey carried out by Alaska Fish and Game. When researchers reviewed several independent lines of evidence (historic patterns of herring spawn, anomalies in the historic fisheries model predictions, as well as a database of acoustic measurements of herring biomass), the analysis showed that the beginning of the herring decline was coincident with the oil spill, and that the decline took place over a five-year period.

This research also showed how the herring collapse appears to be linked to several negative indirect and long-term impacts on many of the fish-eating marine wildlife species in Prince William Sound whose winter food source has traditionally been herring. Many species of seabirds with depressed populations, like pigeon guillemots and marbled murrelets, and marine mammals like harbor seals, are still falling short of recovery in part because they once fed heavily on herring. The rare

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Kittlitz’s murrelet similarly suffered acute mortality from contact with surface oil during the spill. That along with depressed herring populations may be enough to drive this already declining population to extinction.

Indeed, although herring populations up to 1989 had been at record highs, and have remained high in other areas of the North Pacific and Gulf of Alaska like unoiled Sitka Sound, herring populations in the oiled areas have remained extremely low ever since 1993. Even now, herring adult numbers in Prince William Sound remain insufficient to permit a return of full-scale commercial fishing. The spill thus appears to have induced a persistent reduction in reproductive success of this intertidal and shallow subtidal spawner, with potentially long-term consequences at a population level.

C. Long-term Consequences for Sea Otters

Sea otters did not avoid the floating oil. Despite their swimming ability and intelligence, they experienced initially high acute mortality through contamination of pelage, dysfunction of insulation, ingestion of oil, and inhalation. More than a decade of study of sea otter population dynamics after EVOS has revealed important delayed impacts which have slowed their recovery, presumably caused by the loss of animals with compromised health, chronic exposures by ingestion of contaminated prey, or direct contact while excavating oiled sediments during feeding.

After 1989, the rate of sea otter recovery at about 4% per annum (averaged throughout western

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Prince William Sound) has fallen far short of the 10% expected from earlier population recoveries observed after termination of trade in sea otter pelts. At heavily oiled northern Knight Island, sea otters have remained at half the estimated pre-spill numbers with no recovery initiated by 2000, whereas the unoiled Montague Island population doubled just in the period from 1995 to 1998. Modeling of population dynamics based on historic carcass survey data indicates that sea otter survival in oiled areas of Prince William Sound was generally lower in the years after the spill and that survival declined rather than increased in years immediately following the oil spill.

It is clear that sea otters have been consistently exposed to PAH contamination as a result of the spill. First, persistent exposure of otter populations to oil in 1996-98 is confirmed by higher levels of the detoxification enzyme CYP1A in individuals from northern Knight Island than in those from Montague Island. One likely reason is that suspension-feeding clams and mussels, the otter’s main food source, concentrate and only slowly metabolize hydrocarbons, which leads to chronically elevated PAH contamination in their tissues when persistently exposed. Additionally, sediments in protected areas, including oiled mussel beds and shallow eelgrass habitats, also retained contamination, with recovery to background in oiled mussel beds estimated from repeated sampling to require up to 30 years. As recent research on the persistence of subsurface oil in the mid and lower intertidal zones demonstrates, it is likely that otters and other intertidal foragers encounter oil repeatedly as part of their normal foraging in oil-contaminated areas. As a result, foraging sea otters suffer chronic

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exposure to residual petroleum hydrocarbons from both sediment contact and ingestion of bivalve prey with exterior shell and tissue contamination.

It has also been concluded that progress toward recovery of sea otters in Prince William Sound where initial oil effects were greatest is suppressed and may be constrained by residual spill effects, which include elevated mortality and induced emigration. The result has been a protracted recovery period, prolonged by long-term spill effects on survival and emigration and intrinsic limits to population growth.

D. Long-term Consequences for Harlequin Ducks

Because harlequin ducks reside for much of the year in nearshore marine environments while feeding on benthic invertebrates in the intertidal zone, they are particularly susceptible to any impacts to that environment. Individual ducks remain faithful to their particular wintering sites. Like other sea ducks, they have relatively low annual productivity but long life spans to make up for it. Also, because of their small body size, they are limited in the amount of energy reserves they can carry, leaving them dependent on reliable and safe food sources to survive the winter.

In contrast to Exxon’s position that oil spill effects on bird populations would be relatively short in duration, restricted to the period of direct contact between floating or grounded oil and bird feathers, research conducted between 1995 and 1998 determined that adverse impacts on harlequin duck populations were still exhibited at least 9 years after

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the spill. Because harlequins were in many of the areas where oil persisted in the benthic environment, individual ducks in oiled areas continued to have significant exposure to oil, as evidenced by elevated cytochrome P4501A (CYP1A) induction in 1998. This ongoing exposure of harlequin ducks to oil for years after the Exxon Valdez oil spill is further corroborated by studies of other nearshore vertebrate predators of benthic invertebrates during 1995-1999. More recent data from March 2005 demonstrate that harlequin ducks continued to have elevated CYP1A in oiled areas.

By attaching radio transmitters to harlequin ducks, an EVOS Trustee Council research group found that adult females survived less well in oiled than in unoiled areas during the study period from 1995 through 1998, the same period during which continued exposure to residual oil was documented by the CYP1A evidence. Other government researchers doing population surveys found that fall counts of harlequin ducks declined significantly on oiled areas from 1995 through 1997, which contrasted to stable population counts in unoiled areas. Furthermore, population surveys over the 16 years after the spill have indicated that wintering numbers have not increased in oiled areas, indicating suppressed recovery.

As a result, harlequin recovery has been constrained by exposure to and ingestion of residual oil through at least 1998, which led to decreased adult female survival during periods of winter stress. The studies on this population indicate that exposure to oil and delays in population recovery have occurred over a much longer time period for

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harlequin ducks than urged by Exxon at the time of the spill.

E. Long-term Consequences for Other Intertidal Predators

Analogous tissue sampling of Barrow’s goldeneye, adult pigeon guillemots, and various fishes indicate that several nearshore vertebrate predators in oiled areas of western Prince William Sound were exposed years after the spill to lingering Exxon Valdez oil, based on elevated levels of the biomarker CYP1A.

Barrow’s goldeneye is another diving duck that occupies nearshore waters, foraging for mussels and other invertebrates, making them susceptible to long-term contamination from persisting reservoirs of subsurface oil in the intertidal zone, especially in oiled mussel beds. Organ tissue evidence of long-term exposure to oil by Barrow’s goldeneye in oiled areas of Prince William Sound after EVOS serves to explain why Barrow’s goldeneye populations in the oiled areas of western Prince William Sound have continued to fall.

Pigeon guillemots were relatively abundant in Prince William Sound before EVOS. This seabird species feeds close to shore during chick rearing, typically within 0.5 km of the nest. Chicks are fed almost exclusively fish and historically their prey of choice were schooling fishes like sand lance and herring, while adults would augment their diet with nearshore benthic invertebrates. USFWS shoreline boat survey data have demonstrated significant declines in pigeon guillemots in oiled areas of western Prince William Sound as compared to

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unoiled shoreline segments, documenting not only that the population declined after the spill but that recovery has subsequently been suppressed. The finding of elevated CYP1A enzyme concentrations in oiled areas 10 years after the spill indicate that recovery from losses suffered during the oil spill may be suppressed by chronic exposure of adults to residual oil during foraging for benthic prey. An additional factor limiting recovery has been the post-spill shortage of high-quality forage fish such as herring, sand lance and capelin. Thus, chronic challenges to recovery of this seabird are likely to be the result of contributions from multiple sources, directly or indirectly caused by EVOS.

F. Long-term Consequences for Killer Whales

Killer whales are apex predators at the top of the marine food web. These whales are long-lived and aggregate in matrilineal groupings and travel in pods of closely related whales. They mate with other whales exclusively outside the pod during multi-pod aggregations. Individual whales never leave their pod and their life span is, on average, 30-60 years. Because of their group stability and individually distinctive markings, there is a very well documented history of each individual killer whale in the groups that regularly use Prince William Sound.

There are two ecologically distinct types of killer whales, the fish eating “resident” whales and mammal eating “transient” whales. Killer whales from one resident pod and a unique transient population whose range centers in Prince William Sound were photographed swimming through the oil following EVOS. Using photo identification methods

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to monitor these two killer whale populations from five years before to 16 years after the spill has revealed that one resident pod, AB pod, and the small AT1 transient population, suffered losses of 33% and 41% respectively during the year of the spill and the following year. The synchronous losses of unprecedented numbers of killer whales from two ecologically and genetically separate groups and the absence of other obvious perturbations strengthens the link between the high killer whale mortalities and the oil spill as well as their lack of recovery after EVOS.

Population growth (at an annual rate of 3.2%) of all resident pods other than AB pod over the 23-year study suggests that conditions in the northern Gulf of Alaska as a whole (including southeastern Alaska) have been near optimal for resident killer whales. However, despite such ideal conditions, recruitment in AB pod in 16 years since the spill was considerably less than expected as a consequence of the disproportionate loss of reproductive and juvenile females at the time of the spill and the resulting loss in long-term reproductive potential. The AT1 transient population, which lost nine members following the spill, has had no recruitment since, and has continued to decline toward extinction.

Three key aspects of killer whale behavior and ecology leave them highly vulnerable to oil spills. First, free-ranging killer whales do not or cannot detect or avoid crude oil sheens at the water’s surface and are thus susceptible to inhalation of vapors and to oil-lung contact, and, especially in the case of mammal-eating transients, to ingestion of oil. Second, resident killer whale pods, even under optimal conditions, may take decades to recover from

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the impacts of an oil spill if reproductive and nurturing functions of females are lost. Third, in a small, isolated and threatened population like the AT1, a major environmental perturbation can greatly increase the probability of extinction through stochastic effects (accidents matter more to lineages of small families).

Although it appears that the AB resident fish-eating pod will eventually recover if other atypical and unforeseen mortalities do not occur, recovery may take decades because of the demographic consequences of the removal of breeding females. The outlook for the AT1 mammal-eating population is bleak and the group will likely go extinct within the next several decades. Although the future fate of these two injured populations of killer whales differs, each has exhibited suppressed recovery and thus persistent impacts of the spill expressed through altered social demographics that reduce breeding.

Given the small numbers of individuals in these apex predator populations, their potential role in structuring ecological communities, and their cultural value to coastal residents, indigenous populations, and visitors from around the world, the deaths in AB pod and the impending extinction of the AT1 transients represent losses of and damage to resources of international ecological and cultural significance.

G. Long-term Consequences for Harbor Seals

Harbor seals suffered acute mortality (302 individuals) during EVOS from exposure to oil and concentrated fumes. Seals became lethargic and

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disoriented and many died showing evidence of brain lesions during autopsy. Using counts during moulting, it has been shown that the decline that occurred in 1989 after the oil spill was far greater in oiled than in unoiled areas of Prince William Sound. Subsequent to the oil spill, continued censuses during moulting failed to detect any trend toward recovery in the oiled portions of the Sound. The delayed recovery of harbor seals in the oiled portions of Prince William Sound may be a response to low availability of forage fishes, including herring that were significantly depressed by the spill, crashed thereafter, and have not yet begun to recover.

III. Contrary to Exxon’s Representations Regarding its Clean-up Efforts, Those Efforts Were Not Only Often Ineffectual but at Times Harmful

“Exxon acknowledged responsibility for the spill and initiated a massive cleanup, ultimately spending $2.1 billion on that effort”

Petitioners’ Brief at 16-17.

In undertaking the clean-up after the grounding of oil along hundreds of miles of initially pristine beaches, Exxon’s preferred method was to use high-pressure water washing during the summers of 1989, 1990, and 1991 in an effort to disperse the spilled oil and displace it from the beaches. This high-pressure washing by itself caused significant additional injury to plants and animals of both rocky and mixed-soft intertidal beaches by thermal shock and physical disturbance.

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Moreover, recovery of the washed ecosystems has in many cases been delayed more so than on beaches that were not cleaned at all. Recovery of rocky intertidal communities on oiled but uncleaned beaches appeared to have recovered to the status of unoiled beaches within 5 years. By contrast, a considerable proportion of mixed-soft beaches in the treated areas of the Sound remained extremely disturbed and functionally impaired in their ability to support important foraging of clams by humans and nearshore vertebrate predators such as sea otters when studied 13 years after the spill.

For example, large, long-lived hard-shell clams remained in 2002 66% less abundant at washed sites than at unoiled reference sites. Based on several lines of evidence, it has been concluded that the delay in clam recovery has been attributable in large part to the beach washing; namely, the disruption of the physical structure and surface armoring of mixed soft beaches whereby coarser materials accumulate on the surface. When these sedimentary structures become organized by armoring, this structural layer provides newly settled clams with more effective protection from physical hydrodynamic disturbances and predators than sediments lacking organization by armor. In the absence of this natural armoring, clam recovery has been widely suppressed. Consequently, recovery of clams has been suppressed by recruitment failures on beaches where armoring has been disrupted. The destruction of these armored beaches, which were quite common in Prince William Sound, has proven especially significant to predatory invertebrates, shorebirds, diving ducks, sea otters, and subsistence users of shellfish. Yet, based on the recovery trajectory to date, it has been predicted that recovery to pre-spill

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status will still take several more decades for those beaches that were pressure washed resulting in the destruction of their armoring.

Similarly, intertidal communities have at times suffered more from the clean-up intervention than from the oil. Short-term measurements of losses of plants and invertebrates on intertidal rocks have demonstrated greater acute injury to intertidal algae and invertebrates from the high-pressure washing than from the oil itself. Furthermore, the joint impacts of oiling and clean-up modified communities of plants and invertebrates in ways that led to subsequent indirect effect cascades, so the injuries ramified and extended over longer time frames. The loss of the structural habitat-providing rockweed and its gradual recovery over several years suppressed abundances of many invertebrates like small snails and crustaceans that are dependent on the rockweed for protection against physical environmental extremes like desiccation during sunny low tides, for substratum on which to live, and as food for grazing herbivores. Many other similar interactions among species induced indirect impacts of the oil spill and its clean-up on multiple rocky shore populations, extending the duration of injury for years beyond the period of acute mortality and delaying recovery.

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IV. The Public Purpose of Punitive Damages Is Demonstrated by Exxon’s Failure to this Day to Acknowledge Both the Near- and Long-Term Effects Caused by its Oil Spill

“It is unclear what public purpose could support allowing an Alaska jury to transfer to Alaska plaintiffs a windfall of $2.5 billion, on top of the full compensation they already received for their (purely economic) losses.”

Petitioners’ Brief at 49

Oceans cover 70% of our planet and encompass 99% of the inhabitable three-dimensional space for life on Earth. As Professor Jane Lubchenco has pointed out: “Oceans provide a wealth of benefits in the form of food, fiber, medicines, pharmaceuticals, blueprints for new materials, a storehouse of knowledge, the recycling of nutrients, detoxification of pollutants, partial regulation of the water cycle, partial climate regulation, regulation of gases in the atmosphere and the provision of spectacular places for recreation, tourism, inspiration and enjoyment – essentials we call ecosystem goods and services.” Lubchenco, “Lessons from the Land for Protection in the Sea: The Need for a New Ocean Ethic,” in OPEN SPACES (2007).

The types of goods and services collectively provided by the diversity of ocean ecosystems are rarely represented more fully than in Prince William Sound: kelp forests, salt marshes, mud flats, estuaries, rocky shores, sandy beaches, continental shelves, and open oceans. Optimally, each ecosystem harbors a complex assemblage of species that interact with each other and their specific physical

34

and chemical environment to produce the services that are the byproducts of the proper functioning of an intact ecosystem. The economic value of Nature’s services is often taken for granted but is clearly enormous,5 dwarfing the production of most human enterprises.6

Preserving intact ocean ecosystems so that this natural capital can continue to provide its free production of goods and services is in the hands of managers and the abuse of the natural production engine as occurred via EVOS externalizes extensive service losses to diverse human enterprises.

The implications of the many long-term studies of the effects of EVOS are now quite sobering. In many areas to this day oil is retained that might last for decades. Persistence of minimally weathered still toxic oil in shallow subsurface reservoirs in the intertidal zone of the spill area has caused long-term population impacts on important vertebrate predators tied closely to the nearshore and intertidal zone for feeding or reproduction. Consumers like sea otters and diving ducks can themselves ingest residual oil passed upwards from eating contaminated clams and from contact during excavation of prey with residual reservoirs of oil. Meanwhile, beaches that Exxon aggressively cleaned with pressurized water have been seriously impacted

5 Daily, G., NATURE'S SERVICES: SOCIETAL

DEPENDENCE ON NATURAL ECOSYSTEMS, Island Press, Washington, DC (1997).

6 Costanza R., et al. The value of the world's ecosystem services and natural capital, NATURE 387(15): 253-260 (1997).

35

by the modifying of the physical structuring of the sediments so as to render those beaches largely uninhabitable for these clams for several decades after the washing.

The full extent of an oil spill or any other major perturbation to a natural ecosystem can only be assessed by including a basic appreciation of the interconnectivity among multiple species and their environment. This perspective, generally ignored by Exxon, has revealed the long-term, chronic, and indirect effects of the spill on the marine environment and on the natural resources that environment sustains, as well as on the humans who have depended on those systems for their lives and livelihood.

For example, pink salmon populations have suffered for many years from enhanced egg mortality in gravels contaminated by residual oil and the larvae and juveniles that did survive grew less and suffered higher mortality at sea from size-dependent mortality processes. This has prevented many from returning to spawn, thereby reducing the total population dramatically. The sub-lethal effect on growth rate in an early life stage has been transformed into a population reduction by the size-dependency of the interactions between salmon at sea and marine predators, competitors, and other challenges.

When the herring population crashed after the oil spill, a cascade of indirect effects influenced both the many human and non-human vertebrate consumers of herring. Among the many vertebrate consumers of herring that continue to suffer delays in recovery as an indirect result of the oil spill are

36

marbled murrelets and Kitlitz’s murrelet, the latter of which seems headed for extinction.

In fact, as of November 2006, in its most recent “Update on Recovery of Injured Resources and Services,”7 the Trustee Council concluded that 17 years after the spill only 9 out of 22 studied indicator species could be classified as fully recovered. For instance, sea otter recovery even today is incomplete on northern Knight Island and not even initiated in Herring Bay. Harlequin ducks suffered added mortality of over-wintering adults over a decade after the spill and their population recovery is as yet incomplete.

Clearly, the Exxon Valdez oil spill has had a significant long-term impact on the coastal marine ecosystem and the economy which long depended upon that ecosystem, none of which Exxon acknowledges when it represents to this Court that full compensation has been paid. The efforts of those studying the spill and its impacts over long time frames now approaching two decades have resulted in the discovery of immeasurably greater long-term impacts than were understood at the time of the punitive damages award in this case. Indeed, it is clear that recovery of Prince William Sound is far from complete even today – almost twenty years later. It is on this basis that we conclude that to the extent punitive damage awards are meant to provide deterrence or compensation where “the injury is hard to detect or the monetary value of non-economic harm might have been difficult to determine,” BMW

7 www.evostc.state.ak.us/Publications/

injuredresources.cfm

37

of North America, Inc. v. Gore, 517 U. S. 559, 582 (1996), this is undoubtedly one such example.

CONCLUSION

For the reasons stated herein, the Ninth Circuit’s decision should be affirmed.


GERSON H. SMOGER, Counsel of Record STEVEN BRONSON SMOGER & ASSOCIATES, P.C. 3175 Monterey Blvd Suite 3 Oakland, CA (510) 531-4529

January 29, 2008

1a

Appendix A

Amicus Jean-Michel Cousteau is the son of ocean explorer Jacques Cousteau. As such, he spent much of his life with his family exploring the world’s oceans aboard Calypso and Alcyone. Honoring his heritage, Jean-Michel founded the Ocean Futures Society in 1999 to carry on this pioneering work. As Executive Vice President of The Cousteau Society for nearly 20 years, and now as Founder and President of Ocean Futures Society, Jean-Michel travels the globe, meeting with leaders and policymakers at the grassroots level and at the highest echelons of government and business. He served as a spokesman on water issues at the United Nations World Summit on Sustainable Development in Johannesburg, at the Third World Water Forum in Kyoto, and at the Dialogues on Water for Life and Security in Barcelona.

His diplomatic achievements as a voice for the ocean were recognized in 2000 when he was the first person to represent the Environment in the Opening Ceremonies of the 2000 Olympic Games, and in December 2003 when he was the first person to receive the Ocean Hero Award from Oceana, recognizing his commitment to communicate the value of the oceans and the threats they face to people of all nations and generations.

Jean-Michel has been Executive Producer of over 75 films and is currently the Executive Producer of “Jean-Michel Cousteau’s Ocean Adventures,” a twelve-part series in partnership with KQED, a PBS-affiliate, which first aired in 2006. He has been awarded the Emmy, the Peabody Award, the 7 d'Or, and the Cable Ace Award, among other film tributes.

2a

He is dedicated to educating young people, documenting stories of change and hope, and lending his reputation and support to energize alliances for positive change. In recognition of his many and diverse contributions to learning, Pepperdine University awarded Jean-Michel an Honorary Doctor's Degree in Humane Letters in 1976. He has received DEMA's 1994 Reaching Out Award and the 1995 NOGI Award from the Academy of Underwater Arts and Sciences. In 1996, Jean-Michel was awarded the SeaKeepers Award from Showboats International, and the John M. Olguin Marine Environment Award from the Cabrillo Marine Aquarium.

Ocean Futures Society, a non-profit marine conservation and education organization, serves as a voice for the ocean by communicating in all media the critical bond between people and the sea and the importance of wise environmental policy.

Amicus Peter Auster, Ph.D., is the Science Director for the National Undersea Research Center and an Associate Research Professor of Marine Sciences at the University of Connecticut. His research focuses on the ecology and conservation of fishes. Dr. Auster has a Bachelors degree in ecology, a Masters in biological oceanography and a Ph.D. in zoology. For the past 15 years, Dr. Auster has conducted studies to define how variation in underwater landscapes mediate the distribution and abundance of fishes, understand the linkages between habitat level processes and population-community dynamics, and develop methods for monitoring the dynamics of habitat attributes and habitat use. He serves on a number of panels and committees that are focused on marine resource management and conservation and he is involved in

3a

several outreach initiatives that are targeted at informing the public about marine conservation issues. He is a recipient of the Pew Marine Conservation Fellowship in 1999, a NOAA Environmental Hero Award in 2000 and was a Distinguished Conservation Scholar at Duke University Nicholas School of the Environment in 2001. In 2005, he was elected a fellow at the American Institute of Fishery Research Biologists.

Amicus John Avise, Ph.D., is Distinguished Professor of Ecology and Evolutionary Biology at the School of Biological Sciences, University of California at Davis. He has a Ph.D. in Genetics from UC Davis, 1975. Dr. Avise is a current and past member of the editorial boards for 15 scientific journals and he is a fellow of several honorific academies (including the National Academy of Sciences and the American Academy of Arts and Sciences). He is also the recipient of numerous distinguishing academic awards. Dr. Avise is an expert at ecological and evolutionary genetics, natural history and conservation biology. His research involves use of genetic markers (e.g. from allozymes, microsatellites, and mitochondrial DNA) to analyze the natural histories and evolution of wild animals. Topics range from micro- to macro-evolutionary: genetic parentage, mating patterns, geographic population structure, gene flow, hybridization, introgression, phylogeography, speciation, systematics, and phylogenetics. Research has been conducted on all major groups of vertebrates plus some invertebrates, and has involved taxa from marine, freshwater, and terrestrial environments. The primary goal typically is to unveil ecological, behavioral, or evolutionary features of the organisms themselves; an important secondary concern is to elucidate molecular and

4a

evolutionary properties of protein and DNA molecules.

Amicus Donald F. Boesch, Ph.D., is a Professor of Marine Science and President of the University of Maryland Center for Environmental Science (UMCES). Dr. Boesch is a biological oceanographer who has conducted research in coastal and continental shelf environments along the Atlantic Coast and in the Gulf of Mexico, eastern Australia and the East China Sea. He has published two books and more than 85 papers on marine benthos, estuaries, wetlands, continental shelves, oil pollution, nutrient over-enrichment, environmental assessment and monitoring and science policy. Presently his research focuses on the use of science in ecosystem management. UMCES conducts comprehensive research, trains graduate students, contributes to public education, and advises public agencies and others on environmental and natural resource management from its three laboratories distributed across the state. A native of New Orleans, Don Boesch received his B.S. from Tulane University and Ph.D. from the College of William & Mary. He was a Fulbright Postdoctoral Fellow at the University of Queensland. He assumed his present position in Maryland in 1990.

Amicus Benjamin E. Cuker, Ph.D., is Professor of Marine and Environmental Studies at Hampton University. He is noted for creation of student-based programs to promote diversity in the aquatic sciences. These include the American Society of Limnology and Oceanography Minorities Program (ASLOMP), Multicultural students At Sea Together (MAST), and the Hall-Bonner program for minority doctoral scholars in the ocean sciences. These

5a

programs are supported by external grants and have impacted hundreds of minority students from across the nation. Dr. Cuker was named a Pew Fellow in Marine Conservation and given the ASLO Distinguished Service Award for these efforts. He has 16 peer-reviewed publications.

Amicus Daniel Esler, Ph. D., is a research scientist at the Centre for Wildlife Ecology at Simon Fraser University, in British Columbia. He received his doctorate in wildlife science from Oregon State University, in 2000. His research interests are in nearshore marine systems, avian ecology and conservation, sea duck biology, nutritional and physiological ecology, population biology and demography, population structure and genetics, wildlife habitat associations, and oil spill impacts and recovery.

Amicus Michael Fry, Ph.D., is the Director for the Conservation Advocacy at American Bird Conservancy. Dr. Fry is an avian toxicologist with research interests in the effects of pollutants and pesticides on ecosystems, with a focus on wild birds. He received his doctorate at the University of California-Davis, where he then went on to be a research physiologist in the Department of Avian/Animal Sciences for 23 years, and joined American Bird Conservancy in 2005. Dr. Fry has been a panel member for the National Academy of Sciences on hormone active chemicals in the environment and has participated in toxicology reviews and international symposia for the Organization for Economic Cooperation and Development (OECD) and for the United Nations University in Japan. He is a current member of the Scientific Committee of the Dept. of Interior,

6a

Minerals Management Service Advisory Board, and an advisory committee member for EPA. He served on a National Academy of Science panel on hormone active agents in the environment, was a committee member for OECD in revising avian toxicity test methods and was a member of the EPA Ecological Committee for Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Risk Assessment Methods (ECOFRAM).

Amicus Gregory H. Golet, Ph. D., is a senior ecologist for the Nature Conservancy. The Nature Conservancy is the leading conservation organization working around the world to protect ecologically important lands and waters for nature and people. Dr. Golet is a senior advisor for the restoration of the Sacramento River project. Dr. Golet also served with the U.S. Fish and Wildlife agency, and has been a project scientist for the Exxon Valdez Trustee Council. He received his Ph.D. from the University of California, Santa Cruz.

Amicus Roger Green, Ph.D., is Professor Emeritus at the University of Western Ontario in Zoology. His Ph.D. was done at Cornell in ecology with minors in genetics and biogeochemistry. After working in Australia on a Fulbright postdoctoral fellowship at the University of Queensland he returned to serve as Resident Ecologist at the Woods Hole Oceanographic Institute. From there he joined the faculty at the University of Manitoba. During this time he began consulting for private and governmental entities on study design and statistical analysis of data. In 1976-77 supported by a National Research Council contract he wrote one of the leading textbooks on sampling design and biostatistics, Sampling Design and Statistical

7a

Methods for Environmental Biologists (Wiley, 1979). Dr. Green is widely published in the field of study design and statistics, having authored more than 80 articles for peer reviewed journals or presentations and numerous contributions to books or other documents. He has given workshops and presentations in this field around the world. He has consulted for both private industry and government, including most particularly as member of the Scientific Advisory Committee of the Prince William Sound Regional Citizens Advisory Council and for the Exxon Valdez Oil Spill Trustee Council.

Amicus Burr Heneman is a co-founder and the current Ocean Policy Director of Commonweal, Burr has been involved in marine policy and science at the state, national, and international levels since the 1970s. He formerly was director of the (now) Ocean Conservancy's Pacific region (1991-1994); consultant to BirdLife International and the Saudi Arabian wildlife agency on the Gulf War oil spill and fires (1991); consultant to the U.S. Marine Mammal Commission on marine debris and conflicts between marine mammals and fisheries (1985-1988); and executive director of PRBO Conservation Science (1980-1984). Mr. Burr received a Bachelor of Arts degree from Yale University. His marine conservation activities now concentrate on the intersection of policy, management and science. At different times his focus has been policy development, legislation, policy implementation, dispute resolution and initiation of marine monitoring programs. Investigation of various marine issues has taken Mr. Burr to the Farallon Islands (seabird and great white shark research and conservation); the Pribilof Islands (seabirds and marine debris); the Lesser Antilles, Baja California,

8a

and the Yucatan (marine debris); Prince William Sound (the Exxon Valdez oil spill); the Galapagos Islands (seabirds and fisheries); the Persian Gulf (the Gulf War oil spills and fires); Shetland (oil spill prevention and seabird/fisheries conflicts); the Gulf of Maine (seabird research and restoration); Belize (shark research); and Fiji (seabird conservation). Mr. Heneman serves on the Stakeholder Council of the Marine Stewardship Council. He was awarded a Pew Fellowship in Marine Conservation in 1999.

Amicus Richard Kocan is Professor Emeritus at the School of Aquatic and Fishery Sciences at the University of Washington. Dr. Kocan has a Bachelor’s degree from Hiram College, a Masters in Microbiology and Public Health, University of Michigan and a Ph. D. in Microbiology and Public Health, University of Michigan. Dr. Kocan specializes in aquatic toxicology, environmental pathology and aquatic animal diseases. He has been a consultant to a number of state and federal agencies, corporations and Indian Tribes, including the State of Washington, Department of Fish and Game, Exxon Valdez Trustee Council reviewing fish studies in Prince William Sound, the State of Alaska Department of Fish and Game. Some current projects include: An investigation into herring diseases in Prince William Sound Alaska following the Exxon Valdez oil spill, diseases in Yukon River salmon, toxic effects of agricultural pesticides and PCB effects upon trout.

Amicus Jane Lubchenco, Ph.D., is Wayne and Gladys Valley Professor of Marine Biology & Distinguished Professor of Zoology at Oregon State University. She graduated from Colorado College, received her Ph.D. from Harvard University in

9a

marine ecology, taught at Harvard for two years, and has been on the faculty at Oregon State University since 1978. Dr. Lubchenco leads an interdisciplinary team of scientists who study the marine ecosystem off the west coast of the U.S. which is learning how the ecosystem works, how it is changing and how humans can modify their actions to ensure continued benefit from ocean ecosystems. She is a former President of the International Council for Science, the American Association for the Advancement of Science (AAAS) and the Ecological Society of America. She was a Presidential appointee to two terms on the National Science Board which advises the President and Congress and oversees the National Science Foundation. She is a member of the National Academy of Sciences, the American Philosophical Society and the American Academy of Arts and Sciences.

Amicus Craig Matkin, M.S., is a founding member and director of the North Gulf Oceanic Society (NGOS). NGOS is a federally recognized non-profit research and education organization that specializes in long-term marine mammal research. Mr. Matkin completed his M.S. in Zoology in 1980 at the University of Alaska, Fairbanks, and has worked with marine mammals for 25 years. He has authored more than 50 scientific reports and articles on marine mammals. His work has included identification, detailed life histories, geneology, acoustic vocalization and language patterns, and movement of individual whales and whale aggregations, as well as DNA and contaminant analyses. Because NGOS has been monitoring individual killer whales and their clan groups since well before the EVOS, they have detailed data on the status of these populations before and after the spill.

10a

Amicus John Ogden is the Director of the Florida Institute of Oceanography (FIO) and Professor of Biology at the University of South Florida since 1988. He received his undergraduate degree from Princeton University and his Ph.D. in Biological Sciences from Stanford University in 1968. After two years at the Smithsonian Tropical Research Institute in Panama he joined Fairleigh Dickinson University, built the West Indies Laboratory (WIL) in St. Croix in the Virgin Islands, and began his continuing fieldwork on global coral reefs and associated ecosystems. Dr. Ogden was Director of WIL from 1981-1988, operated the saturation diving facility Hydrolab for NOAA during this period, and directed the construction and initial operations of Aquarius, the only currently operational facility. Dr. Ogden has published over 100 scientific papers, has contributed to several books, and has produced several television films on tropical ecosystems. He has served on federal and state commissions dealing with coastal ecosystem management and was a member of the founding Advisory Council of the Florida Keys National Marine Sanctuary. He presently serves on the Technical Advisory Committee of the Sustainable Seas Expedition, the Board of the World Wildlife Fund, and is a Fellow of the American Association for the Advancement of Science.

Amicus Thomas Okey, Ph.D., is a marine ecologist and conservation biologist who studies the scientific, management and policy issues related to the effects of climate change on marine ecosystems and on distinguishing these impacts from those caused by fisheries mismanagement and pollution. His research has ranged from subtidal experimental studies of the effects of natural disturbances and

11a

production subsidies on marine soft sediment communities to broad syntheses of ecosystem knowledge and fisheries impacts using and refining food web trophodynamic modeling techniques. Dr. Okey received his doctorate from the University of British Columbia in the area of zoology, which compliments his Bachelors and Master degrees in Marine and Coastal Biology. Dr. Okey is the founder and current science director for the Conservation Science Institute, an organization that provides science support and education for conservation goals. He is also a Pew Fellow in Marine Conservation, a Scientist-in-Residence at the Bamfield Marine Sciences Centre, and an Adjunct Professor at the University of Victoria School of Environmental Studies. During the late 1990s, he was the director of the Center for Marine Conservation’s Pacific Fisheries Program. He expanded that program from areas adjacent to California, Oregon, and Washington to those adjacent to Alaska and Hawaii. During this time, Dr. Okey also chaired a national working group on Essential Fish Habitat, sat on Marine Mammal Take Teams, and developed marine protected area strategies and teams.

Amicus Daniel Pauly, Ph.D., is the Director of the Fisheries Centre of the University of British Columbia, Vancouver, Canada. Educated in Germany, he has spent most of his working life inventing new approaches for fisheries research and management in data-sparse settings and teaching on these issues in four languages in Europe, Africa, Asia, Oceania and Latin America. Besides numerous and well-cited journal articles, books and other publications, his work led to the creation of software (ELEFAN, Ecopath) and scientific databases (FishBase) now used throughout the world. His work

12a

links to concepts now structuring a wide span of research in marine biology, notably on “fishing down marine food webs,” which impacts all the world's aquatic systems, but which many do not notice because of the “shifting baseline syndrome of fisheries.” Dr. Pauly is Principal Investigator of the Sea Around Us Project, funded by the Pew Charitable Trusts, Philadelphia and is devoted to investigating the global impact of fisheries on marine ecosystems. He has received numerous scientific awards, including UBC's Distinguished University Scholars and elected a Fellow of the Royal Society of Canada (Academy of Science). In 2004, he received the Roger Revelle Medal from IOC/UNESCO, and the Award of Excellence of the American Fisheries Society.

Amicus Charles “Pete” Peterson, Ph.D., is Alumni Distinguished Professor in the Department of Marine Sciences at The University of North Carolina at Chapel Hill. He was trained at Princeton University and the University of California at Santa Barbara. Dr. Peterson has spent his working career of some 40 years in academia conducting research in marine fisheries and conservation ecology. He serves presently as editor of two international scientific journals, has published over 160 peer-reviewed papers, and regularly reviews papers for over 50 scientific journals and for the basic science foundations of several countries. Dr. Peterson has served on 5 panels of the U.S. National Academy of Sciences. His awards include National Science Foundation, Woodrow Wilson Foundation, Ford Foundation, and Japan Society for Promotion of Science fellowships. In 1994, he was named a Pew Charitable Trust Scholar in Conservation and the Environment. He served the U.S. Department of

13a

State for several years as a national representative to the ICES (International Council for Exploration of the Sea) Shellfish and Mariculture Committees. Dr. Peterson may be the most highly cited of all scholars with a primary research focus on marine communities, habitats, and ecosystems based on sedimentary bottoms. Presently, his research focus is on developing ecosystem-based management for marine resources.

Amicus John Teal, Ph.D., is currently Scientist Emeritus for the Woods Hole Oceanographic Institution. Dr. Teal’s professional career began in the early 1950's with his Ph.D. thesis on the trophic relationships in a tiny cold spring in Massachusetts. After getting his degree, he joined the University of Georgia Marine Institute at Sapelo Island where he studied salt marshes. After four years, he went to the new oceanography center at Dalhousie University in Halifax, NS. He joined Woods Hole Oceanographic Institution in 1961 and has been Scientist Emeritus there since 1995. In addition to research on coastal wetlands, he has worked on effects of hydrostatic pressure on deep sea animals, physiology of large, warm blooded fishes, bird migration over the oceans, oil pollution, wastewater treatment, and restoration ecology. He is currently involved with constructed wetlands for wastewater treatment and with marsh restoration in fresh, brackish and salt wetlands. For the last six years, he has worked on a salt marsh restoration project in Delaware Bay that encompasses 32 square miles. He has served on National Academy of Science committees, editorial boards of scientific journals, published in the scientific literature, written popular articles and books, and served on local committees. He has also served on the board of the Conservation

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Law Foundation of New England since 1978 and been vice chair since 1980 and serves as an advisor to local land trusts.

No. 07-219

IN THE

____________

Exxon Shipping Company et al., Petitioners,

v.

Grant Baker et al., Respondents.

____________


for the Ninth Circuit ____________

BRIEF AMICI CURIAE OF SOCIOLOGISTS,

PSYCHOLOGISTS, AND LAW AND ECONOMICS SCHOLARS IN SUPPORT OF RESPONDENTS.

____________

Amy Howe Counsel of Record Kevin K. Russell HOWE & RUSSELL, P.C. 7272 Wisconsin Ave. Bethesda, MD 20814 (301) 941-1913 January 29, 2008

TABLE OF CONTENTS

TABLE OF CONTENTS ..................................................i

TABLE OF AUTHORITIES............................................ii

INTEREST OF AMICI CURIAE ....................................1

SUMMARY OF THE ARGUMENT................................1

ARGUMENT ...................................................................3

I. The Respondents in This Case Suffered Substantial Uncompensated Harms. .....................3

II. A Punitive Damages Award Is Appropriate in This Case to Ensure Adequate Deterrence. .........18

CONCLUSION ..............................................................26

APPENDIX…………………………………………………1a

ii


Cases Ace v. Aetna Life Ins. Co., 139 F.3d 1241 (9th Cir.),

cert. denied, 525 U.S. 930 (1998)...............................24 BMW of North America, Inc. v. Gore, 517 U.S. 559

(1996)..........................................................................20 Ciraolo v. City of New York, 216 F.3d 236 (2d Cir.),

cert. denied, 531 U.S. 993 (2000)..................20, 22, 23 Cooper Industries, Inc. v. Leatherman Tool Group, Inc.,

532 U.S. 424 (2001)........................................19, 20, 23 EEOC v. Convergys Customer Mgmt. Group, Inc.,

491 F.3d 790 (8th Cir. 2007)......................................25 ERA Aviation, Inc. v. Lindfors, 17 P.3d 40

(Alaska 2000) .............................................................24 Exxon Shipping Co. v. Airport Depot Diner, Inc.,

120 F.3d 166 (9th Cir. 1997)........................................3 Forsyth v. City of Dallas, Tex., 91 F.3d 769

(5th Cir. 1996), cert. denied, 522 U.S. 816 (1997).....25 Kemezy v. Peters, 79 F.3d 33 (7th Cir. 1996)................20 Robins Dry Dock & Repair Co. v. Flint, 275 U.S.

303 (1927)........................................................... passim Sloane v. Equifax Info. Servs., LLC, No. 06-2044,

2007 U.S. App. LEXIS 29805 (4th Cir. Dec. 27, 2007) .....................................................................24

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003)................................................3, 25

Union Oil v. Oppen, 501 F.2d 558 (9th Cir. 1974) .......23

Other Authorities A. Mitchell Polinsky & Steven Shavell, Punitive

Damages: An Economic Analysis, 111 Harv. L. Rev. 869 (1998) ..........................................................21

Alan Zarembo, Funding Studies to Suit Need,

iii

L.A. Times, Dec. 3. 2003, at A1 .................................14 Brent K. Marshall et al., Technological Disasters,

Litigation Stress, and the Use of Alternative Dispute Resolution Mechanisms, 26 Law & Pol’y 289 (2004)...................................................9, 10, 16, 18

Catalina M. Arata et al., Coping With Techological Disaster: An Application of the Conservation of Resources Model to the Exxon Valdez Oil Spill, 13 J. Traumatic Stress 23 (2000) ...................... passim

Charles H. Peterson et al., Long-Term Ecosystem Response to the Exxon Valdez Oil Spill, Science, Dec. 19, 2003, at 2082 .................................12

Charles Siebert, After the Spill, Men’s Journal, Apr. 1999................................................................5, 11

Daniel Sharp et al., Alaska Dep’t of Fish and Game: Prince William Sound Management Area 1999 Annual Finfish Management Report (1999) ...............7

David G. Owen, A Punitive Damages Overview: Functions, Problems and Reform, 39 Vill. L. Rev. 363 (1994) ..........................................................21

Duane A. Gill, Technological Disaster, Resource Loss and Long-Term Social Change in a Subarctic Community (2007) ...............................................17, 18

Exxon Valdez Oil Spill Restoration Plan, Update on Injured Resources and Services 2006 (Nov. 2006), available at www.evostc.state.ak.us/ Publications/injuredresources.cfm (visited Jan. 19, 2008).............................................................................7

Impact Assessment, Inc., Exxon Valdez Oil Spill, Cleanup and Litigation: A Collection of Social Impacts Information and Analysis, available at http://www.mms.gov/alaska/reports/2001rpts/2001_058/volume3.pdf (visited Jan. 29, 2008) .....................15

J. Steven Picou & Cecelia G. Martin, Long-Term

iv

Community Impacts of the Exxon Valdez Oil Spill: Patterns of Social Disruption and Psychological Stress Seventeen Years After the Disaster (2007).5, 12, 18

J. Steven Picou & Duane A. Gill, The Exxon Valdez Oil Spill and Chronic Psychological Stress, 18 Am. Fisheries Soc’y Symposium 879 (1996) ............. passim

J. Steven Picou et al., Disaster, Litigation, and the Corrosive Community, 82 Social Forces 1493 (2004)......................................................... passim

J. Steven Picou et al., Disruption and Stress in an Alaskan Fishing Community: Initial and Continuing Impacts of the Exxon Valdez Oil Spill, 6 Indus. Crisis Q. 235 (1992) ........................................... passim

Joanna Endter-Wada et al., Social Indicators Study of Alaskan Coastal Villages: IV. Postspill Key Informant Summaries: Schedule C Communities, Part I (Cordova, Tatitlek, Valdez) and Part 2 (Kenai, Tyonek, Seldovia, Kodiak City, Karluk, Old Harbor, Chignik) (1993), available at http://www.mms.gov/alaska/reports/1990rpts/92_0052.pdf (visited Jan. 28, 2008) ............................4, 14, 15

Journeyman Pictures, USA – Alaska – Exxon Valdez, available at www.journeyman.tv/?lid=9672 .............16

Mari Rodin et al., Community Impacts Resulting from the Exxon Valdez Oil Spill, 6 Indus. Crisis Q. 219 (1992)..........................................................................14

Mark G. Carls et al., Sensitivity of Fish Embryos to Weathered Crude Oil: Part I, 18 Envtl. Toxicology and Chemistry 481, 481 (1999) .................................12

Rachel D’Oro, Exxon Valdez Oil Won’t Vanish Soon, Associated Press, Feb. 1, 2007 ..................................13

Richard E. Thorne & Gary L. Thomas, Herring and the “Exxon Valdez” Oil Spill: An Investigation into

v

Historical Data Conflicts, 65 ICES J. Marine Sci. 44 (2007)............................................................................6

Robert D. Cooter, Economic Analysis of Punitive Damages, 56 S. Cal. L. Rev. 79 (1982) ......................19

Ron A. Heintz et al., Sensitivity of Fish Embryos to Weathered Crude Oil: Part II, 18 Envtl. Toxicology and Chemistry 494 (1999) .........................................12

Thomas C. Galligan, Jr., Augmented Awards: The Efficient Evolution of Punitive Damages, 51 La. L. Rev. 3 (1990) ..................................................19, 21, 22

William R. Freudenburg & Timothy R. Jones, Attitudes and Stress in the Presence of Technological Risk: A Test of the Supreme Court Hypothesis, 69 Soc. Forces 1143 (1991)...................................................................8

INTEREST OF AMICI CURIAE1

Amici are scholars in the fields of sociology, psychology, and law and economics. Amici – several of of whom have conducted extensive empirical research in the Prince William Sound for over a decade – have a professional interest in ensuring that the Court is fully informed regarding the full impact of the Exxon Valdez oil spill on the neighboring communities and on respondents in particular, as well as the appropriateness of an award of punitive damages in light of the extensive but uncompensated harms resulting from the spill.2


In this case, a jury awarded respondents compensatory damages that included compensation for the economic harm suffered by commercial fishermen as a result of the Exxon Valdez oil spill. However, maritime law precluded respondents from recovering compensatory damages for some other economic harms that they suffered, such as losses in the value of fishing permits and fishing vessels, lost tax revenues, and damage to area tourism. Maritime law also precluded respondents from recovering any compensatory damages for their non-economic harms. Empirical research conducted over a seventeen-year

1 No counsel for a party authored this brief in whole or in part, and no counsel or party made a monetary contribution intended to fund the preparation or submission of this brief. No person other than amici curiae or their counsel made a monetary contribution to its preparation or submission. Letters reflecting the consent of the parties have been filed with the Clerk. 2 More detailed information regarding each of the amici is provided in the appendix to this brief.

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period by teams of sociologists and psychologists specializing in disaster research reveals that these non-economic harms were – and continue to be – profound. These impacts include high rates of anxiety, depression, and post-traumatic stress disorder among area residents exposed to the spill, and in particular among commercial fishermen.

It is common ground among legal scholars and economists that inefficient behavior will not be deterred unless actors are forced to internalize all of the costs associated with their activities. Although adequate deterrence may generally be achieved through an award of compensatory damages, an award of punitive damages may be necessary to achieve complete deterrence in cases in which compensatory damages fail to fully account for the costs of a tortfeasor’s actions.

The case before the Court is precisely the kind of case in which an award of punitive damages is not only appropriate but also necessary to achieve adequate deterrence. Specifically, as a result of the restrictive conception of damages under maritime law, compensatory damages were available for only a subset of the actual economic harms inflicted by the spill, and for none of the non-economic harms. When this uncompensated harm is considered, it becomes clear that an award of punitive damages is not only appropriate but essential in this case to ensure that Exxon and others similarly situated are adequately deterred.

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ARGUMENT

I. The Respondents in This Case Suffered Substantial Uncompensated Harms.

This Court has repeatedly indicated that in reviewing an award of punitive damages, courts should consider the totality of the harm to the plaintiffs. See, e.g., State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 424-26 (2003). During the second phase of the trial in this case, the jury awarded $287 million in compensatory damages for economic harm to commercial fishermen in the major fisheries. Pet. App. 160a. Other settlements and payments increased the level of total compensated harm to just over $500 million. Pet. App. 38a. However, maritime law prohibited the plaintiffs from recovering compensatory damages for a variety of other economic and non-economic harms, see infra at 23, including “emotional distress damages, price diminishment in fisheries that were not oiled, diminished value of limited entry fishing permits or fishing vessels absent a sale of the permit or vessel, . . . [and] diminution of market value owing to fear or stigma.” Exxon Shipping Co. v. Airport Depot Diner, Inc., 120 F.3d 166, 167 n.3 (9th Cir. 1997).

These uncompensated harms generally fall into three categories: (1) economic harm arising from the spill for which compensation was precluded by Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927); (2) economic harm arising from the spill for which plaintiffs cannot recover under maritime law because the extent of the harm was unknown at the time of

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trial in 1994; and (3) non-economic harm arising from the spill.

1. The first category of uncompensated harm is that of damages for economic harms for which compensation was precluded by Robins Dry Dock. See J.A. 118-48, 1368-81, 1384-90. This category includes, for example, the damages suffered by commercial fishermen who plied fisheries that were not oiled, but whose catches were devalued by the stigma associated with fish from Alaskan waters, see J.A. 1155-56. It also includes the damages suffered by area municipalities and myriad area residents who were not commercial fishermen, but whose livelihoods depended on fishing, such as those who repaired boats, manufactured fishing nets, and supplied other goods and services to commercial fishermen: the decrease in commercial fishing that resulted from the spill reduced demand for the latter’s services and products and created millions of dollars in uncompensated damages. J.A. 132-40.

This category also includes the harms caused by the spill to the tourist industry, as concerns about the spill’s effects discouraged other tourists from traveling to the region. Joanna Endter-Wada et al., Social Indicators Study of Alaskan Coastal Villages: IV. Postspill Key Informant Summaries: Schedule C Communities, Part I (Cordova, Tatitlek, Valdez) and Part 2 (Kenai, Tyonek, Seldovia, Kodiak City, Karluk, Old Harbor, Chignik), at 66-67 (1993), available at http://www.mms.gov/alaska/reports/1990rpts/92_0052.pdf (visited Jan. 28, 2008). And local governments lost substantial tax revenues as a result of the fisheries’ closure – for example, over twelve million dollars in

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income and revenues were lost with the closure of the shrimp, sablefish, and herring fisheries. Id. at 150.

Among the most significant losses were the losses in value of fishing permits, which are limited in number and are “traded on the open market, their price determined strictly by demand.” Charles Siebert, After the Spill, Men’s Journal, Apr. 1999. In light of the contamination of the fishing grounds resulting from the spill and the uncertainty about its recovery, the fishing permits plummeted in value: when this case went to trial, per-permit losses reached as high as $100,000 for Prince William Sound herring permits, see J.A. 1161, and nearly $200,000 for Prince William Sound salmon permits, see id. 1162; see also J.A. 130 (“The court . . . does not doubt that the going price for limited entry permits and Alaskan fishing vessels dropped significantly when the full impact of the Exxon Valdez grounding was realized.”). Prices for the fishing permits have continued to fall in recent years, reaching per-permit losses as high as $330,000 in 2004. See J. Steven Picou & Cecelia G. Martin, Long-Term Community Impacts of the Exxon Valdez Oil Spill: Patterns of Social Disruption and Psychological Stress Seventeen Years After the Disaster 14 (2007) [hereinafter Picou & Martin, Long-Term Community Impacts] (final report submitted to National Science Foundation). This decline in the value of fishing permits was especially catastrophic in Cordova, where the town’s fishermen hold forty-four percent of all herring permits and fifty-five percent of all salmon fishery permits in the region. J. Steven Picou & Duane A. Gill, The Exxon Valdez Oil Spill and Chronic Psychological Stress, 18 Am. Fisheries Soc’y

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Symposium 879, 884 (1996) [hereinafter Picou & Gill, Chronic Psychological Stress].

The value of fishing vessels designed for use in the oiled waters similarly plunged as a result of the spill. CD7501, Oesting Dec., Exhs. 4-7 (expert reports submitted in district court). That value, which at bottom hinges on predictions regarding the availability of fish and the price of fish, dropped $50,000 – from $350,000 to $300,000 – for a seine vessel used in Prince William Sound, while the value of commercial fishing vessels for use in Cook Inlet declined from $72,000 to $52,000. Id.

2. A second category of harm is that of damages for economic harms that were uncompensated because the extent of the harms were unknown at the time of trial in 1994. See generally Br. Amici Curiae of Natural and Social Scientists in Support of Respondents. One example is the harm to the Prince William Sound herring fishery, an important resource for subsistence and commercial harvests that collapsed in 1993. Given the four years that apparently elapsed between the spill and the fishery collapse, initial research dismissed any suggestion of a link between the two. Subsequent research has demonstrated, however, that “the herring population decline most likely began immediately after the [spill] rather than 4 years later.” Richard E. Thorne & Gary L. Thomas, Herring and the “Exxon Valdez” Oil Spill: An Investigation into Historical Data Conflicts, 65 ICES J. Marine Sci. 44 (2007); as of November 2006, the herring fishery had been closed for eleven of the seventeen years since the spill and was still not regarded as being fully recovered, see Exxon Valdez

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Oil Spill Restoration Plan, Update on Injured Resources and Services 2006, at 35 (Nov. 2006), available at www.evostc.state.ak.us/Publications/ injuredresources.cfm (visited Jan. 19, 2008).3 Significantly, the Exxon Valdez Oil Spill Trustee Council in 2006 described the commercial fishing generally as being “in the process of recovering from the effects of the oil spill,” but it warned that “full recovery has not been achieved.” Id. at 36 (emphasis omitted).

3. A third and substantial category of uncompensated harm is that of non-economic harm arising from the spill, including in particular damages for emotional distress relating to the spill, which disrupted family and community life and caused psychological stress and uncertainty regarding future well-being. Empirical research has consistently demonstrated that disasters, especially those caused by humans, can have long-lasting and deleterious effects on the mental health of the affected communities. This research has been repeatedly borne out in the communities in the Prince William Sound area, which were effectively shattered by the spill and its subsequent effect on the natural resources that

3 During the five years that preceded the spill, the total value of the Prince William Sound herring harvest ranged from five to twelve million dollars per year. Between 1993 and 1999, the herring fishery was closed for three seasons, and the annual value of the herring harvest during the remaining open seasons ranged from approximately $187,000 to $2.8 million dollars. Daniel Sharp et al., Alaska Dep’t of Fish and Game: Prince William Sound Management Area 1999 Annual Finfish Management Report App. H.13 (1999).

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form an integral part of those communities’ livelihood and identity.

When disasters strike, they wreak havoc not only through their physical devastation of the affected communities, but also by creating disruption and stress, J. Steven Picou et al., Disruption and Stress in an Alaskan Fishing Community: Initial and Continuing Impacts of the Exxon Valdez Oil Spill, 6 Indus. Crisis Q. 235, 239 (1992) [hereinafter Picou et al., Disruption and Stress], that result in “significant impacts on mental health functioning.” Catalina M. Arata et al., Coping With Techological Disaster: An Application of the Conservation of Resources Model to the Exxon Valdez Oil Spill, 13 J. Traumatic Stress 23, 23 (2000). These mental health effects can, and frequently do, include depression, anxiety, post-traumatic stress disorder, problems in relationships, and an upswing in visits to mental health and medical facilities. Id.

In the case of natural disasters, such as hurricanes, forest fires, earthquakes, and floods, these mental health effects generally subside within two years. Arata et al., supra, at 24. By contrast, technological disasters – that is, disasters that occur because of breakdowns by humans – consistently have social, cultural, and psychological effects that are both more severe and longer-lasting. See, e.g., William R. Freudenburg & Timothy R. Jones, Attitudes and Stress in the Presence of Technological Risk: A Test of the Supreme Court Hypothesis, 69 Soc. Forces 1143, 1154-59 (1991); Picou & Gill, Chronic Psychological Stress, supra, at 879-80; Picou et al., Disruption and Stress, supra, at 239; Arata et al., supra, at 24; Brent K.

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Marshall et al., Technological Disasters, Litigation Stress, and the Use of Alternative Dispute Resolution Mechanisms, 26 Law & Pol’y 289, 291-92 (2004); J. Steven Picou et al., Disaster, Litigation, and the Corrosive Community, 82 Social Forces 1493, 1495 (2004) [hereinafter Picou et al., Disaster, Litigation]. For example, research following the nuclear accident at Three Mile Island in 1979 found that although they were not exposed to radiation, members of the surrounding community experienced psychological stress for as long as six years. See Picou & Gill, Disruption and Stress, supra, at 238.

Technological disasters also frequently have “debilitating consequences” at the community level, Marshall et al., supra, at 292; Picou et al., Disaster, Litigation, supra, at 1496-98, as the chronic psychological stress experienced by individuals as a result of the disaster collectively undermines the community’s social structure, Marshall et al., supra, at 292. These effects are particularly acute when technological disasters strike renewable resource communities – communities within a defined area whose residents’ “primary cultural, social, and economic existences are based on the harvest and use of renewable natural resources.” In such cases, technological disasters can create a domino effect: they are likely to result in contamination of the environment and natural resources, Picou et al., Disaster, Litigation, supra, at, 1496, which then disrupts subsistence or commercial harvests of those natural resources, Picou et al., Disruption and Stress, supra, at 239, which in turn creates perceptions of “uncertainty, ambiguity and continuing disruption [that] generate patterns of long-term community

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stress,” id. And even after initial stress levels subside for the community as a whole, some groups may continue to experience chronically elevated stress levels based on their special relationship to the disaster – for example, because of a physical proximity to the contamination or “a unique relationship to the resources that have been contaminated, i.e., subsistence and/or commercial harvests.” Id.

Finally, the litigation that frequently follows a technological disaster itself tends to exacerbate, rather than assuage, the stress created by the disaster. The combination of the disaster and the subsequent disaster-related litigation constitutes a “double blow” for victims, who must first “endure the initial trauma of experiencing real or perceived toxic contamination from the disaster-event,” Marshall et al., supra, at 293, and then must navigate an “adversarial legal process” that serves as such “a source of chronic social disruption and psychological stress” as to effectively become a “‘secondary disaster’ that continues over time, preventing timely disaster recovery.” Id.

Non-economic harm caused by the Exxon Valdez spill must be understood in terms of the unique social character of community life in coastal Alaska. Unlike most small, rural communities in the lower forty-eight states, community life in the Prince William Sound area has a cultural, social, and economic base that is directly derived from seasonally available renewable natural resources. Picou et al., Disruption and Stress, supra, at 241-42; Picou & Gill, Chronic Psychological Stress, supra, at 881-82.

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The Prince William Sound community of Cordova, for example, is the primary renewable resource community in the area. Its economy has long been heavily dependent on commercial fishing: nearly half of the community’s labor force works either as fishermen or in jobs relating to fish processing, see Picou & Gill, Chronic Psychological Stress, supra, at 884, while still others work in other occupations that depend on commercial fishing, such as net mending and repairing boats and their electronics, id.; Siebert, supra; see also 3 U.S. Dep’t of Interior, Final Envtl. Impact Statement, Proposed Trans-Alaska Pipeline 370 (1972), reprinted in J.A. 1442 (noting, nearly four decades ago, that “[t]he economy of [the Prince William Sound] area depends almost entirely on commercial fishing, the processing of the catch, and related activities”).

In addition to their commercial fishing activities, many Cordovans engage in a variety of subsistence activities – such as “[h]arvesting, receiving and giving away fish, moose, deer, berries, etc.” – that “provide[] the basis for maintaining social relationships,” Picou et al., Disruption and Stress, supra, at 241, and “are a part of how individuals define themselves and their quality of life,” Arata et al., supra, at 26.

With over eleven million gallons of oil released into Prince William Sound, the Exxon Valdez oil spill was the most devastating in North American history, Picou et al., Disaster, Litigation, supra, at 1499. The inadequate response of Exxon and the government only exacerbated the problem, and the spill ultimately resulted in an oil slick that covered over 3000 square

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miles and affected over 1200 miles of shoreline. Picou et al., Disruption and Stress, supra, at 240.

The ecological effect was immediate and devastating, resulting in the widespread deaths of area birds and marine animals, Picou et al., Disruption and Stress, supra, at 240-41, as well as the closing of primary fishing areas. Picou & Gill, Chronic Psychological Stress, supra, at 884. These ecological effects have persisted to this day. In one of the most tangible examples of these effects, oil was found over a decade after the spill “in surprising amounts and in toxic forms” in Prince William Sound, Charles H. Peterson et al., Long-Term Ecosystem Response to the Exxon Valdez Oil Spill, Science, Dec. 19, 2003, at 2082; Picou et al., Disaster, Litigation, supra, at 1501. The continued presence of the oil has “had long-term impacts” on the area’s natural resources, Peterson et al., supra, at 2082; Picou et al., Disaster, Litigation, supra, at 1499, such as “severe declines in herring and pink salmon fisheries [that] appear to be related to chronic contamination of spawning areas in Prince William Sound,” id. at 1501; see also Mark G. Carls et al., Sensitivity of Fish Embryos to Weathered Crude Oil: Part I, 18 Envtl. Toxicology and Chemistry 481, 481 (1999); Ron A. Heintz et al., Sensitivity of Fish Embryos to Weathered Crude Oil: Part II, 18 Envtl. Toxicology and Chemistry 494, 494-95, 500 (1999). Indeed, by 2006, only a few species had recovered. Picou & Martin, Long-Term Community Impacts, supra, at 1 (only eight of twenty-two species had recovered). Moreover, the quantity and toxicity of oil still present in the Sound long after the spill suggests that the negative consequences for the Prince William Sound ecology and fisheries may persist well into the

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future. See id. at 2; see also Rachel D’Oro, Exxon Valdez Oil Won’t Vanish Soon, Associated Press, Feb. 1, 2007 (reporting on recent study indicating that oil from spill “could persist for decades below the surface of some beaches,” thereby creating “a chronic source of low-level contamination”).

Although the communities in the Prince William Sound area were not directly oiled, the spill nonetheless resulted in serious disruption, conflict, and fragmentation for area residents. This cultural, social, and psychological damage from the spill has been empirically documented by social science research for over seventeen years.4 As two amici have

4 Although petitioners have dismissed the empirical research on which the district court relied, see, e.g., Pet. App. 151a, as “articles by plaintiffs’ retained experts” and assert that, given the opportunity, they “would have shown that their conclusions were methodologically and statistically absurd,” BIO to Cross-Pet. 7 n.2 (No. 07-276), amici note that (1) the majority of the articles were written by independent researchers unaffiliated with respondents; (2) Exxon did not object to these studies when they were presented to the district court; and (3) much of the research on the social and psychological damage inflicted by the spill has been published in numerous peer-reviewed journals in the disciplines of sociology, psychology, and anthropology, including Social Forces, the Journal of Traumatic Stress, the American Journal of Psychiatry, and Law and Policy. Other research has been published in book chapters and social science reports prepared for the National Science Foundation, the Minerals Management Service, the Prince William Sound Regional Citizens’ Advisory Council, and the Alaska Conference of Mayors. Amici further note that although amicus Dr. J. Steven Picou was indeed retained as an expert by respondents in the district court, none of the research on which he relied (or on which this brief relies) was funded by respondents. In contrast with the independence of the social science research on which amici rely, Exxon’s subvention of – and later reliance on – legal and social

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explained, the spill “threatened the essential economic, social, and cultural viability of [renewable resource communities] in the impact region.” Picou & Gill, Chronic Psychological Stress, supra, at 882.

During the months immediately following the spill, the small fishing communities throughout Prince William Sound were overwhelmed and substantially disrupted. Immediate impacts on the communities included rapid increases in local populations as a result of the clean-up efforts, increased demands for childcare, increased health care demands, and an increase in crime rates.5 See, e.g., Mari Rodin et al., Community Impacts Resulting from the Exxon Valdez Oil Spill, 6 Indus. Crisis Q. 219, 223-26 (1992). The spill also placed severe strains generally on community resources, and the strains were subsequently exacerbated by the decreased tax revenues from the closing of fisheries. See Endter-Wada et al., supra, at 366-68, 384-87, 389-93.

And even to the extent that some businesses and commercial fishermen may have initially benefited economically from participating in the clean-up, the money that flowed to those businesses and residents created social conflicts in the form of divisions between those who had participated in the clean-up and those who had not. The divisions were both economic and moral in nature, as some members of the community

science research favorable to it has been well-documented. See, e.g., Alan Zarembo, Funding Studies to Suit Need, L.A. Times, Dec. 3. 2003, at A1. 5 In Valdez, for example, arrests increased 124 percent, while the town experienced a 166-percent increase in accidents and a 71-percent increase in assaults. See Rodin et al., supra, at 225.

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regarded the clean-up workers with disdain because they had accepted money from Exxon. Impact Assessment, Inc., Exxon Valdez Oil Spill, Cleanup and Litigation: A Collection of Social Impacts Information and Analysis, at 1.4 & 1.5 (2001), available at http://www.mms.gov/alaska/reports/2001rpts/2001_ 058/volume3.pdf (visited Jan. 29, 2008).

Empirical research conducted during the seventeen years following the spill consistently found that area residents experienced increased mental stress and spill-related disruptions to daily and family life. These problems manifested themselves in a variety of ways, including reports of chronic feelings of helplessness, betrayal, and anger. The spill’s mental health effects extended even to the region’s children, whose parents were sometimes absent for weeks at a time while working on the clean-up. See Endter-Wada et al., supra, at 366-68. Most importantly, the empirical research revealed high rates of anxiety, depression, and post-traumatic stress disorder among area residents exposed to the spill. See, e.g., L.A. Palinkas et al., Community Patterns of Psychiatric Disorders After the Exxon Valdez Oil Spill, 150 Am. J. of Psychiatry 1517-23 (1993), cited in Arata et al., supra, at 26 (survey conducted one year after the spill found that twenty percent of the individuals affected by the spill could be categorized as having a generalized anxiety disorder, nearly seventeen percent could be categorized as clinically depressed, and nine percent had post-traumatic stress disorder).6

6 Such a relationship is directly reflected in the comments of at least one Cordova resident, who in 1993 explained that there was “a tremendous amount of bitterness” in the town after the spill

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The mental health effects of the spill were particularly acute for commercial fishermen and the other area residents whose livelihoods were directly linked to commercial fishing and the fishing grounds that were contaminated by the spill. The contamination of the fishing grounds not only resulted in an “immediate threat to the fisheries,” but also “generated uncertainty regarding the long-term recovery of the resources” – uncertainty that, in turn, helped to generate chronic stress. Picou & Gill, Chronic Psychological Stress, supra, at 882; see also Pet. App. 123a (“[C]ommercial fishermen not only suffered economic losses but also the emotional distress that comes from having one’s means of making a living destroyed.”). For example, in one survey of commercial fishermen from Cordova conducted six years after the spill, twenty-three percent of men and thirteen percent of women were categorized as having “clinically significant levels of anxiety,” while thirty-nine percent of men and twenty percent of women had “clinically significant levels of depressive symptoms.” In the same survey, thirty-four percent of men and forty percent of women reported a “high number of PTSD-related symptoms.” Arata et al., supra, at 31.7 The significance of these stress

and specifically compared the mental health effects of the spill to “the stress shock that a lot of combat troops felt. It’s just this slow attrition of people’s emotions. It didn’t happen all at once, but we’re all wound up tight.” See Journeyman Pictures, USA – Alaska – Exxon Valdez, available at www.journeyman.tv/ ?lid=9672. 7 See also Picou & Gill, Chronic Psychological Stress, supra, at 888 (survey conducted in 1991 and 1992 revealed high stress levels among commercial fishermen); Marshall et al., supra, at 295-96 (survey finding increased stress levels from 1992 until

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levels becomes even clearer when viewed in context: the average stress levels for commercial fishermen surveyed between 1989 and 2006 were comparable to those of children grieving the loss of a parent six months after the parent’s death. Duane A. Gill, Technological Disaster, Resource Loss and Long-Term Social Change in a Subarctic Community 2, 44 (2007). Even in 2006, seventeen years after the spill, one study determined that depression “continues to be a serious mental health issue” for commercial fishermen from Cordova, while more than a third reported fragmented personal relationships. Id. at iv.

The stress experienced by commercial fishermen reverberated at the community level as well, as the social problems created by that stress further weakened the already fragile social structure in affected communities, see Picou et al., Disaster, Litigation, supra, at 1501. Moreover, the disruption that the spill caused for fishermen and those in fishing-related occupations “amplified and exacerbated basic distinctions between fishing and nonfishing occupations in Cordova’s social structure.” Id. at 1513. This fragmentation of the community in turn led to the development of a “corrosive community,” which seriously impeded community recovery. Arata et al., supra, at 37.

Some negative mental health effects – those attributable to litigation regarding the spill – have continued to impede recovery from the spill, Marshall

1995 and attributing high stress levels to, among other things, “loss of resources from the spill, including herring and salmon fisheries [and] concerns about the contamination of Prince William Sound”).

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et al., supra, at 295-96; Picou et al., Disaster, Litigation, supra, at 1514-15. Some of the litigation-related stress “resulted from time spent with lawyers, trying to understand complex litigation issues, and recurrent unpleasant memories of the spill.” Id. at 1514. Other stress arose from the adversarial process and delay tactics to which litigants were exposed, which are stressful both in and of themselves and also because they delay resolution of the litigants’ damages claims, thereby causing the litigants economic stress. Marshall et al., supra, at 294-96; Picou et al., Disaster, Litigation, supra, at 1514.

Indeed, negative mental health effects attributable to the spill have been documented as recently as last year. Two recent reports to the National Science Foundation provide both qualitative and quantitative empirical evidence that significant levels of spill-related psychological stress, depression, hostility, and loss of trust in the judicial process characterize residents of Cordova seventeen years after the spill. See Gill, supra, at iii-vi; Picou & Martin, Long-Term Community Impacts, supra. This documentation of the chronic social and psychological damages produced by the Exxon Valdez spill is unparalleled in the disaster research literature.

II. A Punitive Damages Award Is Appropriate in This Case to Ensure Adequate Deterrence.

In its brief on the merits, petitioner posits that “there is no role left for punitive damages” in a case, such as this one, in which respondents have purportedly already received “full compensation . . .

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for their (purely economic) losses” and Exxon has been required to pay other clean-up costs, fines, and expenses. Pet. Br. 48-49. A punitive damages award would serve no deterrent effect, petitioner reasons, because the combined effect of these payments would be “enough to deter anyone from anything.” Id. 49. Nor, petitioner asserts, does the punitive damages award in this case serve as an appropriate punishment in light of the statutory penalties already prescribed by Congress in the Clean Water Act. Id.

Although this Court’s jurisprudence makes clear that review of a punitive damages award is not limited to whether such an award will deter future wrongdoing, see, e.g., Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 432, 439-40 (2001), Exxon’s assertion that punitive damages are not necessary in this case to achieve adequate deterrence nonetheless falls short under even a strict law-and-economics analysis, as only an award of punitive damages will ensure that Exxon bears the full cost of its conduct.

There is widespread agreement among legal scholars and economists that, generally, “inefficient behavior can be deterred by forcing actors to accurately take account of all the costs of their activities.”8 Thomas C. Galligan, Jr., Augmented Awards: The Efficient Evolution of Punitive Damages, 51 La. L. Rev. 3, 7-8 (1990); cf. BMW of North America, Inc. v. Gore, 517 U.S. 559. 592-93 (1996) (Breyer, J.,

8 To the extent that a defendant may gain illicit benefits from its behavior, these costs must also include the value of these benefits. See Robert D. Cooter, Economic Analysis of Punitive Damages, 56 S. Cal. L. Rev. 79, 79-80 (1982).

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concurring) (“Some economists, for example, have argued for a standard that would deter illegal activity causing solely economic harm through the use of punitive damages that, as a whole, would take from a wrongdoer the total cost of the harm caused.”). In some cases, adequate deterrence can be achieved through an award of purely compensatory damages, which – as this Court explained in Cooper Industries – “are intended to redress the concrete loss that the plaintiff has suffered by reason of the defendant’s wrongful conduct,” 532 U.S. at 432 (citing Restatement (Second) of Torts § 903).

However, as Judge Calabresi and others have explained, in some categories of cases, an award of compensatory damages, standing alone, will “result in systematic underassessment of costs, and hence in systematic underdeterrence”; in these cases, an award of “[p]unitive damages can ensure that a wrongdoer bears all the costs of its actions, and is thus appropriately deterred from causing harm.” Ciraolo v. City of New York, 216 F.3d 236, 243 (2d Cir.) (Calabresi, J., concurring), cert. denied, 531 U.S. 993 (2000); see also, e.g., Kemezy v. Peters, 79 F.3d 33, 34 (7th Cir. 1996) (Posner, J.) (noting that “punitive damages are necessary . . . to make sure that tortious conduct is not underdeterred, as it might be if compensatory damages fell short of the actual injury inflicted by the tort”).9 One such category of cases, as

9 Indeed, even Professors Polinsky and Shavell, in work supported by petitioner, concede that “[i]n practice, . . . parties may escape having to pay for some of the harm” that they cause, and that the damages should be increased in such cases “to make up . . . for the chance of not having to pay for the full harm.” Moreover, they acknowledge, “[t]he most likely circumstance in which the

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Galligan notes, is those in which a legal rule limits the available damage awards, such as those that permit “recovery of economic losses if the plaintiff suffered some accompanying damage to person or property,” but “prohibit[] the recovery of negligently inflicted economic losses absent personal injury or property damage.” See Galligan, supra, at 11, 44-46 (citing Robins Dry Dock rule as example of such a rule). Cf. David G. Owen, A Punitive Damages Overview: Functions, Problems and Reform, 39 Vill. L. Rev. 363, 377-79 (1994). In this and other categories of cases that fail to fully account for the costs to society in compensatory damages, Galligan posits, deterrence can be achieved by imposing an award that would “ideally equal total accident costs less compensatories

full harm would not be assessed against the defendant arises when a particular component of harm (say, some type of non-pecuniary loss) is excluded from compensatory damages.” A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An Economic Analysis, 111 Harv. L. Rev. 869, 896 (1998). However, they dismiss this scenario, arguing unconvincingly that although the failure to include these harms as part of compensatory damages “does undesirably dilute deterrence,” “remedies for missing components of harm would be best pursued through revision of the rules used to calculate compensatory damages” because of the difficulties purportedly involved in estimating those harms. Id. at 939. They offer no reason, however, why the resulting underdeterrence is appropriate in cases, such as this one, in which the uncompensated harms have been catalogued at length, see Part I, supra. Nor does the article advert, in its discussion of this case, to the substantial uncompensated harms caused by the spill. Instead, the article posits only that “no punitive damages are needed, or appropriate, in the circumstances of this case because the injurer could not have escaped liability for compensatory damages.” Polinsky & Shavell, supra, at 903-04.

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plus the ‘value’ of other applicable fines or penalties.” Galligan, supra, at 12-13.

The use of punitive damages will generally ensure adequate deterrence when compensatory damages do not fully account for all of the costs resulting from the defendant’s activity, Judge Calabresi explains, because a rational actor will act when – based on a cost-benefit analysis – it determines that the benefits of doing so outweigh the costs.10 Ciraolo, 216 F.3d at 243. “Such an analysis cannot be even roughly accurate unless approximately all the costs of the activity are borne by the actor,” and it will “necessarily be distorted” if he will receive the benefits of the activity without being responsible for the costs. Id.11

10 Judge Calabresi notes, however, that in some cases – such as those in which “the ‘benefit’ resulting from the defendant’s conduct is socially illicit” – “allowing a separate award of punitive damages could represent a societal judgment that, for certain conduct, a cost-benefit analysis is inappropriate.” 216 F.3d at 246 n.8 (Calabresi, J., concurring). 11 Similarly, although amicus Washington Legal Foundation posits that “[i]t defies reason to suggest that accident costs of $3.4 billion would not induce Exxon (or any similarly situated company) to implement corrective measures,” Br. Amicus Curiae of Washington Legal Foundation 18, that assertion rests – among other things – on the assumption that a business such as Exxon is a purely rational actor. Such an assumption is belied by Exxon’s actions in this case, Pet. App. 170a, as demonstrated by the fact that it did not take the economically sensible action of replacing Captain Hazelwood with a sober captain “with relatively small expense, when compared with the risk.” Pet. App. 233a. That the costs of taking the economically rational action were tiny when compared with the enormous risk suggests that the illicit benefits of maintaining an alcoholic culture and protecting a colleague

23

As this Court has acknowledged, “[u]ntil well into the 19th century, punitive damages frequently operated to compensate for intangible injuries, compensation which was not otherwise available under the narrow conception of compensatory damages prevalent at the time.” Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 437 n.11 (2001). Although compensatory damages are more broadly available now in many areas of the law, they continue to be more narrowly available under maritime law, which – as relevant here – prohibits plaintiffs from recovering for economic and emotional injuries unless those injuries are accompanied by physical harm. Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927). Courts have carved out a very limited exception to this general maritime prohibition, allowing commercial fishermen to recover economic damages even in the absence of physical harm. See Union Oil v. Oppen, 501 F.2d 558 (9th Cir. 1974); see also J.A. 122 (district court reiterating that when “pure economic loss is at issue – not connected with any injury to one’s body or property, and especially where that economic loss occurs in a marine setting – the reach of legal liability is quite limited except as to commercial fishermen”).

When the extensive but nonetheless uncompensated harms arising from the spill – as catalogued above – are considered, it becomes clear that a sizeable award of punitive damages is not only appropriate but indeed necessary to provide adequate deterrence, as the compensatory damages awarded in

trumped rational economic considerations, see supra note 10 (citing Ciraolo, 216 F.3d at 246 n.8 (Calabresi, J., concurring)).

24

this case do not fully account for the injuries actually inflicted by the spill and thus do not require Exxon to bear all of the costs of its actions.

First, class members suffered substantial damages in the form of uncompensated economic harm due to the district court’s Robins Dry Dock rulings.

Second, and even more significantly, the compensatory damages awarded in this case do not include any compensation for the devastating social and psychological impact on the spill on area residents and the broader Prince William Sound communities, see supra at 15-18. Although no attempt has been made to assess the magnitude of these damages to date, even a relatively modest award of fifty to one hundred thousand dollars per plaintiff would not be inconsistent with other awards for emotional distress, both in Alaska and elsewhere around the country. See, e.g., Ace v. Aetna Life Ins. Co., 139 F.3d 1241, 1243, 1249-50 (9th Cir.) (emotional distress award of $100,000 for bad faith denial of insurance benefits), cert. denied, 525 U.S. 930 (1998); ERA Aviation, Inc. v. Lindfors, 17 P.3d 40, 42 (Alaska 2000) ($50,000 emotional distress award for gender discrimination and retaliatory discharge); Sloane v. Equifax Info. Servs., LLC, No. 06-2044, 2007 U.S. App. LEXIS 29805 (4th Cir. Dec. 27, 2007) (award of $150,000 for emotional distress arising from repeated violations, over two-year span, of Fair Credit Reporting Act); Forsyth v. City of Dallas, Tex., 91 F.3d 769, 774 (5th Cir. 1996) (in Section 1983 retaliation case, upholding emotional distress award of $100,000 to plaintiff who “testified that she suffered depression, weight loss, intestinal troubles, and marital problems, that she had

25

been sent home from work because of her depression, and that she had to consult a psychologist” and award of $75,000 to plaintiff who testified “that he suffered depression, sleeplessness, and marital problems”), cert. denied, 522 U.S. 816 (1997); EEOC v. Convergys Customer Mgmt. Group, Inc., 491 F.3d 790, 797 (8th Cir. 2007) (upholding $100,000 emotional distress award for termination in violation of Americans With Disabilities Act and noting that “[t]he record evidence shows that [the employee] suffered significant emotional injuries as a result of his wrongful termination,” including “severe depression and anxiety,” which in turn caused him to become “isolated, ashamed, and gain[] a significant amount of weight”). Collectively, such awards on a per-plaintiff basis in this case would amount to between 1.6 and 3.2 billion dollars.

Moreover, a larger award would likely be appropriate for the subset of plaintiffs – such as commercial fishermen and others in towns such as Cordova whose livelihoods and identities are closely linked to the availability of natural resources – who were hardest hit by the spill and its aftermath. In State Farm, for example, the plaintiffs were awarded compensatory damages of $500,000 for their emotional distress over the course of eighteen months regarding whether their insurance claim would be covered. See 538 U.S. at 419, 425. Here, by contrast, a large percentage of commercial fishermen experienced mental health effects from the spill that included anxiety, depression, and symptoms of post-traumatic stress disorder as many as six years after the spill. Even if the emotional distress claims of these plaintiffs are valued at the same level as the plaintiffs in State

26

Farm, the uncompensated harms stemming from the spill would increase even more, in all likelihood to the point at which they would in fact dwarf the punitive damages award of $2.5 billion in this case.

CONCLUSION

For the foregoing reasons, the judgment of the court of appeals should be affirmed.


Amy Howe (Counsel of Record) Kevin K. Russell HOWE & RUSSELL, P.C. 7272 Wisconsin Ave. Bethesda, MD 20814 (301) 941-1913 January 29, 2008

1a

LIST OF AMICI CURIAE

J. Steven Picou is Professor of Sociology and Chair of the Department of Sociology, Anthropology and Social Work at the University of South Alabama (Mobile). Dr. Picou’s research interests include disasters, environmental sociology and applied sociology. He has published over 75 peer-reviewed articles, book chapters and four books in these and other areas of research. Dr. Picou’s research has been supported by many agencies and foundations, including the National Science Foundation, U.S. Department of Education, U.S. Department of Labor, The Rockefeller Foundation and Alabama Department of Environmental Management. In 2001 he was the recipient of the American Sociological Association (Environment and Technology Section) “Distinguished Contribution Award” for his development and implementation of intervention programs to reduce the negative community impacts of the Exxon Valdez oil spill. Currently, he is directing research on long-term community recovery in Mississippi and Louisiana from Hurricane Katrina.

Catalina M. Arata is currently a psychologist in private practice. She previously served as an Associate Professor at the University of South Alabama. She has spent eighteen years conducting research on post-traumatic stress disorder and trauma, including research regarding the psychological effects of the Exxon Valdez oil spill, resulting in over twenty publications.

Lee Clarke is an Associate Professor of Sociology at Rutgers University, where he has also served as the

2a

Co-Director of the Center for Social Research and Instruction. He has written extensively about risk communication, panic, civil defense, evacuation, community response to disaster, and organizational failure, and he frequently consults with corporations, government agencies, and research foundations. His most recent book, Worst Cases: Terror & Catastrophe in the Popular Imagination, was nominated for a Pulitzer Prize.

Michael R. Edelstein has worked in the field of environmental psychology for over three decades. He is a Professor in the Environmental Studies program at Ramapo College of New Jersey. Dr. Edelstein was one of the early researchers to study the psycho-social impacts of human-caused disaster, particularly those involving toxic exposure or environmental hazards. His work, Contaminated Communities, now in its second edition (Westview Press, 2004), a book of theory about the psycho-social impacts of such disaster, is considered to be a classic in the field. Dr. Edelstein served as a research consultant to Impact Assessment, Inc. and the “oiled mayors’” study of the Exxon Valdez disaster.

Duane Gill is Associate Director for Research on Society and Environment and Research Professor at the Social Science Research Center (SSRC) and Professor of Sociology in the Department of Sociology, Anthropology and Social Work at Mississippi State University. He also serves as Coordinator of the Societal Risk Unit within the SSRC, where he pursues research interests in the sociology of disasters, environmental sociology, and community. Dr. Gill is part of a research team that has been investigating

http://www.worstcases.com/

http://www.worstcases.com/

3a

human impacts of the 1989 Exxon Valdez Oil Spill in Alaska through a series of longitudinal studies funded by the National Science Foundation, the Earthwatch Center for Field Studies, and the Prince William Sound Regional Citizens’ Advisory Council. Dr. Gill also collaborated on several studies of impacts of Hurricane Katrina. These include a needs assessment of Mississippi State University students and a survey of displaced students from three New Orleans universities. In addition, he organized and led a Katrina Summit that brought together several nationally and regionally recognized disaster scholars to discuss research needs and approaches to the disaster.

Robert Gramling is an environmental sociologist, a professor of sociology, and the director of the Center for Socioeconomic Research at the University of Louisiana at Lafayette. He is the author of two books and numerous journal articles. His research has focused on rural communities and natural resource development. He has served on National Research Council committees and scientific committees for state and federal agencies, including National Marine Fisheries Service, Northwest Power Planning Commission, and the states of Alaska and Louisiana. His research has been funded by a number of agencies, including the Environmental Protection Agency, Department of Interior, Department of Health and Human Services, and the Louisiana Department of natural resources.

4a

Steve Kroll-Smith is professor of sociology at the University of North Carolina, Greensboro and Editor of Sociological Inquiry. His latest book (with Valerie Gunter) is Volatile Places, A Sociology of Communities and Environmental Controversies (2007). Steve has written and edited four additional books on communities, people and environmental troubles. His work on human-made hazards was recognized by the American Sociological Association’s Distinguished Contribution Award for research on environments and technologies. He is currently working on two projects related to Hurricane Katrina: (1) a comparative study of the 1906 San Francisco earthquake and fire and the 2005 flooding of New Orleans and (2) a comparative neighborhood study of post-flood recovery in New Orleans.

Brent K. Marshall is an independent scholar employed by the University of Central Florida. His teaching and research interests include the following areas: disasters, environmental justice, and natural resource management. He has published thirteen articles in peer-reviewed journals in the last five years and has received extramural funding from a diverse set of sources that includes the United States Environmental Protection Agency, Heart of Florida United Way, Rockefeller Foundation, and Southwest Florida Water Management District. He is a research team member of the Task Force on Hurricane Katrina and Rebuilding the Gulf Coast, organized by the Social Science Research Council and American Sociological Association.

Kathleen Tierney is a professor in the Department of Sociology and the Institute of

5a

Behavioral Science at the University of Colorado at Boulder. She also serves as director of the Natural Hazards Center, which since 1976 has served as the nation's clearinghouse for knowledge on the societal dimensions of hazards, disasters, and risk. An internationally recognized expert on the disasters and their impacts, Professor Tierney has written dozens of articles, book chapters, and research reports on the short- and long-term effects of disasters on individuals, households, businesses, and communities. She is senior author of the book Facing the Unexpected: Disaster Preparedness and Response in the United States (2001), which is considered to be one of the most authoritative sources of information on the human dimensions of disasters.

Steve Calandrillo is Professor of Law and Washington Law School Foundation Scholar at the University of Washington, where he teaches (inter alia) contract law and law and economics.

Thomas Galligan has worked in higher education since 1986 as a professor, dean, and college president. He was the Dale Bennett Professor of Law at the Paul M. Hebert Law Center at Louisiana State University, where he taught from 1986-1998. From 1998 until 2006, he served as Dean of the University of Tennessee College of Law from 1998-2006. He has extensively taught, written, and spoken about torts, punitive damages, and admiralty. His work has been cited and relied upon by the U.S. Supreme Court, lower federal courts, state courts, the Restatement of Torts, and commentators.

6a

Ugo Mattei is the Alfred and Hanna Fromm Chair in International and Comparative Law at the University of California Hastings College of the Law, where he teaches (inter alia) law and economics. He is a member of the Editorial Board of the International Review of Law and Economics and the New Palgrave: A Dictionary of Economics and Law.

Richard O. Zerbe, Jr., is the Associate Dean and the Daniel J. Evans Distinguished Professor of Public Affairs and an Adjunct Professor of Law at University of Washington. He teaches environmental ethics, microeconomics, government regulation, law and economics, and benefit-cost analysis. He has worked on the executive board of the Western Economic Association, and with the American Bar Foundation, was a founding board member of the American Law and Economics Association, and serves as editor of the Research in Law and Economics journal.

No. 07-219 ================================================================

In The



Petitioners, v.


Respondents.

--------------------------------- ♦ ---------------------------------



--------------------------------- ♦ ---------------------------------

AMICI CURIAE BRIEF OF SHIP MASTERS AND EXPERT MARINERS CAPTAINS MITCHELL

STOLLER, JOSEPH AHLSTROM, ROGER JOHNSON, JOHN SCOTT MERRILL, AND TOM TROSVIG


--------------------------------- ♦ ---------------------------------

PAUL EDELMAN Counsel of Record

RICHARD M. GARBARINI KREINDLER & KREINDLER LLP

100 Park Avenue New York, N.Y. 10017-5590

(212) 687-8181

Counsel for Amici Curiae Former Ship Masters and Expert Mariners



i

TABLE OF CONTENTS

Page

INTEREST OF AMICI CURIAE ........................... 1

STATEMENT.......................................................... 4

SUMMARY OF ARGUMENT ................................ 6

ARGUMENT........................................................... 7

I. EXXON’S ARGUMENTS DO NOT COM-PORT WITH THE REALITIES OF THE SHIPPING INDUSTRY............................... 7

A. Modern Maritime Cargo Can Be Very Harmful to the Marine Environment ... 7

B. Modern Technologies Allow for Contact Between Ship and Shore at Anytime.... 9

1. Navigational Technology ................ 9

2. Communications Technology .......... 13

3. Exxon’s Use of Modern Communi-cations Technology.......................... 14

C. The Ship Master’s Modern Role Is Akin to Plant Manager or Division CEO........................................................ 16

D. The Availability of Insurance to Insulate Shipowners from Liability...... 17

II. IMPOSING PUNITIVE DAMAGES FOR THE RECKLESS ACTS OF A SHIP CAP-TAIN PROPERLY REFLECTS MODERN MARITIME REALITIES ............................. 18

A. The Amiable Nancy’s Background and Holding .................................................. 18

ii


Page

B. Application of The Amiable Nancy to This Case ............................................... 24

CONCLUSION ....................................................... 28

iii


Page

CASES

Askew v. American Waterways, 411 U.S. 325 (1973) .....................................................................7, 8

Hopkins v. Atlantic & St. Lawrence R.R., 36 N.H. 9 (1857) ...........................................................23

In the City of Carlisle, 39 F. 807 (D. Or. 1889) ..........26

Norwich Co. v. Wright, 80 U.S. 104 (1871) ................27

The Amiable Nancy, 16 U.S. 546 (1818) ............passim

OTHER AUTHORITIES

GEORGE COGGESHALL, HISTORY OF THE AMERICAN PRIVATEERS, AND LETTERS-OF-MARQUE (1956).....20, 21

DAVID M. COONEY, CHRONOLOGY OF THE U.S. NAVY 1775-1965 (1965) ...........................................18

DON I. DALGEISH, AN INTRODUCTION TO SATEL-

LITE COMMUNICATIONS (1989)...................................13

STOJCE DIMOV ILCEV, GLOBAL MOBILE SATELLITE COMMUNICATIONS FOR MARITIME, LAND AND AERONAUTICAL APPLICATIONS (2005) ........................13

EUROPEAN MARITIME SAFETY AGENCY, EMSA ACTION PLAN FOR HNS POLLUTION PREPARED-

NESS AND RESPONSE (2007) ........................................8

JEROME R. GARITEE, THE REPUBLIC’S PRIVATE NAVY: THE AMERICAN PRIVATEERING BUSINESS AS PRACTICED BY BALTIMORE DURING THE WAR OF 1812 (1977) .........................................................19

iv


Page

CHARLES JAROD INGERSOLL, HISTORY OF THE SECOND WAR BETWEEN THE UNITED STATES AND BRITAIN (1852) ..................................................22

INTERNATIONAL MARINE ORGANIZATION, IMO AND DANGEROUS GOODS AT SEA (1996)..............................8

RICHARD POSNER, TORT LAW: CASES AND ECO-

NOMIC ANALYSIS (1982).............................................24

WILLIAM L. PROSSER, THE LAW OF TORTS (4th ed. 1971) ........................................................................26

JOSEPH ALFRED SCOVILLE, THE OLD MERCHANTS OF NEW YORK (1864) ................................................20

REUBEN E. STIVERS, PRIVATEERS AND VOLUN-

TEERS: THE MEN AND WOMEN OF OUR RESERVE NAVAL FORCES, 1766 to 1866 (1975) ........................20

GOMER WILLIAMS, HISTORY OF THE LIVERPOOL PRIVATEERS AND LETTERS OF MARQUE (1897)...........20

RESTATEMENT (SECOND) OF TORTS (1979) ....................27

S. REP. NO. 101-94 (1990), reprinted in 1990 U.S.C.C.A.N. 749.......................................................8

N.P. Kyrtatos, Ocean-going Ship Support Using Multimedia Teleconferencing Via Satellite, 5 ELECTRONICS & COMMUNICATION ENGINEERING JOURNAL 198 (1993)...................................................9

Edgar Gold, Vessel Traffic Regulation: The Interface of Maritime Safety and Operational Freedom, 14 J. MAR. L. & COM. 1 (1983) ................16

v


Page

Mark E. King, Note, In re Complaint of Armatur, S.A.: The Limitation of Liability Act and Maritime Environmental Disasters, 21 ENVTL. L. 405 (1991) ..........................................25

Sandra Speares, Inmarsat 20 Successful Years: A Revolution in Marine Communications, LLOYD’S LIST, Nov. 17, 1999, at 17 ....................13, 16

Captain Shawn P. Walsh, Training with Exxon, QUARTERMASTER PROFESSIONAL BULLE-

TIN (1995), http://www.quartermaster.army. mil/oqmg/Professional_Bulletin/1995/Autumn/ walsh.html ..............................................................15

Exxon Valdez Oil Spill Trustee Council, Where the Oil Went, http://www.evostc.state.ak.us/ History/PWSmap.cfm................................................4

International Marine Organization, Long range identification and tracking (LRIT), http://www. imo.org/Safety/mainframe.asp?topic_id=905 ....12, 13

National Space-Based Positioning, Navigation, and Timing Coordination Office, Marine Applications of GPS, http://www.gps.gov/ applications/marine/index.html .......................10, 12

Richard E. Thorne, Biological Monitoring in Prince William Sound, http://www.pwssc. gen.ak.us/hydroacoustics/biologicalmonitoring. shtml..........................................................................8

U.S. Coast Guard Navigation Center, AIS Overview, http://www.navcen.uscg.gov/enav/ ais/default.htm ........................................................10

vi


Page

U.S. Coast Guard Navigation Center, How AIS Works, http://www.navcen.uscg.gov/enav/ais/ how_AIS_works.htm...............................................11

U.S. Coast Guard Navigation Center, What AIS Broadcasts, http://www.navcen.uscg.gov/ enav/ais/what_AIS_broadcasts.htm .......................11

1

INTEREST OF AMICI CURIAE1

Amici Curiae Captains Mitchell Stoller, Joseph Ahlstrom, Roger Johnson, John Scott Merrill, and Tom Trosvig have extensive experience in the mari-time industry. As former ship masters and expert mariners, amici have a strong interest in ensuring that the rules applied in this case are consistent with the realities of the modern shipping industry.

Captain Mitchell Stoller graduated as valedicto-rian from the California Maritime Academy. Captain Stoller worked for Exxon Shipping Company between 1975 and 1988, first as a third mate from 1975 to 1977, then as a second mate from 1977 to 1979, then as a first mate from 1979 to 1984, and finally as a master from 1984 to 1988, where he became a pilot in Los Angeles Harbor. While employed by Exxon, Captain Stoller worked with and for Joseph Hazel-wood – the captain of the EXXON VALDEZ when the spill occurred – and was master on several vessels that made the same run as the EXXON VALDEZ be-tween Valdez, Alaska, through Prince William Sound to various ports in Washington, Oregon, and Califor-nia. Captain Stoller twice received awards from Exxon for safe vessel operation.

1 Pursuant to Supreme Court Rule 37.6, amici affirm that no counsel for a party authored this brief in whole or in part and that no person other than amici made a monetary contribution to its preparation or submission. The parties have consented to the filing of this brief, and their letters of consent have been filed with this Court.

2

During his more than thirty-five-year maritime career, Captain Stoller has served as an expert and consultant for more than four hundred law firms nationwide, has been retained on over one thousand seven hundred cases, and has testified in over sixty-five trials. He has earned an Unlimited Master’s License and First Class Pilot’s License for, among other areas, Prince William Sound. Captain Stoller has also written safety manuals on oil spill preven-tion for major oil and shipping companies, and has served as an advisor to Congress, the U.S. Coast Guard, and federal, state, and local organizations on the prevention of oil spills, collisions, allisions, and groundings.

Captain Joseph Ahlstom is Professor of Marine Transportation at the State University of New York, Maritime College. He is a well-known expert in the area of marine communications and has developed several courses in the field. Captain Ahlstom’s experi-ence as a Master and Chief Officer spans more than fifteen years. He is currently a United States Coast Guard licensed Master Mariner and is a Captain in the United States Navy Reserve.

Captain Roger Johnson is a retired Master of large ocean-going vessels carrying hazardous com-modities, including 200,000-barrel asphalt tankers and 30,000-ton sulphur tankers. He worked for, among others, Sargeant Marine and Duval Sulphur. Captain Johnson’s merchant officer’s license is Mas-ter Unlimited Oceans. For twenty years, he was a member of the Masters, Mates and Pilots Officers

3

union. He spent the twenty years before that as a member of the National Maritime Union sailing as a deck hand, and working his way up to third mate, second mate, chief mate, and eventually master.

Captain John Scott Merrill has been employed by the Alaska Marine Highway System for eleven years, and is currently the Master of M/V TUSTUMENA, an ocean class vehicle and passenger ferry operated by the Alaska Marine Highway System. He has an Ocean Masters License, unlimited tonnage, with an endorsement as a First Class Pilot, for Alaskan waters including Prince William Sound. During Captain Merrill’s twenty-three years of service with the United States Coast Guard, he commanded buoy tenders and cutters, commanded Loran communica-tions stations, and was a staff officer in the Marine Environmental Protection Branch. Between 1984 and 1988, he was the Coast Guard’s Alaska Aids to Navi-gation Branch Chief, and was responsible for man-agement of Alaska’s navigable waterways including Prince William Sound. In that role, he was responsi-ble for all of Alaska’s seven Loran C electronics navi-gation stations.

Captain Tom Trosvig is a retired officer of the United States Coast Guard. While in the Coast Guard, Captain Trosvig served as (1) a marine in-spector, (2) the first commissioned supervisor of the USCG Marine Safety Detachment in Kodiak, Alaska, (3) an operations officer/navigator aboard the USCGC CONFIDENCE, which patrolled the North Pacific and Bering Sea, (4) the Operations/Administrative Officer

4

of the USCG Support Center in Kodiak, Alaska, and (5) the Commanding Officer of the Bering Sea patrol vessel, USCGC YOCONA. He maintains a merchant marine license for Master, Steam and Motor Vessels of 2000 Gross Tons Upon Oceans. Currently, Mr. Trosvig serves as the Security, Safety, and Hazardous Materials Officer for an Alaskan shipping terminal.

--------------------------------- ♦ ---------------------------------

STATEMENT

On March 24, 1989, the EXXON VALDEZ super-tanker “ran aground on Bligh Reef in Prince William Sound, Alaska.” Pet. App. 60a. Over eleven million gallons of oil flowed into the Sound, eventually spreading over 11,000 square miles. Pet. App. 64a; Exxon Valdez Oil Spill Trustee Council, Where the Oil Went, http://www.evostc.state.ak.us/History/PWSmap. cfm; see Pet. App. 123a. This tragedy was the direct result of the recklessness of Petitioners Exxon Ship-ping Company and Exxon Mobil Corporation (collec-tively “Exxon”) because for many years, Exxon allowed an employee who had longstanding problems with alcohol to command the EXXON VALDEZ super-tanker. Pet. App. 63a-64a; JA 212 (Exxon stipulated to its liability for Hazelwood’s acts that led to the spill).

By 1985, Exxon was well-aware that its employee, Joseph Hazelwood, had a substance abuse problem that needed treatment and monitoring. That year Captain Hazelwood had attended a twenty-eight-day

5

residential rehabilitation program. Pet. App. 63a. By the spring of 1986, however, Exxon knew that Captain Hazelwood was drinking again. Pet. App. 121a. It nevertheless left the captain in command of its super-tankers, including the EXXON VALDEZ. Pet. App. 121a.

On March 23, 1989, Captain Hazelwood was in command of the EXXON VALDEZ when it left Valdez, Alaska, loaded with fifty-three million gallons of crude oil. See Pet. App. 120a-122a. Before leaving Valdez, however, the captain “drank at least five doubles (about fifteen ounces of 80 proof alcohol) in waterfront bars.” Pet. App. 64a. Shortly after setting out, “Captain Hazelwood assumed command of the vessel from a harbor pilot and made arrangements to divert the vessel from the normal shipping lanes in order to avoid considerable ice which had calved off Columbia Glacier.” Pet. App. 120a. The diversion from the standard shipping lanes meant that the tanker was headed directly toward Bligh Reef. Pet. App. 120a. When it was time to make the critical turn to avoid the reef, Captain Hazelwood was not on the bridge. Pet. App. 120a. He left the Third Mate, who was, “more probably than not, overworked and exces-sively tired at the time in question,” Pet. App. 120a, to make the maneuver, even though Captain Hazel-wood, not the Third Mate, was the only one aboard licensed to navigate that portion of the Sound. Pet. App. 63a. As shown at trial, “captains simply do not leave the bridge during maneuvers such as this one and that there is no good reason for the captain to go

6

to his cabin to do paperwork at such a time.” Pet. App. 63a.

Not surprisingly, shortly after the spill, many claims were filed against Exxon. Pet. App. 124a. The civil cases claiming economic and punitive damages “were ultimately (but with a few exceptions) consoli-dated into this case.” Pet. App. 125a. The District Court certified several classes for compensatory damages and a single mandatory punitive damages class, which consisted of 32,677 members. Pet. App. 67a; 123a. The Court of Appeals concluded that the total compensable economic harm caused by Exxon to these plaintiffs was over $500 million. Pet. App. 38a. That court also reduced the total punitive damages award to $2.5 billion. Pet. App. 42a.

--------------------------------- ♦ ---------------------------------

SUMMARY OF ARGUMENT

Today’s maritime industry and the circumstances under which the EXXON VALDEZ spill occurred bear little resemblance to those of the early 1800s when The Amiable Nancy, 16 U.S. 546 (1818), was decided. First, as is obvious, modern commercial maritime business has little in common with the activities of bygone privateers. In addition, modern communica-tions and navigational technologies has revolution-ized the ship-to-shore relationship between the captain and the owner. Finally, the cargo transported by ships today is much more dangerous than in the 1800s. The transport of those substances requires

7

heightened coordination between vessel and shore, which necessitates a very different relationship between shipowner and captain than that of the early 1800s.

Nevertheless, as The Amiable Nancy teaches, maritime law should accurately reflect the maritime conditions of the time. Given the current nature of the industry, punitive damages are sometimes neces-sary to punish and deter intentional or reckless discharges of oil and other hazardous substances into the marine environment. For that reason, and be-cause the punitive damages awarded in this case are appropriate and reasonable, this Court should affirm the judgment of the Court of Appeals.

--------------------------------- ♦ ---------------------------------

ARGUMENT

I. EXXON’S ARGUMENTS DO NOT COM-PORT WITH THE REALITIES OF THE SHIPPING INDUSTRY

A. Modern Maritime Cargo Can Be Very Harmful to the Marine Environment

Thirty-five years ago, this Court recognized in Askew v. American Waterways, 411 U.S. 325 (1973), that “not only is more oil being moved by sea each year, but the tankers are much larger.” Id. at 335. The trend to larger ships has continued unabated since that time. Some container vessels (scheduled to be constructed) will have a capacity of 16,000 20-foot equivalent containers (TEUs), which represents an

8

increase in capacity of thirty-two times the number of TEUs carried on most vessels at the time of this Court’s decision in Askew. In addition, more than half of all cargo transported by sea today is harmful to the environment. INTERNATIONAL MARINE ORGANIZATION, IMO AND DANGEROUS GOODS AT SEA 1 (1996).

The impacts from toxic marine spills go far beyond the concerns of safety of ships’ crews and passengers. Such spills can have devastating conse-quences for the environment and for resource-based businesses such as the commercial fishing industry. See Br. of Natural and Social Scientists as Amicus Curiae in Support of Respondents. In this case, for instance, over 300,000 sea birds were reported dead in the months following the EXXON VALDEZ disaster. S. REP. NO. 101-94, at 2 (1990), reprinted in 1990 U.S.C.C.A.N. 749, 750. But the direct lethal effect on marine organisms is only the beginning. Spills of dangerous cargos can also damage marine ecosystems by causing critical changes in the environment. See EUROPEAN MARITIME SAFETY AGENCY, EMSA ACTION PLAN FOR HNS POLLUTION PREPAREDNESS AND RE-

SPONSE 44 (2007). In this case, the EXXON VALDEZ spill has caused long-term damage to the Prince William Sound Pacific herring fishery, a once tremendously valuable resource. See Richard E. Thorne, Biological Monitoring in Prince William Sound, http://www. pwssc.gen.ak.us/hydroacoustics/biologicalmonitoring. shtml.

9

B. Modern Technologies Allow for Con-tact Between Ship and Shore at Any-time

Ship-to-shore communications today are also much different than in the 1800s. A shipowner and a vessel’s master can be in contact anytime. If there is a serious technical problem on the ship, experts at the shipping company and other locations use modern communication facilities for remote inspection, prob-lem diagnosis, advice, cooperative decision-making and supervision of the repair procedure. See N.P. Kyrtatos, Ocean-going Ship Support Using Multime-dia Teleconferencing Via Satellite, 5 ELECTRONICS & COMMUNICATION ENGINEERING JOURNAL 198-208 (1993). Even supplies, refueling, and weather alerts are handled ashore by the shipping company. Id.

Several other technologies are critical to modern maritime communications and contact between ship and shore.

1. Navigational Technology

The Global Positioning System (“GPS”) allows a ship to identify its location with absolute precision, conveying this position to the company office via worldwide cellular phone technology or by satellite communications known as Inmarsat, discussed in more detail below. This allows guidance and direction from the office ashore to be provided to the ship on a regular basis rather than only during times of crisis as in the past. Id.

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GPS information is embedded in the Automatic Identification System (“AIS”). AIS is endorsed by the International Maritime Organization (“IMO”) and is used for vessel traffic control around busy seaways. National Space-Based Positioning, Navigation, and Timing Coordination Office, Marine Applications of GPS, http://www.gps.gov/applications/marine/index. html. AIS functions by “us[ing] a transponder system that operates in the VHF maritime band and is capable of communicating ship to ship as well as ship to shore, transmitting information relating to ship identification, geographic location, vessel type, and cargo information – all on a real-time, wholly auto-mated basis.” Id.

More specifically, AIS provides the officer in charge of the navigational watch with a radar display that includes a mark for every significant ship within radio range, each with a velocity vector indicating speed and heading:

Each ship ‘mark’ can reflect the actual size of the ship and its position with GPS or differ-ential GPS accuracy. By clicking on a ship mark, the officer can learn the ship name, course, speed, classification, call sign, regis-tration number, and other information. Ma-neuvering information, closest point of approach, time to closest point of approach, and other navigation information are also available.

U.S. Coast Guard Navigation Center, AIS Overview, http://www.navcen.uscg.gov/enav/ais/default.htm; see

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also U.S. Coast Guard Navigation Center, How AIS Works, http://www.navcen.uscg.gov/enav/ais/how_AIS_ works.htm (providing more detailed explanation of technology).

While underway, shipboard AIS units broadcast the following information every two to ten seconds and every three minutes while at anchor: (i) the unit’s maritime mobile identity (“MMSI”), a unique identi-fier for each ship radio unit, assigned by the Interna-tional Telecommunications Union; (ii) the navigation status of the ship (e.g., underway using engine, at anchor, not under command); (iii) rate of turn; (iv) speed over ground; (v) position accuracy; (vi) longitude and latitude; (vii) course over ground, (viii) true heading; and (ix) time stamp. U.S. Coast Guard Navigation Center, What AIS Broadcasts, http://www.navcen.uscg.gov/enav/ais/what_AIS_broad casts.htm. In addition, the AIS unit broadcasts the following information every six minutes: (i) MMSI number (ii) Ship’s IMO number; (iii) Ship’s radio call sign; (iv) Name of ship (up to 20 characters); (v) Type of ship and cargo; (vi) Dimensions of ship (in meters); (vii) Location on ship where the reference point for position reports is located; (viii) Type of position fixing device utilized by ship; (ix) Draft of ship (in meters); (x) Destination of ship (at master’s discre-tion); and (xi) Estimated time of arrival (ETA) at destination.

AIS is not only vital for navigation, but is in-creasingly used to bolster the security of ports and waterways by providing governments with greater

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situational awareness of commercial vessels and their cargo: “Because the ship’s GPS position is embedded in [the] transmissions, all essential information about vessel movements and contents can be uploaded automatically to electronic charts. The safety and security of vessels using this system is significantly enhanced.” National Space-Based Positioning, Navi-gation, and Timing Coordination Office, Marine Applications of GPS, http://www.gps.gov/applications/ marine/index.html.

As new developments continue to occur, it is clear that we now sail in an age when the control of shoreside owners over vessels at sea will become even more comprehensive. Long Range Identification and Tracking (“LRIT”) is a system spearheaded by the United States Coast Guard after September 11, 2001, to track the approximately 50,000 large ships around the world. The LRIT information that ships will be required to transmit include “the ship’s identity, location and date and time of the position.” IMO, Long range identification and tracking (LRIT), http://www.imo.org/Safety/mainframe.asp?topic_id=905. An important difference between LRIT and AIS – in addition to the disparity in range – is the availability of information. AIS is a broadcast system available to all; “data derived through LRIT will be available only to the recipients who are entitled to receive such information and safeguards concerning the confidentiality of those data have been built into the regulatory provisions.” Id. The LRIT system will be

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operational with respect to the transmission of LRIT information by ships from December 30, 2008. Id.

2. Communications Technology

In 1989, ships had instantaneous and continuous communications with the company office ashore available through satellites. This form of communica-tion is known as Inmarsat, which is short for Interna-tional Marine Satellite Organization. See Sandra Speares, Inmarsat 20 Successful Years: A Revolution in Marine Communications, LLOYD’S LIST, Nov. 17, 1999, at 17. There are four Inmarsat satellites that circle the world at the equator and provide instant communication with personnel with public phone access similar to landline phones at home or cell phones. DON I. DALGEISH, AN INTRODUCTION TO SATEL-

LITE COMMUNICATIONS 239 (1989). It was common practice for mariners of that time to use the satellite phone to speak immediately with the company, agent, or charterers. Id.

The Inmarsat phone can be used for voice and telex communications. STOJCE DIMOV ILCEV, GLOBAL MOBILE SATELLITE COMMUNICATIONS FOR MARITIME, LAND AND AERONAUTICAL APPLICATIONS 32 (2005). Based on the experience of these amici, however, it is clear that the widespread use of worldwide cellular phones has replaced the Inmarsat system for voice communication. In fact, the use of worldwide cellular phones, shore-based communication networks, satel-lites and ship-board equipment has radically changed

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the operating practices of the marine industry. The use of advanced telecommunications, such as high data-rate land networks and satellite links, allows the transmission of digitized moving video, voice and computer data, to support applications such as mul-timedia conferencing and computer interworking. All of these technologies can be used for the remote support of a ship’s master and crews from land-based agencies.

3. Exxon’s Use of Modern Communi-

cations Technology

To appreciate the import of modern communica-tions in today’s maritime industry one need only look at the spill at issue here. On March 24, 1989 when the EXXON VALDEZ ran aground on Bligh Reef the vessel immediately contacted Valdez traffic stating “we . . . should be on your radar.” PX92A (Resps.’ DVD). Captain Hazelwood received a call on the ship’s satellite phone from Exxon executives in San Francisco shortly after the ship’s grounding. JA 223-24, 354-55, 872-75. Using that same phone, they discussed his near-disastrous plan to dislodge the EXXON VALDEZ from Bligh Reef. Id.

In response to an inquiry from the United States Senate following the grounding of the EXXON VALDEZ, Exxon detailed the communication system on board the ship:

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Is the EXXON VALDEZ equipped to main-tain communications with Exxon Headquar-ters during its shipping operations?

Yes, the EXXON VALDEZ is equipped with a number of ship-to-shore communications to enable the vessel to communicate with any shore location. These systems include Marsat [Inmarsat] voice and telex systems, single sideband radio, VHF Marine radio, HF Ra-dio, cellular telephone, SITOR telex, and fac-simile.

SJA249sa.

As of 1995, one of Exxon’s employees explained that Exxon had moved from hard copy telexes to electronic mail: “According to Lamp, an Exxon publica-tion, ‘Exxon ships are tied into a satellite network so they can receive and initiate instantaneous telecom-munications, including voice, data and facsimile, just as if they were in a modern office building instead of thousands of miles from civilization.’ ” Captain Shawn P. Walsh, Training with Exxon, QUARTERMASTER PRO-

FESSIONAL BULLETIN (1995), http://www.quartermaster. army.mil/oqmg/Professional_Bulletin/1995/Autumn/walsh. html. He explained further that Exxon had such extensive access to information about its ships that if one was delayed, “shipping specialists [could] imme-diately approve or disapprove a vessel for movement of petroleum product anywhere in the world.” Id.

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C. The Ship Master’s Modern Role Is Akin to Plant Manager or Division CEO

The vessel has become a fully integrated part of the corporate commercial network, and its master the manager of the floating corporate office. Master and vessel are part of the fully integrated corporate network, and the master is a corporate manager responsible for the safety of the ship, cargo, and crew. The marine communication and navigational tech-nologies discussed above have changed the relation-ship between shipowners and captains, which allows for an increasingly coordinated approach to decision making between ships and shore-side management. See Sandra Speares, Inmarsat 20 Successful Years: A Revolution in Marine Communications, LLOYD’S LIST, Nov. 17, 1999, at 17.

Well before 1989, oil carriers and many shipping companies recognized this new reality. See Edgar Gold, Vessel Traffic Regulation: The Interface of Maritime Safety and Operational Freedom, 14 J. MAR. L. & COM. 1, 13 (1983) (“The master is expected to be a key member of a total ‘management team’ and would disregard instructions at his own professional risk.”). In essence, the master is viewed as the corpo-rate manager of a seagoing staff, constantly coordi-nating with his or her shore-side counterparts. In Exxon’s parlance, the master is the “management representative on board the ship.” JA 898. Decisions once handled by the master such as course and speed are decided ashore or in conjunction with the shore. Even supplies, refueling, repairs and technological

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problems are handled remotely from the shore or are managed with the assistance of integrated computer communications.

D. The Availability of Insurance to Insu-

late Shipowners from Liability

Exxon has not raised the issue of its capacity to pay punitive damages at the level assessed in this case. Nor has Exxon claimed that pollution liability losses are not capable of being insured. In fact, the capacity of the insurance market is much larger today than it was historically. If a vessel operator such as Exxon is capable of insuring its exposure for compen-satory losses, punitive damages become even more necessary from a societal standpoint. If all losses are insurable, there is no longer any element of deter-rence and the cost of the risk becomes merely a cost of “doing business.”

One of the parties supporting Exxon in this litigation, the American Institute of Marine Under-writers, acknowledged in its brief supporting Exxon at the certiorari stage that punitive damages are even sometimes insurable. See Br. of Am. Inst. of Marine Underwriters at 1 n.2, 2 n.3. Regardless of whether punitive damages might be covered by insurance, with the growth of insurance capacity for vessels, there is no longer any serious threat that the vicarious liability of a single reckless corporate shi-powner for punitive damages will destroy the marine insurance industry.

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II. IMPOSING PUNITIVE DAMAGES FOR THE RECKLESS ACTS OF A SHIP CAP-TAIN PROPERLY REFLECTS MODERN MARITIME REALITIES

Exxon’s argument against the award of punitive damages in this case relies heavily on The Amiable Nancy, 16 U.S. 546 (1818). What Exxon misses, however, is that that case reflected the conditions and customs of the maritime industry at that time – particularly the activities of privateers – not today’s world.

A. The Amiable Nancy’s Background and

Holding

The Amiable Nancy was decided in the context of the War of 1812. When the U.S. declared war on Britain, it had only seventeen seaworthy ships, with four hundred forty-seven guns and five thousand men. DAVID M. COONEY, CHRONOLOGY OF THE U.S. NAVY 1775-1965 (1965). As a result, it was necessary for the United States to encourage “privateers” in order to ensure national security.

A privateer was a quasi-sovereign, privately financed, owned, outfitted, crewed, and operated armed vessel. They were relatively small vessels compared to naval warships, and typically lightly-armed. Neverthe-less, they had sufficient power to take on more lightly armed or unarmed cargo ships, which were their primary targets. By virtue of Letters of Marque & Reprisal issued by Congress pursuant to Article I,

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Section 8 of the United States Constitution, privateers were allowed to commit maritime torts and to attack the vessels of a declared national enemy for profit.

Although in today’s era of professional navies privateers are a historical anachronism, for centuries they were dispatched from most maritime nations at one time or other. In fact, Elizabethan England was “almost totally dependent upon the private initiative and individual enterprise of its privateering estab-lishment.” JEROME R. GARITEE, THE REPUBLIC’S PRI-

VATE NAVY: THE AMERICAN PRIVATEERING BUSINESS AS PRACTICED BY BALTIMORE DURING THE WAR OF 1812, at 5 (1977). For example, Sir Walter Raleigh, a privateer himself, was rescued in his failed attempt at the colonization of Virginia in 1585 by fellow privateer Sir Francis Drake.

In hindsight, the sheer magnitude of such activ-ity was remarkable. Britain’s American colonies commissioned one hundred thirteen privateers during King George’s War of 1744-1748, and four hundred to five hundred during the Seven Years’ War of 1756-1763. Id. at 7-8. During the American Revolution, both sides freely employed privateers. Despite having a large public navy, the British commissioned at least seven hundred such vessels, ninety-four of which were from Liverpool alone. During the American Civil War, secessionist states sent about eight hundred privateers to sea in search of prizes.

The activities of a privateer were viewed as vital to the national interest. Accordingly, it was necessary

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to insulate those owners who took the risk of com-mitting their vessels to the national service from various consequences relating to the conduct of war. REUBEN E. STIVERS, PRIVATEERS AND VOLUNTEERS: THE MEN AND WOMEN OF OUR RESERVE NAVAL FORCES, 1766 TO 1866 at 29 (1975). As former President Thomas Jefferson explained in 1813:

[E]very possible encouragement should be given to privateering in time of war with a commercial nation. . . . Our national ships are too few in number . . . [but] by licensing private armed vessels, the whole naval force of the nation is truly brought to bear on the foe.

GEORGE COGGESHALL, HISTORY OF THE AMERICAN PRIVATEERS, AND LETTERS-OF-MARQUE xliv (1956); see also GOMER WILLIAMS, HISTORY OF THE LIVERPOOL PRIVATEERS AND LETTERS OF MARQUE 459 (1897).

The Amiable Nancy arose from the activities of the privateer SCOURGE. Peter H. Schenck, the co-owner of the SCOURGE, was already a national hero at the time of the events in question. He had given the nearly bankrupt federal government $10,000 and had transported supplies to New York during the British blockade of that city. COGGESHALL, HISTORY, at 221; JOSEPH ALFRED SCOVILLE, THE OLD MERCHANTS OF NEW YORK 91 (1864).

When the SCOURGE set sail for the north coast of England and Norway to aid the war effort, its owners would not see the vessel again for more than a year.

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Nor would they be able to communicate, guide, or even know its whereabouts. Moreover, they would have no ability to make changes in crew, including its captain. COGGESHALL, HISTORY, at 219-23. For exam-ple, while in Dronheim, Norway, the ship’s master, Captain Nicoll, decided to remain in Norway. Id. at 223. He was replaced on March 10, 1814, by Captain J. R. Perry. Id. It was not possible to convey the change in command to the owners of the SCOURGE, nor was the owners’ approval deemed necessary even if he could have reached them. It was understood that the choice of competent captain and crew was a matter for experienced seamen, not for New York merchants.

The SCOURGE became one of the most successful privateers of the war. Id. In the summer and late fall of 1813, it captured and looted dozens of ships, in total amounting to 4,505 tons and sixty guns. Id. at 223. A 19th century historian expressed the hope that the ship’s “acts and deeds in [its] country’s service will ever be appreciated, while bravery and patriot-ism are held in high regard by civilized nations.” Id. at 219. After more than a year away from the United States, with only tales of their good fortune reaching home, the SCOURGE sailed into the harbor at Chat-ham, Cape Cod, in May 1814, along with several captured ships and four hundred twenty prisoners taken along the route home. Id. at 225.

On November 4, 1814, armed crewmen of the SCOURGE, led by a Lieutenant Dickenson, boarded THE AMIABLE NANCY. Doing exactly what they had

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done for a year and a half, the men looted the ship. The mistake, however was that THE AMIABLE NANCY was neutral. The Amiable Nancy, 16 U.S. at 551.

The owners of THE AMIABLE NANCY sued the owners of the SCOURGE – but not any of the men who looted their ship2 – seeking only compensatory dam-ages. Id. at 558. The Court upheld portions of the compensatory damages award against the owners of the SCOURGE. It also explained in dicta that punitive damages might have been warranted if they had been sought against Lieutenant Dickenson and the origi-nal wrongdoers. The Court then went out of its way to explain that punitive damages would not have been appropriate against the national heroes Schenck and Brett, owners of the SCOURGE, given the nature of privateering:

2 Because the SCOURGE operated in a quasi-sovereign capacity, the crew of the SCOURGE was subject to naval military law for its looting of THE AMIABLE NANCY. After the incident, and “[ j]ust before the war ended, a court-martial of naval officers . . . on the 10th of February, 1815, adjudged Jeremy S. Dickenson, first Lieutenant of [the SCOURGE], to imprisonment for . . . mutinous and seditious conduct. At the same time, the same court sentenced the boatswain and three seamen of the Scourge to be flogged . . . for pillaging [the AMIABLE NANCY] and mal-treating persons aboard the vessel.” CHARLES JAROD INGERSOLL, HISTORY OF THE SECOND WAR BETWEEN THE UNITED STATES AND BRITAIN 37 (1852). In addition, the Lieutenant and the three crew members were forced to forfeit their share of the captures made by the SCOURGE. Id. Unlike Exxon’s stipulation that Captain Hazelwood was at fault for the EXXON VALDEZ spill, however, it was determined that the Captain of the SCOURGE had no part in the misdeeds of the looting seamen. Id.

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But it is to be considered, that this is a suit against the owners of the privateer, upon whom the law has, from motives of policy, devolved a responsibility for the conduct of the officers and crew employed by them, and yet, from the nature of the service, they can scarcely ever be able to secure to themselves an adequate indemnity in cases of loss. . . . While the government of the country shall choose to authorize the employment of priva-teers in its public wars, with the knowledge that such employment cannot be exempt from occasional irregularities and improper conduct, it cannot be the duty of courts of justice to defeat the policy of the govern-ment, by burthening [sic] the service with a responsibility beyond what justice requires, with a responsibility for unliquidated dam-ages, resting in mere discretion, and in-tended to punish offenders.

Id. at 558-59.

This passage on punitive damages was widely understood at the time to reflect “peculiar relations subsisting between the owners and the officers and crew of a privateer, and on reasons of public policy connected with the employment of privateers in our public wars.” Hopkins v. Atlantic & St. Lawrence R.R., 36 N.H. 9, 20 (1857). It was clear that it was not intended to have any application outside of that context.

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B. Application of The Amiable Nancy to This Case

Like The Amiable Nancy, the rule governing this case should reflect the conditions and norms of the incident at issue. But the particulars of The Amiable Nancy have little bearing on this case because the circumstances surrounding The Amiable Nancy are simply too different from those surrounding the EXXON VALDEZ spill.

First, the cargo transported by ship at the time of The Amiable Nancy was relatively harmless. IMO, DANGEROUS GOODS, at 1-3 (1996). It was not until sixty years ago that there was sufficient transport of dangerous goods to justify comprehensive regulation. Id. at 1.

Now, given the potential for environmental harm posed by dangerous cargo spills, care must be taken to reduce the risk of such spills. As the district court said in this case: “This is not someone hauling dry cargo, the spilling of which would have minimal impact on the fisheries and other uses of Prince William Sound.” Pet. App. 155a.

Shipowners are in the best position to insure that the risks associated with the transport of dangerous cargo are minimized and fully internalized. It is clear from an economic standpoint that a high cost of harm, even when coupled with a relatively low prob-ability of occurrence, serves to promote high avoid-ance costs. See RICHARD POSNER, TORT LAW: CASES AND ECONOMIC ANALYSIS 1-9 (1982). But if the shipowner

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does not have to account for the high cost of harm, then the shipowner is less likely to engage in optimal efforts to prevent such disasters. See id.; Mark E. King, Note, In re Complaint of Armatur, S.A.: The Limitation of Liability Act and Maritime Environ-mental Disasters, 21 ENVTL. L. 405, 422 (1991). In other words, the way to get shipowners to pay atten-tion to their responsibilities is to hold them account-able for the high costs of harm caused by their activities.

Second, at the time of The Amiable Nancy, once a vessel sailed over the horizon, all contact between the ship and owners ashore ceased. Ships today, however, are no longer the autonomous, isolated entities that they once were. As detailed above, modern ships have available instantaneous and continuous communica-tions with the company office and agents ashore, the Coast Guard, port officials, and other ships.

Third, modern commercial transport of oil is unlike privateering. Privateers were permitted to engage in many activities that were prohibited, including committing acts that would normally amount to maritime torts. Exxon, on the other hand, is engaged in a commercial business that has no similar claim to immunity from tort liability. More-over, its transport of oil should not include the “ir-regularities and improper conduct” that were expected in privateering. The Amiable Nancy, 16 U.S. at 559.

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Finally, ship captains today pilot ships that are enormous compared to those in existence at the time of The Amiable Nancy. Modern container ships will soon carry up to 16,000 20-foot containers. In addition to piloting these enormous ships, captains may man-age as many as several hundred crew members. In order to run all of the operations on these ships, captains must maintain contact with the shore. As a result, captains of today are much like plant manag-ers of a land-based operation.

Like the selection of plant managers, shipowners will exercise optimal care over the selection of their ship masters if they know that they may be exposed to vicarious punitive damages by reason of the con-duct of such onboard managers.3 Indeed, punitive damages serve the purposes “of punishing the defen-dant, of teaching him not to do it again, and of deter-ring others from following his example.” WILLIAM L. PROSSER, THE LAW OF TORTS § 2, at 9 (4th ed. 1971). Punitive damage awards can also serve to capture some of the externalities associated with harms that

3 Even early maritime cases recognized that vicarious liability sends the right message to shipowner-employers, encouraging maritime employers to be careful about who they hire. See, e.g., In the City of Carlisle, 39 F. 807, 817 (D. Or. 1889) (stating “if owners do not wish to be mulct [sic] in damages for such misconduct, they should be careful to select men worthy to command their vessels”). The justification for the availability of vicarious punitive damages is even stronger today than in the past given the acknowledged potential for extreme environ-mental harm from dangerous cargos.

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are not captured by compensatory damage awards and for which shipowners would not otherwise be held accountable.

Because the vast majority of jurisdictions permit vicarious punitive damages to be awarded based on the actions of an employee who “was employed in a managerial capacity and was acting in the scope of employment,” RESTATEMENT (SECOND) OF TORTS § 909 (1979), punitive damages should be available in the same circumstances under maritime law. Maritime law ought to reflect the reality that the modern shipping industry bears many business similarities to land-based operations. Cf. Norwich Co. v. Wright, 80 U.S. 104, 122 (1871) (reasoning that shipping indus-try was analogous to any other industry that used corporate entities).

The punitive damages award here – as revised by the lower court – accurately reflects the relationship between shipowners and masters in the modern shipping industry. Moreover, it accurately reflects the reprehensibility of Exxon’s conduct in knowingly allowing a man with a serious substance abuse prob-lem to continue in his managerial capacity, eventually leading to the EXXON VALDEZ catastrophe.

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CONCLUSION

The judgment of the Court of Appeals should be affirmed.


PAUL EDELMAN Counsel of Record RICHARD M. GARBARINI KREINDLER & KREINDLER LLP 100 Park Avenue New York, N.Y. 10017-5590 (212) 687-8181

Counsel for Amici Curiae

No. 07-219 ================================================================

In The



Petitioners, v.


Respondents.

--------------------------------- ♦ ---------------------------------



--------------------------------- ♦ ---------------------------------

BRIEF AMICUS CURIAE OF EXPERTS ON ALCOHOL IN THE WORKPLACE


--------------------------------- ♦ ---------------------------------

VANYA HOGEN COLETTE ROUTEL Counsel of Record JACOBSON, BUFFALO, MAGNUSON, ANDERSON & HOGEN 1360 Energy Park Drive Suite 210 St. Paul, Minnesota 55108 (651) 644-4710




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TABLE OF CONTENTS

Page

INTEREST OF THE AMICI CURIAE................... 1

INTRODUCTION AND SUMMARY OF THE ARGUMENT ....................................................... 3

ARGUMENT........................................................... 5

I. Exxon Misrepresents Its Alcohol Policy and Its Enforcement Of That Policy ........... 5

A. The Inadequacies of Exxon’s Alcohol Policy...................................................... 6

B. Exxon Made No Attempt To Enforce Its No-Alcohol-In-The-Workplace Rule ...... 10

1. Captain Hazelwood Drank Aboard the EXXON YORKTOWN After 1985................................................... 11

2. Captain Hazelwood Drank Aboard the EXXON VALDEZ ....................... 13

3. Captain Hazelwood Returned To The EXXON VALDEZ Drunk Just Days Before The Grounding ............ 15

II. This Case Is Not The Appropriate Vehicle To Consider Whether Or Not To Craft A Special Punitive Damages Rule For Mari-time Torts ..................................................... 17

A. While The Oil Spill Occurred At Sea, It Could Have Been Completely Pre-vented On Land ..................................... 18

B. Exxon Was Culpable and Reckless ....... 21

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Page

1. Exxon Knew That A Captain Drink-ing On-The-Job Posed Enormous Safety Risks...................................... 22

2. Exxon Failed To Provide Any Assis-tance To Captain Hazelwood While He Was Struggling With Problem Drinking ........................................... 24

3. Exxon’s Corporate Culture Toler-ated On-The-Job Drinking And Enabled Captain Hazelwood’s Ad-diction.............................................. 27

CONCLUSION..................................................... 30

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Page

FEDERAL STATUTES AND REGULATIONS

46 U.S.C. § 8502 .........................................................19

33 C.F.R. § 95.045 .........................................................7

46 C.F.R. § 15.812 .......................................................19

OTHER AUTHORITIES

Oddvar Arner, “The Role of Alcohol in Fatal Accidents Among Seamen,” 68(2) The British Journal of Addiction to Alcohol & Other Drugs (June 1973)...................................................22

Ronald Casper, “Drinking as Conformity: A Critique of Sociological Literature on Occu-pational Differences in Drinking,” 40(9) Journal of Studies on Alcohol (Sept. 1979)............28

Kaye Middleton Fillmore, “Occupational Drink-ing Subcultures: An Exploratory Epidemiologi-cal Study,” in Alcohol Problem Intervention in the Workplace (Paul M. Roman ed. 1990) ..............28

Michelle Fine, et al., “Cultures of Drinking: A Workplace Perspective,” Social Work (Sept. 1982) ........................................................................29

Robert G. Heath, “Group Psychotherapy and Alcohol Addiction,” 5 Quarterly Journal of Studies on Alcohol 555, 558 (1944-45) ...................20

Danielle Hitz, “Drunken Sailors and Others: Drinking Problems in Specific Occupations,” 24 Quarterly J. Stud. Al. (1973) .............................28

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Page

Stefanie Ritz-Timme et al., “What Shall we do with the Drunken Sailor? Effects of alcohol on the performance of ship operators,” 156 Forensic Science International 16 (2006) .........22, 23

Paul M. Roman, “Employee Alcoholism Pro-grams in Major Corporations in 1979: Scope, Change, and Receptivity,” in Prevention, In-tervention and Treatment: Concerns and Models (U.S. Dep’t of Health and Human Services 1982) .........................................................26

Paul M. Roman & Terry C. Blum, “Alcohol: A Review of the Impacts of Worksite Interven-tions on Health and Behavioral Outcomes,” The American Journal of Health Promotion (1996) .......................................................................26

William J. Sonnenstuhl & Harrison Trice, Strategies for Employee Assistance Programs: The Crucial Balance (1986) ................................2, 25

William J. Sonnenstuhl & Harrison Trice, “The Social Construction of Alcohol Problems in a Union’s Peer Counseling Program,” 17(3) The Journal of Drug Issues, Inc. 223 (Summer 1987) ..................................................................25, 28

William Sonnenstuhl, Samuel Bacharach & Peter Bamberger, Member Assistance Pro-grams in the Workplace: The Role of Labor in the Prevention and Treatment of Substance Abuse (1994) ..............................................................2

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Page

William J. Sonnenstuhl, Working Sober: The Transformation of an Occupational Drinking Culture (1996) ...............................................2, 26, 28

Harrison Trice & Paul Roman, Spirits and Demons At Work: Alcohol and Other Drugs on the Job (2d ed. 1978) ..........................................25

Harrison M. Trice & William J. Sonnenstuhl, 51(3) “On the Construction of Drinking Norms in Work Organizations,” Journal of Studies on Alcohol 201 (1990) ..........................25, 30

Harrison M. Trice, The Alcoholic Employee and His Supervisor: A General Management Problem....................................................................28

1

INTEREST OF THE AMICI CURIAE1

Amici curiae Dr. Paul M. Roman and Dr. William J. Sonnenstuhl are experts on alcohol abuse and treatment in the workplace. They have conducted numerous studies to ascertain the causes of work-place problem drinking, and to determine the struc-ture, content, and effectiveness of various employer alcohol policies and employee assistance programs. Dr. Roman and Dr. Sonnenstuhl have published extensively on alcohol and drug abuse, and have spent their professional careers teaching related courses.

Dr. Paul M. Roman has been a professor of soci-ology for 40 years and is currently the Distinguished Research Professor of Sociology at the University of Georgia and an adjunct professor at the Center for Alcohol Studies at Rutgers University. Throughout his career, Dr. Roman has conducted extensive re-search on alcohol abuse and treatment. He has been awarded more than $15 million in extramural grants to fund this research, and he has written more than 100 books and journal articles on alcohol-related issues. Because he is one of the nation’s leading experts on substance abuse, Dr. Roman has served as an Editor-in-Chief or Editorial Board member for

1 Pursuant to Supreme Court Rule 37.6, the amici curiae state that no counsel for a party authored this brief in whole or in part and that no person or entity other than the amici and its counsel contributed monetarily to the preparation or submission of this brief.

2

numerous journals that publish peer-reviewed re-search, including the Journal of Employee Assistance Research, the Journal of Workplace Behavioral Health, the Journal of Substance Abuse Treatment, the Alcohol, Health and Research World, and the Labor Management Alcoholism Journal.

Dr. William J. Sonnenstuhl is an Associate Pro-fessor and Director of Graduate Studies at the School of Industrial and Labor Relations at Cornell Univer-sity. He is also the Associate Director of the R. Brink-ley Smithers Institute for Alcohol-Related Workplace Studies, where he conducts research on substance abuse in the workplace. Dr. Sonnenstuhl is a prolific author of dozens of books, chapters and articles relating to substance abuse, including Working Sober: The Transformation of an Occupational Drinking Culture (1996); Strategies for Employee Assistance Programs: The Crucial Balance (with H. Trice) (2d ed. 1990); and Member Assistance Programs in the Work-place: The Role of Labor in the Prevention and Treat-ment of Substance Abuse (with Samuel Bacharach and Peter Bamberger) (1994).

Amicus curiae the Employee Assistance Profes-sionals Association (EAPA) is the leading membership organization for employee assistance professionals. Founded in 1971, the EAPA is a 501(c)(3) non-profit organization, whose mission is to promote the highest standards of employee assistance practice and the continuing development of employee assistance professionals, programs and services. Its membership includes substance abuse practitioners, professional

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counselors and therapists, social workers, occupa-tional health and wellness professionals, peer counsel-ors, human resource professionals, risk management experts, benefits specialists and others dedicated to protecting and enhancing employee and workplace effectiveness through prevention, identification and resolution of personal and productivity issues, includ-ing alcohol, drug, health, marital, family, financial, legal, emotional, stress-related, and other personal or behavioral concerns. The EAPA sets and publishes professional standards for employee assistance pro-grams, sponsors the Certified Employee Assistance Professional (CEAP®) credential, publishes the Jour-nal of Employee Assistance, hosts professional confer-ences, and offers training and other resources to fulfill its mission.

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INTRODUCTION AND SUMMARY OF THE ARGUMENT

Exxon argues that it should not be held liable for punitive damages for the massive oil spill that re-sulted when its supertanker, the EXXON VALDEZ, struck Bligh Reef in Prince William Sound, Alaska. In so arguing, Exxon attempts to absolve itself from the actions of its managerial employee – Captain Joseph Hazelwood – whose inebriated state was the cause of the spill. Exxon claims that its alcohol policies “con-formed to industry standards,” and that “employers who implement and enforce proper polices should not be subject to . . . punitive damages” for the actions of

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rogue employees.2 It also asks this court to craft a general rule limiting the availability of punitive damages under maritime law to those cases where the employer itself acts culpably or recklessly. This rule is supposedly necessary because employers cannot closely monitor their employees’ actions while at sea.

But Exxon did not have an alcohol policy that “conformed to industry standards.” In reality, Exxon’s “policy” only consisted of two rules: first, no drinking aboard ship, and second, no drinking within four hours of going on watch.3 Importantly, Exxon did not design the policies and procedures necessary to implement these rules. And in practice, Exxon did not enforce them. For years, Captain Hazelwood repeat-edly drank just prior to boarding and while aboard the EXXON VALDEZ and the EXXON YORKTOWN, and Exxon knew about it. Yet Exxon did not relieve him of duty or take any other disciplinary actions against him.

The facts of this case also make it an inappropri-ate vehicle for this Court to determine whether or not to craft a special rule limiting punitive damages in maritime cases. First, on the night of the spill, Cap-tain Hazelwood was already intoxicated when he boarded the EXXON VALDEZ. Thus, everything Exxon needed to do to prevent this disaster could

2 Petrs. Br. 9-10, 15. 3 JA655; DX3614.

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have been done on dry ground, where there is no doubt that Exxon could and should have properly supervised its employees. Second, Exxon’s actions were culpable and reckless. Top company officials knew that Captain Hazelwood was drinking on the job, yet no disciplinary action was taken despite the obvious and serious safety risk. Exxon did not assist Captain Hazelwood in overcoming his addiction, even though it was in a position to do so. Rather, Exxon fostered a company culture that tolerated on-the-job drinking, thereby enabling and exacerbating Captain Hazelwood’s alcohol problems.

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ARGUMENT

I. Exxon Misrepresents Its Alcohol Policy and Its Enforcement Of That Policy

In its petition for certiorari, Exxon claimed that this case was about whether “punitive damages [can] be imposed under maritime law against a shipowner . . . even when the [employee] conduct [at issue,] was contrary to polices established and enforced by the owner.”4 Similarly, Exxon claims in its opening brief that its alcohol policies “conformed to industry stan-dards,” and that “employers who implement and enforce proper polices should not be subject to . . . punitive damages.”5 At the time of the spill, however,

4 Exxon Cert. Petition at i. 5 Petrs. Br. 9-10, 15.

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Exxon did not have an alcohol policy that conformed to industry standards, and regardless, it did not enforce that policy.

A. The Inadequacies of Exxon’s Alcohol

Policy

Exxon’s alcohol policy, as it existed in 1989, primarily consisted of two basic rules. The first rule, contained in a document entitled “Policy Statement on Employee Alcohol and Drug Use,” stated as fol-lows:

Possession, use, distribution, or sale of alco-holic beverages on Company premises is not allowed without prior approval of appropri-ate senior management. Being unfit for work because of use of drugs, or alcohol is strictly prohibited and is grounds for termination of employment.6

Exxon Shipping President Frank Iarossi confirmed this policy in his trial testimony, and acknowledged that “company premises” included ships.7 The second alcohol-related rule was based on Coast Guard regu-lations, and provided that officers and crew “shall not perform or attempt to perform any scheduled duties

6 DX3614. 7 Tr. 2891 (all such references are to the trial transcript).

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within four hours of consuming any alcohol” and “shall not be intoxicated at any time” while onboard.8

It has long been common knowledge, however, that a “policy” must consist of more than printed rules. It must include a course or method of action. For safety-sensitive positions, a standard alcohol policy, even in 1989, would have included procedures to determine whether an employee was fit for duty, procedures for reporting violations of the alcohol policy, procedures governing enforcement of that policy, and finally, procedures for monitoring employ-ees returning to work after undergoing alcohol or drug treatment. But Exxon’s alcohol “policy” con-sisted only of bare bones rules; there were no written procedures to explain how these rules would be implemented.

1. Fit for duty. The captain and crew of a super-tanker hold safety-sensitive positions. Even the smallest amount of alcohol can impair their ability to perform their job, and endanger the ship and the lives of everyone on it. For that reason, a standard alcohol policy would have established a procedure for ensur-ing that each member of the crew was fit to assume his post. For example, Exxon could have required that each crew member pass through a check point prior to boarding the ship. At that check point, an Exxon official could have evaluated their fitness for duty through simple observation and by asking

8 JA324; Tr. 1135-36. See also 33 C.F.R. § 95.045.

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questions. If that official noticed bloodshot eyes, smelled alcohol on the crew member’s breath, or detected slurred speech, an individual (non-random) alcohol test9 could then be used to confirm or disap-prove the suspicion of alcohol use.10 Exxon’s alcohol policy did not include any procedures relating to employee fitness for duty.

2. Reporting violations and enforcement proce-dures. A standard alcohol policy would also have included a procedure for reporting and confirming violations of the no-alcohol rule. That procedure could have mandated that employees witnessing or suspect-ing violations of the no-alcohol rule report such viola-tions to the company. The procedure should have spelled out the person or persons designated to receive reports and should have guaranteed confidentiality to

9 Amicus curiae American Maritime Safety, Inc.’s lengthy discussion of the legality of random alcohol and drug testing in 1989 is a red herring. The parties to this brief are not advocates of random alcohol and drug testing. But such testing is not the only means an employer has for determining whether its employees are fit for duty, nor is it the most effective. Personal observation, proper supervision, and performance testing should be used for all employees in safety sensitive positions. 10 Obviously, this is not the only way for determining whether an employee is fit for duty. Today, for example, an employer may wish to have all ship officers take a computerized test when reporting for duty, which could measure each officer’s judgment and response time. This test could be an effective means of detecting not only any impairment caused by alcohol or drug use, but also other common problems such as fatigue, abnormal levels of stress, or mental-health issues.

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the informant making the report, thereby protecting him from retaliatory action. A standard alcohol policy should also have explicitly stated the progressive disciplinary actions (verbal warnings, written notices, suspension, and discharge) to be taken by manage-ment if the no-alcohol rule was violated. Exxon’s alcohol policy did not include any procedure for reporting violations,11 and with respect to enforce-ment, it simply claimed that violation of the rule would be “grounds for termination.”12

3. Monitoring procedures. Finally, a standard alcohol policy would have established some monitor-ing program for employees who returned to work after completing an alcohol treatment program. Typically, an employee would meet with his desig-nated monitor, who would reiterate the company’s alcohol rules. Then, that monitor would meet regu-larly with the employee to discuss how he was read-justing to his job, and to address any concerns. The length of this monitoring period could be tailored to the particular employee, depending on the depth of his substance abuse problem and the type of position he held within the company. Usually, monitoring programs last for a minimum of 90 days to one year. Some companies in the maritime industry, however, required far longer monitoring periods, even in

11 Additionally, testimony established that Exxon did not encourage reporting violations. JA434, 707, 721-22, 742-43. 12 DX3614.

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1989.13 Exxon’s alcohol policy did not include any monitoring procedures.

Without formal procedures to determine fitness for duty, to mandate the reporting of on-the-job drinking, and to establish monitoring of troubled employees, an employer is much less likely to detect employees with substance abuse problems. Exxon’s alcohol “policy” presented only a false front of rules prohibiting certain alcohol use by its employees. It did not contain any written policies or procedures explaining how these rules would be implemented and enforced. Because many of Exxon’s employees hold safety-sensitive positions, its failure to create these procedures endangered public safety.

B. Exxon Made No Attempt To Enforce Its

No-Alcohol-In-The-Workplace Rule

Even without formal procedures, if an employee’s alcohol problem is severe and extends over a long period of time, company management will eventually hear about it, whether that awareness comes from piecemeal reports or only after a workplace accident. Obviously, once an employer knows that an employee has been drinking on the job or reporting to work

13 For example, Jerry Aspland, the president of ARCO Marine, Inc., testified at trial that in his company, a captain who had returned to work after attending a substance abuse treat-ment program was monitored for the next seven years. JA284-85, JA368, JA369-71, 68sa.

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intoxicated, it must then enforce its no-alcohol policy by imposing progressive disciplinary actions or ter-minating the employee.

Because Captain Hazelwood’s drinking problem was severe, even without formal reporting procedures or guarantees of confidentiality, some Exxon employ-ees14 reported his on-the-job drinking. What follows is a brief description of three such reports, taken from materials in the joint appendix filed with this Court. These reports illustrate that because Exxon had no procedures in place for implementing its no-alcohol rule, employees did not know to whom they should report violations of the policy. Reports were therefore made in a haphazard manner to individuals who did not believe it was their responsibility to investigate the incidents. Ultimately, although these reports made their way up the chain of command to top Exxon officials, no one took any disciplinary action against Captain Hazelwood.

1. Captain Hazelwood Drank Aboard

the EXXON YORKTOWN After 1985

Jim Shaw was a port steward who regularly boarded Exxon vessels. He testified that on several

14 Those reports were not made by his fellow crew members. Crew members were reluctant to report alcohol violations by their commanding officers. Tr. 1631, 2153, 2175, 2207. As noted earlier, Exxon did not have any procedures in place to ensure confidentiality for the reporter and thus, reporting an officer “could come back to haunt you.” Tr. 2183.

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separate occasions while aboard the EXXON YORK-TOWN, he smelled “the distinct odor of alcohol on [Hazelwood’s] breath.”15 Shaw reported this informa-tion to William Sheehy, the port captain of the Gulf Coast fleet, noting that Captain Hazelwood “had fallen off the wagon,” and that he had seen him “drunk.”16

Rather than investigate this report himself, Captain Sheehy tried to refer the matter to other Exxon employees. The first was Captain Pierce, who advised Sheehy that if Hazelwood was drinking again, he would be in serious trouble.17 Captain Pierce did not have any supervisory authority over Captain Hazelwood, however, and thus could not take any disciplinary action. Sheehy also contacted Dwight Koops, the Gulf Coast fleet manager. Koops did have supervisory authority over Captain Hazelwood, but rather than initiate an investigation or take enforce-ment action, Koops testified that he told Sheehy to go over to the EXXON YORKTOWN unannounced and “spend as much time as possible on board the ship and see if things are okay.” Sheehy claimed he spoke with Captain Hazelwood once, but admitted that he did not launch an investigation, and “did not specifi-cally ask anybody if they had seen Captain Hazel-wood drunk or anything like that.”18 Koops never

15 JA410, 413-14, 418, 422-24. 16 JA847-50. 17 JA852. 18 JA851.

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spoke with Captain Hazelwood. Exxon’s no-alcohol rule was not enforced.

2. Captain Hazelwood Drank Aboard

the EXXON VALDEZ

Shortly thereafter, Exxon transferred Captain Hazelwood to fill a vacancy on the West Coast.19 This new assignment – to the EXXON VALDEZ – meant that Hazelwood would be piloting a larger ship on more treacherous routes. Just prior to the transfer, Koops told Harvey Borgen, his counterpart on the West Coast, that Hazelwood had a “clean bill of health” as far as drinking was concerned.20 Likewise, Sheehy spoke to Captain Andre Martineau, a port captain on the West Coast. Martineau had heard rumors about Hazelwood’s drinking and asked Sheehy about it.21 Sheehy simply responded by saying that Hazelwood’s performance had been “above average,” even though Hazelwood now ranked near the bottom of all ship captains.22

With the increased stress of operating a larger ship on more dangerous routes, Captain Hazelwood’s relapse continued. In May 1988, an assistant repair superintendent named Steve Day heard Captain Hazelwood order Henry Weinhardt’s beer over a

19 JA427-30, 437-38. 20 Tr. 3630. 21 JA428-30, 860-61. 22 JA861-62.

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company walkie-talkie while the EXXON VALDEZ was docked in Portland.23 Day later saw empty Henry Weinhardt’s beer bottles on board the vessel.24

Day reported these violations to his boss, Herb Leyendecker, a repair superintendent from Houston headquarters.25 Leyendecker in turn reported the incident up the chain of command to West Coast Fleet Manager Harvey Borgen.26 Borgen did nothing.27 Day also told Ship Group Coordinator Paul Myers, Cap-tain Hazelwood’s supervisor, about this incident.28 According to Hazelwood, Myers talked to him about it “as an aside,” and “just wanted to make sure that there was no violation of the alcohol policy.”29 When Hazelwood assured him there was no violation, Myers took no enforcement action and did not launch an investigation.30

23 JA708, 710-11. 24 JA725-26. 25 JA320-31, 712. 26 JA1065-66, 717-18, 949-50. 27 JA1073. 28 JA321-23. 29 JA718-19, 727. 30 JA322-23.

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3. Captain Hazelwood Returned To The EXXON VALDEZ Drunk Just Days Before The Grounding

Less than two weeks before the grounding, the EXXON VALDEZ was docked in San Francisco.31 Late one evening, a launch left the dock to transport Exxon personnel back to their vessels. Mary William-son, assigned to the EXXON GALVESTON, was aboard that launch as was Captain Hazelwood.32 During the short trip, Captain Hazelwood loudly demanded that Williamson convey insulting com-ments to the EXXON GALVESTON’s Captain Reeder. Williamson smelled alcohol on Hazelwood’s breath. She told him “maybe in the morning if you feel better, you can relay that message” yourself.33 When Captain Hazelwood arrived back on board the EXXON VAL-DEZ, however, he radioed the GALVESTON, calling Captain Reeder a “douche bag,” and a “scum bag.”34 In light of this incident, Mary Williamson approached Steve Day, the officer supervising repairs on the EXXON GALVESTON, and requested that Hazel-wood be investigated.35 Of course, Day already knew of Hazelwood’s drinking problems but had no super-visory authority over him. Day once again reported the incident to Captain Hazelwood’s immediate

31 JA736, 894. 32 JA694-95. 33 JA697. 34 JA329-30. 35 JA696-98, 705-06, 730-32.

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supervisor, Ship Group Coordinator Paul Myers. But yet again, neither Myers nor any other Exxon official enforced the no-alcohol rule.36

As these three incidents indicate, because Cap-tain Hazelwood’s alcohol abuse problems were so severe, even without procedures to require the report-ing of violations of the no-alcohol rule, several reports were in fact made to Exxon officials. Just from the three incidents described above, four on-shore officers of Exxon Shipping who were Hazelwood’s direct supervisors – Sheehy, Koops, Myers, and Borgen – had received reports about Hazelwood’s drinking. And yet, other than obtaining Hazelwood’s denials that there was any violation of the alcohol policy, none of them did anything to investigate the incidents or enforce the policy. Exxon was simply not an “em-ployer[ ] who implement[ed] and enforce[d] proper polices.”37 Rather, Exxon was an employer who, for years, allowed an employee who repeatedly violated federal law and the company’s own no-alcohol rule to continue in command of a supertanker.

36 JA332-36, 745-46. 37 Petrs. Br. 9-10, 15.

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II. This Case Is Not The Appropriate Vehicle To Consider Whether Or Not To Craft A Special Punitive Damages Rule For Mari-time Torts

Exxon asks this court to craft a special rule limiting the recovery of punitive damages in mari-time cases.38 Exxon argues that in the maritime setting, employee conduct should not be imputed to the employer absent “some level of culpability” on the part of the employer, or unless “the acts . . . were those of an unfit master and the owner was reckless in employing him.”39 This rule is supposedly required because employers cannot effectively supervise em-ployees while they are at sea.40

This court should not entertain Exxon’s request. As an initial matter, while the oil spill occurred at sea, it could have been completely prevented on land by stopping a noticeably intoxicated captain from boarding a supertanker. Thus, the main justification

38 Petrs. Br. 18-27. 39 Petrs. Br. 20. 40 Petrs. Br. 18, 20. Exxon also points to lower court deci-sions that justified a special maritime rule because ship captains need to be able to make split-second decisions, and imposing liability on the employer for those decisions would supposedly “result in hesitations and disastrous delays on the part of the master while he obtains advice and authority from his superiors many miles from the scene.” Petrs. Br. 24. Captain Hazelwood made no split-second decision here because Bligh Reef was a known, stationary hazard.

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for the creation of a special maritime rule for punitive damages is not implicated.

More importantly, even if this Court were to adopt the rule advocated by Exxon, it would not change the outcome of this case because Exxon was both independently culpable and reckless. During the years in which Captain Hazelwood was battling alcoholism, Exxon did not reach out at all to assist him in overcoming his addiction by referring him to its employee assistance program. Instead, Exxon enabled his behavior by fostering a culture of toler-ance to on-the-job drinking. Exxon also failed to remove Captain Hazelwood from his command even though company management knew he was drinking while on duty. Even small amounts of alcohol can impair a captain’s judgment and navigational skills. Exxon knew that, and more, Exxon knew that an accident involving a supertanker filled with crude oil could have devastating impacts. This was culpable, reckless conduct.

A. While The Oil Spill Occurred At Sea, It

Could Have Been Completely Prevented On Land

The disastrous oil spill that caused millions of dollars in damage occurred because Captain Hazel-wood, the only person authorized under federal law to steer the EXXON VALDEZ through Prince William

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Sound,41 was so drunk42 that he chose to put the ship on autopilot, leave the bridge, and return to his cabin, all just moments before a change in course was required to avoid Bligh Reef.43 Exxon admitted at trial, through a stipulation with the plaintiffs, that Captain Hazelwood’s decision to leave the bridge caused the oil spill:

The Exxon Defendants admit that Hazel-wood was negligent in leaving the bridge of the EXXON VALDEZ at or about 11:53 p.m., local time, that such negligence was a proximate cause of the Spill, and that the Exxon Defendants are responsible for this act of negligence.44

41 Coast Guard regulations require that vessels passing through Prince William Sound be directed by a person holding a Prince William Sound pilotage endorsement. PX1793 (SER 280). Captain Hazelwood was the only member of the EXXON VAL-DEZ’s March 23, 1989 crew that possessed such an endorse-ment. 42 In its brief, Exxon preposterously claims that Captain Hazelwood was not drunk on the night in question. Petrs. Br. 9 n.3. Yet Exxon’s top officials admitted that he was drunk in testimony before Congress. Tr. 1589-90 (Exxon CEO Lawrence Rawl testified to the Senate that Hazelwood’s “impairment apparently . . . created the spill”); PX184 (Rawl admits on Face the Nation that Hazelwood was not on the bridge at the time of the accident because “he was drunk”). 43 46 U.S.C. § 8502; 46 C.F.R. § 15.812. See also JA801-02; Tr. 1590-91. 44 JA894.

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No captain would have left the bridge at this critical juncture if his or her reasoning were not significantly impaired by alcohol. And Captain Hazelwood’s rea-soning was undeniably impaired on that night.

On March 23, 1989, at 9:21 p.m., Hazelwood boarded the EXXON VALDEZ, which was loaded with a cargo of more than 53 million gallons of oil.45 Before boarding, he drank between 10 and 18 single shots of vodka in port bars.46 As a result, his blood alcohol level at the time of the accident was approximately 0.241, which is six times the legal limit.47

One of the main justifications proffered for imposing a special punitive damages rule in maritime cases is that employers cannot properly supervise their employees while at sea. But most problem drinking in the maritime industry occurs when ships are in port. Robert G. Heath, “Group Psychotherapy and Alcohol Addiction,” 5 Quarterly Journal of

45 PX18; PX86 (SER 137); JA1248, 1253; Tr. 422, 898, 4729. 46 JA249-50, 252-55, 334-35; Tr. 202-04, 2729, 2730, 2766-67. 47 When the Coast Guard and the Alaska Department of Environment arrived at the scene of the accident at approxi-mately 11:50 a.m. the next morning, they were still able to smell alcohol on Hazelwood’s breath. JA266-67; JA268-71, 489-92, 1015-16. This observation gave the Coast Guard reasonable suspicion to perform a blood alcohol test. That test indicated that Captain Hazelwood presently had an alcohol level of 0.61, which, based on standard retrograde analysis, established that his blood alcohol level was approximately .241 at the time of the accident. JA575-79.

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Studies on Alcohol 555, 558 (1944-45). And here, Captain Hazelwood was intoxicated before he boarded the ship. As explained in section I(a) infra, Exxon should have had polices and procedures in place to determine whether an employee in a safety-sensitive position was fit for duty. This accident was caused by Exxon’s failure to craft and enforce those policies, and thus, its failure to supervise even its employees’ land-based actions. Furthermore, Exxon had numerous prior opportunities to relieve Captain Hazelwood of his command due to alcohol policy violations that occurred while the EXXON YORKTOWN and the EXXON VALDEZ was in port. Under these circum-stances, it is entirely appropriate to hold Exxon to the same punitive damages standard that generally applies in all tort actions.

B. Exxon Was Culpable and Reckless

Exxon knew that it was dangerous to have a captain with a drinking problem commanding a supertanker.48 Exxon also knew that a major oil spill in Prince William Sound would have devastating effects on the local community.49 Yet during the years in which Captain Hazelwood was battling alcoholism, Exxon did not reach out at all to assist him in over-coming his addiction by referring him to its employee assistance program. Instead, Exxon enabled his

48 Pet. App. 121a-122a (District Court order). 49 Id.

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behavior by fostering a culture of tolerance to on-the-job drinking.

1. Exxon Knew That A Captain Drink-

ing On-The-Job Posed Enormous Safety Risks

Exxon knew that Hazelwood was repeatedly drinking on the job, yet it allowed him to continue to command supertankers.50 This is extraordinarily reckless behavior because even small quantities of alcohol can have a significant impact on nautical performance.

Alcohol is reported to be involved in up to 40% of all U.S. fatalities on the water. Stefanie Ritz-Timme et al., “What Shall we do with the Drunken Sailor? Effects of alcohol on the performance of ship opera-tors,” 156 Forensic Science International 16 (2006). See also Oddvar Arner, “The Role of Alcohol in Fatal Accidents Among Seamen,” 68(2) The British Journal of Addiction to Alcohol & Other Drugs (June 1973) (noting that seafaring ranked higher than any other occupational group with respect to fatal accidents in Norway, and determining, after studying official governmental reports, that at least 33% of the de-ceased were intoxicated when the fatal accident occurred). While many lay people believe that the impact of alcohol on drivers of automobiles is more

50 Id. See also Pet. App. 4a (Ninth Circuit’s 2006 order); Pet. App. 83a (Ninth Circuit’s 2001 order).

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severe than its impact on ship operators, the opposite is actually true. One expert recently explained:

Whereas the operations of drivers in road traffic are highly automated, skippers and commercial ship operators are confronted . . . with unpredictable outside influences such as weather and current. Options to react in case of imminent danger are limited in water traffic. Larger vessels may have stopping distances that take up kilometers and need a long time for course changes . . . The advanc-ing technologic and electronic upgrade on-board of modern vessels requires a high level of intellectual capability and concentration. The complex process from the acquisition of information to adequate manoeuvres in wa-ter traffic demands a high degree of target-ing foresight, attentiveness, flexibility, power of concentration, and sense of responsibility, which all may be impaired even by low [blood alcohol levels]. . . .

Ritz-Timme (2006).

Recently, a study was conducted to evaluate nautical performance in a ship-piloting simulator by captains before and after alcohol consumption. The study established that even very low blood alcohol levels bear high risks in water traffic. The most affected actions were the analysis of situations, foresight, concentration, navigation, risk disposition, and accurateness. None of the participants were able to operate the simulated ship with adequate safety after the ingestion of alcohol. Ritz-Timme (2006). This

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study demonstrates that given the effect of alcohol on nautical performance, the maritime industry needs at least as much incentive as other industries to closely supervise their employees. For that reason, this Court should not limit the availability of punitive damages in the maritime setting.

Exxon officials acknowledged that an alcoholic captain presented “a potential for a disaster,”51 since the captain “is the most critical member of the crew.”52 To make matters worse, Exxon was well aware that an accident could have enormous implications if it occurred in Prince William Sound, because a major oil spill could not be contained in that area. Under these circumstances, it is obvious that Exxon employed an “unfit master” and that Exxon, as “the owner[,] was reckless in employing him.”53 Thus, even if this Court were to apply the special maritime rule that Exxon is advocating for, Exxon would not prevail.

2. Exxon Failed To Provide Any Assis-

tance To Captain Hazelwood While He Was Struggling With Problem Drinking

The principal means of helping alcoholic workers is through an employee assistance program (EAP). An EAP identifies “troubled employees,” (e.g., problem

51 JA530-31. 52 JA680, 692, 844-45, 869-70, 889, 898-899, 957. 53 Petrs. Br. 20.

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drinkers, drug users, etc.) motivates them to resolve their problems, and when necessary, either provides them with direct services or refers them to in-patient treatment facilities or community-based organiza-tions such as Alcoholics Anonymous.

The core technology of an EAP is a strategy referred to as “constructive confrontation.” Construc-tive confrontation requires that supervisors confront employees with evidence of their unsatisfactory job performance, coach them on ways to improve their work, urge them to seek help through the EAP, and, at the same time, emphasize to them the job conse-quences of continued poor performance. If construc-tive confrontation is used in conjunction with progressive stages of discipline, the employee’s natu-ral tendency to deny his addiction is gradually dimin-ished until he finally recognizes the need to seek help. See, e.g., William J. Sonnenstuhl & Harrison Trice, Strategies for Employee Assistance Programs: The Crucial Balance (1986); Harrison Trice & Paul Roman, Spirits and Demons At Work: Alcohol and Other Drugs on the Job (2d ed. 1978).

Several studies have been conducted to deter-mine the effectiveness of constructive confrontation in a variety of work settings. These studies conclude that when properly implemented, an EAP program is very effective. William J. Sonnenstuhl & Harrison Trice, “The Social Construction of Alcohol Problems in a Union’s Peer Counseling Program,” 17(3) The Journal of Drug Issues, Inc. 223 (Summer 1987); Harrison M. Trice & William J. Sonnenstuhl, 51(3)

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“On the Construction of Drinking Norms in Work Organizations,” Journal of Studies on Alcohol 201 (1990); Paul M. Roman & Terry C. Blum, “Alcohol: A Review of the Impacts of Worksite Interventions on Health and Behavioral Outcomes,” The American Journal of Health Promotion (1996). In fact, the typical recovery rate for employees using EAP pro-grams is 70% or better. William J. Sonnenstuhl, Working Sober: The Transformation of an Occupa-tional Drinking Culture (1996).

EAPs have been in existence for decades, and by 1979, a majority of Fortune 500 companies had created effective programs. E.g., Paul M. Roman, “Employee Alcoholism Programs in Major Corpora-tions in 1979: Scope, Change, and Receptivity,” in Prevention, Intervention and Treatment: Concerns and Models (U.S. Dep’t of Health and Human Ser-vices 1982). While Exxon had an EAP in theory, it never referred Captain Hazelwood to its program. Instead, in 1985, a friend and fellow Exxon employee, Captain Pierce, told Hazelwood that he had a drink-ing problem and told him to “see what you can do to fix it up.” Captain Hazelwood had to find a rehabilita-tion program in the Yellow Pages. Even though he completed the 28-day treatment program, he may never have actually reached the realization that he was an alcoholic without the assistance of con-structive confrontation to overcome his denial. He “dropped out” of the outside treatment facility’s

27

aftercare program54 fairly quickly, and began drinking once again.55 Then, although Hazelwood continued drinking for the next three years, Exxon officials never referred him to their EAP, never again suggested that he seek treatment for his disease, and left him in command of a supertanker even though they “knew that he was drinking and driving.”56 Instead, Exxon waited to act until after the oil spill, and then, simply fired Hazelwood for violating the company’s alcohol policy.57

3. Exxon’s Corporate Culture Tolerated

On-The-Job Drinking And Enabled Captain Hazelwood’s Addiction

Drinking behavior is learned within the cultural context of a group. Groups establish norms, ration-ales, and social controls about how, when, and where to drink. The workplace is an important place where drinking norms can be established because practi-cally everyone wants to work, and most people spend

54 Exxon’s EAP did not have its own aftercare program. In 1986, Exxon Shipping Company’s Medical Director, Dr. Wrendell Nealy, told his supervisor that he would like to establish a company aftercare program “to give added motivation and support to people in recovery.” The response was “that’s not our job,” and thus, Exxon never created such a program. Tr. 1946-48. 55 JA285, 413-15, 418, 562-63, 567-71, 647-50, 693-98, 708-11, 728-33, 736. 56 Pet. App. 154a. 57 JA198sa.

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more time working then they do with their own families. See, e.g., Ronald Casper, “Drinking as Con-formity: A Critique of Sociological Literature on Occupational Differences in Drinking,” 40(9) Journal of Studies on Alcohol (Sept. 1979); Danielle Hitz, “Drunken Sailors and Others: Drinking Problems in Specific Occupations,” 24 Quarterly J. Stud. Al. 496 (1973).

Most workplaces develop temperate drinking cultures that discourage heavy consumption of alco-holic beverages and confine all drinking to leisure time. A small minority of workplaces, however, de-velop intemperate cultures, where heavy drinking is seen as “normal” rather than “pathological.” In these companies, the consumption of alcohol, even on-the-job, is tolerated by fellow employees and manage-ment. Oftentimes, drinking is actually seen as per-forming useful functions, such as easing group relations, establishing greater intimacy, or activating fraternalism. Sonnenstuhl, Working Sober (1996); Kaye Middleton Fillmore, “Occupational Drinking Subcultures: An Exploratory Epidemiological Study,” in Alcohol Problem Intervention in the Workplace (Paul M. Roman ed. 1990); Sonnenstuhl & Trice, “The Social Construction of Alcohol Problems” (1987). Thus, fellow employees are reluctant to report their colleagues’ drinking problems and supervisors refuse to act on any reports that are made. Harrison M. Trice, The Alcoholic Employee and His Supervisor: A General Management Problem 341-42 (Attributing gap between alcohol policies and actual practice of

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supervisors to “strong group feeling among his imme-diate subordinates that drinking problems should be ‘kept between the boys’ ”).

Workplaces where on-the-job drinking is toler-ated are especially problematic for individuals with existing alcohol problems. Workers returning from detoxification find themselves excluded from social groups by virtue of their abstinence from alcohol. This makes long-term rehabilitation that much more difficult. Michelle Fine, et al., “Cultures of Drinking: A Workplace Perspective,” Social Work 436 (Sept. 1982).

Exxon was one of those few companies with a culture that tolerated on-the-job drinking. The EXXON VALDEZ, for example, openly hosted parties, attended by almost all ship personnel, where liquor was present. The crew kept liquor in their cabins.58 They shared drinks with each other on board the ship, on board launches returning to the ship, and in shipyards.59 Officers confiscated bottles from the crew only to drink them themselves.60 Exxon’s own Valdez agent repeatedly transported crew members to and from bars, often returning them to the Exxon tankers “noticeably drunk.”61 And when Captain Hazelwood returned to work after attending an out-patient

58 JA568-71; Tr. 1406-09. 59 JA231-33, 236-37, 562-63, 648-49. 60 JA227-30. 61 JA746-48, 750.

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treatment program, his supervisor actually held his back-to-work meeting at a bar, and ordered a beer.

Exxon’s culture of tolerance to on-the-job drink-ing made its conduct in this case that much more culpable. The company itself not only failed to provide Captain Hazelwood with assistance through its EAP, but company culture actually served as an “enabler” of Hazelwood’s alcoholism, and limited his chances for recovery. Trice & Sonnenstuhl (1990). That behavior was reckless and it warrants no special rule absolving Exxon or any other company from punishment.

--------------------------------- ♦ ---------------------------------

CONCLUSION

For the foregoing reasons, punitive damages were properly imposed against Exxon, and we urge this Court to affirm.


VANYA HOGEN COLETTE ROUTEL Counsel of Record JACOBSON, BUFFALO, MAGNUSON, ANDERSON & HOGEN 1360 Energy Park Drive Suite 210 St. Paul, Minnesota 55108 (651) 644-4710

No. 07-219

IN THE

____________


Petitioners, v.


____________


____________

BRIEF AMICUS CURIAE OF PROFESSOR THOMAS J. SCHOENBAUM IN SUPPORT OF

RESPONDENTS ____________

Thomas J. Schoenbaum Counsel of Record, Pro Se

INTERNATIONAL CHRISTIAN UNIVERSITY

ERB 11, Room 229 3-10-2 Osawa, Mitaka shi Tokyo, 181-8585 Japan 81-3-3483-7067 January 25, 2008

QUESTIONS PRESENTED

1. May punitive damages be imposed under maritime law against a shipowner for the conduct of a ship’s master at sea, absent a finding that the owner directed, countenanced, or participated in that conduct, and even when the conduct was contrary to policies established and enforced by the owner?

2. When Congress has specified the criminal and civil penalties for maritime conduct in a controlling statute, here the Clear Water Act, but has not provided for punitive damages, may judge-made federal maritime law expand the penalties Congress provided by adding a punitive damages remedy?

3. Is this $2.5 billion punitive damages award within the limits allowed by federal maritime law?

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TABLE OF CONTENTS

INTEREST OF AMICUS CURIAE .....................................1

SUMMARY OF THE ARGUMENT ....................................2

ARGUMENT ............................................................................3

I. The General Maritime Law Contains No Special Rules for the Award of Punitive Damages that are Distinct from the Rules of the Common Law, and No Reason Exists for this Court to Create Such Rules..........................................................3

II. Punitive Damages Are Available Under the General Maritime Law with Respect to the Conduct of a Ship’s Master at Sea Under the Doctrine of Vicarious Liability. ...................................8

A. There is No Reason Why This Court Should Adopt a Special Maritime Vicarious Liability Rule for Masters of Ships. .............................................................................8

B. Under the General Maritime Law, the Court of Appeals Applied the Correct Rule for Vicarious Liability for Punitive Damages .....................................................12

C. Restatement § 909(c) Should Be Interpreted to Render a Business Entity Vicariously Liable for Punitive Damages Assessed Because of the Actions of a Ship Master and Other Agents Employed in a Managerial Capacity.......................................................................18

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III. Congress Has Not Foreclosed the Imposition of Punitive Damages in the Case at Bar. ....................23

IV. The Size of the Award of Punitive Damages in the Case at Bar is Within the Limits Allowed by Federal Maritime Law. ...............................................30

CONCLUSION ......................................................................34

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CASES American Soc'y of Mechanical Eng'rs v. Hydrolevel

Corp., 456 U.S. 556 (1982).......................................................... 17 Askew v. American Waterways Opers., 411 U.S. 325, 336 (1973) ................................................. 25 Atl. Sounding Co. v. Townsend, 496 F.3d 1282 (11th Cir. 2007) ..................................... 29 Banana Sers. Inc. v. M/V Fleetwave, 911 F.2d 519, 521 (11th Cir. 1990)................................. 9 CEH, Inc. v. F/V Seafarer, 70 F.3d 694 (1st Cir. 1995)...................................... passim Chamberlain v. Chandler, 5 F. Cas. 413 (C.C.D. Mass. 1823) .................................. 6 Churchill v. F/V Fjord, 892 F.2d 763, 772 (9th Cir. 1988) ................................... 7 Complaint of Merry Shipping, 650 F.2d 622 (5th Cir. 1981) ............................................ 7 Conner v. Aerovox, Inc., 730 F.2d 835 (1st Cir. 1984)........................................... 26 Continental Oil Co. v. Bonanza Corp., 706 F.2d 1365 (5th Cir. 1983) (en banc)...................... 10 Coryell v. Phipps, 317 U.S. 406, 410 (1943) ................................................. 10 Day v. Woodworth, 54 U.S. 363 (1851) .......................................................... 5, 6

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Empresa Lineas Maritimas S.A. v. United States,

730 F.2d 153 (4th Cir. 1984) .......................................... 10 Gallagher v. The Yankee, 9 F. Cas. 1091 (D.C. Cal. 1859), aff’d, 30 F. Cas. 781

(C.C. Cal. 1859)................................................................... 6 Gamma-10 Plastics, Inc., v. American President Lines, 32 F.3d 1244, 1256 (8th Cir. 1994)................................. 7 Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974) ................................................. 18 Glynn v. Roy Al Boat Management Corp., 57 F.3d 1495 (9th Cir. 1995) .......................................... 28 Gould v. Christianson, 10 F. Cas. 857 (S.D.N.Y. 1836)........................................ 6 Guevara v. Maritime Overseas Corp., 34 F.3d 1279 (5th Cir. 1994), reversed in part on

reh’g, 59 F.3d 1496 (1995) .............................................. 28 Illinois v. Milwaukee (City of Milwaukee I), 406 U.S. 91 (1972) ............................................................ 24 In re Amtrack “Sunset Limited” Train Crash v. Warrior

& Gulf Navigation Co., 121 F.3d 1421 (11th Cir. 1997).................................................................................... 29

In the Matter of P & E Boat Rentals, Inc., 872 F.2d 642, 650 (5th Cir. 1989) ..................... 12, 13, 14 International Paper Co. v. Ouellette, 479 U.S. 481 (1987).......................................................... 24 International Brotherhood of Elec. Workers v. Faust, 442 U.S. 42, 48 (1979) ..................................................... 18 Ira S. Bushey & Sons, Inc. v. United States, 398 F.2d 167, 171 (2d Cir. 1968)................................... 18

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Keramac v. Compagnie Generale Transatlantique,

358 U.S. 625, 630 (1959) ................................................... 4 Kolstad v. American Dental Ass’n, 527 U.S. 526 (1999).......................................................... 17 Lake Shore & M. S. Ry. Co. v. Prentice, 147 U.S. 101, 107 (1893) ................................. 4, 13, 14, 33 Lousiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019 (5th Cir. 1985) (en banc)...................... 33 Matter of Oil Spill by Amoco Cadiz, 954 F.2d 1279 (7th Cir. 1992)........................................ 10 Middlesex County Sewerage Auth. v. National Sea

Clammers Ass’n, 453 U.S. 1 (1981) .............................. 24 Miles v. Apex Marine Corp., 498 U.S. 19 (1990) .................................................. 7, 27, 29 Miller v. American President Lines, 989 F.2d 1450 (6th Cir. 1993)........................................ 28 Milwaukee v. Illinois (City of Milwaukee II), 451 U.S. 304 (1981).......................................................... 24 Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978).......................................................... 29 Moragne v. U.S. Lines, Inc., 398 U.S. 375 (1970)............................................................ 4 Muratore v. The M/S Scotia Prince, 845 F.2d 347 (1st Cir. 1988)........................................... 21 Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 17 (1991) ................................................... 6, 12 Petition of M/V Sunshine II, 808 F.2d 762 (11th Cir. 1987)........................................ 10

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Pope & Talbott, Inc. v. Hawn,

346 U.S. 406 (1953)............................................................ 4 Protectus Alpha Navigation Co. Ltd. v. N. Pac. Grain

Growers, Inc., 767 F.2d 1379 (9th Cir. 1985)....... 16, 21 Ralston v. The States Rights, 20 F. Cas. 201 (E.D. Pa. 1836)............................. 5, 22, 23 Robins Dry Dock & Repair v. Flint, 275 U.S. 303 (1927).......................................................... 33 Smith v. Wade, 461 U.S. 30, 51 (1983) ..................................................... 18 Southern Pac. Co. v. Jensen, 244 U.S. 205 (1917)............................................................ 4 Steamboat Co. v. Whilldin, 4 Har. 229 (Del. 1845) ....................................................... 5 The Amiable Nancy, 16 U.S. 546 (1818) ............................................................ 13 The Blackwall, 77 U.S. 1 (1869) .................................................................. 4 The Lively, 15 F. Cas. 631 (C.C.D. Mass. 1812)................................ 5 The Sabine, 101 U.S. 384 (1879)............................................................ 4 Tug Ocean Prince, Inc. v. United States, 584 F.2d 1151 (2d Cir. 1978) ......................................... 10 U.S. Steel Corp. v. Fuhrman, 407 F.2d 1143 (6th Cir. 1969).................................. 13, 14 United States v. Tex-Tow, Inc., 589 F.2d 1310 (7th Cir. 1978)........................................ 27

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Wahlstrom v. Kawasaki Heavy Indus., Ltd.,

4 F.3d 1084 (2d Cir. 1993) .............................................. 28 Yamaha Motor Corp. U.S.A. v. Calhoun, 516 U.S. 199, 215 (1996) ........................................... 29, 32

STATUTES 33 U.S.C. §§ 2701-2761 ....................................................... 32 33 U.S.C. §§1321(o)(1) ......................................................... 24 46 U.S.C. § 30501 et seq. ................................................ 9, 10 46 U.S.C. §§ 1300-1315 (2000) ............................................ 9 46 U.S.C. app. §§ 190-196 (2000)........................................ 9

OTHER AUTHORITIES DOBBS, DAN B., DOBBS LAW OF REMEDIES, vol. I (2d ed.

1993)...................................................................................... 8 Force, Robert, The Curse of Miles v. Apex Marine

Corp.: The Mischief of Seeking “Uniformity” and “Legislative Intent” in Maritime Personal Injury Cases, 55 LA. L. REV. 745 (1995)................................... 29

LAYCOCK, DOUGLAS, MODERN AMERICAN REMEDIES:

CASES AND MATERIALS (3d ed. 2002) ............................ 33 MCCORMICK, CHARLES, HANDBOOK ON THE LAW OF

DAMAGES (1935) .................................................................. 5 Nickerson, Colin, For Ships, End of the Dotted (and

Dashed) line, BOSTON GLOBE, Jan. 31, 1999, at A1.. 11 RESTATEMENT (SECOND) OF TORTS § 909............... passim Robertson, David, Punitive Damages in American

Maritime Law, 28 J. MAR. L. & COM. 73 (1997)6, 29, 31

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Schoenbaum, Thomas J., ADMIRALTY AND MARITIME LAW (Westgroup ed., 4th ed. 2004)................................. 1

INTEREST OF AMICUS CURIAE1

Amicus is a law professor and an attorney who has spent much of his professional life in the practice and study of maritime law. He currently holds two posts: Professor of International Studies at International Christian University in Japan and Visiting Research Professor of Law at The George Washington University School of Law. He has previously taught at the law schools of the University of North Carolina, Tulane University, and the University of Georgia.

He is the author of many books and articles, including Thomas J. Schoenbaum, ADMIRALTY AND MARITIME LAW (Westgroup ed., 4th ed. 2004). This treatise and its previous editions are regularly cited in judicial opinions in maritime cases by federal and state courts, as well as occasionally by this Court.

Amicus has never before worked on or had any contact with the case at bar.2 The only interest of amicus in this case is concern for justice and the proper and optimal development of the important field of admiralty and maritime law. Amicus regards this case as extremely important with respect to these concerns. 1 The parties have consented to this brief; no party has authored any part of this brief; and no one other than amicus has made a monetary contribution to fund this brief. I solicited several academic colleagues and asked them to join in this brief; however, while I received emails praising my work, they reported that conflicts of interest prevented them from doing so. Thus, I decided to file on my own. 2 Amicus was a consultant for the State of Alaska on the issue of recovery of natural resource damages immediately after the oil spill occurred in 1989.

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This brief will focus on the distinctly maritime law character of the issues involved. Four points are relevant in this regard:

1. No special maritime law rules regarding punitive damages are warranted or needed in maritime law cases. Punitive damages are a remedy of the common law that has a long history of indistinguishable application to maritime cases. This remedy serves the same purposes—punishment and deterrence—in maritime cases as in the common law. In oil spill cases such as the case at bar, punitive dam-ages serve the societal purpose of deterring reckless conduct that endangers the marine environment.

2. In both the maritime law and the common law contexts some confusion presently exists with respect to vicarious liability for punitive damages. The Restatement (Second) rule on this topic is a useful analytical framework that may be employed by this Court to clear up this confusion because it retains the core idea that vicarious liability requires culpability but subjects the employer to liability in the case of an action by a managerial employee. There is no reason to formulate a special rule for vicarious liability limited to the conduct of masters of vessels.

3. Neither the Clean Water Act nor any rule of the general maritime law excludes the application of punitive damages in appropriate maritime cases. The Clean Water Act specifically preserves private tort actions, and punitive damages are available under the general maritime law.

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4. No special doctrine of general maritime law presently regulates the size of an award of punitive damages. There is no principled way to impose a judicial limit on punitive damages applicable only to maritime law cases. The size of the award of punitive damages in maritime law cases is appropriately limited by the Due Process Clause of the U.S. Constitution. Non-constitutional restraints may be added by statute, but no statutory limit applies to the case at bar.

ARGUMENT

I. The General Maritime Law Contains No Special Rules for the Award of Punitive Damages that are Distinct from the Rules of the Common Law, and No Reason Exists for this Court to Create Such Rules.

The case at bar concerns the legal architecture to support an award of $2.5 billion in punitive damages assessed by a jury (and already greatly reduced by lower federal courts) in favor of tens of thousands of Alaska residents who suffered grievous disruption of their lives and livelihoods by the spill of some 11 million gallons of oil when the EXXON VALDEZ ran aground in 1989. Since all three of the legal questions that concern this Court are maritime in nature, an overarching and threshold question is whether it is appropriate or necessary to create a special rule (or rules) with respect to punitive damages that applies only to maritime cases.

This Court has advanced three reasons for the necessity of an exclusively maritime rule. First, when uniformity is a concern, there is need for a rule that

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applies only in the maritime context. The primary reason for the founding fathers’ concern to “federalize” maritime law was to ensure the development of uniformity in American maritime law.

This Court has many times reiterated this concern. E.g. Moragne v. U.S. Lines, Inc., 398 U.S. 375 (1970) (declaring an action for wrongful death for unseaworthiness under the general maritime law). See also Southern Pac. Co. v. Jensen, 244 U.S. 205 (1917). However, the case at bar does not present any uniformity issue since whatever rule this Court applies will be the uniformly applicable rule.

Second, a purely maritime law rule is appropriate for areas of law that are distinctively maritime. For example, in the law of salvage this Court has created a distinctly maritime body of legal rules. E.g., The Sabine, 101 U.S. 384 (1879); and The Blackwall, 77 U.S. 1 (1869). But punitive damages are not distinct-ively maritime; they arise in other contexts as well.

Third, a special maritime law rule is sometimes necessary to establish a general maritime law rule that is “free from inappropriate common law concepts.” Keramac v. Compagnie Generale Transatlantique, 358 U.S. 625, 630 (1959) (common law distinctions between licensee and invitee in personal injury cases do not apply in admiralty); Pope & Talbott, Inc. v. Hawn, 346 U.S. 406 (1953) (common law rule that contributory negligence bars recovery is incompatible with admiralty). However, the legal doctrines involving the assessment of punitive damages arise in both maritime and non-maritime cases, and, as this Court stated in Lake Shore & Michigan Southern Railway Co. v. Prentice, 147 U.S. 101, 107 (1893), “courts of

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admiralty . . . proceed, in cases of tort, upon the same principles as courts of common law, in allowing exemplary damages.” In keeping with this injunction, no distinctions have ever been drawn by lower federal courts between punitive damages in the maritime law context and cases arising on land.

Punitive damages have been awarded in a variety of contexts, both maritime and non-maritime, by American courts over the past almost 200 years. Indeed, punitive damages were a feature of the English common law. See CHARLES MCCORMICK, HANDBOOK ON THE LAW OF DAMAGES 275-279; 286-291 (1935). In the nineteenth century in England as well as in the United States, courts and juries did not sharply distinguish between punitive damages, which were commonly called “exemplary” or “vindictive” damages, and compensatory damages. What we would call today punitive damages was an allowance of additional compensatory damages in cases of outrageous conduct. MCCORMICK at 278. Some early maritime cases, in fact, distinguished between “vindictive” damages, involving conduct really outrageous, and “exemplary” damages, for conduct merely undesirable enough to warrant making an example of the penalty given. See The Lively, 15 F. Cas. 631 (C.C.D. Mass. 1812); Ralston v. The States Rights, 20 F. Cas. 201 (E.D. Pa. 1836); and Steamboat Co. v. Whilldin, 4 Har. 229 (Del. 1845). Apparently no case after 1900, however, has used the term “vindictive” damages, and the term “exemplary” was replaced by the current name of punitive damages. In the non-maritime 1851 case of Day v. Woodworth, 54 U.S. 363 (1851), this Court (in dicta, because the plaintiff had not claimed punitive damages) stated

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that “[i]t is a well-established principle of the common law, that in . . . actions on the case for torts, a jury may inflict what are called exemplary, punitive, or vindictive damages upon a defendant.” Id. at 371. In the more recent case of Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 17 (1991), this Court again noted the common law origin of punitive damages.

The history of punitive damages from the beginning of the republic until 1990 shows no distinction at all between maritime and non-maritime cases. This was the conclusion of Professor David W. Robertson, who made an exhaustive study of the subject in Punitive Damages in American Maritime Law, 28 J. MAR. L. & COM. 73 (1997). His conclusion is amply borne out by the cases. Punitive damages were considered appropriate in maritime as well as non-maritime cases when the defendant’s conduct amounts to gross negligence, actual malice or criminal indifference which is the equivalent of reckless and wanton misconduct. Amicus will spare the Court going through all the cases, which are set out in detail by Professor Robertson, and confine his argument to salient examples. In Chamberlain v. Chandler, 5 F. Cas. 413 (C.C.D. Mass. 1823) Justice Story, who was sitting on circuit, awarded punitive damages in a maritime case against the master of a vessel, stating, “If [a master] is guilty of gross abuse and oppression, I hope it will never be found, that the courts of justice are slow in visiting him, in the shape of damages, with an appropriate punishment.” Id. at 414. In Gould v. Christianson, 10 F. Cas. 857 (S.D.N.Y. 1836), the court gave an augmented award of damages to a seaman who was mistreated by his ship’s captain. In Gallagher v. The Yankee, 9 F. Cas. 1091 (D.C. Cal. 1859), aff’d,

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30 F. Cas. 781 (C.C. Cal. 1859) the court awarded punitive damages against a vessel master who transported the plaintiff against his will to the Sandwich Islands (now Hawaii). Finally, in Complaint of Merry Shipping, 650 F.2d 622 (5th Cir. 1981), the court awarded punitive damages under the general maritime law against a shipowner found guilty of willful and wanton misconduct.

Only after this Court’s decision in Miles v. Apex Marine Corp., 498 U.S. 19 (1990)—a case that did not involve punitive damages at all—did some comment-ators and courts begin to advocate a distinctive punitive damage regime for maritime law. Despite some differences among the lower courts engendered by Miles, a matter to be addressed in a later section of this brief, cases after Miles have generally upheld the imposition of punitive damages under the general maritime law. For example, in Gamma-10 Plastics, Inc., v. American President Lines, 32 F.3d 1244, 1256 (8th Cir. 1994), the court ruled that the district court had abused its discretion in denying the plaintiff’s motion to amend its complaint to include a claim for punitive damages, stating that “[i]t is well-settled that punitive damages may be recovered under the general maritime law ‘for conduct which manifests reckless disregard for the rights of others or for conduct which shows gross negligence or actual malice or criminal indifference,’” citing Churchill v. F/V Fjord, 892 F.2d 763, 772 (9th Cir. 1988).

A further reason why no special punitive damage rule should apply in admiralty cases is that such a special rule would be impractical. Should this Court declare a rule limiting punitive damages under the

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general maritime law, the practical effect would be that in future maritime cases plaintiffs would invoke state law punitive damages which are available under the common law in most states. This would lead to further debate and possible conflicting court decisions concerning the question whether a general maritime law rule limiting punitive damages beyond what is required by the constitutional limits of Due Process preempts state common law.

II. Punitive Damages Are Available Under the General Maritime Law with Respect to the Conduct of a Ship’s Master at Sea Under the Doctrine of Vicarious Liability.

The doctrine of vicarious liability for punitive damages is a major concern in the case at bar for the reason that differences in the circuits have arisen on this issue in the maritime context. However, differing views exist with respect to vicarious liability for punitive damages in the common law of the states as well. See DAN B. DOBBS, DOBBS LAW OF REMEDIES, vol. I, 495-97 (2d ed. 1993). Therefore, this Court’s resolution of the vicarious liability issue will have repercussions beyond the general maritime law itself.

A. There is No Reason Why This Court Should Adopt a Special Maritime Vicarious Liability Rule for Masters of Ships.

A threshold question in the case at bar is whether this Court should fashion a special maritime version of the doctrine of vicarious liability for ship’s masters at sea. Is the job of ship master so distinctive as to warrant a different approach than should be taken with respect to the myriad other occupations—from

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nuclear power plant operator to investment banker—regarding vicarious liability? The argument in favor of a special rule for ship masters is that when a ship is at sea the master is beyond the control of his principal; therefore it is unfair to visit full liability on the principal in such a case.

Congress has in fact accepted carefully targeted versions of this argument in two federal maritime statutes. First, the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. §§ 1300-1315 (2000), exonerates errors in the navigation of a vessel with respect to the carrier’s liability for lost or damaged goods. Id., §§ 1304(2)(a), 1305(2)(a). However, this statute, passed in 1936, reflects an historic legislative compromise originally agreed between carriers and shippers of goods in 1890 with the passage of the Harter Act, 46 U.S.C. app. §§ 190-196 (2000), whereby carriers assume statutory responsibility for providing sea-worthy vessels (the concept of seaworthiness includes a competent and functioning ship master) and the care of the cargo, in return for possible exoneration for matters such as navigation errors and perils of the sea. Moreover, COGSA is a narrow exemption that shifts the burden of proof of exoneration to the carrier. E.g., Banana Services Inc. v. M/V Fleetwave, 911 F.2d 519, 521 (11th Cir. 1990). COGSA, therefore has no application to the case at bar. There is no reason to carry over COGSA into the law of maritime torts.

A second statute that in some respects is forgiving of errors of ship masters is the 1851 Shipowners’ Limitation of Liability Act, 46 U.S.C. § 30501 et seq., which provides a special procedure in admiralty to allow the owner of a vessel to limit liability in certain

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circumstances to the value of the vessel after an accident. This Act was passed in order to promote investment in the shipping industry and is still in force today. The standard for limiting liability under the Limitation Act is that the shipowner must show that the fault causing the loss occurred without his “neglect, privity or knowledge.” Id. Moreover, the shipowner has the entire burden to show that there was no neglect, privity or knowledge on his part. E.g., Petition of M/V Sunshine II, 808 F.2d 762 (11th Cir. 1987).

Modern cases interpreting this phrase now deny limitation for a master’s navigational errors if the company did not exercise reasonable care in selecting or training the master. See, e.g. Continental Oil Co. v. Bonanza Corp., 706 F.2d 1365 (5th Cir. 1983) (en banc); Tug Ocean Prince, Inc. v. United States, 584 F.2d 1151 (2d Cir. 1978); and Matter of Oil Spill by Amoco Cadiz, 954 F.2d 1279 (7th Cir. 1992). In Empresa Lineas Maritimas S.A. v. United States, 730 F.2d 153 (4th Cir. 1984), the court denied limitation because the ship master’s poor health, which contributed to the casualty, was known to the shipowner. Exxon’s amici, Transportation Institute, et al., ignore these recent decisions, attributing a master’s actions at sea to the shipowner for Limitation Act purposes. Br. for Amicus Curiae Transportation Inst., et al., at 16-17. Moreover, this Court has commented that “it has been thought that the scope of authority delegated by an individual owner to a subordinate may be so broad as to justify imputing privity.” Coryell v. Phipps, 317 U.S. 406, 410 (1943). Indeed, in the case at bar Exxon took the decision not to petition the court for limitation of liability after the

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grounding of the EXXON VALDEZ, reportedly upon the advice of counsel that a limitation petition would have been futile. BIO App. 38a-43a.

Not only is there no statutory reason to craft a special vicarious liability rule for masters of ships, such a rule would be bad policy as well. First, modern technology permits instantaneous communication and constant tracking of a vessel at sea by shore personnel and even high corporate officials. The record in the case at bar shows that Captain Hazelwood conferred by phone with an Exxon official before trying to dislodge the vessel from Bligh Reef. Pet. App. 122a, 234a, n.13. No longer is the master of a vessel completely free of supervision and control. See Colin Nickerson, For Ships, End of the Dotted (and Dashed) line, BOSTON GLOBE, Jan. 31, 1999, at A1 (“[A]dvances in communications technology . . . have made email, fax, and crystal clear phone calls as commonplace on the bridge of a ship in the most remote sea as in a business office”). A ship now functions, in effect, as the branch office of the company. Second, a special rule for ship masters would inevitably give rise to close cases and borderline situations as well as appeals from other occupations to be given the benefit of such a rule. Thus, a special rule for ship masters would not be practical and may inspire a morass of future litigation (for example, is a foreman on a dry-docked vessel a “ship master”? What if reckless conduct, such as Captain Hazelwood’s drinking, occurs shoreside but has consequences at sea?).

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B. Under the General Maritime Law, the Court of Appeals Applied the Correct Rule for Vicarious Liability for Punitive Damages.

While no special rule should apply only to ship masters, this Court is called upon to resolve conflicts of authority that have developed in maritime cases. In Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1 (1991), this Court ruled that vicarious liability for punitive damages “is not fundamentally unfair and does not in itself violate the Due Process Clause.” Id. at 14.

Although this Court has already ruled that full respondeat superior vicarious liability does not violate due process, in the case at bar the Court will determine the optimum rule on this issue exercising its authority under the general maritime law. Three different versions of vicarious liability for punitive damages are applied by the states and, at this point, by the lower federal courts.

1. The “majority rule.” The first rule—termed by courts and commentators to be the “majority rule”—is that a corporation or business entity should bear full vicarious liability for both compensatory and punitive damages. See In the Matter of P & E Boat Rentals, Inc., 872 F.2d 642, 650 (5th Cir. 1989). This rule has the advantage of being simple and easy to apply for both judges and juries. This Court was not troubled by the application of this rule by the Supreme Court of Alabama in the Haslip case, supra.

2. The strict complicity rule. A second much more restrictive rule derived from the early decisions of this Court is termed the “strict complicity” rule. This rule

13

states that “punitive damages are not recoverable against the owner of a vessel unless it can be shown that the owner authorized or ratified the acts of the master either before or after the accident.” In the Matter of P&E Boat Rentals, 872 F.2d at 650. In this case the Fifth Circuit relied greatly upon the Sixth Circuit’s application of the strict complicity rule in United States Steel Corp. v. Fuhrman, 407 F.2d 1143 (6th Cir. 1969).

The strict complicity rule is ultimately derived, however, from the opinions of this Court in the case of The Amiable Nancy, 16 U.S. 546 (1818) and Lake Shore & Michigan Southern Railway v. Prentice, 147 U.S. 101 (1893). The Amiable Nancy involved an action for damages against the owners of an armed privateer whose crew had plundered and robbed a neutral vessel at sea. Justice Story, who delivered the opinion of the Court termed the case “gross and wanton outrage,” and ruled that the honor of the country and the duty of the Court was to require “just compensation.” 16 U.S. at 558. Justice Story, as an aside, also stated that “if this were a suit against the original wrong-doers, it might be proper to go yet farther, and visit upon them in the shape of exemplary damages, the proper punishment which belongs to such lawless misconduct.” Id. However, this statement was made purely as a hypothetical since not only were the “original” wrongdoers not before the Court, the libellants had not prayed for exemplary or vindictive (punitive) damages. Thus, Justice Story in The Amiable Nancy was not announcing any rule of law; his statement was intended as an expression of the Court’s own outrage against the actual perpetrators of the incident.

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In the 1893 Lake Shore case this Court announced as a rule of “general jurisprudence” that “[a] principal [employer] . . . cannot be held liable for exemplary or punitive damages, merely by reason of wanton, oppressive, or malicious intent on the part of the agent [employee],” but that punitive damages might lie if the employer “participated in, approved, or ratified” the employee’s conduct. 147 U.S. at 117. The Court in Lake Shore also stated, very importantly, that punitive damages might also lie if the employer knew that the employee was an “unsuitable person.” Id. The example that the Court gave was “employing a drunken engineer or switchman,” id. at 116, which is sufficient to affirm the judgment in this case under Lake Shore’s express terms.

This latter point—that the employer knew that the employee was an unsuitable person—is explicitly part of the modern formulation of the strict complicity rule. In the P&E Boat Rental case, the Fifth Circuit stated that “[p]unitive damages also may be recoverable if the acts complained of were those of an unfit master and the owner was reckless in employing him.” 872 F.2d at 652. The court in Fuhrman also stated this rule, citing Lake Shore and The Amiable Nancy. 407 F.2d 1148.

3. The Restatement rule. The Ninth Circuit in the case at bar applied a third rule based upon the RESTATEMENT (SECOND) OF TORTS § 909,3 which contains four separate grounds for awarding punitive damages against a principal/employer (paraphrasing slightly):

3 The same rule is contained in the RESTATEMENT (SECOND) OF AGENCY § 217C.

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(a) if the principal or a managerial agent authorized the action of the employee;

(b) if the agent/employee was unfit and the principal/managing agent was reckless in employing or retaining him;

(c) if the wrongdoer himself was employed in a managerial capacity; or

(d) if the principal/managing agent ratified or approved the action.

It is evident that the formulation of three of these grounds, RESTATEMENT § 909(a), (b), and (d), are drawn directly from Lake Shore and its progeny that have announced the strict complicity rule. Only Restatement paragraph (c) can be said to be an extension of this rule.

In the case at bar the Ninth Circuit affirmed the jury’s findings that both Captain Hazelwood and Exxon acted recklessly. Captain Hazelwood’s reckless actions were leaving the bridge of the supertanker on the night of the accident and leaving an unqualified crew member in charge of the navigation of the vessel. (Pet. App. 63a, 87a.) Captain Hazelwood was also reckless in leaving port while inebriated (Pet. App. 63a-64a, 87a-88a), which rendered the EXXON VALDEZ unseaworthy under maritime law principles. Exxon’s reckless conduct was that responsible officials of the company knowingly allowed a relapsed alcoholic to have charge of the supertanker EXXON VALDEZ. (Pet. App. 83a.) The Ninth Circuit in affirming the award of punitive damages in this case relied upon its earlier opinion in Protectus Alpha Navigation Co. Ltd. v.

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North Pacific Grain Growers, Inc., 767 F.2d 1379 (9th Cir. 1985).

Protectus Alpha involved a fire that broke out on a vessel docked at a grain facility. Fire fighters were immediately called and the fire was quickly brought under control. However, when the dock foreman arrived, without consulting the firefighters, he immediately ordered the vessel to be cast off from the dock, thereby dangerously stranding firefighters on board and causing the loss of the vessel. In assessing punitive damages against the employer for the action of the foreman, the Ninth Circuit stated that the Restatement formulation “reflects the reality of corporate America.” Id. at 1386. However, the court minimized the value of Restatement formulations (a) and (d), stating that “[i]t seems obvious that no corporate executive or director would approve the egregious acts to which punitive damages would attach and, therefore, no recovery for more than compensatory damages could ever be had against a corporation” under this rule. Thus, the court, considering the “realities” of corporate America, rejected what amounts to the “strict complicity” approach in favor of a more modern and realistic approach that emphasizes paragraphs (b) and (c) of the Restatement rule. The court relied upon the finding that the dock foreman in the Protectus Alpha case was a managerial employee acting within the scope of his employment.

The case at bar differs from Protectus Alpha in that, while Protectus Alpha was based upon Restatement paragraph (c), the case at bar is based upon both paragraphs (b) and (c), in that corporate

17

officials of Exxon as well as Captain Hazelwood were found to have acted recklessly. Nevertheless, the heart of the matter upon which this Court granted certiorari is Restatement paragraph (c), whether Captain Hazelwood should be considered a managerial employee with respect to Exxon Corporation. The strict complicity rule already includes Restatement paragraphs (a), (b), and (d). The really new question is the matter of Restatement (c) as applied in Protectus Alpha and in the case at bar.

It is respectfully submitted that Restatement paragraph (c) as applied in this case is the better rule of law not only in maritime cases, but as a general rule for vicarious liability for punitive damages. As the Ninth Circuit stated in Protectus Alpha, paragraph (c) of the Restatement represents a natural evolution of the strict complicity rule that corresponds to the realities of today’s corporate America. This Court also has signaled that an extension of the Lake Shore formulation is needed. In American Society of Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 U.S. 556 (1982) (adopting the “any agent” rule for antitrust punitive damages), this Court stated (at 575, n. 14) that “[t]he Court may have departed from the trend of late 19th century decisions when it issued Lake Shore . . . , requiring the principal’s participation, approval, or ratification.” See also Kolstad v. American Dental Ass’n, 527 U.S. 526 (1999).

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C. Restatement § 909(c) Should Be Interpreted to Render a Business Entity Vicariously Liable for Punitive Damages Assessed Because of the Actions of a Ship Master and Other Agents Employed in a Managerial Capacity.

The crux of this case as far as the vicarious liability issue is concerned is RESTATEMENT § 909(c). This section allows punitive damages to be awarded against a principal, “but only if . . . the agent was employed in a managerial capacity and was acting in the scope of employment.”

To judge the appropriateness of this rule, we should consider the purpose of punitive damages as well as vicarious liability. Punitive damages are said to have two purposes: to punish and to deter, so that not only the defendant in the particular case but others will not commit the same faults. International Brotherhood of Electrical Workers v. Faust, 442 U.S. 42, 48 (1979); Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974). See also PROSSER AND KEETON ON TORTS at 9 and 13. This purpose makes such damages available not for ordinary legal wrongs but only in extraordinary circumstances involving conduct that is intentional or manifests a reckless disregard for the rights of others. Smith v. Wade, 461 U.S. 30, 51 (1983).

The purpose of vicarious liability in tort is that since a business entity commonly acts only through its agents, it is only fair that a business bear the risk of liability for the wrongdoings of its agents toward innocent parties. The best expression of this purpose was stated by Judge Friendly in Ira S. Bushey & Sons, Inc. v. United States, 398 F.2d 167, 171 (2d Cir. 1968):

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Vicarious liability . . . rests not so much on policy grounds consistent with the governing principles of tort law as in a deeply rooted sentiment that a business enterprise cannot justly disclaim responsibility for accidents which may fairly be said to be characteristic of its activities.

Construing these two purposes together, to impose vicarious liability for punitive damages on a principal, it is reasonable to distinguish between managerial and non-managerial employees or agents. Business enter-prises typically employ personnel with a wide range of responsibilities, from the Chief Operating Officer to the most menial or part-time employee. Each employee will have a delegated job or responsibility. Obviously in the case of so-called managerial employees, the bus-iness has a greater responsibility in selecting and supervising the person. This greater duty should carry correspondingly greater legal responsibility.

While with respect to compensatory damages it is reasonable that a business entity is responsible for the legal wrongs of its agents acting in the scope of their employments, this may not seem fair in the case of punitive damages. While every business has a duty to select quality employees, for non-managerial employ-ees the duty of careful selection is not as high as for managerial employees who carry heavy responsibility. Thus, contrary to the so-called “majority” rule, a business enterprise should be vicariously liable for punitive damages only for wrongs committed by managerial employees. This rule retains the “complicity” idea behind Lake Shore and its progeny, but updates this idea to require not “strict complicity”

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but rather simple “complicity.” It is important to retain the complicity principle because of the purpose behind the imposition of punitive damages: the punishment and deterrence of reckless conduct. The complicity standard retains the idea of fault on the part of the principal. In the case of reckless conduct on the part of a managerial employee (as opposed to a menial or non-managerial employee) there is “complicity” (culpability, fault or guilt), so that it is proper for the business enterprise to be vicariously liable for punitive damages.

This was the interpretation of the RESTATEMENT § 909(c) rendered by the First Circuit in the case of CEH, Inc. v. F/V Seafarer, 70 F.3d 694 (1st Cir. 1995). The Seafarer case involved the malicious actions of a shipmaster, Niles, who destroyed the plaintiff’s lobster traps and gear during May and June of 1992. The Seafarer was trawling for monkfish on the ocean floor, and the plaintiff’s lobster traps posed an obstacle to this trawling operation. Although there was no evidence the shipowner, Doyle, authorized, ratified or participated in the wrongdoing, the court held that the shipowner was liable for punitive damages under the doctrine of vicarious liability because, as the court stated, “we conclude that strict adherence to the complicity approach would shield a principal, who, though not guilty of direct participation, authorization, or ratification in his agent’s egregious conduct, nevertheless shares blame for the wrongdoing.” 70 F.3d at 705. In imposing vicarious liability on the shipowner, however, the court stated that it is very important to retain “requiring some level of culpability.” Id. The court found this culpability in the fact that the shipmaster was a managing employee.

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The court upheld the district court’s findings that Captain Niles had “complete managerial discretion over the means and methods of fishing.” Id.

The First Circuit’s ruling in the Seafarer case is consistent on its facts with the Ninth Circuit’s holding in Protectus Alpha as well as with the case at bar. In Protectus Alpha the court, while not making explicit the idea that the Restatement’s formulation should be interpreted to persons who are delegated managerial authority, ruled that the foreman/employee involved in the reckless actions in that case “clearly occupied a managerial position. He performed a supervisory role, managing several employees.” 767 F.2d at 1386. In the case at bar as well, Captain Hazelwood clearly exercised managerial responsibilities for all aspects of the navigation of the EXXON VALDEZ and her crew. In the case at bar, Exxon in fact has admitted that Captain Hazelwood was exercising managerial responsibilities at the time of the accident. Pet. for Cert. 6.

Courts and juries can easily distinguish between employees who have a managerial position and those who do not. For example, in Muratore v. The M/S Scotia Prince, 845 F.2d 347 (1st Cir. 1988), the First Circuit considered the imposition of punitive damages against the defendant carrier for the intentional infliction of emotional distress by photographers upon the plaintiff, who was a passenger on a vessel. The court, applying the Restatement standard, denied punitive damages because the photographers did not occupy a managerial position.

Thus, RESTATEMENT § 909(c) is the proper formulation as long as it is clear that managerial

22

employees are defined as those with discretionary responsibility for important business operations and decisions that may affect members of the general public. A second characteristic of managerial employees frequently is that they have authority over other business personnel. This interpretation of the Restatement ensures that the remedial purposes of punitive damages will be fulfilled and that punitive damages will not be imposed unreasonably upon a business enterprise. Such a ruling would make it clear that every business enterprise must exercise special vigilance and care in selecting and in retaining its managerial employees. The Restatement approach makes clear that the term “managerial agent” is not restricted to top corporate officials. Rather, the Restatement specifies a functional approach to the question of who is “managerial” that is more realistic and does not depend on artificial job labels.

While the question of who is a “managerial agent” will be dependent upon particular circumstances, the job of ship master of a large vessel such as an oil tanker is one that virtually always will qualify for this designation. Ship masters such as Captain Hazelwood have great responsibility not only for important business matters but also for public and environmental safety. The cases of the Seafarer and the case at bar are only the most recent instances when this has been recognized. The principle that a shipowner may be liable for punitive damages for the actions of a ship master was recognized long ago in the case of Ralston v. The States Rights, 20 F. Cas. 201, 209 (E.D. Pa. 1836). In that case, a Delaware River steamboat captain deliberately rammed his rival’s boat. The court gave “exemplary damages,” which it

23

defined as “a high and exaggerated estimate of the wrong or injury” in the form of lost profits, which at that time was not proper in property damage cases. Id. at 210.

While the case at bar is a maritime case, the Restatement rule as interpreted by the Seafarer court is appropriate outside admiralty as well. The Seafarer court, after carefully examining authorities, noted that “most courts outside the maritime context do not follow [the strict complicity rule of] Lake Shore.” 70 F.3d at 704. The court also stated that “we discern no reason, and the defendants point to none, why vicarious liability should be treated differently on sea than on land.” Id.

In summary, the best rule for vicarious liability for punitive damages is the RESTATEMENT (SECOND) OF TORTS formulation in § 909(c) as interpreted by the First and Ninth Circuit Courts of Appeal. This approach occupies a middle ground between the “majority rule,” on the one hand, and the strict culpability rule on the other. This rule also retains the culpability principle while updating the Lake Shore formulation.

III. Congress Has Not Foreclosed the Imposition of Punitive Damages in the Case at Bar.

This Court has granted certiorari to examine whether Congress may have precluded the imposition of punitive damages by statute. The question arises because at the time of the EXXON VALDEZ oil spill in 1989, the Federal Clean Water Act (CWA) provided a remedial scheme that imposed damages for clean-up of an oil spill, damages for natural resources as well as

24

civil and criminal penalties against a violator. The question that arises from this statutory scheme is really twofold: does the CWA preempt private tort actions for property damage? And second, does the CWA preempt punitive damages?

To answer these questions the Court considers the regulatory framework of the CWA as was done in prior cases raising similar issues. Illinois v. Milwaukee (City of Milwaukee I), 406 U.S. 91 (1972); Milwaukee v. Illinois (City of Milwaukee II), 451 U.S. 304 (1981); Middlesex County Sewerage Auth. v. National Sea Clammers Ass’n, 453 U.S. 1 (1981); and International Paper Co. v. Ouellette, 479 U.S. 481 (1987). In the latter three cases, which were decided after comprehensive amendments were added to the CWA, the Court stated that the CWA provides a comprehensive regulatory scheme to combat water pollution including oil spills. E.g., Int’l Paper, 479 U.S. at 489. But as the Court stated, the CWA is a regulatory scheme designed to protect only public rights in water resources and to adopt and enforce standards for the nation’s navigable waters. Damages to private property were not addressed under the CWA, and common law claims were explicitly saved by Congressional mandate pursuant to 33 U.S.C. §§1321(o)(1) and (2), which in 1989 provided as follows:

(o) Obligation for damages unaffected; local authority not preempted . . . .

(1) Nothing in this section shall affect or modify in any way the obligations of any owner or operator of any vessel . . . to any person . . . under any

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provision of law for damages to any . . . publicly owned or privately owned property resulting form a discharge of oil or hazardous substance . . . .

(2) Nothing in this section shall be construed as preempting any State or political subdivision thereof from imposing any requirement or liability with respect to the discharge of oil or hazardous substance into any waters within such State . . . .

In Askew v. American Waterways Operators, Inc., 411 U.S. 325, 336 (1973) this Court explicitly stated that “the Federal [Water Pollution Control] Act does not preempt the states from establishing ‘any requirement or liability’ respecting oil spills.” The general maritime law is closely analogous to state common law liability, and there is no statutory mandate of preemption.

This Court has never ruled that the CWA preempts private tort actions. In City of Milwaukee II this Court ruled that the CWA preempted the federal common law remedy of nuisance for interstate pollution, and this was followed by International Paper, which ruled that the CWA preempted state interstate nuisance law as well. The important policy behind these preemption rulings was the fact that common law nuisance law principles would interfere with the regulatory scheme of Congress in establishing a permit system for point source discharges, because common law nuisance law would permit courts to impose separate discharge standards and different compliance schedules from the U.S. Environmental

26

Protection Agency, creating a confusing dual system of administrative requirements. In Sea Clammers this Court ruled that the CWA (Federal Water Pollution Control Act) and the Marine Protection, Research and Sanctuaries Act cannot be interpreted to provide plaintiffs with an implied private cause of action under federal law. Although the plaintiffs had also sued on a maritime tort theory, this action had been dismissed by the lower court, and this Court did not address the matter. In Conner v. Aerovox, Inc., 730 F.2d 835 (1st Cir. 1984), the court ruled that a maritime law nuisance action was preempted under the authority of this Court’s opinions. Therefore, what this line of cases teaches is that the entire federal common law of nuisance, whether maritime or non-maritime, as well as state interstate nuisance law, is preempted by the Clean Water Act (Federal Water Pollution Act), and no implied federal cause of action can be derived from this Act. On the other hand, private rights of action for damages either under state law or the general maritime law are still available and are explicitly saved by the CWA.

The fact that the CWA unquestionably leaves untouched the underlying causes of action in the case at bar supports the conclusion that Congress did not intend to preempt any of the available private remedies.

The criminal and civil penalties provided in the Clean Water Act do not preempt any remedies provided in private tort actions under either state law or the general maritime law. Not only is there a complete absence of preemptive intent in the sections of the CWA dealing with criminal and civil penalties,

27

but such provisions are common in regulatory statutes, and no previous case has held such remedies to have preemptive effect. Criminal penalties obviously are no substitute for the recovery of private tort damages, and the civil penalties provided in the Act have the character of quasi-criminal monetary fines intended to deter conduct detrimental to the public interest. The liability in such cases is strict; there are virtually no defenses to civil penalties under the Act. United States v. Tex-Tow, Inc., 589 F.2d 1310 (7th Cir. 1978) (no third party causation defense is available to the discharger). The fact that a violator of the CWA is subject to civil and criminal penalties is not intended to substitute for or to preempt punitive damages in a private action in maritime tort.

As the Ninth Circuit ruled in the case at bar, where the private law remedy clearly does not interfere with administrative judgments or conflict with the statutory scheme, there is no preemption. Pet. App. 77a.

The punitive damage remedy is also not preempted under the authority of Miles v. Apex Marine Corp., 498 U.S. 19 (1990), which involved the question whether the parent of a seaman killed in territorial waters could recover loss of society and lost future income damages for wrongful death under the general maritime law of unseaworthiness. This Court, relying primarily upon the remedial statute for seamen passed by Congress, the Jones Act, ruled that the general maritime law would not afford the plaintiff a greater remedy than had been provided seaman suing for negligence under the Jones Act.

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The case at bar can be distinguished from Miles on several grounds. First, Miles was a general maritime law wrongful death action that was parallel to a private cause of action created by Congress under the Jones Act. In enacting the Clean Water Act, however, Congress did not create any private cause of action for damages in cases of oil spills. Second, Miles did not involve punitive damages. Third, in Miles the Court was concerned with alleviating an anomaly created by the private law remedies specified by Congress in the Death of the High Seas Act (DOHSA); but no such anomaly is present in the case at bar, because Congress has not passed any statute on maritime tort property damages, but has left this matter to the common law.

Nevertheless, some courts have engaged in an unwarranted extension of Miles, although Miles did not concern punitive damages and this Court did not address this matter. Several lower federal courts have used what they term the “analytical framework” of Miles to deny punitive damages in maritime law cases. For example, many courts now deny punitive damages in seamen’s personal death and injury cases See, e.g. Miller v. American President Lines, 989 F.2d 1450 (6th Cir. 1993) (no punitive damages under the Jones Act or for unseaworthiness); Guevara v. Maritime Overseas Corp., 34 F.3d 1279 (5th Cir. 1994), reversed in part on reh’g, 59 F.3d 1496 (1995) (no punitive damages for wrongful withholding of maintenance and cure). The Ninth Circuit has followed the precedent set by Guevara. See Glynn v. Roy Al Boat Management Corp., 57 F.3d 1495 (9th Cir. 1995). Some lower courts have also denied punitive damages generally in maritime wrongful death actions based on Miles.

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Wahlstrom v. Kawasaki Heavy Indus., Ltd., 4 F.3d 1084 (2d Cir. 1993); In re Amtrack “Sunset Limited” Train Crash v. Warrior & Gulf Navigation Co., 121 F.3d 1421 (11th Cir. 1997). As a result, confusion and conflicts of authority are occurring in the lower federal courts on the question of the impact of Miles on punitive damages. Some courts hold that punitive damages are still available after Miles even for seamen. Atl. Sounding Co. v. Townsend, 496 F.3d 1282 (11th Cir. 2007) (in disagreement with the Fifth and Ninth Circuits, punitive damages are available for wrongful denial of maintenance and cure). The confusion over punitive damages engendered by Miles is detailed by Professor Robertson in his article, Punitive Damages in American Maritime Law, supra. See also Robert Force, The Curse of Miles v. Apex Marine Corp.: The Mischief of Seeking “Uniformity” and “Legislative Intent” in Maritime Personal Injury Cases, 55 LA. L. REV. 745 (1995).

To put an end to this confusion this Court should reiterate the limited parameter of Miles. The rationale of Miles is clearly stated in the Court’s opinion: “[i]n this era an admiralty court . . . must be vigilant not to overstep the boundaries imposed by federal legislation.” Miles, 498 U.S. at 27. This rationale was identical to that articulated by this Court in Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978) (DOHSA by its terms limits recovery in wrongful death actions to pecuniary damages). This Court repeated this rationale in the Yamaha case: “when Congress has prescribed a comprehensive tort recovery regime…, there is no room for enlargement of the damages statutorily provided.” Yamaha Motor Corp. U.S.A. v. Calhoun, 516 U.S. 199, 215 (1996). Therefore, Miles

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should be interpreted not to limit or to be concerned with punitive damages in the case at bar, which is not a personal injury claim and is not based upon federal statutory law. The concern of Miles was rather inconsistency with statutory law where specific and comprehensive remedies have been enacted by Congress. See also CEH, Inc. v. F/V Seafarer, 70 F.3d 694, 699-702 (1st Cir. 1995). The Miles/Higginbotham rule only applies when Congress has enacted a comprehensive statutory regime like the Jones Act or the Death on the High Seas Act that is directly on point and that specifically provides private tort victims with rights as well as remedies under federal law. In the case at bar, that is clearly not the case. The CWA does not create a federal right of recovery for plaintiffs in this case; the plaintiffs’ substantive rights come solely from the general maritime law, a purely common law source. The Ninth Circuit therefore correctly rejected the argument based on Miles that was made by Exxon in the case at bar.

IV. The Size of the Award of Punitive Damages in the Case at Bar is Within the Limits Allowed by Federal Maritime Law.

In the case at bar Exxon challenged the size of the punitive damage award on due process grounds, and in response the Ninth Circuit reduced the award by fifty percent, from $5 billion to $2.5 billion, in order to comply scrupulously with the constitutional standards set out in the decisions of this Court. Since this Court has not granted review on the due process issue, the size of the award can be duly taken to satisfy the constitutional standards of the Due Process Clause.

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Thus, the issue in the case at bar is whether this Court should single out maritime plaintiffs and the general maritime law to be treated differently with respect to punitive damages than the entire universe of tort law plaintiffs. In other words, should the Court in the exercise of its authority over the general maritime law announce that maritime plaintiffs shall be subject to more stringent limits on punitive damages than are required generally under the Due Process Clause?

Such a limitation for maritime plaintiffs would be unjust and unwarranted because no principled application of such a limit for a particular class of plaintiffs is possible. No distinctive doctrine or characteristic of maritime law requires a limit on the size of an award of punitive damages beyond that required by the Due Process Clause.

First, the long history of the application of punitive damages as a common law doctrine shows no distinction between maritime and non-maritime cases with respect to both the process of imposing punitive damages and the amounts involved. The cases demonstrating this point are collected in Part I of this brief and even more fully in the exhaustive article of David Robertson, Punitive Damages in American Maritime Law, 28 J. MAR. L. & COM. 73 (1997). The history of the imposition of punitive damages shows that this doctrine did not originate in maritime law but was simply applied as a common law doctrine that has been part of maritime law since earliest times.

Second, the traditional maritime law emphasis on uniformity is completely fulfilled by the adoption of the common law rule that bases vicarious liability for

32

punitive damages upon the fault of a managerial agent. There is no need for a special cap on punitive damages that applies only in maritime cases. Moreover, uniformity is not a concern in the case at bar because punitive damages concerns only remedy, not substantive rights; this Court has expressly ruled that uniformity of remedies is not essential in maritime law cases. Yamaha Motor Corp. U.S.A. v. Calhoun, 516 U.S. 199 (1996) (maritime law remedies may be supplemented by state law remedies for wrongful death). Moreover, the due process limits that were employed to limit the award in the case at bar and that apply to all maritime cases satisfy any lingering uniformity concern. There is no need for a special cap on punitive damages that applies only to maritime law cases.

Third, Congress has not seen fit to limit punitive damages for oil spills or in maritime cases. The civil and criminal penalties under the Clean Water Act are intended to punish and deter harm to public resources, not to substitute for private tort damages. The punitive damages award in this case is also well within the limits of the civil and criminal penalties for which Exxon could have been liable, which exceeded $3 billion. Pet. App. 173a-175a. This Court may also take note that the oil spill that is the subject of the case at bar moved Congress to pass the Oil Pollution Act of 1990, 33 U.S.C. §§ 2701-2761, which greatly increased the financial penalties for dischargers of oil into navigable waters. Many states, including Alaska, did the same in response to this concern.

Fourth, an artificial limit on punitive damages imposed by this Court under the general maritime law

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would be impractical and ultimately futile since injured parties would then likely avoid maritime law and seek punitive damages instead in the common law courts, where punitive damages will remain available under more generous terms.

Fifth, there is no basis in the cases imposing punitive damages of any size differences or, indeed, any special maritime law rules. In the Lake Shore opinion this Court stated that “courts of admiralty . . . proceed, in cases of tort, upon the same principles as courts of common law, in allowing exemplary damages.” 147 U.S. at 107. The general maritime law generally embraces the doctrinal principles of the common law, and no court has ruled that punitive damages run counter to any essential characteristic of maritime law. See CEH v. F/V Seafarer, 70 F.3d at 704-705.

Punitive damages serve identical purposes in both maritime and non-maritime cases: punishment and deterrence of reckless conduct. In the case at bar these purposes are particularly important and relevant. Compensatory damages in the case of oil spill virtually always under-compensate and have little deterrence value. See DOUGLAS LAYCOCK, MODERN AMERICAN REMEDIES: CASES AND MATERIALS 728 (3d ed. 2002). There are two reasons for this: first, the rule of Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927), generally applies in oil spill cases so that there is no recovery for pure economic losses sustained without associated property damage. See, e.g., Lousiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019 (5th Cir. 1985) (en banc); and second, the environmental damages of an oil spill are frequently of a magnitude that

34

compensation by any measure is inadequate. Punitive damages in the case at bar are particularly needed to serve the purpose of deterring reckless conduct that endangers the marine environment.

CONCLUSION

For the foregoing reasons, the decision of the Court of Appeals should be affirmed.


Thomas J. Schoenbaum Counsel of Record, Pro Se

INTERNATIONAL CHRISTIAN UNIVERSITY

ERB 11, Room 229 3-10-2 Osawa, Mitaka shi Tokyo, 181-8585 Japan 81-3-3483-7067 January 25, 2008

No. 07-219

IN THE

Supreme Court of the United States

_______________________________

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

213747

A((800) 274-3321 • (800) 359-6859


Petitioners,

v.


Respondents.

BRIEF FOR AMICUS CURIAEPROFESSOR ARTHUR R. MILLER IN

SUPPORT OF RESPONDENTS

ARTHUR R. MILLER

University ProfessorVanderbilt Hall 409D40 Washington Square SouthNew York, New York 10012(212) 992-8147

STANLEY D. BERNSTEIN

Counsel of RecordANN M. LIPTON

BERNSTEIN LIEBHARD &LIFSHITZ, LLP

10 East 40th StreetNew York, New York 10016(212) 779-1414

Counsel for Amicus CuriaeProfessor Arthur R. Miller

i

Cited Authorities

Page

TABLE OF CONTENTS

TABLE OF CITED AUTHORITIES . . . . . . . . . iii

INTEREST OF AMICUS CURIAE . . . . . . . . . . 1

SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . 1

PROCEDURAL HISTORY . . . . . . . . . . . . . . . . . . 3

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

THIS COURT SHOULD NOT PASSUPON THE ISSUE OF CWADISPLACEMENT OF PUNITIVEDAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

A. The Ninth Circuit Erred inConcluding that Exxon HadPreserved the Issue for AppealBecause the Requirements of Rule 50Cannot Be Waived . . . . . . . . . . . . . . . . . 14

B. The Ninth Circuit ImproperlySubstituted its Judgment for that ofthe District Court . . . . . . . . . . . . . . . . . 17

C. By Disregarding the District Court’sRefusal to Allow the Filing, the NinthCircuit Undermined Trial Courts’Authority to Manage ComplexLitigation . . . . . . . . . . . . . . . . . . . . . . . . . 21

ii

Cited Authorities

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D. This Court Should Not Ratify theNinth Circuit’s Abuse of Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Contents

iii

Cited Authorities

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TABLE OF CITED AUTHORITIES

Cases:

Anderson v. Liberty Lobby,477 U.S. 242 (1986) . . . . . . . . . . . . . . . . . . . . . . . . 15

Bagot v. Ashcroft,398 F.3d 252 (3d Cir. 2005) . . . . . . . . . . . . . . . . . . 20, 22

Blazak v. Ricketts,971 F.2d 1408 (9th Cir. 1992) . . . . . . . . . . . . . . . . 14

Caudle v. Bristow Optical Co.,224 F.3d 1014 (9th Cir. 2000) . . . . . . . . . . . . . . . . 17

Daniels v. Board of Educationof Ravenna City Sch. District,805 F.2d 203 (6th Cir. 1986) . . . . . . . . . . . . . . . . . 19

In re Exxon Valdez,270 F.3d 1215 (9th Cir. 2001) . . . . . . . . . . . . . . passim

Fuesting v. Zimmer, Inc.,448 F.3d 936 (7th Cir. 2007) . . . . . . . . . . . . . . . . . 15

Glynn v. Roy Al Boat Management Corp.,57 F.3d 1495 (9th Cir. 1995) . . . . . . . . . . . . . . . . . 12

Guevara v. Maritime Overseas Corp.,59 F.3d 1496 (5th Cir. 1995) . . . . . . . . . . . . . . . . . 12

iv

Cited Authorities

Page

Kontrick v. Ryan,540 U.S. 443 (2004) . . . . . . . . . . . . . . . . . . . . . . . . 17

Landis v. N. America Co.,299 U.S. 248 (1936) . . . . . . . . . . . . . . . . . . . . . . . . 18

Mendez v. Banco Popular de P.R.,900 F.2d 4 (1st Cir. 1990) . . . . . . . . . . . . . . . . . . . 19

Perez-Cordero v. Wal-Mart P.R.,440 F.3d 531 (1st Cir. 2006) . . . . . . . . . . . . . . . . . 18

Pershing Park Villas Homeowners Associationv. United Pac. Insurance Co.,219 F.3d 895 (9th Cir. 2000) . . . . . . . . . . . . . . . . . 19

Petrini v. Howard,918 F.2d 1482 (10th Cir. 1990) . . . . . . . . . . . . . . . 22

Pierce v. Underwood,487 U.S. 552 (1988) . . . . . . . . . . . . . . . . . . . . . . . . 18

Rates Technology, Inc. v. Nortel Networks Corp.,399 F.3d 1302 (Fed. Cir. 2005) . . . . . . . . . . . . . . . 17

Reasonover v. St. Louis County,447 F.3d 569 (8th Cir. 2006) . . . . . . . . . . . . . . . . . 19

Robins Dry Dock & Repair Co. v. Flint,275 U.S. 303 (1927) . . . . . . . . . . . . . . . . . . . . . . . . 7

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Cited Authorities

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Rogers v. Samedan Oil Corp.,308 F.3d 477 (5th Cir. 2002) . . . . . . . . . . . . . . . . . 17

Ruyle v. Cont. Co.,44 F.3d 837 (10th Cir. 1994) . . . . . . . . . . . . . . . . . 15

Singleton v. Wulff,428 U.S. 106 (1976) . . . . . . . . . . . . . . . . . . . . . . . . 17, 22

Sosa v. Airprint System,133 F.3d 1417 (11th Cir. 1998) . . . . . . . . . . . . . . . 19

Tell v. Trustees of Dartmouth College,145 F.3d 417 (1st Cir. 1998) . . . . . . . . . . . . . . . . . 17

Torres v. Puerto Rico,485 F.3d 5 (1st Cir. 2007) . . . . . . . . . . . . . . . .18, 19, 20

Trinity Carton Co. v. Falstaff Brewing Corp.,767 F.2d 184 (5th Cir. 1985) . . . . . . . . . . . . . . . . . 19

Turnage v. General Electric Co.,953 F.2d 206 (5th Cir. 1992) . . . . . . . . . . . . . . . . . 19

United States v. Williams,504 U.S. 36 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . 14

Unitherm Food System v. Swift-Eckrich, Inc.,546 U.S. 394 (2006) . . . . . . . . . . . . . . . . . . . . . . . . 16

Wong v. Regents of the University of Cal.,410 F.3d 1052 (9th Cir. 2005) . . . . . . . . . . . . . . . . 18, 19

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Cited Authorities

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Rules:

Fed. R. Civ. P. 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Fed. R. Civ. P. 49 . . . . . . . . . . . . . . . . . . . . . . . . . 12, 14, 15

Fed. R. Civ. P. 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Fed. R. Civ. P. 56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Fed. R. Civ. P. 58 . . . . . . . . . . . . . . . . . . . . . . . . . 12, 14, 15

Fed. R. Civ. P. 59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 15

Other:

Manual for Complex Litigation (Fourth) (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

6A Federal Practice & Procedure: Civil 2d . . . . . 21

11 Federal Practice & Procedure: Civil 2d . . . . . 15

9B Federal Practice & Procedure: Civil 3d . . . . . 15, 16

1


Amicus Professor Arthur R. Miller has devoted muchof his almost 50-year career to the study of civilprocedure in the federal courts. Prior to joining NewYork University School of Law as a University Professorin 2007, he was the Bruce Bromley Professor of Law atHarvard Law School, where he taught since 1971.He is the author of numerous books and articles oncivil procedure, including the multi-volume FederalPractice and Procedure (with C.A. Wright, some withE.H. Cooper, M.K. Kane, and R. Marcus; 1968-2008,West Publishing Co.).

Professor Miller files this brief on behalf of himselfindividually, and not as a member of the NYU School ofLaw, to identify certain procedural errors by the NinthCircuit that, if ratified by this Court, threaten toundermine the district courts’ authority to manage theirdockets in complex actions.

SUMMARY OF ARGUMENT

After the Exxon Valdez oil spill in 1989, thousandsof plaintiffs filed lawsuits in state and federal court, mostof which eventually were consolidated into a massiveaction in the United States District Court for the District

1 No counsel for a party authored this brief in whole or inpart, and no such counsel or party made a monetary contributionintended to fund the preparation or submission of this brief.No person other than the amicus curiae, or his counsel, made amonetary contribution to its preparation or submission. Theparties have filed blanket waivers consenting to the filing of allamicus briefs.

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of Alaska. After five years of complex litigation, theparties and issues were winnowed down to essentiallytwo points: the amount of compensatory damages dueto various groups of plaintiffs, and the liability of Exxonfor, and the amount of, any punitive damages. Theseclaims eventually were tried to a jury, which awardedthe plaintiffs $5 billion in punitive damages (eventuallyreduced to $2.5 billion after several appeals). The NinthCircuit would later remark that the district court did“a masterful job of managing this very complex case.”In re Exxon Valdez, 270 F.3d 1215, 1225 (9th Cir. 2001).

Over a year after both the trial and the stipulateddeadline for filing any post-trial motions, Exxon soughtleave to file a “Motion and Renewed Motion byDefendants Exxon Corporation and Exxon ShippingCompany for Judgment on Punitive Damages Claims,”in which it argued, for the first time in the six years sincethe inception of litigation, that punitive damages wereunavailable in part because they would go beyond thescope of liability allowed by the Clean Water Act(“CWA”). The district court refused Exxon’s request tofile the motion.

On appeal, Exxon again advanced its argument thatthe award of common law punitive damages wasinconsistent with the CWA. Over the plaintiffs’ objection,the Ninth Circuit held that it would not treat theargument as waived, and instead went on to decide theissue on the merits. The Ninth Circuit held that the CWAdoes not displace punitive damages.

The Ninth Circuit’s decision to reach the argumenton the merits, rather than simply affirm the district

3

court’s rejection of the motion, was error. To the extentthat Exxon’s motion properly was categorized as amotion for judgment as a matter of law pursuant toFederal Rule of Civil Procedure 50, Exxon’s failure toraise the argument prior to submission to the jury wasa fatal error that courts do not have discretion tooverlook. Moreover, even if Exxon’s motion was notsubject to the mandatory requirements of Rule 50,district courts have broad latitude to manage theirdockets, and their supervisory decisions, includingscheduling and determinations of waiver, are subject toabuse of discretion review. This discretion particularlyis critical when they manage the sort of exceedinglycomplex action at issue here. The Ninth Circuit, ratherthan reviewing the district court’s refusal to allow Exxonto file its motion for abuse of discretion, insteaddisregarded the district court’s ruling entirely andreached its own de novo determination on waiver. In sodoing, the Ninth Circuit usurped the proper role of thetrial court and set an inappropriate precedent for futuresecond-guessing of district court case managementdecisions. This Court should not ratify the NinthCircuit’s error by reaching the issue on the merits, butinstead should affirm on the alternative ground that thedistrict court did not abuse its discretion by rejectingExxon’s motion.

PROCEDURAL HISTORY

On March 24, 1989, the Exxon Valdez ran agroundon Bligh Reef, releasing 11 million gallons of crude oilinto Prince William Sound. In the wake of the spill,thousands of named plaintiffs filed lawsuits in both stateand federal court, causing then-Chief Judge H. Russel

4

Holland of the District Court for the District of Alaskato remark that the litigation had “the potential for beingthe largest and most complex ever filed in this court”that would “call for an extraordinary level of effort andcooperation on the part of all counsel to the end that therights of all plaintiffs and defendants may be promptlyand effectively determined.” Pretrial Order No. 1,Clerk’s Docket No. (“CD”) 130 (Apr. 25, 1989), at 9.In December 1989, the district court and the statecourt each issued similar pretrial orders establishingthe plaintiffs’ case management team and theresponsibilities of its members, appointing LeadCounsel, members of the Executive Committee, theDiscovery Committee, the Law Committee, the DamagesCommittee, the Government Liaison Committee, andLiaison Counsel. Pretrial Order No. 9, CD 748 (Dec. 22,1989); Pretrial Order No. 6, Dec. 22, 1989, Exxon ValdexOil Spill Litig., Case No. 3AN-89-2533 Civil(Consolidated), Superior Court for the State of Alaska,Third Judicial District at Anchorage. The two sets ofcases proceeded on coordinated discovery schedules.Discovery Order No. 2, CD 806 (Feb. 9, 1990); PretrialOrder No. 13 (Discovery Plan), Feb. 9, 1990, ExxonValdez, Case No. 3AN-89-2533. Although in response tothe disaster, Congress amended the CWA by passing theOil Pollution Act of 1990, 33 U.S.C. §§ 2701-2761, whichcreated a new scheme of liability for oil spills, that Actdid not apply retroactively, and thus could not governthe proceedings in the Exxon Valdez cases.

By mid-March of 1991, there were over 150 statecourt actions with over 3,000 plaintiffs, and over 50federal court actions with over 1,000 named plaintiffs;by October 1992, after several removals from state court,

5

the federal consolidated cases consisted of over 150direct actions on behalf of over 4,000 named plaintiffs,and five certified class actions with estimatedmembership in the tens of thousands.

In the earliest years of litigation, there wererepeated removals by the various defendants (whichincluded Exxon as well as the Alyeska Pipeline ServiceCompany and related entities) from state to federalcourt, and subsequent motions by plaintiffs to have thecases remanded. In light of the increasingly chaoticdocket, in April 1992 the district court indicated itsintention to keep a tight rein on motion practice byissuing Order No. 74, which stated:

The parties to this consolidated litigation . . .have had ample opportunity to propose a casemanagement plan. For whatever reasons, theywere unable to do so. The court has had toundertake this task for the time being. . . .

It is neither an efficient use of judicialresources nor a good practice for this court torule on motions in cases that have pendingmotions to remand. . . .

Motion practice (except as to discovery) inthose consolidated cases which are in thiscourt by reason of removal is stayed and anydeadlines previously established with respectto motion practice are stayed until furtherorder of the court.

CD 2423 (Apr. 7, 1992), at 4-6.

6

In September 1992, the district court denied certainplaintiffs’ unopposed motion to lift the stay on motionpractice.2 As the court explained:

The court is unwilling to simply vacate OrderNo. 74 . . . unless and until a meaningful casemanagement plan is developed for this case.As counsel are well aware, there have beensevere difficulties in the development of sucha plan, many of which are directly attributableto the defendants’ efforts to move the centerof gravity of this litigation from state court tofederal court while the plaintiffs areattempting to do just the opposite throughmotions to remand. It would appear to thecourt useful for the parties and the court totake up those matters which are most likelyto affect the siting of cases for the purposes ofthe continuation of this litigation. To that end,the stay imposed by Order No. 74 is lifted withrespect to motions to dismiss by any plaintiffin this consolidated litigation.

Order No. 98, CD 2871 (Sept. 28, 1992), at 2.

In March and April 1993, the court commented onproposed case management plans and defendants’

2 In its order, the court observed that the motion did notspecify which plaintiffs were parties to the motion, andadmonished counsel to exercise “greater attention to this kindof detail which, if unattended, causes delay and uncertainty foreveryone.” Order No. 98, CD 2871 (Sept. 28, 1992), at 1 n.1.

7

request to lift the stay on dispositive motion practice.In Order No. 138, the court stated:

The court’s largest concern is over theextensive motion practice contemplated by theproposed case management order. . . . Thecourt is extremely concerned about the filingof fact-oriented motions for summaryjudgment. For this reason, the court will notlift the stay on motion practice. To keep thiscase manageable, the court needs to maintaincontrol over the motions filed. The court willconduct an initial screening of any motion filedto determine if the motion is fact-based . . .

Another concern of the court’s is regardingmotions based upon the doctrine enunciatedin Robins Dry Dock & Repair Co. v. Flint, 275U.S. 303 (1927). . . . [in light of a pendinginterlocutory appeal], this court is inclined tonot render any rulings on the subject until theNinth Circuit does so.

CD 3395 (Mar. 30, 1993), at 2-3. In Order No. 141, thecourt ordered that the proposed case management planbe modified to include a provision that legal, issue-oriented dispositive motions would proceed only inaccord with a specified schedule, and that parties seekingto file additional such motions seek relief from the stayby submitting “a memorandum explaining in summaryfashion the appropriateness and timeliness of the motion– that is, how it fits into the orderly development of the

8

case for trial.” CD 3460 (Apr. 21, 1993), at 5. The courtexplained the necessity for such a provision:

By so doing, the court does not mean to stiflelegitimate motion practice which will advancethe ultimate disposition of this case. The courtdoes, however, feel the need to exerciseconsiderable control over the flow of businessin order that it may be timely managed.

Id. at 4. Ultimately, in May 1993, the district courtapproved a case management plan that, among otherthings, stayed issue-oriented dispositive motion practiceexcept as to seven specific summary judgment motionsscheduled to be filed throughout 1993. Order No. 143,CD 3522 (May 10, 1993). Prior to the issuance of the plan,the district court already had issued three ordersaddressing various motions for partial summaryjudgment, judgment on the pleadings, and judgmentunder Rule 54(b). See Order No. 38, CD 1178 (Feb. 8,1991); Order No. 121, CD 3194 (Dec. 23, 1992); OrderNo. 139, CD 3421 (Apr. 8, 1993). Ultimately, thedefendants would file over 15 fact-based and legal-oriented motions for summary judgment in 1993 alone.

The first summary judgment motion contemplatedby the case management plan was the defendants’ motionfor “Partial Summary Judgment on Claims for PunitiveDamages Based on TAPAA Displacement of GeneralMaritime Law.” JA60. The motion argued that thefederal Trans-Alaska Pipeline Authorization Act(“TAPAA”) created a “comprehensive remedialscheme” for oil spills that could not be “supplemented”with additional remedies under maritime law. JA64.

9

In support of this position, the defendants pointed outthat the “narrow scope” of the TAPAA savings clausewas “confirmed by comparison with the broader savingsclause” of the Federal Water Pollution Control Act (whichincludes the CWA). JA87 n.9. The defendants explainedthat the FWPCA savings clause, “[i]n marked contrastto its TAPAA counterpart,” preserved state authorityto impose “liabilities.” Id. That the TAPAA savings clausehad not done so, the defendants contended, providedfurther support for its argument that the statuteforeclosed claims for punitive damages. Id.

Simultaneous with their motion for partial summaryjudgment based on TAPAA displacement, the defendantsalso filed a motion for partial summary judgment on theground that previous settlements had a res judicataeffect on plaintiffs’ punitive damages claims. The districtcourt denied both motions on October 21, 1993. OrderNo. 158, CD 3982 (Oct. 21, 1993); Order No. 159, CD 3983(Oct. 21, 1993).

During this period, as the parties continued tolitigate various issues, several interlocutory appealswere filed with the Ninth Circuit, concerning suchmatters as the propriety of the removals from state courtand the availability of various types of damages.See Exxon, 270 F.3d at 1224 n.12. In early November1993, after the Alyeska defendants settled with theplaintiffs, Exxon agreed to stipulate to its liability fornegligence and that its negligence proximately hadcaused the spill. As a practical matter, then, “Exxon’sliability for compensatory damages was undisputed, butthe amount of plaintiffs’ losses was controverted. Exxon’s

10

liability for punitive damages was vigorously litigated.”Order No. 365, CD 7837 (Jan. 29, 2004).

With the disputed issues so narrowed, the partiesfiled their first proposed trial plan, which provided for afour-phase trial structure predicated on the court’searlier conclusion that punitive damages were legallyavailable. Phase I would be devoted to establishing thenegligence of individual defendants, and the “recklessindifference” of Exxon and Defendant JosephHazelwood. If “willful misconduct” was established inPhase I, then liability for, and the amount of, punitivedamages would be established in Phase III. Phases IIand IV would address the amount of damagesproximately caused by the spill for certain groups ofplaintiffs. Proposed Joint Trial Plan, CD 4032 (Nov. 3,1993), at 4-7.

In the trial plan, Exxon also identified 14 “Issues ofLaw to Be Resolved,” of which seven concerned thepropriety of any punitive damages award – including theissue of TAPAA displacement, res judicata, and Exxon’scontention that liability for punitive damages would haveto be established by clear and convincing evidence. Thetrial plan did not include any contention that punitivedamages were precluded by the federal CWA. Id. at 40-43. The day after the plan was filed, Exxon moved for anorder requiring that the elements of a punitive damagesclaim be proved by clear and convincing evidence; thedistrict court eventually denied the motion in Order No.171 on January 13, 1994. Motion in Limine, CD 4035 (Nov.4, 1993); Order No. 171, CD 4405 (Jan. 13, 1994).

11

Even though the trial plan was revised on severaloccasions, the basic four-phase structure remained, asdid Exxon’s various challenges to any punitive damageawards. The Third Amended Revised Trial Plan, whicheventually became the final pretrial order, ultimately wasfiled on March 30, 1994, and similarly did not listdisplacement by the CWA as a legal issue in contention.JA195-97. The plan was approved by the district courton June 22, 1994. JA1410.

The trials in Phases I, II(a) (concerning damages tofishermen), and III ran approximately four months fromMay to September 1994; the parties reached a settlementon Phase II(b) (concerning Native American subsistencedamages) on July 25, 1994. Prior to the trials, thedefendants filed more motions for summary judgmentregarding the various phases, and, after the close ofevidence in each phase, the defendants made oral Rule50(a) motions. Reporter’s Tr., CD 5220 (June 3, 1994), at3938-49; Reporter’s Tr., CD 5224 (July 11, 1994), at 6821-32; Reporter’s Tr., CD 5770 (Aug. 29, 1994), at 7547-48.

After the jury returned a verdict of $5 billion inpunitive damages on September 16, 1994, the partiesentered a stipulation requiring that post-trial motionsbe filed by September 30, 1994. JA 1410. On that date,Exxon filed 11 motions for new trials and for judgmentas a matter of law involving all three phases, objectingto, among other things, the jury instructions in Phase I,the validity of a blood test used in Phases I and III, theweight of the evidence in Phases I and III, and theamount of the punitive damages award. DefendantHazelwood filed an additional 11 motions in support of anew trial and judgment as a matter of law for all three

12

phases. In none of these motions did either Exxon orHazelwood contend that the CWA displaced any ofplaintiffs’ remedies. The district court denied thesemotions on January 27, 1995. Order Nos. 264-75, CD6231-42 (Jan. 27, 1995).

On October 23, 1995 – nearly 13 months after thestipulated deadline for post-trial motions had passed, andmore than six years since the inception of litigation –Exxon moved to lift the stay on motion practice to allowit to file what it called a “Motion and Renewed Motionby Defendants Exxon Corporation and Exxon ShippingCompany for Judgment on Punitive Damages Claims.”BIO App. 30a Exxon contended that the motion wasbrought pursuant to Rules 49(a) and 58(2) of the FederalRules of Civil Procedure, but also included a provisionthat it was made, “to the extent they may be applicable,pursuant to Rules 50(b), 56(b), 56(d), 59(a), and 59(e).”Id. at 31a.3 The request to lift the stay stated that thegrounds for the motion were recent decisions in theNinth and Fifth Circuits (identified in the accompanyingbrief lodged with the court as Glynn v. Roy Al BoatManagement Corp., 57 F.3d 1495 (9th Cir. 1995) (whichhad been decided four months earlier), and Guevara v.Maritime Overseas Corp., 59 F.3d 1496 (5th Cir. 1995)(en banc)). Bio App. 31a; Memo in Support, CD 6496(Oct. 23, 1995), at 1. In its brief, Exxon conceded thatneither Glynn nor Guevara actually addressed thequestion of punitive damages in the context of maritimeoil spills.4 Memo in Support, at 1-2. On November 2, 1995,

3 Rule 58 has now been reorganized and reworded.

4 In fact, neither Glynn nor Guevara discussed the CWA orits relationship to punitive damages at all; both cases concerned

(Cont’d)

13

the district court denied Exxon’s request to lift the stayto file its motion. BIO App. 35a.

In January 1996, the parties reached a settlementon the compensatory damages issues slated forresolution in Phase IV. After the entry of final judgment,Exxon and some plaintiffs appealed to the Ninth Circuit.

On appeal, Exxon argued that the CWA displacedany common law claims for punitive damages. The NinthCircuit, rejecting plaintiffs’ contention that the argumenthad been waived, stated:

“We conclude that the issue should not betreated as waived. Exxon clearly andconsistently argued statutory preemption asone of its theories for why punitive damageswere barred as a matter of law, and arguedbased on the CWA prior to entry of judgment.Because the issue is massive in its significanceto the parties and is purely one of law, whichrequires no further development in districtcourt, it would be inappropriate to treat it aswaived in the ambiguous circumstances of thiscase.”

Exxon, 270 F.3d at 1229. After the Ninth Circuitconcluded that the CWA did not displace punitivedamages claims, this Court granted certiorari.

punitive damages for failure to pay “maintenance and cure,” acause of action limited to seamen’s relationships with theiremployers. See Exxon, 270 F.3d at 1226-1227.

(Cont’d)

14

ARGUMENT

THIS COURT SHOULD NOT PASS UPON THEISSUE OF CWA DISPLACEMENT OF PUNITIVEDAMAGES

The Supreme Court ordinarily will review only issuesthat were raised properly before the court of appeals,or passed upon by the appellate court “in an appropriateexercise of its appellate jurisdiction.” United States v.Williams, 504 U.S. 36, 42-43 (1992) (citations omitted).In this case, the Ninth Circuit abused its discretion andexceeded its authority under the Federal Rules bydisregarding the district court’s refusal to allow Exxonto file its October 1995 challenge to the punitive damageaward. This Court should not ratify the Ninth Circuit’serror.

A. The Ninth Circuit Erred in Concluding thatExxon Had Preserved the Issue for AppealBecause the Requirements of Rule 50 CannotBe Waived

Though Exxon styled its motion as brought pursuantto Rules 49(a) and 58(2) of the Federal Rules of CivilProcedure, neither of these rules is, in and of itself, avehicle for seeking judgment as a matter of law.Rule 49(a) provides only that juries may be requestedto return “special verdicts” with separate findings oneach issue of fact, see Fed. R. Civ. P. 49(a); Rule 58(2), atthe time of Exxon’s motion, provided only that a court“must promptly approve the form of the judgment”returned by a jury, Blazak v. Ricketts, 971 F.2d 1408,1409 n.2 (9th Cir. 1992). Neither rule addresses

15

permissible motion practice; to the contrary, Rule 49 wascreated merely to provide alternative procedures to thetraditional general verdict, see 9B Wright & Miller,Federal Practice & Procedure: Civil 3d, § 2501, at 88-89,and Rule 58 was added to eliminate uncertainty as tothe precise date of judgment for the purpose of allowingproper calculation of time, see 11 Wright & Miller,Federal Practice & Procedure: Civil 2d, § 2781, at 9. Infact, despite Exxon’s invocation of Rules 49 and 58, theonly Federal Rule that would permit the relief Exxonsought – judgment as a matter of law after a jury verdict– is Federal Rule of Civil Procedure 50(b).5 Therefore,Exxon’s motion must be evaluated under Rule 50’sstrictures.6

5 The only other potentially applicable rule, Federal Ruleof Civil Procedure 59(e), permits a court to “alter or amend ajudgment.” That Rule, however, “may not be used to relitigateold matters, or to raise arguments or present evidence that couldhave been raised prior to the entry of judgment.” 11 Wright &Miller, supra, § 2810.1, at 127-28. (Federal Rule of Civil Procedure56, addressing summary judgment, contains no time-limit but isgenerally conceived as a pretrial motion. See Anderson v. LibertyLobby, 477 U.S. 242, 251 (1986); it could hardly be otherwise,else it would render Rule 50 redundant.)

6 To be sure, in the ordinary case, “a party may assert onappeal any question that has been properly raised in the trialcourt,” 11 Wright & Miller, supra, § 2818, at 186; thus, as courtshave observed, various errors that do not implicate thesufficiency of evidence, such as the improper admission ofevidence or collateral estoppel, may be asserted on appeal evenin the absence of a proper Rule 50 motion. See, e.g., Fuesting v.Zimmer, Inc., 448 F.3d 936, 939 (7th Cir. 2007); Ruyle v. Cont.Co., 44 F.3d 837, 841 (10th Cir. 1994). However, in these cases,

(Cont’d)

16

Federal Rule of Civil Procedure 50(a) provides thata litigant may move for judgment as a matter of law atany time before a case is submitted to a jury. Rule 50further states that

“If the court does not grant a motion forjudgment as a matter of law made under Rule50(a), the court is considered to havesubmitted the action to the jury subject to thecourt’s later deciding the legal questionsraised by the motion. No later than 10 daysafter the entry of judgment . . . the movantmay file a renewed motion for judgment as amatter of law.”

Fed. R. Civ. P. 50(b). Thus, according to the text of therule, post-verdict motions for judgment as a matter oflaw are permissible only if they renew motions on similargrounds made prior to jury submission. See 9B Wright& Miller, supra, § 2537, at 603-04. This requirementcannot be waived, either by a district court or at theappellate level. See Unitherm Food Sys. v. Swift-Eckrich, Inc., 546 U.S. 394, 402 n.4 & 404 (2006). Forthis reason alone, the Ninth Circuit was without powerto consider Exxon’s argument, and its decision shouldbe affirmed on the alternative ground that the districtcourt did not abuse its discretion in rejecting it.

proper objections were raised prior to a jury verdict, usingvarious other procedural avenues. Here, Exxon raised noobjection; thus its motion can be evaluated only as a (failed) Rule50 motion.

(Cont’d)

17

B. The Ninth Circuit Improperly Substituted itsJudgment for that of the District Court

Even if Exxon’s motion was not subject to themandatory constraints of Rule 50, the Ninth Circuit stillabused its discretion by holding that it would not “treat”the argument as waived.7 This is because the districtcourt already made that determination when it refusedto accept Exxon’s motion; the Ninth Circuit erred byignoring the district court’s ruling.

Although “[t]he matter of what questions may betaken up and resolved for the first time on appeal is oneleft primarily to the discretion of the courts of appeals,”Singleton v. Wulff, 428 U.S. 106, 121 (1976), there arelimits to an appellate court’s discretion to consider issuesnot passed upon below. See id. One important limitationis the principle that a district court’s determination thatan argument has been waived is reviewed for abuse ofdiscretion. See, e.g., Rates Tech., Inc. v. Nortel NetworksCorp., 399 F.3d 1302, 1307 (Fed. Cir. 2005); Rogers v.Samedan Oil Corp., 308 F.3d 477, 483 (5th Cir. 2002);Caudle v. Bristow Optical Co., 224 F.3d 1014, 1022 (9thCir. 2000) (citing Tell v. Trs. of Dartmouth Coll., 145 F.3d417, 419-20 (1st Cir. 1998)).

This review of waiver determinations under anabuse-of-discretion standard arises from the “bedrock”principle of procedure that “trial judges have an abiding

7 The issues involved in this case actually concern forfeiture,rather than waiver; however, because “jurists often use the wordsinterchangeably,” Kontrick v. Ryan, 540 U.S. 443, 458 n.13 (2004),this brief will attempt to avoid confusion by employing the term“waiver.”

18

responsibility for the efficient management of the caseson their dockets.” Torres v. Puerto Rico, 485 F.3d 5, 10(1st Cir. 2007). Courts have an inherent power to “controlthe disposition of the causes on its docket with economyof time and effort for itself, for counsel, and for litigants,”a process that “calls for the exercise of judgment, whichmust weigh competing interests and maintain an evenbalance.” Landis v. N. Am. Co., 299 U.S. 248, 254-55(1936); see Pierce v. Underwood, 487 U.S. 552, 558 n.1(1988) (issues that concern the “supervision of litigation”fall within the district court’s discretion).

To that end, Federal Rule of Civil Procedure 16(b)requires that district courts issue a scheduling order“as soon as practicable.” Fed. R. Civ. P. 16(b). Thescheduling order “must limit the time to . . . file motions.”Id. In creating the schedule, trial judges have“significant discretionary authority” to set filingdeadlines in accordance with the Federal Rules of CivilProcedure. Perez-Cordero v. Wal-Mart P.R., 440 F.3d 531,533 (1st Cir. 2006); see also Smith v. Insley’s, Inc., 499F.3d 875, 879 (8th Cir. 2007); Chudasama v. Mazda MotorCorp., 123 F.3d 1353, 1366 (11th Cir. 1997).

A necessary corollary to the authority to setschedules is the authority to enforce them. See Perez-Cordero, 440 F.3d at 533. “Courts set such schedules topermit the court and the parties to deal with cases in athorough and orderly manner, and they must be allowedto enforce them, unless there are good reasons not to.”Wong v. Regents of the Univ. of Cal., 410 F.3d 1052, 1062(9th Cir. 2005). As the First Circuit put it, “[A] districtjudge must often be firm in managing crowded docketsand demanding adherence to announced deadlines. If he

19

or she sets a reasonable due date, parties should not beallowed casually to flout it or painlessly to escape theforeseeable consequences of noncompliance.” Mendez v.Banco Popular de P.R., 900 F.2d 4, 7 (1st Cir. 1990). On thisissue, as well, a district court’s refusal to accept a tardyfiling is reviewed for abuse of discretion. See Torres, 485F.3d at 9-10; Reasonover v. St. Louis County, 447 F.3d 569,579 (8th Cir. 2006); Wong, 410 F.3d at 1062; Turnage v. Gen.Elec. Co., 953 F.2d 206, 208-09 (5th Cir. 1992).

The district court’s discretion to reject new legal orfactual contentions is perhaps at its zenith when a partyraises the issue after the adoption of the final pretrial order.In that situation, specifically, a district court has discretionto reject new arguments not included in the order. See, e.g.,Trinity Carton Co. v. Falstaff Brewing Corp, 767 F.2d 184,192 n.13 (5th Cir. 1985) (district court has discretion to rejectamendments to the final pretrial order except when“manifest injustice” otherwise would result),8 see alsoPershing Park Villas Homeowners Ass’n v. United Pac.Ins. Co., 219 F.3d 895, 900 (9th Cir. 2000); Sosa v. AirprintSys., 133 F.3d 1417, 1418 (11th Cir. 1998); Daniels v. Bd. ofEduc. of Ravenna City Sch. Dist., 805 F.2d 203, 210 (6thCir. 1986).

In this case, the Ninth Circuit found that the districtcourt had done “a masterful job of managing this verycomplex case.” Exxon, 270 F.3d at 1225. Over the courseof several years, the district court worked diligently withthe parties to manage a sprawling litigation, to resolvedispositive legal issues as quickly as possible, and tonarrow the scope of the issues for trial. As the district

8 Presumably, if “manifest injustice” resulted from therefusal to allow an amendment, the district court wouldnecessarily have exceeded its discretion.

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court emphasized on several occasions, it believed thatto accomplish this feat it was obliged to “exerciseconsiderable control over the flow of business in orderthat it may be timely managed” by setting specificschedules for dispositive legal motions, from which eitherparty could seek relief. Order 141, supra. Given thishistory, the district court seems to have acted well withinits discretion in refusing to accept a motion proposing anew legal argument – one that was fully available toExxon at least as far back as 1993 (as evidenced by thefact that Exxon maintained its argument regardingTAPAA displacement consistently throughout the case)– offered for the first time 13 months after the juryverdict. Indeed, no one – not Exxon, and not the NinthCircuit – ever has contended that the trial court abusedits discretion by rejecting the filing, and it is difficult tosee how such an argument could be made.

To be sure, appellate courts, as well as district courts,have discretion to consider arguments that were notraised below. See, e.g., Bagot v. Ashcroft, 398 F.3d 252,256 (3d Cir. 2005). However, this is not a situation inwhich a matter was raised for the first time on appeal;rather, this is a case in which the argument waspresented to – and rejected by – the district court. TheNinth Circuit was required to consider Exxon’sargument in that context. Cf. Torres, 485 F.3d at 9(disposition of judgment on the pleadings ordinarily isreviewed de novo; when motion is disposed of as a matterof case management, the decision is reviewed for abuseof discretion).

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C. By Disregarding the District Court’s Refusalto Allow the Filing, the Ninth CircuitUndermined Trial Courts’ Authority toManage Complex Litigation

District courts explicitly are encouraged to overseecomplex cases actively by managing them closely, settingreasonable deadlines, and by resolving legal issuesearly so as to prevent waste of judicial resources.See 6A Wright & Miller, Federal Practice & Procedure:Civil 2d, § 1530, at 302-04; Manual for ComplexLitigation (Fourth) § 10.13 (2004); Manual for ComplexLitigation § 11.66. It was precisely this concern thatlarge, protracted cases were clogging judicial docketsthat led the Coordinating Committee for MultipleLitigation of the United States District Courts to developthe Manual for Complex Litigation in the late 1960s. See6A Wright & Miller, supra, § 1530, at 304. The Manualexplains that effective management of a complex actionrequires that:

[o]nce established . . . schedules are met, and,when necessary, appropriate sanctions areimposed . . . for derelictions and dilatorytactics . . . The judge’s role is crucial indeveloping and monitoring an effective planfor the orderly conduct of pretrial and trialproceedings . . . [E]ach plan must include anappropriate schedule for bringing the case toresolution.

Manual for Complex Litigation § 10.13. This is exactlyhow the district court proceeded; it worked with theparties to develop a case management plan, the plan

22

provided ample opportunity for the parties to raise theirlegal arguments, and the court refused to accept a filingthat was grossly out of time. The district court’sauthority to manage its docket would be meaningless ifappellate courts were free to examine the merits ofrejected arguments without regard for the districtcourt’s own case management rulings.

Moreover, this was a particularly poor case tooverlook Exxon’s tardiness. Ordinarily, appellate courtswill decide issues not raised below only in limitedcircumstances, such as when the law is clear, when theissue is of exceptional importance, or when manifestinjustice otherwise would result. See, e.g., Singleton, 428U.S. at 121; Bagot, 398 F.3d at 256; Petrini v. Howard,918 F.2d 1482, 1483 n.4 (10th Cir. 1990). In this case, theissue was one of first impression: no federal court before(or since) had occasion to decide the issue, and the NinthCircuit believed that the issue was “close.” See Exxon,270 F.3d at 1230. Moreover, the CWA no longer governsoil spills, and did not even do so at the time of the NinthCircuit’s ruling. The issue thus had little relevance in2001, and the lack of further legal development on thesubject in the intervening years demonstrates it has evenless importance today. Finally, Exxon was a well-financedlitigant that vigorously defended its interests, and thetrial was structured and predicated, to a large degree,on the assumption that punitive damages were legallyavailable under maritime law. Exxon’s unexplainedfailure to raise its argument at an earlier date potentiallyadded years to the litigation and consumedimmeasurable judicial resources. Under thesecircumstances, the Ninth Circuit arguably would haveabused its discretion even if the district court had not

23

itself previously rejected Exxon’s filing; in the face ofthe district court’s own refusal to allow the motion, theNinth Circuit’s failure even to acknowledge the trialcourt’s exercise of its discretion manifestly was improper.

D. This Court Should Not Ratify the NinthCircuit’s Abuse of Discretion

If this Court reaches the issue of CWA displacementof maritime law, it implicitly would endorse the NinthCircuit’s usurpation of the district court’s proper role inmanaging the litigation. The references to irrelevantFederal Rules by Exxon in its October 1995 motion mayhave obscured the desirability of enforcing the legitimatemanagement controls of the district court and thedesirability of honoring trial court discretion in highlycomplex cases. That should not be validated by theCourt’s effectively giving credence to such tactics (orappellate courts’ riding roughshod over these policies)by compounding the Ninth Circuit’s error. Given theenormous challenges of this litigation and the broaddiscretion of a district court to manage its docket, thisCourt should affirm the Ninth Circuit’s decision on thealternative ground that the district court did not abuseits discretion in rejecting Exxon’s untimely filing.

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CONCLUSION

This Court should hold that the district court actedwithin its discretion in rejecting Exxon’s October 1995motion, and that therefore Exxon’s argument will notbe considered.


STANLEY D. BERNSTEIN

Counsel of RecordANN M. LIPTON

BERNSTEIN LIEBHARD &LIFSHITZ, LLP

10 East 40th StreetNew York, New York 10016(212) 779-1414

Counsel for Amicus CuriaeProfessor Arthur R. Miller

ARTHUR R. MILLER

University ProfessorVanderbilt Hall 409D40 Washington Square SouthNew York, New York 10012(212) 992-8147

No. 07-219 ================================================================

In The Supreme Court of the United States

--------------------------------- ♦ ---------------------------------


Petitioners, v.


Respondents. --------------------------------- ♦ ---------------------------------


For The Ninth Circuit --------------------------------- ♦ ---------------------------------

BRIEF AMICUS CURIAE OF TRUSTEES FOR ALASKA, ALASKA CENTER FOR THE

ENVIRONMENT, ALASKA COMMUNITY ACTION ON TOXICS, ALASKA MARINE CONSERVATION COUNCIL, COOK INLETKEEPER, DEFENDERS

OF WILDLIFE, ENVIRONMENTAL LAW & POLICY CENTER, EYAK PRESERVATION

COUNCIL, HUMANE SOCIETY OF THE UNITED STATES, IZAAK WALTON LEAGUE OF AMERICA, NATIONAL WILDLIFE FEDERATION, NATURAL RESOURCES DEFENSE COUNCIL, NORTHERN ALASKA ENVIRONMENTAL CENTER, PRINCE

WILLIAM SOUNDKEEPER, WATERKEEPER ALLIANCE AND THE WILDERNESS SOCIETY

IN SUPPORT OF RESPONDENTS --------------------------------- ♦ ---------------------------------

HOWARD A. LEARNER Counsel of Record ALBERT F. ETTINGER BRADLEY D. KLEIN ENVIRONMENTAL LAW & POLICY CENTER 35 East Wacker Drive, Suite 1300 Chicago, Illinois 60601 (312) 673-6500

Attorneys for Environmental Amici ================================================================

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964 OR CALL COLLECT (402) 342-2831

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ................................. iii

STATEMENT OF INTEREST ............................. 1

SUMMARY OF THE ARGUMENT...................... 2

ARGUMENT........................................................ 4

I. The Text, History and Purposes of the Clean Water Act Preserve Common Law Remedies for Property Damage Caused By Oil Spills............................................... 4

A. The Text of the Clean Water Act Does Not “Speak To” Private Remedies for Property Damage, Except to Explic-itly Retain Them ................................. 4

B. The Legislative History of the Clean Water Act Confirms That Congress Did Not Intend for the Act to Provide Exclusive Remedies for Oil Spills ....... 5

C. Exxon Mischaracterizes the Goals and Purposes of the Clean Water Act in Arguing that Congress Intended to Cap the Liability of Shipping Compa-nies ...................................................... 7

II. Exxon Cannot Overcome the Presump-tion Favoring Retention of Pre-Existing Common Law Remedies ............................. 10

A. The Clean Water Act’s Silence Regard-ing Punitive Damages Does Not Imply an Affirmative Congressional Purpose to Supplant Maritime Law ................... 12

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Page

B. Punitive Damages Do Not Frustrate the Purposes of the Clean Water Act .... 16

III. Federal Environmental Laws Do Not “Wipe Out” Common Law Tort Remedies in Cases Involving Pollution............................ 20

CONCLUSION ....................................................... 23

iii


Page

CASES

Alabama v. Ala. Wood Treating Corp., 2006 U.S. Dist. LEXIS 37372 (S.D. Ala. 2006) ...............20

Askew v. American Waterways Opers., Inc., 411 U.S. 325 (1973)..........................................................7

Bates v. Dow Agrosciences, L.L.C., 544 U.S. 431 (2005) .................................................................18, 21

CEH, Inc. v. F/V Seafarer, 70 F.3d 694 (1st Cir. 1995) ........................................................................13

City of Milwaukee v. Illinois, 451 U.S. 304 (1980) .................................................6, 11, 12, 16, 19

Doralee Estates, Inc. v. Cities Servs. Oil Co., 569 F.2d 716 (2d Cir. 1977) .....................................22

Ellis v. Gallatin Steel Co., 390 F.3d 461 (6th Cir. 2004) .................................................................21

Ferebee v. Chevron Chem. Co., 736 F.2d 1529 (D.C. Cir. 1984)........................................................21

Gutierrez v. Mobil Oil Corp., 798 F. Supp. 1280 (W.D. Tex. 1992) ......................................................21

Hillsborough County v. Automated Med. Labs., Inc., 471 U.S. 707 (1985).........................................18

In re Cropwell Leasing Co. v. NMS, Inc., 5 F.3d 899 (5th Cir. 1993) ..................................................20

In re Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001) ........................................................................16

In re Methyl Tertiary Butyl Ether Prod. Liab. Litig., 457 F. Supp. 2d 324 (S.D.N.Y. 2006)............21

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Page

In re Oswego Barge Corp., 664 F.2d 327 (2d Cir. 1981) ..................................................................10, 11

Int’l Paper Co. v. Ouellette, 479 U.S. 481 (1987) ...................................................5, 6, 15, 16, 17

Johansen v. Combustion Eng’g, Inc., 170 F.3d 1320 (11th Cir. 1999)...............................................22

Knabe v. National Supply Div., 592 F.2d 841 (5th Cir. 1979) .........................................................22

Middlesex County Sewerage Auth. v. National Sea Clammers Ass’n, 453 U.S. 1 (1981) ........6, 12, 16, 17

Miles v. Apex Marine Corp., 498 U.S. 19 (1990) ...passim

Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978) ...........................................................10, 12, 19

Moragne v. States Marine Lines, Inc., 398 U.S. 375 (1970) ..........................................................10, 15

Morton v. Mancari, 417 U.S. 535 (1974)....................14

Oxygenated Fuels Ass’n v. Davis, 331 F.3d 665 (9th Cir. 2003) .........................................................18

PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610 (7th Cir. 1998) ..................................................20

Poe v. PPG Indus., 782 So.2d 1168 (La. Ct. App. 2001) ..................................................................15, 22

Racich v. Celotex Corp., 887 F.2d 393 (2d Cir. 1989) ........................................................................14

Reynolds v. Pegler, 123 F. Supp. 36 (S.D.N.Y. 1954) ........................................................................22

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Page

Satsky v. Paramount Commc’ns, 7 F.3d 1464 (10th Cir. 1993) .......................................................20

Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984) ...............................................................passim

Smith v. Wade, 461 U.S. 30 (1983).............................13

Sterling v. Velsicol Chem. Corp., 855 F.2d 1188 (6th Cir. 1988) .........................................................22

United States v. Texas, 507 U.S. 529 (1993) .................................................3, 10, 11, 18, 19

Wilson v. Chevron Chem. Co., 1986 U.S. Dist. LEXIS 16368 (S.D.N.Y 1986) .................................21

Yamaha Motor Corp. v. Calhoun, 516 U.S. 199 (1996) .......................................................................15

STATUTES

2 U.S.C. § 1361 ...........................................................14

3 U.S.C. § 435 .............................................................14

6 U.S.C. § 442 .............................................................14

24 U.S.C. § 1983 .........................................................13

28 U.S.C. § 2674 .........................................................14

Clean Air Act (CAA), 42 U.S.C. § 7401 et seq. ...........................................21

Clean Water Act (CWA), 33 U.S.C. § 1251 et seq. ...................................passim

33 U.S.C. § 1251(a) ...................................................2

vi


Page

33 U.S.C. § 1321(o)....................................................7

33 U.S.C. § 1321(o)(1) ...............................................5

33 U.S.C. § 1365(e)................................................5, 7

Comprehensive Environmental Response, Liabil-ity and Compensation Act (CERCLA),

42 U.S.C. § 9601 et seq. .....................................20, 21

Federal Insecticide Fungicide and Rodenticide Act (FIFRA), 7 U.S.C. § 136 et seq..........................21

Marine Protection, Research, and Sanctuaries Act of 1972 (MPRSA), 33 U.S.C. § 1401 et seq. .......17

Oil Pollution Act of 1990 (OPA), 33 U.S.C. § 2702 et seq. .............................................8

OTHER AUTHORITIES

S. Rep. No. 91-351 (1969) .........................................5, 8

H.R. Rep. No. 91-940 (1970) (Conf. Rep.) ....................7

S. Rep. No. 101-94 (1989) ...........................6, 7, 8, 9, 19

David W. Robertson, Punitive Damages in American Maritime Law, 28 J. Mar. L. & Com. 73 (1997) ..................................................................11

1

STATEMENT OF INTEREST

The environmental amici curiae1 have long en-gaged in environmental and wildlife protection and natural resources preservation activities in Alaska and across the nation. They work to implement and enforce the Clean Water Act and other federal envi-ronmental statutes, federal and state common law, and state laws and policies in order to advance their organizational goals and the public’s environmental interests.

Environmental amici address the limited issue of whether the federal Clean Water Act should be held to preempt maritime law remedies for damage to private property and other economic damages caused by oil spills. Such preemption would create an unwar-ranted gap in the framework of federal and state statutes and federal and state common law governing

1 Pursuant to S. Ct. R. 37.3(a) and 37.6, the undersigned Environmental amici: Trustees for Alaska, Alaska Center for the Environment, Alaska Community Action on Toxics, Alaska Marine Conservation Council, Cook Inletkeeper, Defenders of Wildlife, Environmental Law & Policy Center, Eyak Preserva-tion Council, Humane Society of the United States, Izaak Walton League of America, National Wildlife Federation, Natural Resources Defense Council, Northern Alaska Environ-mental Center, Prince William Soundkeeper, Waterkeeper Alliance and The Wilderness Society represent that (1) each party has filed with the Court blanket consent to the filing of amicus curiae briefs, (2) no counsel for any party authored this brief in whole or in part, and (3) no person or entity other than the above-named amici curiae and their counsel made a mone-tary contribution to the preparation or submission of this brief.

2

clean water protection. The Clean Water Act is de-signed to “restore and maintain” the integrity of our nation’s waters. 33 U.S.C. § 1251(a). It should not shield a private company from part of its liability for damages arising from an environmental disaster for which it is responsible.

Environmental amici seek to protect the public’s interests in the integrity and effectiveness of the nation’s integrated system of environmental statutes and common law remedies to preserve our natural resources and achieve cleaner waters.

--------------------------------- ♦ ---------------------------------


The Clean Water Act (CWA), state statutes and common law rights and remedies together provide a complementary and robust legal structure for clean-ing up our nation’s waters. Exxon’s argument that the CWA “leaves no room” for maritime law punitive damages remedies would create a gap in this struc-ture even though Congress stated no such intent. The CWA’s text and the legislative history indicate that Congress intended the Act to supplement private remedies by enhancing the federal government’s ability to deter and clean up oil and other water pollution, not to displace shipowners’ existing obliga-tions and incentives to keep clean water clean. More-over, Congress’ silence in the statute cannot be deemed to imply preemption, especially when the CWA includes savings clauses that explicitly preserve

3

private remedies for damages to property and allow any person, under common law, “to seek any other relief. . . .” There is a legal presumption favoring the retention of common law remedies where Congress has not directly spoken.

When the text, structure and history of the CWA are given their due regard, it becomes clear that: (1) Exxon’s reliance on Miles v. Apex Marine Corp., 498 U.S. 19 (1990), is misplaced, and (2) punitive dam-ages awards for economic losses of private parties do not inherently conflict with the administration of the CWA, nor frustrate any purpose of the federal reme-dial scheme. Exxon has not overcome the presump-tion that when Congress passes legislation, it intends to retain common law remedies. United States v. Texas, 507 U.S. 529, 534 (1993). This case is much like Silkwood v. Kerr-McGee in which the Court held that state-imposed punitive damages for the release of plutonium from a nuclear power plant were avail-able despite the extensive federal regulatory frame-work governing nuclear safety. 464 U.S. 238 (1984).

Effective environmental protection depends on the interwoven fabric of federal statutory and regula-tory standards, state statutory and regulatory stan-dards, and federal and state common law remedies. Federal environmental laws often work in combina-tion with, and leave room for, pre-existing private remedies, and they should be interpreted to preserve common law remedies unless Congress has directly spoken to displace them. Under Exxon’s theory,

4

Congress would be compelled to write even more detailed and lengthier statutes lest a gap be implied even when a savings clause is specifically enacted.

Exxon’s conduct in this case – leaving a relapsed alcoholic in command of a supertanker – resulted in an environmental disaster and widespread property damage. Accepting Exxon’s overreaching preemption argument in this case could lead to the ironic and unfortunate result of the federal CWA being used as a shield against, rather than a sword to help achieve, cleaner water. Such a result would undermine Con-gress’ objectives and weaken the nation’s efforts to protect the environment.

--------------------------------- ♦ ---------------------------------

ARGUMENT

I. The Text, History and Purposes of the Clean Water Act Preserve Common Law Remedies for Property Damage Caused By Oil Spills.

A. The Text of the Clean Water Act Does Not “Speak To” Private Remedies for Prop-erty Damage, Except to Explicitly Retain Them.

Exxon contends that the CWA “speaks directly and comprehensively” to plaintiffs’ claims. Exxon Br. 33. However, no provisions of the Act affirmatively define a private remedy for property damages, and the plain language shows that Congress decided not to displace tort claims for property damage when it enacted the oil spill liability provisions of the Act:

5

Nothing in this section shall affect or modify in any way the obligations of any owner or operator of any vessel . . . to any person or agency under any provision of law for damages to any publicly owned or pri-vately owned property resulting from a dis-charge of any oil or hazardous substance. . . .

33 U.S.C. § 1321(o)(1) (emphasis added). Similarly, the CWA’s citizen suit provision states:

Nothing in this section shall restrict any right which any person (or class of persons) may have under any statute or common law . . . to seek any other relief. . . .

33 U.S.C. § 1365(e). These broadly worded savings clauses “negate[ ] the inference that Congress ‘left no room’ ” for common law remedies. Int’l Paper Co. v. Ouellette, 479 U.S. 481, 492 (1987).

B. The Legislative History of the Clean

Water Act Confirms That Congress Did Not Intend for the Act to Provide Ex-clusive Remedies for Oil Spills.

The CWA’s legislative history confirms that the oil pollution liability section “in no ways affects the rights of third parties against the party causing the discharge.” S. Rep. No. 91-351, at 5 (1969). Exxon argues that the CWA “prescribes a comprehensive, calibrated scheme of public enforcement.” Exxon Br. 40. However, the oil liability provisions at issue here are different than the CWA’s section 402 pervasive

6

regulatory program for permitting point source discharges.2 The federal oil liability regime has “his-torically provided only partial protection.” It set statutory liability limits “with respect to Federal oil spill removal costs and natural damages,” but pro-vided “no coverage or compensation for other dam-ages.” S. Rep. No. 101-94, at 3 (1989) (Legislative History of the Oil Pollution Act of 1990) (describing the federal provisions as they existed at the time of the Exxon Valdez disaster).

Exxon’s argument that the CWA was intended to be the exclusive remedy for oil spills is also incorrect. Congress has noted that, in 1989, “at least five stat-utes” dealt with the issue of oil spill liability and compensation. S. Rep. No. 101-94, at 3. “Each is different, and each is inadequate.” Id. Moreover, if the CWA provisions had been intended to limit the liabil-ity of shipowners in third-party tort suits, Congress would not have explicitly preserved the ability of States to provide “additional requirements and penal-ties” that are “separate and independent from those

2 See discussion infra at 13-14. The preemptive effect of the section 402 regulatory program was considered in City of Milwaukee v. Illinois, 451 U.S. 304, 318-19 (1980); Middlesex County Sewerage Authority v. National Sea Clammers Ass’n, 453 U.S. 1 (1981); and Int’l Paper Co. v. Ouellette, 479 U.S. 481, 492 (1987). These cases, involving the Act’s “pervasive” and “all-encompassing” program for regulating permitted discharges from point sources under section 402 of the Act, are not directly relevant to the Court’s evaluation here of the more limited oil pollution liability provisions at section 311 of the Act.

7

imposed by [the federal Act].” H.R. Rep. No. 91-940, at 42 (1970) (Conf. Rep.). Nor would Congress have included the savings clauses at sections 1321(o) and 1365(e) of the CWA. See Askew v. American Water-ways Opers., Inc., 411 U.S. 325 (1973) (holding that the 1970 Water Quality Improvement Act did not preempt strict liability under Florida’s Oil Spill Prevention Act, in part, because “no remedy under the Federal Act exists for state or private property owners damaged by a massive oil slick”).3

C. Exxon Mischaracterizes the Goals and

Purposes of the Clean Water Act in Ar-guing that Congress Intended to Cap the Liability of Shipping Companies.

Exxon argues that the CWA involves “twin goals,” which are “carefully calibrated”: “protecting the environment and limiting the liability of shipowners.” Exxon Br. 16, 32, 39-41. However, the legislative history contradicts this argument, which incorrectly elevates benefits for the shipping industry to one of Congress’ principal purposes in this part of the Act. Congress instead recognized that oil pollution was a growing national problem that requires a multi-pronged approach, including both federal clean-up actions and penalty authority while explicitly pre-serving existing state and common law remedies.

3 As of 1990, 24 States had oil spill liability and compensa-tion laws, and 17 of them had liability without specified limits. S. Rep. No. 101-94, at 7.

8

For example, following “extensive discussion,” the Senate Committee on Public Works reported that “[t]wo factors” influenced the decision regarding liability for oil spills: “First, the increasing volume of oil being handled by an increasing number of vessels and facilities enhances the risk of major disaster, and, second, the protection of our vital water resources and shorelines is more and more imperative.” S. Rep. No. 91-351, at 5-7 (1969). In conclusion, the Commit-tee explained that “[w]hile the legislative approach is complex, the intent of the committee is clear. The legislation is designed to encourage preventive action to eliminate discharges of oil wherever possible and to provide adequate authority to clean up those discharges which do occur and assess the cost on the responsible party. . . .” Id. at 7. The report clarified that the “oil pollution section deals only with the matter of clean up of discharges and costs associated therewith,” and “in no ways affects the rights of third parties against the party causing the discharge.” Id. at 5.

Twenty years later, Congress considered, but ultimately decided against, changing the “long-standing policy” that federal oil liability provisions are a floor, not a ceiling. See S. Rep. No. 101-94, at 6-7, 17 (history of the Oil Pollution Act of 1990). Thus, even after enacting the Oil Pollution Act, Congress plainly intended that the owners or operators of vessels would be liable in accordance with “[the new Act] and section 311 of the Clean Water Act . . . [and] under maritime tort law. . . .” Id. at 14 (emphasis

9

added). At that time, the shipping industry argued vigorously for a federal liability cap. See id. at 17 (“Preemption has been discussed by the members of the Committee more than any other single issue.”). The shipping companies’ arguments then, which sound remarkably like Exxon’s policy arguments now, were explicitly rejected by Congress:

It is sometimes argued that liability must be limited in order for the owner or op-erator to afford reasonably priced insurance coverage. Some arguments are so extreme as to suggest that tankship companies and off-shore producers would not operate in an at-mosphere of “unlimited” risk. But these claims are totally unfounded. Even in the 17 States without liability limits, oil shipping and producing companies are not refusing to do business. None of the testimony received by the Committee contained evidence that any shipper or producer has avoided these 17 States or has chosen to quit the business.

S. Rep. No. 101-94, at 7 (emphasis added).

Exxon’s preemption argument here would allow the shipping industry to achieve a liability cap through the courts where it has been unable to achieve such a policy through Congress. Just as courts should not “supplement” Congress’ answer when a federal statute speaks directly to limit available remedies, Miles, 498 U.S. at 31, the courts should refrain from unnecessar-ily limiting the common law where Congress gives “no affirmative indication of an intent to preclude the

10

judicial allowance of a remedy.” Moragne v. States Marine Lines, Inc., 398 U.S. 375, 393 (1970).4 The Court should reject Exxon’s preemption argument as contrary to the CWA’s text, legislative history and purposes and should allow for common law remedies for property damage caused by oil spills.

II. Exxon Cannot Overcome the Presumption

Favoring Retention of Pre-Existing Com-mon Law Remedies.

When statutes “invade the common law,” there is a presumption favoring the retention of existing law “except when a statutory purpose to the contrary is evident.” United States v. Texas, 507 U.S. 529, 534-35 (1993).

Exxon attempts to avoid this presumption in two ways. First, it claims that there is a “presumption in favor of preemption” in this case because it involves federal common law. Exxon Br. 29, citing In re Oswego Barge Corp., 664 F.2d 327, 335 (2d Cir. 1981). But the Court has held that the presumption favoring

4 In Moragne, the Court, guided by “major legislative innovations” at both the state and federal level, held that a federal cause of action for wrongful death exists under general maritime law. 398 U.S. at 392-93. In Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978), and Miles v. Apex Marine, 498 U.S. 19 (1990), the Court limited the remedies available for maritime wrongful death claims, finding that “Congress has spoken directly to the question of recoverable damages on the high seas” in the Death on the High Seas Act and the Jones Act, respectively.

11

the retention of existing law applies equally to cases involving preemption of federal common law as it does to preemption of state law. United States v. Texas, 507 U.S. at 534. Here, the CWA does not “speak to” private remedies for private oil spill dam-ages, and thus “no presumption of preemption arises.” Oswego Barge, 664 F.2d at 345.

Second, Exxon incorrectly portrays this case as asking the courts to “supplement” and create new “judge-made” remedies after passage of the CWA. Exxon Br. 28, 33. However, admiralty law developed long before the passage of the CWA, and courts have “freely awarded punitive damages in property dam-age cases” arising under admiralty law. David W. Robertson, Punitive Damages in American Maritime Law, 28 J. Mar. L. & Com. 73, 137-38, 360-67 (1997).

This is not a case like City of Milwaukee v. Illi-nois, 451 U.S. 304 (1980), in which the Court was determining whether the creation of federal common law was necessary to fill an “interstice” in the exist-ing decisional framework. See id. at 323, 324 n.18. The real question here is not whether the Court should supplement the CWA; it is whether Exxon can demonstrate an evident statutory purpose to supplant pre-existing maritime law with respect to claims for property damage caused by oil pollution. United States v. Texas, 507 U.S. at 534-37.

Exxon then makes two general claims in at-tempting to meet its burden of showing that the statutory purpose of the CWA requires preemption of

12

punitive damages. First, citing Miles, Exxon argues that the CWA “speaks directly” to the issue and “leaves no room” for maritime law. Exxon Br. 31-36. Second, citing City of Milwaukee and Sea Clammers, Exxon argues that punitive damages will interfere with Congressional policies and “obliterate” the balance that Congress has struck. Exxon Br. 33-41. These arguments, however, are not rooted in the CWA’s text or purpose or sound policy. They fail to rebut the presumption favoring retention of pre-existing common law remedies.

A. The Clean Water Act’s Silence Regard-

ing Punitive Damages Does Not Imply an Affirmative Congressional Purpose to Supplant Maritime Law.

The Court’s preemption analysis is straightfor-ward when a federal statute speaks directly to the types of remedies available. In the Death on the High Seas Act (DOHSA), for example, Congress explicitly limited recoverable damages in wrongful death suits to “pecuniary loss.” When Congress has “spoken directly to the question . . . the courts are not free to ‘supplement’ Congress’ answer. . . .” Miles, 498 U.S. at 31 (quoting Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 625 (1978)).

In this case, however, Exxon overlooks the “basic difference between filling a gap left by Congress’ silence and rewriting rules that Congress has af-firmatively and specifically enacted.” Mobil Oil, 436

13

U.S. at 625. Here, when “Congress has not spoken” to the obligations of shipowners for private property damages, there is “no basis” to apply Miles. See CEH, Inc. v. F/V Seafarer, 70 F.3d 694, 701 (1st Cir. 1995). The Clean Water Act does not speak directly to pri-vate parties’ property damage claims under maritime law, except to explicitly preserve them through the savings clauses.

The best Exxon can do is argue that the word “obligations” in the savings clause at section 1321(o) was not intended to include punitive damages be-cause punitive damages are “never awarded as of right.” Exxon Br. 37, citing Smith v. Wade, 461 U.S. 30, 52 (1983). Smith, however, does not support Exxon’s interpretation. In that case, the Court broadly interpreted the text of 24 U.S.C. § 1983 to include the availability of punitive damages in ap-propriate circumstances because the defendant had failed to provide a “persuasive reason” based on the “policies and purposes” of the federal statute that would “require a departure from the rules of tort common law.” Id. at 48-49, 51. Notably, the Court rejected the defendant’s argument that the phrase “for redress” at the end of section 1983 meant that Congress intended to limit recovery to compensatory damages. Id. at 36 n.5. Here, as in Smith, the defen-dant’s “novel construction is strained.” Id.

Exxon argues that Congress’ silence “speaks volumes.” Exxon Br. 33. Actually, it says nothing at all. The Court specifically rejected this line of argu-ment in Silkwood v. Kerr-McGee:

14

Kerr-McGee focuses on the differences between compensatory and punitive dam-ages awards and asserts that, at most, Con-gress intended to allow the former. This argument, however, is misdirected because our inquiry is not whether Congress ex-pressly allowed punitive damage awards. . . . Congress assumed that traditional principles of state tort law would apply with full force unless they were expressly supplanted. Thus, it is Kerr-McGee’s burden to show that Congress intended to preclude such awards.

464 U.S. at 255. See also Racich v. Celotex Corp., 887 F.2d 393, 396 (2d Cir. 1989) (“Since a common-law tort action for personal injury by definition includes the element of damages, including punitive damages where factually appropriate, the omission in the [New York statute] and the legislative silence with respect to punitive damages do not preclude such a recov-ery.”) (citations omitted).5

In this case, as with Kerr-McGee in Silkwood, Exxon “is unable to point to anything in the legislative

5 Exxon also argues that “Congress knows how to provide punitive damages” when it “thinks they are necessary.” Exxon Br. 33. While this is true, Congress also knows how to explicitly forbid punitive damages when it wants to do so. See, e.g., 28 U.S.C. § 2674 (Federal Tort Claims Act); 2 U.S.C. § 1361 (Con-gressional Accountability Act); 3 U.S.C. § 435 (Presidential and Executive Office Accountability Act); 6 U.S.C. § 442 (Homeland Security Act of 2002). Thus, it is not appropriate to draw conclu-sions from Congress’ silence. Cf. Morton v. Mancari, 417 U.S. 535, 550-51 (1974) (repeals by implication are disfavored).

15

history or in the regulations that indicates that punitive damages were not to be allowed.” 464 U.S. at 255. When the text, history and purpose of the CWA are taken into consideration, the better conclusion is that Congress did not intend to “speak to” property damage claims at all. See Ouellette, 479 U.S. at 499 n.19 (finding “no suggestion” of a distinction between compensatory and punitive damages remedies in either the Act or its legislative history); Poe v. PPG Indus., 782 So.2d 1168, 1174 (La. Ct. App. 2001) (“Simply stated, we fail to discern the existence of any applicable relevant legislation which eviscerates the deterrent protection of punitive damages. . . .”). In this regard, this case is more like Moragne than it is like Miles.6

The CWA’s express savings clause and evident purpose are the proper guideposts for the Court here. See, e.g., Yamaha Motor Corp. v. Calhoun, 516 U.S. 199, 215-16 (1996) (considering the relevant savings clause and congressional purpose underlying DOHSA in determining that Miles does not bar state remedies for deaths in territorial waters). “Taking into account what Congress sought to achieve,” id. at 216, the

6 See Moragne, 398 U.S. at 397-98 (DOHSA’s provision of a statutory cause of action for wrongful death on the high seas does not implicitly bar a maritime cause of action for deaths in territorial waters because Congress’ “failure to extend the Act to cover such deaths primarily reflected the lack of necessity for coverage by a federal statute, rather than an affirmative desire to insulate such deaths from the benefits of any federal remedy that might be available independently of the Act.”).

16

Court should reject Exxon’s argument that Miles controls this case and that Congressional silence should be construed as a deliberate and complete shield to a punitive damages remedy for reckless conduct.

The Court of Appeals below correctly concluded:

It is reasonable to infer that had Congress meant to limit the remedies for private dam-age to private interests, it would have said so. The absence of any private right of action in the Act for damage from oil pollution may more reasonably be construed as leaving pri-vate claims alone than as implicitly destroy-ing them.

In re Exxon Valdez, 270 F.3d 1215, 1231 (9th Cir. 2001).

B. Punitive Damages Do Not Frustrate the

Purposes of the Clean Water Act.

Even though Congress did not “speak directly” to the availability of punitive damages in the CWA, Exxon contends that punitive damages would some-how frustrate the Act’s purpose. However, this is not a case like City of Milwaukee, Sea Clammers or Ouellette, each of which involved the Act’s detailed section 402 program for regulating permitted dis-charges from point sources and potential interference through common law of expressly permitted activi-ties. The CWA’s oil pollution provisions do not involve permitted activities and common law does not so interfere.

17

In Sea Clammers, the Court noted that respon-dents’ claims “appear to fall into two categories,” both involving the government’s administration of permits under the CWA and the Marine Protection, Research, and Sanctuaries Act (MPRSA). Middlesex County Sewerage Auth. v. Nat’l Sea Clammers Ass’n, 453 U.S. 1, 12 (1981).7 In other words, the specific claims in Sea Clammers were based on “substantive violations” of sections of the CWA and MPRSA that provide their own “comprehensive enforcement mechanisms.” Id. at 20. The Court recognized that claims arising under other statutes or common law would be “far differ-ent.” Id. at 21 n.31. Likewise, Ouellette states: “[t]he CWA precludes only those suits that may require standards of effluent control that are incompatible with those established by the procedures set forth in the Act.” 479 U.S. at 497.

In this case, there are no effluent standards appli-cable to oil spills, and Exxon could not apply for and receive a CWA permit to crash one of its supertankers against a reef. Therefore, unlike those cases involving permits for discharges, there is no opportunity for a court in this case to rebalance CWA obligations and

7 The main contention is that the EPA and the Army

Corps of Engineers have permitted the New Jersey and New York defendants to discharge and dump pol-lutants in amounts that are not permitted by the Acts. In addition, they seem to allege that the New York and New Jersey defendants have violated the terms of their permits.

Id. at 12.

18

common law principles or rewrite rules that Congress or the implementing agencies have enacted.

When reviewing the “evident purpose” of a fed-eral statute as part of a preemption analysis, the Court has taken care to avoid finding unnecessary conflicts. United States v. Texas, 507 U.S. at 536; see, e.g., Silkwood, 464 U.S. at 257 (punitive damages would not “frustrate any purpose” of the federal atomic energy remedial scheme); Bates v. Dow Agro-sciences, L.L.C., 544 U.S. 431, 451 (2005) (private remedies “would seem to aid, rather than hinder” the functioning of federal pesticide law). The Court has rejected arguments that advance a false “balancing” purpose as Exxon contrives here. See Hillsborough County v. Auto. Med. Labs., Inc., 471 U.S. 707, 720 (1985) (even if local regulations restricted the na-tional blood supply, they were not preempted because neither Congress nor the FDA had “struck a particu-lar balance between safety and quantity,” but had merely intended to “establish minimum safety stan-dards”).8

8 See also Oxygenated Fuels Ass’n v. Davis, 331 F.3d 665, 673 (9th Cir. 2003) (“We take it as true that Congress wanted to reduce pollution caused by motor vehicles, but at the same time did not want to harm the nation’s economy by causing gasoline prices to rise too much. But saying that Congress might not have wanted to cause a substantial increase in gasoline prices is not the same as saying that assuring inexpensive gasoline was a goal of the Act.”).

19

In United States v. Texas, the Court recognized that the Federal Debt Collection Act was passed “in order to strengthen the Government’s hand in collect-ing its debts,” but under the reading proposed by respondents, it “would have the anomalous effect of placing delinquent States in a position where they had less incentive to pay their debts to the Federal Government than they had prior to its passage.” 507 U.S. at 536-37.9

The same logic holds here. Congress passed the CWA to restore and maintain water quality. Exxon misconstrues the statute in ways that would have the anomalous effect of weakening overall incentives to keep clean water clean. See S. Rep. No. 101-94, at 7 (preemption of state oil pollution laws might result in “a decrease in the degree of protection from oil spill damage, rather than an increase”). The Court should reject Exxon’s preemption argument as contrary to the CWA’s purposes and because Exxon has not demonstrated that punitive damages would result in “irreconcilable conflict” or would otherwise “frustrate the objectives” of federal law. Silkwood, 464 U.S. at 256.

9 Chief Justice Rehnquist’s opinion in United States v. Texas, 507 U.S. at 534, rested in part upon maritime law, Mobil Oil v. Higginbotham, and CWA case law, City of Milwaukee v. Illinois.

20

III. Federal Environmental Laws Do Not “Wipe Out” Common Law Tort Remedies in Cases Involving Pollution.

Congress passes environmental laws to enhance environmental protection, not to “wipe out people’s rights inadvertently, with the possible consequence of making the intended beneficiaries of the legislation worse off than before it was enacted.” PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610, 618 (7th Cir. 1998) (Posner, J.) (discussing the Comprehensive Environmental Response, Compensation, and Liabil-ity Act, “CERCLA”).

Congress typically designs federal environmental laws to work in combination with existing common law tort remedies. CERCLA, for example, preempts certain types of claims – e.g., contribution and in-demnity – for which the Act specifically provides a private cause of action, but “preserve[s] to victims of toxic wastes the other remedies they may have under federal or state law.” PMC, Inc., 151 F.3d at 617. Thus, courts regularly uphold common law remedies in toxic tort cases for damages to persons or property. See, e.g., Satsky v. Paramount Commc’ns, 7 F.3d 1464, 1470 (10th Cir. 1993) (CERCLA does not cover private property); In re Cropwell Leasing Co. v. NMS, Inc., 5 F.3d 899, 901 (5th Cir. 1993) (traditional maritime claims not barred by CERCLA); Alabama v. Ala. Wood Treating Corp., 2006 U.S. Dist. LEXIS 37372 at *43 (S.D. Ala. 2006) (punitive damages not barred by CERCLA).

21

The same complementary framework exists in other federal environmental statutory contexts. See Ferebee v. Chevron Chem. Co., 736 F.2d 1529, 1542-43 (D.C. Cir. 1984) (Federal Insecticide, Fungicide and Rodenticide Act would preempt state damage actions “only if FIFRA were viewed not as a regulatory stat-ute aimed at protecting citizens from the hazards of modern pesticides, but rather as an affirmative subsidization of the pesticide industry”); Bates, 544 U.S. at 450-51 (private remedies “would seem to aid, rather than hinder, the functioning of FIFRA”); Wilson v. Chevron Chem. Co., 1986 U.S. Dist. LEXIS 16368 (S.D.N.Y 1986) (punitive damage awards not preempted by FIFRA); Ellis v. Gallatin Steel Co., 390 F.3d 461, 472 (6th Cir. 2004) (Clean Air Act does not foreclose companion punitive damage claims under common law); In re Methyl Tertiary Butyl Ether Prod. Liab. Litig., 457 F. Supp. 2d 324 (S.D.N.Y. 2006) (Clean Air Act does not preempt common law reme-dies, despite comprehensive federal Reformulated Gasoline Program); Gutierrez v. Mobil Oil Corp., 798 F. Supp. 1280, 1284 (W.D. Tex. 1992) (preemption of private damage claims “is clearly not intended under, and would not further the goals of, the Clean Air Act”).

Plaintiffs’ claims here bear the same relationship to the CWA as toxic tort claims do to CERCLA. They neither duplicate any statutory cause of action, nor do they interfere with any statutory purpose. Thus, courts can and often do award punitive damages for private torts that involve water pollution. See, e.g.,

22

Johansen v. Combustion Eng’g, Inc., 170 F.3d 1320 (11th Cir. 1999) (polluting stream with acidic water); Sterling v. Velsicol Chem. Corp., 855 F.2d 1188 (6th Cir. 1988) (contaminating water supply); Knabe v. Nat’l Supply Div., 592 F.2d 841 (5th Cir. 1979) (dump-ing industrial waste); Doralee Estates, Inc. v. Cities Servs. Oil Co., 569 F.2d 716 (2d Cir. 1977) (spilling oil).10

In this case, the “relevant misconduct” – indeed, the “critical factor” – was Exxon’s failure to remove Captain Hazelwood from command. Pet. App. 22a, 155a-156a. Leaving a relapsed alcoholic in charge of a supertanker set in motion a series of events that ultimately resulted in a massive and catastrophic oil spill from the Exxon Valdez. Consequently, the fishing grounds were closed, and the plaintiffs incurred enormous economic harm.

By enacting the Clean Water Act, Congress did not intend to immunize defendants like Exxon from maritime liability simply because one of the links in the causal chain between recklessness and harm happens to involve oil pollution. The Act does not “speak to” this matter of maritime tort law. See Poe,

10 “Exemplary damages are intended to inject an additional factor into the cost-benefit calculations of companies who might otherwise find it fiscally prudent to disregard the threat of liability. To function effectively, the award must be ‘of sufficient substance to ‘smart’ . . . the offender.’ ” Doralee Estates, 569 F.2d at 723 (quoting Reynolds v. Pegler, 123 F. Supp. 36, 41 (S.D.N.Y. 1954)).

23

782 So.2d at 1174 (holding that the Clean Water Act is “not sufficiently relevant . . . to invoke a shield against punitive damages”).

Exxon’s expansive preemption theory fails to account for the Act’s savings clauses, and it is con-trary to the presumptions against preemption and in favor of the retention of existing common law reme-dies. Exxon’s argument, if accepted, would weaken environmental protections, threaten principles of federalism, and undermine Congress’ efforts to pro-tect the nation’s waters.

--------------------------------- ♦ ---------------------------------

CONCLUSION

The Court should affirm the judgment of the court of appeals.


HOWARD A. LEARNER Counsel of Record ALBERT F. ETTINGER BRADLEY D. KLEIN ENVIRONMENTAL LAW & POLICY CENTER 35 East Wacker Drive, Suite 1300 Chicago, Illinois 60601 (312) 673-6500

January 28, 2008

No. 07-219

IN THE

Supreme Court of the United States ________________________________________

EXXON SHIPPING COMPANY, ET AL.,

Petitioners, v.


Respondents. ___________________________

On Writ Of Certiorari to the United States Courts of Appeals

for the Ninth Circuit ______________________________________________________

AMICUS CURIAE BRIEF OF THE AMERICAN ASSOCIATION FOR JUSTICE

AND PUBLIC JUSTICE, P.C. IN SUPPORT OF RESPONDENTS

_____________________________________________________

ARTHUR BRYANT 555 12th St, Suite 1620 Oakland, CA 94607 Executive Director, Public Justice, P.C. KATHLEEN FLYNN PETERSON 1050 31st St., N.W. Washington, DC 20007 President, American Association for Justice

JEFFREY ROBERT WHITE* ROBERT S. PECK ANDRE M. MURA Center for Constitutional

Litigation, P.C. 1050 31st St., NW Washington, DC 20007 (202) 944-2839 *Counsel of Record

Attorneys for Amici Curiae Additional counsel listed on inside cover

LESLIE A. BRUECKNER Public Justice, P.C. 1825 K Street, NW, Suite 200 Washington, DC 20006

TABLE OF CONTENTS

TABLE OF AUTHORITIES .................................... iii IDENTITY AND INTEREST OF AMICI CURIAE......1

SUMMARY OF THE ARGUMENT ..........................2

ARGUMENT................................................................7

I. NEITHER THE EXISTENCE OF STATUTORY CRIMINAL AND CIVIL PENALTIES FOR CAUSING THE EXXON VALDEZ OIL SPILL, NOR EXXON’S CONVICTION AND PAYMENT OF A CRIMINAL FINE, PRECLUDES AN AWARD OF PUNITIVE DAMAGES IN THIS MARITIME TORT ACTION. ........................... 7

A. Criminal and Civil Penalties Do Not Preclude Punitive Damages in a Private Civil Action Arising Out of the Same Misconduct. .............................8

1. It is well settled that the imposition of criminal fines or civil penalties does not preclude an award of punitive damages..........................................................8

2. The rationale for the general rule, that punitive damages supplement the criminal law, is applicable in this case.......11

B. This Court’s Decisions According Deference To Congress In Matters Involving Interstate Disputes and Wrongful Death Do Not Warrant Eliminating Punitive Damages In This Case. .................................................14

ii

1. The rule that federal common law is displaced whenever Congress legislates on the same subject applies in the context of interstate disputes, and is inapposite to this maritime case..................14

2. This Court’s deference to statutory restrictions on wrongful death damages when providing for non-statutory actions does not preclude punitive damages under a traditional maritime law remedy. ..................................19

C. Congress Did Not Intend the Clean Water Act to Alter the General Rule Permitting Punitive Damages Under General Maritime Law. ............22

1. It is Exxon’s burden to prove Congress intended the Clean Water Act to preclude relief traditionally available under general maritime law........23

2. Congress in the Clean Water Act expressly preserved plaintiff’s’ private tort actions for harm caused by oil spills, including the availability of punitive damages. ........................................24

II. MARITIME LAW IMPOSES NO GREATER LIMITS ON PUNITIVE DAMAGES THAN DOES DUE PROCESS.....................................................29

CONCLUSION ..........................................................34

iii


CASES

American Dredging Co. v. Miller, 510 U.S. 443 (1994). .................................................................... 15

American Export Lines, Inc. v. Alvez, 446 U.S. 274 (1980) ..................................................................... 21

Askew v. American Waterways Operators Inc., 411 U.S. 325 (1973). ..................................................... 28

Bell v. Hood, 327 U.S. 678 (1946)............................. 27 BMW of North America v. Gore, 517 U.S. 559 (1996).

......................................................................... 10, 33 Breshears v. River Marine Contractors, Inc., Civ. A.

No. 92-1850, 1992 WL 245656 (E.D. La. Sept. 10, 1992) ...................................................................... 22

Carson Harbor Village, Ltd. v. Unocal Corp., 287 F. Supp. 2d 1181 (C.D. Cal. 2003)............................. 28

CEH, Inc. v. F/V Seafarer, 70 F.3d 694 (1st Cir. 1995) ................................................................ 11, 30

Cheatham v. Pohle, 789 N.E.2d 467 (Ind. 2003)........ 9 Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992)

............................................................................... 27 City of Milwaukee v. Illinois, 451 U.S. 304 (1981) ................................................. 15, 16, 17, 18, 19. 25 Conner v. Aerovox, Inc., 730 F.2d 835 (1st Cir 1984)

............................................................................... 24 Cooper Indus., Inc. v. Leatherman Tool Group, Inc.,

532 U.S. 424 (2001) ............................................... 32 Day v. Woodworth ......................................... 30, 31, 33

iv

Dooley v. Korean Air Lines Co., Ltd., 524 U.S. 116 (1998) ..................................................................... 19

East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1986) ............................................... 30

Erie R.R. v. Tompkins, 304 U.S. 64 (1938) .............. 17 Franklin v. Gwinnett County Public Schools, 503

U.S. 60 (1992) ........................................................ 27 Gallagher v. The Yankee, 9 F. Cas. 1091 (N.D. Cal.)

(No. 5,196), aff’d, 30 F. Cas. 781 (C.C.N.D. Cal. 1859) (No. 18,124) ................................................. 11

Gamma-10 Plastics, Inc. v. American President Lines Ltd., 32 F.3d 1244 (8th Cir. 1994) ........................ 30

Glynn v. Roy Al Boat Management Corp., 57 F.3d 1495 (9th Cir. 1995) .............................................. 22

Grimshaw v. Ford Motor Co., 119 Cal. App. 3d 757, 174 Cal. Rptr. 348 (1981). ..................................... 13

Hendrickson v. Kingsbury, 21 Iowa 379, 391 (1866)................................................................................ 12

Hinderlider v. La Plata River & Cherry Creek Ditch Co., 304 U.S. 92 (1938).......................................... 17

Hurtado v. California, 110 U.S. 516 (1884);............ 31 Illinois v. City of Milwaukee, 406 U.S. 91 (1972). ... 17 Isbrandtsen Co. v. Johnson, 343 U.S. 779 (1952) .... 24 Jensen v. Sattler, 696 N.W.2d 582 (Iowa 2005) ....... 28 Kansas v. Colorado, 206 U.S. 46 (1907)................... 16 Kelly v. Robinson, 479 U.S. 36 (1987) ...................... 13 Lake Shore Ry. v. Prentice, 147 U.S. (40 Davis) 101

(1893) ..................................................................... 31

v

Matter of Oswego Barge Corp., 664 F.2d 327 (2d Cir. 1981) ................................................................ 16, 24

McGuire v. The Golden Gate, 16 F. Cas. 141 (C.C.N.D. Cal. 1856) (No. 8,815)........................... 11

Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996). .......... 28 Middlesex County Sewerage Authority v. National

Sea Clammers Ass’n, 453 U.S. 1 (1981). .. 16, 19, 23 Miles v. Apex Marine Corp., 498 U.S. 19 (1990) ................................................... 9, 18, 19, 20, 21, 22 Mobil Oil Corp. v. Higginbotham, 436 U.S. 618

(1978) ................................................... 18, 19, 20, 22 Monell v. Department of Social Services, 436 U.S.

658 (1978) .............................................................. 31 Moragne v. States Marine Lines, 398 U.S. 375 (1970)

............................................................................... 19 Nader v. Allegheny Airlines, Inc., 426 U.S. 290 (1976)

............................................................................... 22 New Jersey v. New York, 283 U.S. 336 (1931) ......... 17 New York Times Co. v. Sullivan, 376 U.S. 254 (1964)

................................................................................. 9 Norfolk Shipbuilding & Drydock Corp. v. Garris, 532

U.S. 811 (2001) ................................................ 15, 18 Northwest Airlines, Inc. v. Transport Workers Union

of America, AFL-CIO, 451 U.S. 77 (1981). ........... 18 Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991)

..................................................................... 9, 13, 31 Philadelphia, Wilmington & Baltimore R.R. v.

Quigley, 62 U.S. (21 How.) 202 (1858) ................. 31 Philip Morris v. Williams, 127 S. Ct. 1057 (2007)... 12

vi

Ralston v. The States Rights, 20 F. Cas. 201 (E.D. Pa. 1836) (No. 11,540). .......................................... 11

Ridenour v. Holland America Line Westours, Inc., 806 F. Supp. 910 (W.D. Wash. 1992).................... 22

Romero v. International Terminal Operating Co., 358 U.S. 354 (1959) ...................................................... 16

Scott v. Donald, 165 U.S. 58 (1897) ......................... 32 Sea-Land Services, Inc. v. Gaudet, 414 U.S. 573

(1974), .................................................................... 21 Seas Shipping Co. v. Sieracki, 328 U.S. 85 (1946) .. 19 Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984) ............................................................... 9, 10, 22, 28 Smith v. Wade, 461 U.S. 30 (1983)........................... 32 State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S.

408, 425 (2003) .......................................... 10, 32, 33 Taber v. Hutson, 5 Ind. 322 (1854)............................. 9 Texas & Pacific Ry. v. Abilene Cotton Oil Co., 204

U.S. 426 (1907) ...................................................... 22 The Amiable Nancy, 16 U.S. (3 Wheat.) 546 (1818) 10 The Harrisburg, 119 U.S. 199 (1886)....................... 20 TXO Production Corp. v. Alliance Resources Corp.,

509 U.S. 443 (1993) ............................................... 33 United States v. Dixie Carriers, Inc., 627 F.2d 736

(5th Cir. 1980). ...................................................... 29 United States v. Halper, 490 U.S. 435 (1989). ........... 9 United States v. Szilvagyi, 398 F. Supp. 2d 842 (E.D.

Mich. 2005) ............................................................ 27 United States v. Texas, 507 U.S. 511 (1993). ........... 24

vii

Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199 (1996) .............................................................. 21

STATUTES

28 U.S.C. § 1331 ....................................................... 16 33 U.S.C. § 1311, et seq. (Clean Water Act) .... passim 33 U.S.C. §1321(o)(1) ................................................ 26 33 U.S.C. § 1365(e) ................................................... 25 46 U.S.C. App. § 688 (Jones Act)........................ 18, 20 46 U.S.C. §§ 761-67 (DOHSA) ............................ 18, 20

OTHER AUTHORITIES

A Legislative History of the Water Pollution Control Act Amendments of 1972, 93d Cong., 1st Sess. (Comm. Print 1973)............................................... 26

Annot., “Intoxication of Automobile Driver as Basis for Awarding Punitive Damages,” 33 A.L.R.5th 303 (1995). .................................................................... 12

Colby, Thomas B., Beyond the Multiple Punishment Problem: Punitive Damages as Punishment for Individual, Private Wrongs, 87 Minn. L. Rev. 583 (2003). .................................................................... 11

Freifield, Samuel, The Rationale of Punitive Damages, 1 Ohio St. L.J. 5 (1935). ....................... 13

Friendly, Henry J., In Praise of Erie – And of the New Federal Common Law, 39 N.Y.U.L. Rev. 383 (1964). .................................................................... 17

Ghiardi, James D. and John J. Kircher, PUNITIVE DAMAGES LAW AND PRACTICE (1989) ...................... 8

Hale, William B., HANDBOOK ON THE LAW OF DAMAGES (1896)..................................................... 31

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H.R. Rep. No. 92-911 (1972) ..................................... 26 Morris, Clarence, Punitive Damages in Tort Cases,

44 Harv. L. Rev. 1173 (1931) ................................ 13 Restatement (Second) of Torts § 908, cmt. a ............. 9 Robertson, David W., ADMIRALTY AND FEDERALISM

(1970). .................................................................... 18 Robertson, David W., Punitive Damages In American

Maritime Law, 28 J. of Mar. L. and Comm. 73 (1997) ............................................................... 11, 30

Schlueter, Linda & Kenneth Redden, PUNITIVE DAMAGES (2d ed. 1989)............................................ 9

S. Rep. No. 92-414 (1972) ......................................... 26 Water Pollution Control Legislation: Hearings Before

the Subcomm. on Air and Water Pollution of the Senate Comm. on Public Works, 92d Cong., 1st Sess. ....................................................................... 26

Young, Ernest A., Preemption at Sea, 67 Geo. Wash. L. Rev. 273 (1999).................................................. 18

IDENTITY AND INTEREST OF AMICI CURIAE The American Association for Justice (“AAJ”)

and Public Justice, P.C. respectfully submit this brief as amici curiae. The parties have filed letters of consent to the filing of amicus briefs.1

AAJ is a voluntary national bar association whose trial lawyer members primarily represent individual plaintiffs in civil actions. AAJ, through its Admiralty Law Section, has championed the remedies that courts have traditionally made available under general maritime law. Those remedies would be undermined by this Court’s adoption of Petitioners’ proposed new rules to govern punitive damages in maritime cases.

Public Justice, P.C. is a national public interest law firm that specializes in precedent-setting and socially significant civil litigation and is dedicated to pursuing justice for the victims of corporate and governmental abuses. Litigating in the federal and state courts, Public Justice prosecutes cases designed to advance consumers’ and victims’ rights, environmental protection and safety, civil rights and civil liberties, occupational health and employees’ rights, the preservation and improvement of the civil justice system, and the protection of the poor and the powerless. In 1989, Public Justice, on behalf of a coalition of environmental groups, sued Petitioners over the environmental harms caused by

1 Pursuant to Rule 37.6, Amici disclose that no counsel for a party authored any part of this brief, nor did any person or entity other than Amici Curiae, their members, or counsel make a monetary contribution to its preparation.

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the oil spill at issue in this case. Through its work, Public Justice helped to document the full effects of the disastrous spill and prompted a major increase in the government’s recovery for environmental damage. Although Public Justice does not have any role or monetary interest in the outcome of this case, it remains committed to ensuring that Exxon is adequately punished for the disastrous impact of its wrongful conduct.

SUMMARY OF THE ARGUMENT 1. Exxon’s second Question Presented asks

whether the criminal and civil penalties in the Clean Water Act preclude an award of punitive damages in this maritime tort action. That question has long been settled.

a. Every state that permits punitive damages, permits them for misconduct that may also result in criminal or civil penalties. Federal courts, including this Court, have indicated that punitive damages may be imposed in maritime actions for reckless or willful wrongdoing that is also subject to criminal sanction. Indeed, this Court looks to the criminal or civil penalties applicable to a defendant’s misconduct as an indicium of the reprehensibility of the conduct.

Criminal and civil penalties further the same purposes of punishment and deterrence, but they do not overlap entirely with punitive damages. Criminal and civil fines paid to the government are designed to punish a harm that is separate from the harm punished by awarding punitive damages awarded to the victim of misconduct. Moreover, penalties established in the abstract by the legislature may not provide sufficient punishment or deterrence in a

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particular case. For that reason, punitive damages have long been viewed as a needed supplement to the criminal law. That rationale is applicable in this case, where statutory penalties were plainly insufficient punishment and deterrence for widespread destruction of environmental resources by America’s largest and most profitable publicly traded corporation.

b. Exxon, however, urges an exception for oil spill cases such as this one. Exxon proposes that punitive damages under general maritime law be barred whenever Congress has addressed the same subject in a statute, here, the Clean Water Act. The intent of Congress in enacting the statute, in Exxon’s view, is irrelevant.

The only support Exxon has found for its “same subject” rule consists of two decisions by this Court which do not deal with maritime law, but with the specialized application of federal common law to resolve interstate disputes. In that context, federal common law is interstitial; it necessarily gives way whenever Congress provides statutory law governing the dispute at hand.

On the other hand, development of federal common law outside that context – and general maritime law in particular – more closely resembles a shared venture between Congress and the judicial branch. This Court has on occasion supplemented statutory remedies with additional judge-made remedies. For example, the Court has recognized new rights of action for wrongful death under general maritime law, although Congress has addressed the same subject in legislation. The interstate common law decisions supporting Exxon’s

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“same subject” rule are simply inapposite to this case.

Where a remedy is provided both by a statutory right of action and a judge-made right of action, as in maritime wrongful death, this Court has limited claimants to the types of damages “affirmatively and specifically” enacted by Congress. These decisions are also inapposite to this case. The Clean Water Act provides no private cause of action at all for damages caused by oil spills. In such circumstances, this Court has repeatedly held that the damages traditionally recoverable under general maritime law remain available.

c. Whether punitive damages that have generally been recoverable in maritime tort actions have been displaced by the Clean Water Act turns on the intent of Congress. Exxon bears the burden of proving that Congress so intended. On this question, express provisions of the statute which explicitly preserve common law remedies are conclusive.

33 U.S.C. § 1365(e) of the Act states that the section allowing citizens to sue to enforce pollution standards, which is the only private action provided by the Act, does not restrict “any right” that any person may have “to seek any other relief.” Any uncertainty that this provision preserves the remedy for plaintiffs in this case is clarified by the legislative history. In addition, 33 U.S.C. §1321(o)(1) provides that enforcement of pollution standards does not affect or modify “the obligations of any owner or operator of any vessel, . . . under any provision of law for damages” caused by a discharge of oil.

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Despite these statutory provisions explicitly preserving Respondents’ remedies in this case, Exxon insists that the Clean Water Act is “comprehensive” legislation that leaves no room for non-statutory remedies. Even accepting that the Act provides a comprehensive regime for setting pollution standards and authorizing the government to recoup its cleanup costs, the statute makes no provision for – and does not even address – the recovery by private parties for harm caused by oil spills. This Court has interpreted Congress’s silence on private causes of action as legislative intent that traditional judicial remedies remain available. Finally, Exxon asserts that awarding punitive damages for reckless misconduct would upset the balance struck by Congress in the Clean Water Act between protecting the environment and protecting vessel owners. Implications of intent, of course, do not control over the express provisions of the legislation. Moreover, the balance Congress struck is far different than the one Exxon describes. As the legislative history makes clear, Congress balanced competing interests by imposing strict liability for cleanup costs on vessel owners up to a limit that was insurable. But Congress specifically imposed unlimited liability on vessel owners who are guilty of reckless or willful conduct resulting in oil spills. 2. In response to the third Question Presented, Amici submit that the excessiveness review of punitive damages under general maritime law is no more restrictive than the standards established by this Court for reviewing such awards under due process. Although this Court has not had occasion to address standards of excessiveness in maritime actions, the traditional course followed by the Court

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has not been to concoct new principles that have never applied to punitive damages before. Instead, the Court has looked to familiar applicable common-law standards. The longstanding recognition that punitive damages are recoverable in maritime tort actions is entitled to great respect. Exxon certainly has offered no persuasive reason to abandon the common-law approach that this Court has repeatedly approved. That approach depends upon the wisdom and common sense of juries to tailor an award of punitive damages to the particular facts and circumstances of an individual case. Although this Court has modified this emphasis on the jury’s prerogative, it has not abandoned the precept that an individualized assessment of the misconduct must remain the touchstone for a proper punitive damage award. Exxon, however, proposes standards that have no anchor in the common law. Instead, it seeks to measure the appropriate size of an award on the basis of one-size-fits-all standards based on ill-fitting factors relating to congressional preference, compensatory damages, illicit profits from the misconduct, and prohibiting consideration of a defendant’s wealth. This Court has rejected such arbitrary approaches in favor of a proportionality test that looks to the enormity of the harm, including harm that may not be quantified and reflected in the compensatory damages award.

The careful repeated analysis of the courts below, faithful to a substantial factual record and to this Court’s refined due process analysis of punitive damages, has sustained an award in this case that

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fully comports with the principles of maritime law, common law and constitutional law.

ARGUMENT I. NEITHER THE EXISTENCE OF STATUTORY

CRIMINAL AND CIVIL PENALTIES FOR CAUSING THE EXXON VALDEZ OIL SPILL, NOR EXXON’S CONVICTION AND PAYMENT OF A CRIMINAL FINE, PRECLUDES AN AWARD OF PUNITIVE DAMAGES IN THIS MARITIME TORT ACTION.

Plaintiffs are a class of 32,677 commercial and subsistence fishermen and other individuals and businesses whose lives and livelihoods were disrupted, some permanently, when oil spilled from the Exxon Valdez and spoiled a long stretch of Alaska’s coast. The harm to fishing resources resulted not only in economic loss to commercial fishermen and others, but also widespread depression and psychological disorder. Native Alaskans for whom subsistence fishing is a way of life, suffered similar serious harms. Pet. App. 151a, 160a-163a. Petitioners [“Exxon”] were prosecuted for unlawful discharge of a pollutant under the Clean Water Act, 33 U.S.C. §§ 1311(a) and 1319(c)(1), and other criminal offenses. Upon a plea of guilty, Exxon paid a criminal fine of $25 million and was ordered to pay $100 million as restitution. In addition, Exxon agreed to repay the state of Alaska and the United States approximately $900 million over ten years in clean-up and restoration costs. The consent decrees provided that the payments were compensatory and remedial, rather than punitive, and that “nothing in

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this agreement, . . . is intended to affect legally the claims, if any, of any person or entity not a Party to this Agreement.” Pet. App. 71a. Exxon’s second Question Presented states:

2. When Congress has specified the criminal and civil penalties for maritime conduct in a controlling statute, here the Clean Water Act, but has not provided for punitive damages, may judge-made federal maritime law expand the penalties Congress provided by adding a punitive damages remedy?

This question has long been answered and settled.

A. Criminal and Civil Penalties Do Not Preclude Punitive Damages in a Private Civil Action Arising Out of the Same Misconduct.

1. It is well settled that the imposition of criminal fines or civil penalties does not preclude an award of punitive damages.

Punitive damages in private civil actions serve similar purposes of punishment and deterrence as criminal penalties. Nevertheless, every state that permits punitive damages allows them in civil actions to punish and deter conduct that also violates a criminal law. Even if defendant has been convicted and has paid a criminal fine, the universal rule is:

The same act which exposes a defendant to civil liability and possibly to punitive damages may also expose the defendant to criminal liability.

James D. Ghiardi and John J. Kircher, PUNITIVE DAMAGES LAW AND PRACTICE § 5.32 (1989); see also

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Linda Schlueter & Kenneth Redden, PUNITIVE DAMAGES § 5.4(E) (2d ed. 1989) (similar) (citing authorities).2 See also Restatement (Second) of Torts § 908, cmt. a:

The awarding of punitive damages is not prevented by a prior criminal conviction for the same act, which is relevant only to the amount of the award; nor does the granting of punitive damages prevent a subsequent criminal conviction.

This Court should not adopt, in the exercise of its admiralty powers, a rule “that is disfavored by a clear majority of the States.” Miles v. Apex Marine Corp., 498 U.S. 19, 36 (1990).3

2 The sole exception, for a time, was Indiana. Taber v. Hutson, 5 Ind. 322 (1854), held that punitive damages for conduct that is subject to criminal punishment would amount to double jeopardy. This Court has since made clear that “[t]he protections of the Double Jeopardy Clause are not triggered by litigation between private parties” and do not “preclude[] a private party from filing a civil suit seeking damages for conduct that previously was the subject of criminal prosecution and punishment.” United States v. Halper, 490 U.S. 435, 451 (1989). The Indiana legislature itself abolished the bar on punitive damages for criminal violations. See Cheatham v. Pohle, 789 N.E.2d 467, 472 n.2 (Ind. 2003). 3 Many of the punitive damage awards reviewed by this Court have involved criminal misconduct. E.g., Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 23 (1991) (fraud); Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 262 (1984) (criminal violations of Atomic Energy Act); New York Times Co. v. Sullivan, 376 U.S. 254, 277 (1964) (criminal libel). Indeed, the Court has deemed statutory penalties relevant, not as a bar to punitive damages, but as an

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This Court has similarly rejected the argument advanced by Exxon that statutory civil penalties preclude a punitive damages award. In Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984), this Court upheld an award of punitive damages under state law for harm caused by plutonium contamination at a federally licensed nuclear facility.

The United States, as amicus curiae, contends that the award of punitive damages in this case is preempted because it conflicts with the federal remedial scheme, noting that the NRC is authorized to impose civil penalties on licensees when federal standards have been violated. . . . However, the award of punitive damages in the present case does not conflict with that scheme.

Id. at 257. The Court found it not “inconsistent to vest the NRC with exclusive regulatory authority over the safety aspects of nuclear development while at the same time allowing plaintiffs like Silkwood to recover for injuries caused by nuclear hazards,” including recovery of punitive damages. Id. at 258. No different rule obtains in maritime cases. In The Amiable Nancy, 16 U.S. (3 Wheat.) 546, 558 (1818), this Court stated that the vessel’s crew, which robbed and plundered a neutral vessel at sea, could be held liable under maritime law “in the shape of exemplary damages, the proper punishment indicium of the reprehensibility of the defendant’s misconduct. BMW of North America v. Gore, 517 U.S. 559, 583 (1996). See also State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 428 (2003) (“The existence of a criminal penalty does have bearing on the seriousness with which a State views the wrongful action.”).

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which belongs to such lawless misconduct.” 16 U.S. at 558-59. The vessel owner, if involved, might also be subject to punitive damages. Id. Historically, federal courts have imposed punitive damages in maritime actions for conduct punishable under the criminal law. See, e.g., Ralston v. The States Rights, 20 F. Cas. 201, 209 (E.D. Pa. 1836) (No. 11,540) (defendants’ crew deliberately rammed plaintiff’s boat); McGuire v. The Golden Gate, 16 F. Cas. 141, 143 (C.C.N.D. Cal. 1856) (No. 8,815) (assault on passengers); Gallagher v. The Yankee, 9 F. Cas. 1091 (N.D. Cal.) (No. 5,196), aff’d, 30 F. Cas. 781 (C.C.N.D. Cal. 1859) (No. 18,124). (kidnapping). More recently, CEH, Inc. v. F/V Seafarer, 70 F.3d 694 (1st Cir. 1995), upheld punitive damages awarded a vessel owner and captain for willful destruction of plaintiff’s lobster traps. See also David W. Robertson, Punitive Damages In American Maritime Law, 28 J. of Mar. L. & Comm. 73 (1997) (compiling and discussing federal cases awarding or indicating the availability of punitive damages under general maritime law).

2. The rationale for the general rule, that punitive damages supplement the criminal law, is applicable in this case.

The general rule is based largely on the recognition that “punitive damages are punishment, not for the improper act in the abstract, or the wrong that the defendant caused to society, but for the legal wrong to the individual plaintiff.” Thomas B. Colby, Beyond the Multiple Punishment Problem: Punitive Damages as Punishment for Individual, Private Wrongs, 87 Minn. L. Rev. 583, 622 (2003). The Iowa Supreme Court, for example, concluded that under “the clear weight of authority” punitive damages are

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imposed “as a punishment for the wrong done to the individual” and “have no necessary relation to the penalty incurred for the wrong done to the public.” Hendrickson v. Kingsbury, 21 Iowa 379, 391 (1866). The Ninth Circuit correctly relied upon this same reasoning, stating that the criminal penalty imposed on Exxon “is for damage to public resources, enforceable by the United States,” which is distinct from injury to private interests, such as the losses inflicted on commercial fishermen. Pet. App. 77a. It is well settled, for example, that the criminal fine paid by a driver for driving under the influence does not address the harm addressed by awarding punitive damages to the person injured by the drunk driver. Annot., “Intoxication of Automobile Driver as Basis for Awarding Punitive Damages,” 33 A.L.R.5th 303, 345 (1995). See also Philip Morris v. Williams, 127 S. Ct. 1057, 1063-64 (2007) (punitive damages punish plaintiff’s individual harm, not harm to non-parties or to the general public). In addition, the availability of punitive damages enlists the involvement of civil juries in the enforcement of the law and the tailoring of punishment to fit the offense. This Court has stated:

The law giving exemplary damages is an outgrowth of the English love of liberty regulated by law. It tends to elevate the jury as a responsible instrument of government, discourages private reprisals, restrains the strong, influential, and unscrupulous, vindicates the rights of the weak, and encourages recourse to and confidence in the courts of law by those wronged or oppressed by acts or practices not cognizable in or not sufficiently punished by the criminal law.

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Haslip, supra, at 8 n.4 (emphasis added). Legislatures must prescribe criminal punishments in advance and in the abstract, anticipating the possible violations and violators. Criminal penalties are “often calculated without regard to the harm the defendant has caused,” and may lack “precise deterrent effect.” Kelly v. Robinson, 479 U.S. 36, 49 n.10 (1987). Consequently, punitive damages have traditionally been viewed as a necessary supplement to criminal penalties. See Clarence Morris, Punitive Damages in Tort Cases, 44 Harv. L. Rev. 1173, 1195-98 (1931); Samuel Freifield, The Rationale of Punitive Damages, 1 Ohio St. L.J. 5, 8-9 (1935). The California court of appeal, upholding a large punitive award against the maker of the Ford Pinto, rejected the argument Exxon makes here:

It is precisely because monetary penalties under government regulations prescribing business standards or the criminal law are so inadequate and ineffective as deterrents against a manufacturer and distributor of defective products that punitive damages must be of sufficient amount to discourage such practices.

Grimshaw v. Ford Motor Co., 119 Cal. App. 3d 757, 820, 174 Cal. Rptr. 348, 389 (1981). The United States Attorney, at the criminal sentencing stage following Exxon’s guilty plea, informed the court that “the government’s evidence would have shown, the discharge of nearly 11 million gallons of crude oil was directly related to criminally negligent conduct by Exxon Shipping.” Government’s Memorandum in Aid of Sentencing, JA 50. Pointing

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out that the purpose of criminal sanctions is to send a message deterring similar conduct by defendant and others, the government bluntly stated that imposition of the statutory fines that would apply here “would utterly fail to send that message.” Id. In short, this is precisely the case in which an award of punitive damages can serve as a needed supplement to legislatively set criminal penalties.

B. This Court’s Decisions According Deference To Congress In Matters Involving Interstate Disputes and Wrongful Death Do Not Warrant Eliminating Punitive Damages In This Case.

Exxon proposes an oil-spill exception to the general rule permitting punitive damages and criminal penalties for the same misconduct. For support, Exxon stitches together statements regarding the judicial role in lawmaking, cribbed from disparate and inapposite opinions of this Court. These relate to: (1) the limited authority of courts under “new federal common law” relating to interstate disputes, and (2) the self-imposed limits on allowing certain types of damages in non-statutory actions for wrongful death that Congress has specifically rejected by statute. Neither set of decisions warrants this Court’s departure from the traditional rule permitting punitive damages and criminal penalties for the same conduct.

1. The rule that federal common law is displaced whenever Congress legislates on the same subject applies in the context of interstate disputes, and is inapposite to this maritime case.

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Exxon asserts that the second Question Presented in this case implicates “basic separation of powers principles,” Exxon Br. at 27, pitting the judicial branch against Congress as to “which branch of the Federal Government is the source of federal law.” Id. at 29. The conflict described by Exxon is largely imagined. As Justice Ginsburg has correctly stated, “development of the law in admiralty [is] a shared venture in which ‘federal common lawmaking’ does not stand still, but ‘harmonize[s] with the enactments of Congress in the field.’” Norfolk Shipbuilding & Drydock Corp. v. Garris, 532 U.S. 811, 821 (2001) (Ginsburg, J., concurring), quoting American Dredging Co. v. Miller, 510 U.S. 443, 455 (1994). That “shared venture,” as amici discuss in part C, infra, is informed by the intent of Congress.

Exxon, however, proposes a “same subject” rule to replace any inquiry into congressional intent. Its view is that the federal courts’ lawmaking power “is strictly circumscribed, if not displaced outright, where Congress has already addressed the problem.” Exxon Br. at 28. Under such a rule, the intent of Congress to displace judge-made remedies is not relevant at all. Id. at 29. Instead, Exxon urges upon the Court a “rule that federal common-law remedies applicable to a given subject are displaced when Congress has addressed the same subject.” Id. at 34. For support, Exxon looks to City of Milwaukee v. Illinois, 451 U.S. 304 (1981), and Middlesex County Sewerage Authority v. National Sea Clammers Association, 453 U.S. 1 (1981). Neither is an admiralty case. City of Milwaukee, where a state sued a political subdivision of another state to abate water pollution, was governed by “non-maritime

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federal common law.” Matter of Oswego Barge Corp., 664 F.2d 327, 335 (2d Cir. 1981). In Sea Clammers, plaintiff association brought suit against New York, New Jersey, and federal officials for pollution damage to fishing, based on federal common law.4 Neither case represents a typical application by the Court of judge-made remedies. Instead, both cases involve the unique enclave of federal law this Court has called “interstate common law.” Kansas v. Colorado, 206 U.S. 46, 98 (1907). They typify only the “unique role federal common law plays in resolving disputes between one State and the citizens or government of another.” City of Milwaukee, 451 U.S. at 334 (Blackmun, J., dissenting). Following this Court’s decision in Erie R.R. v. Tompkins, 304 U.S. 64 (1938), “federal common law” has referred to those enclaves of judicial lawmaking serving peculiarly federal interests, including, most notably, interstate disputes where it would be “inappropriate that the law of either state should govern.” Henry J. Friendly, In Praise of Erie – And of 4 Exxon mistakenly characterizes Sea Clammers as applicable to maritime tort actions. Exxon Br. at 34. This Court granted certiorari in that case on the limited question: “Whether a private citizen has standing to maintain a federal common law nuisance action for alleged damages sustained resulting from ocean pollution as a general federal question under 28 U.S.C. § 1331.” 449 U.S. 917 (1980). Because a claim based on maritime law does not arise under the laws of the United States within the meaning of § 1331 jurisdiction, Romero v. International Terminal Operating Co., 358 U.S. 354 (1959), the Court was addressing only federal common law.

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the New Federal Common Law, 39 N.Y.U.L. Rev. 383, 408 n.119 (1964). Indeed, the very day Justice Brandeis declared for this Court, “there is no federal general common law,” Erie, 304 U.S. at 78, the Court issued an opinion, also authored by Justice Brandeis, resolving an interstate dispute over water apportionment, as “a question of ‘federal common law’ upon which neither the statutes nor the decisions of either State can be conclusive.” Hinderlider v. La Plata River & Cherry Creek Ditch Co., 304 U.S. 92, 110 (1938). With respect to the law governing interstate disputes, “federal common law is ‘subject to the paramount authority of Congress.”’ City of Milwaukee, 451 U.S. at 313-14, quoting New Jersey v. New York, 283 U.S. 336, 348 (1931). That paramount authority is called forth by our system of federalism. The States are represented in Congress, not by the judicial branch. Id. at 317 n.9. To the extent the Court has any lawmaking role at all, it is as the practical default authority: where Congress has not provided legislation governing an interstate dispute, it falls to the Court to act interstitially. Illinois v. City of Milwaukee, 406 U.S. 91, 107 & n.9 (1972). When Congress has addressed the subject, “the need for such an unusual exercise of lawmaking by federal courts disappears.” City of Milwaukee, 451 U.S. at 314, and “the task of the federal courts is to interpret and apply statutory law, not to create common law.” Northwest Airlines, Inc. v. Transport Workers Union of America, AFL-CIO, 451 U.S. 77, 107 n.34 (1981). In such a case, the Court need not inquire whether Congress specifically intended to displace judge-made law. That law is displaced because

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“[t]here is no ‘interstice’ here to be filled by federal common law.” City of Milwaukee, 451 U.S. at 323. The judge-made law governing this case differs from that specialized interstate common law. Maritime law is a “federal corpus of law which is in no sense interstitial.” David W. Robertson, ADMIRALTY AND FEDERALISM 140-41 (1970). See also Ernest A. Young, Preemption at Sea, 67 Geo. Wash. L. Rev. 273, 282 (1999) (admiralty law is a “free-standing corpus, rather than a set of interstitial principles intended to flesh out the meaning of a federal statutory scheme.”). The Court’s role is not one of subservience where Congress has addressed the same subject. Instead, it is more aptly characterized as a “shared venture,” as Justice Ginsburg suggested in Norfolk Shipbuilding, supra, where the Court seeks to harmonize common-law remedies with the congressional intent expressed in statutory provisions.

Thus, despite the fact that Congress has addressed the subject of maritime wrongful death in the Jones Act, 41 Stat. 1007, as amended, 46 U.S.C. App. § 688, and in the Death on the High Seas Act (DOHSA), 46 U.S.C. §§ 761-67, this Court has acted with respect to the same subject to “supplement these statutory remedies.” Miles, 498 U.S. at 27; see also Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 625 (1978) (same). Thus, in Moragne v. States Marine Lines, 398 U.S. 375 (1970), the Court created a non-statutory wrongful death remedy under general maritime law.5

5 Moragne was a longshoreman killed aboard a vessel and treated as a seaman for purposes of the Jones Act under Seas Shipping Co. v. Sieracki, 328 U.S. 85 (1946).

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To the extent that this Court in City of Milwaukee and Sea Clammers required that judge-made federal common law give way when Congress has addressed the same subject, those decisions are addressed to the unique specialized role of federal common law in interstate disputes. They have no bearing on maritime law cases such as this one.

2. This Court’s deference to statutory restrictions on wrongful death damages when providing for non-statutory actions does not preclude punitive damages under a traditional maritime law remedy.

Exxon relies on Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978), and Miles v. Apex Marine Corp., 498 U.S. 19 (1990), for the proposition that, because Congress did not authorize imposing punitive damages on vessel owners under the Clean Water Act, such damages may not be awarded in private causes of action under general maritime law. Exxon also cites Dooley v. Korean Air Lines Co., Ltd., 524 U.S. 116 (1998), where the Court held that the beneficiaries of passenger killed in an airline crash, who were entitled under DOHSA to recover only for “pecuniary loss,” could not recover under general maritime law for decedent’s pain and suffering, because allowing such damages would contradict the expressed will of Congress. Id. at 123. Those cases, however, speak to an entirely different issue.

In Miles v. Apex Marine Corp., 498 U.S. 19 (1990), the Court confirmed that “there is a general maritime cause of action for the wrongful death of a [true] seaman.” Id. at 30.

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Prior to 1970, at common law and in admiralty, there existed no remedy for wrongful death. The Harrisburg, 119 U.S. 199 (1886). Congress in 1920 enacted statutory remedies for wrongful death of a seaman in the Jones Act, 41 Stat. 1007, as amended, 46 U.S.C. App. § 688, and for wrongful death outside territorial waters in DOHSA, 46 U.S.C. §§ 761-767 (1976). This Court has determined that Congress intended that claimants under both statutes be limited to recovery of pecuniary damages. Miles, 498 U.S. at 31-32 (Jones Act); Higginbotham, 436 U.S. at 622-24 (1978) (DOHSA). This Court has stated that in situations where plaintiff could bring either a statutory cause of action or a non-statutory one, it would be guided by the limits on the types of damages Congress “has affirmatively and specifically enacted.” Id. at 625 (emphasis added). See also Miles, 498 U.S. at 31 (explicit limitation of statutory recovery to “pecuniary” loss forecloses recovery for non-pecuniary loss in non-statutory remedy). Thus, “[i]t would be inconsistent with our place in the constitutional scheme were we to sanction more expansive remedies in a judicially created cause of action . . . than Congress has allowed.” Id. at 32-33. This case does not present the Court with such a conflict. The Clean Water Act does not “affirmatively and specifically” proscribe recovery of punitive damages. Indeed, the Act does not make any provision for any remedy providing any type of damages to private parties for pollution-caused harms. Exxon concedes as much, stating that the CWA “is not addressed to compensation for private

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harms, but instead prescribes a comprehensive, calibrated scheme of public enforcement,” of effluent standards. Exxon Br. at 40. Thus, in cases where the statute at hand did not provide a remedy for plaintiff’s harm, as is the case with the Clean Water Act here, this Court has not limited plaintiff’s relief to those types of damages enumerated in the statute. For example, in Sea-Land Services, Inc. v. Gaudet, 414 U.S. 573 (1974), involving the death of a longshoreman in territorial waters, plaintiff could not have brought an action under either the Jones Act or DOHSA. Consequently, those statutes had no preclusive effect on the damages available under plaintiff’s non-statutory remedy. See Miles, 498 U.S. at 31; see also American Export Lines, Inc. v. Alvez, 446 U.S. 274 (1980) (allowing damages for loss of society in cases of non-fatal injuries occurring in state territorial waters not provided for in federal statutes); cf. Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199 (1996) (loss of consortium recoverable in state cause of action for wrongful death of a nonseafarer in state territorial waters for which federal law provides no remedy). Thus, courts have concluded, where the remedy provided by the general maritime law “has no statutory analogue,” there is no statutory constraint or limit on that remedy, including the right to recover punitive damages for breach of a duty created by the general maritime law. Glynn v. Roy Al Boat Management Corp., 57 F.3d 1495 (9th Cir. 1995) (allowing punitive damages in a maritime tort action claiming willful failure to pay maintenance and cure); Breshears v. River Marine Contractors, Inc., Civ. A. No. 92-1850, 1992 WL 245656, at *2 (E.D. La. Sept. 10, 1992) (actions for

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failure to pay maintenance and cure “are grounded in the general maritime law and have no counterpart in the tort provisions of DOHSA and the Jones Act.” Miles is “therefore, inapposite to the determination of whether punitive damages are available.”); Ridenour v. Holland America Line Westours, Inc., 806 F. Supp. 910, 911 (W.D. Wash. 1992) (same). In this case, the Clean Water Act provides a remedy only for the government to recover its cleanup costs. Plaintiffs’ action for negligence causing their commercial losses has no analog or counterpart in the Clean Water Act. Miles and Higginbotham are therefore inapposite. Absent an explicit congressional declaration to the contrary, this Court has repeatedly stated that a right under common law or maritime law “is not to be abrogated ‘unless it be found that the preexisting right is so repugnant to the statute’” as to “render its provisions nugatory.” Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 298 (1976), quoting Texas & Pacific Ry. v. Abilene Cotton Oil Co., 204 U.S. 426, 437 (1907). See also Silkwood v. Kerr-McGee Corp., 464 U.S. at 255 (“Congress assumed traditional principles of state tort law would apply with full force” including awards of punitive damages, “unless they were expressly supplanted.”). In this case, the only inference that can be drawn from the absence of any provision in the Clean Water Act for the recovery of punitive damages is that Congress intended such traditional forms of relief to remain available to those harmed by oil spills.

C. Congress Did Not Intend the Clean Water Act to Alter the General Rule

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Permitting Punitive Damages Under General Maritime Law.

1. It is Exxon’s burden to prove Congress intended the Clean Water Act to preclude relief traditionally available under general maritime law. Exxon argues that the intent of Congress is

irrelevant to answering the second Question Presented. Rather, judge-made law must give way “whenever it can be said that Congress has legislated on the subject.” Exxon Br. at 29-30.

Such a position is plainly untenable. Assume for a moment a federal statute that directly addresses the same subject as general maritime law. Yet, the legislation also includes a savings provision that expressly preserves the existing judge-made rule. Under Exxon’s proposed rule, the general maritime remedy would be eliminated, despite Congress’s expressed contrary intent, under the banner of deference to the legislative branch and separation of powers.

One point of agreement between the majority and dissent in Sea Clammers was that the party asserting that the judge-made law is displaced by a statute bears the burden of proving that Congress so intended. Justice Powell stated for the Court, “we do not suggest that the burden is on a plaintiff to demonstrate congressional intent to preserve [other] remedies.” 453 U.S. at 21 n.31. The question is “whether Congress intended to withdraw that right of action.” Id. at 27 n.11 (Stevens, J., dissenting). Indeed, as this Court has repeatedly stated:

Statutes which invade the common law or the general maritime law are to be read with

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a presumption favoring the retention of long-established and familiar principles, except when a statutory purpose to the contrary is evident.

Isbrandtsen Co. v. Johnson, 343 U.S. 779, 783 (1952); United States v. Texas, 507 U.S. 511, 534 (1993). Thus, it is Exxon’s burden to prove Congress intended to eliminate punitive damage awards to private plaintiffs. In fact, Congress expressly preserved Plaintiffs’ right to seek that relief.

2. Congress in the Clean Water Act expressly preserved plaintiffs’ private tort actions for harm caused by oil spills, including the availability of punitive damages.

In discerning whether Congress intended the Clean Water Act to eliminate judge-made private rights of action under maritime law for oil spills, including the damages traditionally available under that remedy, “[a]ny terms of the statute explicitly preserving or preempting judge-made law are of course controlling.” Matter of Oswego Barge Corp., 664 F.2d at 338; Conner v. Aerovox, Inc., 730 F.2d 835, 840 (1st Cir 1984). Punitive damages, as earlier noted, have historically been deemed available in maritime tort actions on proof of willful or reckless misconduct. See p. 11, supra. In several provisions of the Clean Water Act, Congress has expressly preserved this remedy. First, 33 U.S.C. § 1365(e) provides:

Nothing in this section shall restrict any right which any person (or class of persons) may have under any statute or common law to seek enforcement of any effluent standard or limitation or to seek any other relief.

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Exxon argues that § 1365(e) is ineffective because it provides only that nothing in “this section,” regarding citizen suits, revokes other remedies, but does not “mean that the Act as a whole does not supplant formerly available federal common-law actions.” Exxon Br. at 39, quoting City of Milwaukee, 451 U.S. at 328-29.

This argument is in error. In City of Milwaukee, the State of Illinois brought a federal common-law action for abatement of a nuisance to halt the city’s discharge of sewage into Lake Michigan. This Court held that the CWA “as a whole” provided for comprehensive regulation of such pollution using standards set by EPA, leaving no room for courts to impose their own higher standards. Id. at 328.

This case, by contrast, involves a private cause of action for damages. None of the provisions of the Act pertains to a remedy seeking damages. Section 1365 is the only section that permits a private cause of action, and it expressly preserves the private claimant’s right “to seek any other relief.” It cannot be argued that the Clean Water Act “as a whole” leaves no room for a private cause of action for damages under other law.

Any uncertainty as to the meaning of the statutory text is removed by the legislative history. The House Report explains that this section “provides that the right of persons (or class of persons) to seek enforcement or other relief under any statute or common law is not affected.” H.R. Rep. No. 92-911, at 134 (1972), reprinted in 1 A Legislative History of the Water Pollution Control Act Amendments of 1972, 93d Cong., 1st Sess. 821 (Comm. Print 1973).

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The Senate Report states that this section “would specifically preserve any rights, or remedies under any other law. Thus, if damages could be shown, other remedies would remain available.” S. Rep. No. 92-414, at 81, reprinted in 2 A Legislative History, supra, at 1499.

Significantly, Congress considered and rejected a proposal to preempt the common law and make citizen suits under § 1365 “the sole and exclusive method [by] which citizens may participate in this kind of litigation.” Water Pollution Control Legislation: Hearings Before the Subcomm. on Air and Water Pollution of the Senate Comm. on Public Works, 92d Cong., 1st Sess., Pt. 1, at 724 & 730-31, reprinted in 1 Legislative History, supra, at 1071-77. Second, in the section providing for the enforcement of pollution standards and imposing penalties on vessel owners for non-compliance, Congress has provided:

Nothing in this section shall affect or modify in any way the obligations of any owner or operator of any vessel, . . . under any provision of law for damages to any publicly owned or privately owned property resulting from a discharge of any oil.

33 U.S.C. §1321(o)(1) (emphasis added). Contrary to Exxon’s contention that this provision preserves only compensatory damages, Exxon Br. at 37, Congress has clearly preserved plaintiffs’ maritime cause of action for damages, including all relief traditionally recoverable under that remedy.6

6 This Court has recognized that common law causes of action constitute “obligations imposed under state law,”

27

This Court has often stated that the question of what relief is available to plaintiffs under a federal private right of action “is ‘analytically distinct’ from the issue of whether such a right exists in the first place.” Franklin v. Gwinnett County Public Schools, 503 U.S. 60, 65-66 (1992) (citation omitted). Where plaintiffs have a valid right of action, “we presume the availability of all appropriate remedies unless Congress has expressly indicated otherwise,” a principle which, the Court stated, “has deep roots in our jurisprudence.” Id. at 66. That principle requires that “where legal rights have been invaded, and a federal statute provides for a general right to sue for such invasion, federal courts may use any available remedy to make good the wrong done.” Bell v. Hood, 327 U.S. 678, 684 (1946). Amici suggest that the same principle extends to non-statutory rights of action.7

Cipollone v. Liggett Group, Inc., 505 U.S. 504, 518 (1992), so that preemption of state requirements “easily encompass[es] obligations that take the form of common-law rules.” Id. at 521. 7 Exxon also argues that “provision of law” is limited to clauses in statutes or contracts and does not include common law claims. Exxon Br. at 38 n.14. See also id. at 39. In fact, courts often deem “provision of law” to include the common law. See, e.g., United States v. Szilvagyi, 398 F. Supp. 2d 842, 846 (E.D. Mich. 2005) (“notwithstanding any other provision of law” encompasses common law doctrine of collateral estoppel); Jensen v. Sattler, 696 N.W.2d 582, 588 (Iowa 2005) (savings clause preserving liability “created by another provision of law” includes common-law claims); Carson Harbor Village, Ltd. v. Unocal Corp., 287 F. Supp. 2d 1181, 1183 (C.D. Cal. 2003) (where releases are exempt from strict liability under

28

Despite these express savings provisions, Exxon argues that the Clean Water Act is “comprehensive” legislation that leaves no room for non-statutory remedies. Exxon Br. at 34. The necessary question is: comprehensive as to what domain? Even accepting that the CWA provides a comprehensive regime for effluent discharge permits and providing legal authority for the government to recover its cleanup costs, the statute makes no provision whatever for private claims for harms caused by oil spills or the damages recoverable in such claims. As this Court stated: “Shrimp, clam, oyster and scallop beds may be destroyed, and ruined and the livelihood of fishermen imperiled. The Federal [Clean Water] Act takes no cognizance of those claims but only of costs to the Federal Government, if it does the cleaning up.” Askew v. American Waterways Operators Inc., 411 U.S. 325, 333-34 (1973).

If Congress intended to eliminate private causes of action for those harms, “its failure even to hint at it is spectacularly odd.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 491 (1996). As the Court stated in Silkwood, “Congress’ failure to provide any federal remedy for persons injured” by illegal conduct suggests that Congress did not intend to eliminate judicial recourse. 464 U.S. at 251. Finally, Exxon asserts that the CWA “involves an explicit balance of Congress’s twin goals of protecting the environment and limiting the liability of shipowners and other carriers so as not to impair commerce.” Exxon Br. at 32. CERCLA, plaintiffs “must assert their claims under some other provision of law, including common law”).

29

As the Fifth Circuit has pointed out, Congress struck that balance in a much different manner than Exxon suggests. The legislative history plainly indicates that Congress’s aim was “to protect the taxpayers from potential cleanup costs” from oil spills but not unfairly imposing “crushing liability” on vessel owners. United States v. Dixie Carriers, Inc., 627 F.2d 736, 739-40 (5th Cir. 1980). The compromise reflected in the CWA imposes strict liability for cleanup costs on vessel owners up to limits that Congress deemed insurable, but allows unlimited cleanup liability for oil spills resulting from willful or reckless conduct. Id. This “balanced and comprehensive remedial scheme . . . precludes recovery by the government under additional legal theories.” Id. at 740. It does not preclude recovery by private parties for economic harm caused by oil spills, a subject that was not at all a factor in the legislative balance. II. MARITIME LAW IMPOSES NO GREATER

LIMITS ON PUNITIVE DAMAGES THAN DOES DUE PROCESS

The Third Question Presented asks: Was this $2.5 billion award within the limits permitted by federal maritime law?

Exxon’s argument that the punitive damages assessed here exceed those permitted under maritime law erroneously treats the issue as a matter of first impression, faulting the court below for failing “to articulate, based on the policies of maritime law, the rules that should govern punitive damages, and to reduce the award accordingly.” Exxon Br. at 44. While it is true that there exists no maritime law principle establishing a limited range

30

of permissible punitive damages, the traditional approach to such a supposed vacuum is not to concoct new principles but to apply such “traditional common-law rules, modifications of those rules, and newly created rules” as can be “[d]rawn from state and federal sources.” East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 864-65 (1986) (footnote omitted). Exxon does not disagree that punitive damages in maritime cases must be evaluated under the same considerations that govern the common-law review of punitive damages. See Exxon Br. at 46. However, the company attempts to articulate new standards that have never governed punitive damage decisions in maritime cases – or any other type of case – before. The common law decisively rejects Exxon’s first argument that public policy precludes any punitive damages in maritime cases. Not only have punitive damages long been a “well-established principle of the common law,” Day v. Woodworth, 54 U.S. (13 How.) 363, 371 (1851), but were equally well recognized as a matter of maritime law. See CEH, 70 F.3d at 699 (collecting cases); Gamma-10 Plastics, Inc. v. American President Lines Ltd., 32 F.3d 1244, 1254 (8th Cir. 1994); David W. Robertson, Punitive Damages In American Maritime Law, 28 J. of Mar. L. & Comm. 73 (1997). This longstanding recognition of punitive damages in maritime law is entitled to great respect. This Court has recognized that its “flexibility and capacity for growth and adaptation is the peculiar boast and excellence of the common law.” Hurtado v. California, 110 U.S. 516, 530 (1884); Still, and quite appropriately, “[t]his Court traditionally has been

31

hesitant to overrule prior constructions of statutes or interpretations of common-law rules,” absent “countervailing considerations.” Monell v. Department of Social Services, 436 U.S. 658, 708 (1978) (emphasis added). Neither Exxon nor its amici provide this Court with any developments or other rationales that would require reexamination. Instead, all their briefs continue to argue against punitive damages in maritime cases as though the common law were as fungible as the ever-changing dictates of fashion. Under the common law, there were few restraints on punitive damages. See William B. Hale, HANDBOOK ON THE LAW OF DAMAGES § 86, at 212-13 (1896) (it “is the province of the jury to determine whether or not [exemplary] damages should be awarded” and that the “amount of exemplary damages is limited only by the sound discretion of the jury,” except where such damages are excessive due to the jury’s “passion, prejudices, or corruption”). In other words, the prerogative to assess punitive damages had to be exercised intelligently so as to reflect the “peculiar circumstances of each case.” Day v. Woodworth, 54 U.S. at 371, cited with approval in Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 15 (1991). See also Philadelphia, Wilmington & Baltimore R.R. v. Quigley, 62 U.S. (21 How.) 202, 213 (1858); Lake Shore Ry. v. Prentice, 147 U.S. (40 Davis) 101, 107 (1893); and Scott v. Donald, 165 U.S. 58, 86 (1897). In Smith v. Wade, 461 U.S. 30, 34 (1983), this Court flatly declared that it “has repeatedly approved that common-law method for assessing punitive awards.” While the jury’s prerogative on punitive damages has shifted somewhat more recently, see

32

Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 437 (2001), this Court has adhered to the notion that an individualized assessment of the misconduct must remain the touchstone for a proper punitive damage award. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003) (“The precise award in any case . . . must be based upon the facts and circumstances of the defendant’s conduct.”). Contrary to these principles, the standards proposed by Exxon have no anchor in the common law. Instead, Exxon would have this Court variously transfer the authority to determine the size of a punitive damage award in any particular case to unarticulated and fanciful imaginings of congressional preference, Exxon Br. at 51, to the jury’s determination of compensatory damages as if that established a common-law maximum,8 Exxon Br. at 52, to limiting punitive damages to any illicit profit, as if that were the only legitimate consideration, Exxon Br. at 54, as well as prohibiting consideration of a defendant’s wealth, Exxon Br. at 55, which has always been a standard consideration under the common law. See TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 462 n.28 (1993) (“Under well-settled law, however, factors such as these are typically considered in assessing punitive damages.”).

Instead of these one-size-fits-all arbitrary approaches, the common law, like the constitutional considerations this Court employs, reflect an 8 This Court has categorically rejected any mathematical bright-line limits on punitive damages. See State Farm, 538 U.S. at 424-25.

33

acknowledgement that an appropriate punitive award reflects “‘the enormity of the offense.’” BMW, 517 U.S. at 575 (1996) (quoting Day, 54 U.S. at 371). The Court has found this proportionality principle “‘deeply rooted and frequently repeated in common law jurisprudence.’” Id. at 575 n.24 (citation omitted). Moreover, the compensatory damages awarded here only encompassed certain economic harms. Pet. App. 166a-167a. Because the noneconomic harms visited upon the plaintiffs could not be quantified or valued, id., this Court has recognized that a larger award may be merited. See State Farm, 538 U.S. at 425 (justifying larger awards when “the monetary value of noneconomic harm might have been difficult to determine”).

For that reason, among others, the careful, repeated analysis of the courts below – involving an enormous record and taking place over a long period of time as this Court refined the due process analysis of punitive damages – should be credited with having sustained a punitive damage assessment that comports with all criteria that can be devised as a function of maritime, common and constitutional law.

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CONCLUSION For the above reasons, the decision of the court of appeals should be affirmed.

Respectfully submitted, JEFFREY ROBERT WHITE ROBERT S. PECK ANDRE M. MURA Center for Constitutional

Litigation, P.C. 1050 31st St., NW Washington, DC 20007 (202) 944-2839 KATHLEEN FLYNN PETERSON 1050 31st St., N.W. Washington, DC 20007 President, American Association for Justice ARTHUR BRYANT 555 12th St, Suite 1620 Oakland, CA 94607 Executive Director, Public Justice, P.C. LESLIE A. BRUECKNER Public Justice, P.C. 1825 K Street, NW, Suite 200 Washington, DC Attorneys for Amici Curiae

January 29, 2008

No. 07-219 ================================================================

In The



Petitioners, v.


Respondents.

--------------------------------- ♦ ---------------------------------



--------------------------------- ♦ ---------------------------------

BRIEF FOR THE PACIFIC COAST FEDERATION OF FISHERMEN’S ASSOCIATIONS AND THE

INSTITUTE FOR FISHERIES RESOURCES, AS AMICI CURIAE IN SUPPORT OF RESPONDENTS

--------------------------------- ♦ ---------------------------------

GLEN H. SPAIN Northwest Regional Director PACIFIC COAST FEDERATION OF FISHERMEN’S ASSOCIATIONS AND THE INSTITUTE FOR FISHERIES RESOURCES PO Box 11170 Eugene, OR 97440-3370 (541) 689-2000

AMY J. WILDERMUTH Counsel of Record UNIVERSITY OF UTAH S. J. QUINNEY COLLEGE OF LAW332 South 1400 East, Room 101 Salt Lake City, UT 84112-0730(801) 581-6833




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TABLE OF CONTENTS

Page

INTRODUCTION AND INTEREST OF THE AMICI CURIAE .................................................. 1

STATEMENT.......................................................... 3


ARGUMENT........................................................... 11

I. Just as With Land-Based Torts, Punitive Damages May Be Imposed Under Mari-time Law When a Managerial Agent Acts Recklessly..................................................... 11

A. Modern Maritime Communications and Contact with Shore................................ 14

B. Modern Maritime Cargo........................ 19

C. The Rule Applied in This Case Is Fair to All Maritime Businesses ................... 23

D. Punitive Damages Under Maritime Law for Reckless Acts of a Managerial Agent Will Not Threaten Maritime Business................................................. 25

II. This Particular Punitive Damage Award Is Permissible Under Maritime Law............... 29

III. The Clean Water Act Poses No Bar To Impos-ing Punitive Damages In This Case............. 32

A. The District Court Did Not Err In Denying Exxon’s Belated Attempt to Claim Clean Water Act Preemption As Untimely ................................................ 32

ii


Page

B. There Is No Merit to Exxon’s Clean Water Act Preemption Defense............. 37

CONCLUSION ....................................................... 39

APPENDIX ..........................................................App. 1

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Page

CASES

A.D.E. Inc. v. Louis Joliet Bank and Trust Co., 742 F.2d 395 (7th Cir. 1984) ...................................34

American Federal Group, Ltd. v. Rothenberg, 136 F.3d 897 (2d Cir. 1998) .....................................33

American Soc’y of Mech. Eng’rs v. Hydro Level Corp., 456 U.S. 556 (1982)......................................13

Askew v. American Waterways Operators, 411 U.S. 325 (1973)....................................................3, 22

Blonder-Tongue Lab., Inc. v. Univ. of Ill. Found., 402 U.S. 313 (1971) ...................................35

Clinton v. Jones, 520 U.S. 681 (1997) ........................33

Commercial Molasses Corp. v. New York Tank Barge Corp., 314 U.S. 104 (1941) ...........................28

Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001) ......................30, 32

Coryell v. Phipps, 317 U.S. 406 (1943).......................28

Dukes v. Wal-Mart Stores, Inc., 222 F.R.D. 137 (N.D. Cal. 2004), aff ’d, 509 F.3d 1168 (9th Cir. 2007) .................................................................15

Exxon Co. U.S.A. v. Sofec, Inc., 517 U.S. 830 (1996) .......................................................................11

Exxon Shipping Co. v. Airport Depot Diner, 120 F.3d 166 (9th Cir. 1997) ..........................................32

GMAC v. Froelich, 273 F.2d 92 (D.C. Cir. 1959)........24

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Page

Hartford Accident & Indemnity Co. of Hartford v. Southern Pacific, 273 U.S. 207 (1927)................28

In re Fine Paper Antitrust Litigation, 685 F.2d 810 (3d Cir. 1982) ....................................................33

International Paper Co. v. Ouellette, 479 U.S. 481 (1987) ................................................................37

Kimble v. Hoso, 439 F.3d 331 (6th Cir. 2006) ............33

Laboratory Corp. of America Holdings v. Chi-ron Corp., 384 F.3d 1326 (Fed. Cir. 2004) ..............33

Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438 (2001) ................................................................28

Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991) .......................................................................30

Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927)........................................................31

Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984) .......................................................................37

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003).................................................30

The Amiable Nancy, 16 U.S. 546 (1818) ........11, 13, 14

Union Oil Co. v. Oppen, 501 F.2d 558 (9th Cir. 1974) ..........................................................................3

United States v. Locke, 529 U.S. 89 (2000) ..................5

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Page

STATUTES, REGULATIONS, AND RULES

33 U.S.C. § 1321(o)(1) (2002)......................................38

33 U.S.C. § 2718 (2002) ..............................................27

46 U.S.C. §§ 30501-35012 (2002) ...............................28

49 C.F.R. § 173.1 (2007)..............................................20

FED. R. CIV. P. 8 ....................................................34, 35

FED. R. CIV. P. 16 ........................................................36

FED. R. CIV. P. 50 ........................................................36

LEGISLATIVE MATERIALS

S. REP. NO. 101-94 (1989), reprinted at 1990 U.S.C.C.A.N. 722.......................................................5

Hearing on H.R. 1465 – To Establish Limita-tions on Liability for Damages Resulting from Oil Pollution, To Establish a Fund for the Payment of Compensation for such Dam-ages, and for Other Purposes Before Sub-comm. on Coast Guard and Navigation, House Comm. on Merch. Marine & Fisheries, 101st Cong. 187 (May 11, 1989) .............................26

Pending Oil Spill Legislation, Hearing on S. 686, S. 1066, and S. 1223 Before Subcomm. on Envtl. Prot., Senate Comm. on Env’t and Pub. Works, 101st Cong. 128 (July 21, 1989).........26

135 Cong. Rec. H8133 (Nov. 8, 1989) .........................27

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Page

OTHER AUTHORITIES

ROBERT GREENHALGH ALBION, THE RISE OF NEW YORK PORT (1939) ....................................................19

EUROPEAN MARITIME SAFETY AGENCY, EMSA ACTION PLAN FOR HNS POLLUTION PREPARED-

NESS AND RESPONSE (2007) ................................21, 22

EXXON VALDEZ OIL SPILL TRUSTEE COUNCIL, HERRING RESTORATION STEERING COMMITTEE BACKGROUND AND STATUS REPORT (2007), avail-able at http://www.evostc.state.ak.us/Universal/ Documents/Publications/HerringCommittee-Exec Summary.pdf .........................................................8, 9

EXXON VALDEZ OIL SPILL TRUSTEE COUNCIL, UPDATE ON INJURED RESOURCES AND SERVICES (2006), available at http://www.evostc.state.ak. us/Universal/Documents/Publications/2006IRS Update.pdf...........................................................8, 31

EXXON VALDEZ OIL SPILL TRUSTEE COUNCIL, EXXON VALDEZ OIL SPILL RESTORATION PLAN (1994), available at http://www.evostc.state. ak.us/Policies/restplan.cfm .......................................7

IRVING E. FANG, A HISTORY OF MASS COMMUNI-

CATION: SIX INFORMATION REVOLUTIONS (1997)........14

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Page

STEPHEN E. FLYNN ET AL., NAVIGATING THE UNCERTAIN WATERS OF THE 21ST CENTURY: THE ROLE OF NEW TECHNOLOGIES IN BUILDING A COMPETITIVE AND SECURE MARITIME INFRA-

STRUCTURE (1998), available at http://www.ion. org/ionsite/search/view_abstract.cfm?jp=p&idno =1231 .......................................................................16

L.S. HOWETH, HISTORY OF COMMUNICATIONS: ELECTRONICS IN THE UNITED STATES NAVY (1963), available at http://earlyradiohistory. us/1963hw.htm ........................................................14

JOHN J. KIRCHER AND CHRISTINE M. WISEMAN, PUNITIVE DAMAGES: LAW AND PRACTICE (2d ed. 2000) ........................................................................12

WILLIAM MEADE FLETCHER, CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS (rev. vol. 2001) .......23

INTERNATIONAL MARINE ORGANIZATION, IMO AND DANGEROUS GOODS AT SEA (1996)................19, 20, 21

JONATHAN L. RAMSEUR, CONGRESSIONAL RE-

SEARCH SERVICE, OIL SPILLS IN U.S. COASTAL WATERS (2007) ...............................................5, 22, 30

CHARLES ALAN WRIGHT & ARTHUR R. MILLER, 5 FED. PRAC. & PROC. CIV. 3D (2007) ...................34, 35

UNITED STATES GENERAL ACCOUNTING OFFICE, ADEQUACY OF PREPARATION AND RESPONSE TO THE EXXON VALDEZ OIL SPILL (1989) .....................5, 6

RESTATEMENT (THIRD) OF AGENCY (2006) ....................12

RESTATEMENT (SECOND) OF TORTS (1979) ..............12, 29

viii


Page

Danielle Droitsch, Muddy Waters: Clarifying the Line Between Public and Private Recov-ery of Natural Resource Damages, VT. J. ENTVL. LAW (1998), http://www.vjel.org/essays/ roscoe98a.html ........................................................21

Edgar Gold, Vessel Traffic Regulation: The Interface of Maritime Safety and Operational Freedom, 14 J. MAR. L. & COM. 1 (1983) ................18

Richard E. Thorne and Gary L. Thomas, Her-ring and the “Exxon Valdez” oil spill: an in-vestigation into historical data conflicts, 65 ICES J. OF MARINE SCIENCE 44 (2007)......................9

Jeffrey W. Short et al., Slightly Weathered Exxon Valdez Oil Persists in Gulf of Alaska Beach Sediments After 16 Years, 41 ENVIRON. SCI. TECHNOL. 1245 (2007) ........................................7

Peter MacKay, The Song Remains the Same, THE HAZARDOUS CARGO BULL., Jan. 1, 2005 ...........20

Colin Nickerson, For Ships, End of the Dotted (and Dashed) Line, BOSTON GLOBE, Jan. 31, 1999, at A1...............................................................15

European Space Agency, Low Cost Internet Access at Sea, Apr. 19, 2006, http://www.esa. int/esaTE/SEMMAWNFGLE_index_0.html ..........15

Exxon Valdez Oil Spill Trustee Council, History, http://www.evostc.state.ak.us/History/PWSmap. cfm .............................................................................5

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Page

Exxon Valdez Oil Spill Trustee Council, History, http://www.evostc.state.ak.us/History/excerpt. cfm .............................................................................6

Exxon Valdez Oil Spill Trustee Council, History FAQ, http://www.evostc.state.ak.us/history/faq. cfm........................................................................5, 30

Exxon Valdez Oil Spill Trustee Council, Injured Resources and Services, http://www.evostc.state. ak.us/Publications/injuredresources.cfm .......6, 7, 31

Exxon Valdez Oil Spill Trustee Council, Linger-ing Oil, http://www.evostc.state.ak.us/Habitat/ lingering.cfm .......................................................6, 30

United States Coast Guard, Vessel Traffic Services, http://www.navcen.uscg.gov/mwv/vts/ vts_home.htm..........................................................16

http://maritimematters.com/shipcams.html..............17

1

INTRODUCTION AND INTEREST OF THE AMICI CURIAE

The parties’ consent to the filing of this brief was lodged with the Clerk of this Court in accordance with Supreme Court Rule 37.1

Founded in 1976, the Pacific Coast Federation of Fishermen’s Associations (“PCFFA”) is the largest trade association of working commercial family fish-ermen and women on the west coast of the United States. PCFFA is a nonprofit federation and trade association dedicated to protecting the rights of indi-vidual fishermen and fighting for the long-term sur-vival of commercial fishing as a productive livelihood and way of life. It consists of seventeen different port associations, fishermen’s marketing associations, and commercial fishing vessel owner’s associations span-ning the Pacific coast from San Diego to Alaska, with a combined membership of about 2,000 commercial fishing vessels.2

PCFFA’s members include small- and medium-sized family businesses whose operations range from commercial fishing vessels in distant grounds to small, trailerable boats that work nearshore waters. They

1 In accordance with Supreme Court Rule 37.6, Amici Curiae certify that no counsel for any party in this case authored this brief in whole or in part, and furthermore, that no person or entity, other than Amici Curiae, has made a monetary contribu-tion specifically for the preparation or submission of this brief. 2 A complete list of PCFFA member organizations is in-cluded in the Appendix.

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harvest a wide variety of ocean seafood, including fresh wild salmon, Dungeness and rock crab, squid, herring, swordfish, shark, blackcod, rockfish, alba-core, sea cucumber, California halibut and flounder, urchin and abalone.

PCFFA commercial fishing members are profes-sionals who derive their incomes largely from har-vesting the sea. They may operate small or large vessels; they may be full or part-time. But all share a common commitment to preserving their businesses, which all depend on ensuring the future of sustain-able fisheries resources.

In order to better preserve and protect their members’ livelihoods, PCFFA established the Insti-tute for Fisheries Resources (“IFR”) in 1992. IFR is a separate nonprofit organization dedicated to the protection and restoration of marine and anadromous fish resources throughout the west coast. In particu-lar, IFR manages PCFFA’s sustainable fishery con-servation and restoration programs. Many PCFFA commercial fishing industry members are also mem-bers of IFR.

These organizations have a clear interest in this case. “This is a case about commercial fishing,” Pet. App. 59a, and, in particular, the economic harm to commercial fishing and other businesses resulting from the EXXON VALDEZ spill. As commercial fishing families, amici will be uniquely impacted by the decision in this case. Just like other maritime businesses, “the fishing industry is clearly a part of traditional maritime

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activity.” Union Oil Co. v. Oppen, 501 F.2d 558, 561 (9th Cir. 1974). One goal of maritime law is to protect and promote the interests of fishermen and women and the owners of fishing vessels. See id.; cf. Askew v. American Waterways Operators, 411 U.S. 325, 333 n.5 (1973) (“[T]he importance of the fishing industry within the world’s economy is not in doubt and is steadily increasing”).

The livelihoods of commercial fishermen and women depend on healthy fisheries. As a result, they support federal maritime rules that will punish those who engage in egregious conduct similar to that of Petitioners Exxon Shipping Company and Exxon Mobil Corporation (collectively “Exxon”) in this case, and that will provide adequate deterrence to prevent in the future the extraordinary and long-lasting harms of the sort that resulted from the EXXON VAL-

DEZ spill. In so doing, the members of PCFFA and IFR are particularly interested in rules (1) that reflect the reality of modern maritime business with respect to both modern technology and modern cargo and (2) that are consistently applied to all maritime busi-nesses and therefore give no advantage to large corporations like Exxon.

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STATEMENT

1. For many years, Exxon knew that its em-ployee, Joseph Hazelwood, had a drinking problem that interfered with his work on Exxon supertankers.

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Pet. App. 63a-64a; 121a. In 1985, after Exxon re-ceived reports of Hazelwood’s drinking problem, Hazelwood went to an alcohol treatment program that lasted 28 days, after which Hazelwood was reinstated to command supertankers. Pet. App. 63a; see Pet. App. 121a. Shortly after his reinstatement, however, his superiors at Exxon received reports that Hazelwood had returned to drinking. Pet. App. 64a; 121a. Despite many such reports, Exxon left Hazel-wood in command of the EXXON VALDEZ. Pet. App. 64a; 121a.

On March 24, 1989, the terrible but all-too-predictable consequence of Exxon’s behavior hap-pened. Although the supertanker was freshly loaded with 53 million gallons of crude oil, Exxon’s known-alcoholic captain – the only officer aboard licensed to navigate through the difficult parts of Prince William Sound – was drunk and left his post. See Pet. App. 61a-64a; 120a-122a. The fatigued Third Mate, who was not licensed to steer the ship in those waters, was left in charge and eventually the ship ran into Bligh Reef. Pet. App. 63a-64a; 120a-121a. As Exxon acknowledged and stipulated to in the district court, Hazelwood “was negligent in leaving the bridge of the vessel on the night of the grounding, [his] negligence was a legal cause of the oil spill, and . . . the Exxon defendants are responsible for this act of negligence.” JA212.

The grounding of the EXXON VALDEZ spilled nearly 11 million gallons of oil into Prince William Sound. Pet. App. 64a; 122a. The oil eventually spread

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across several hundred linear miles and impacted over 10,000 square miles of the surrounding coastal saltwater ecosystem, including well over 1,000 miles of coastline. See Exxon Valdez Oil Spill Trustee Council, History, http://www.evostc.state.ak.us/History/ PWSmap.cfm. This astounding spill is one of the largest spills to date in American waters, United States v. Locke, 529 U.S. 89, 94 (2000); JONATHAN L. RAMSEUR, CONGRESSIONAL RESEARCH SERVICE, OIL SPILLS IN U.S. COASTAL WATERS at CRS-1 (2007), and “it is widely considered the number one spill world-wide in terms of damage to the environment.” See Exxon Valdez Oil Spill Trustee Council, History FAQ, http://www.evostc.state.ak. us/history/faq.cfm.

The oil companies’ contingency plan for Prince William Sound had long recognized that even a properly conducted response would not be able to contain a spill of this size. SJA62sa. Making matters worse, however, Exxon’s and the government’s re-sponse to the spill was “unreasonably slow [and] confused,” see S. REP. NO. 101-94, at 2 (1989), reprinted at 1990 U.S.C.C.A.N. 722, 723-24, and “was clearly inadequate to contain and recover the spilled oil.” UNITED STATES GENERAL ACCOUNTING OFFICE, ADE-

QUACY OF PREPARATION AND RESPONSE TO THE EXXON VALDEZ OIL SPILL 1 (1989). The problems identified with the inadequate response “ranged from a short-age of equipment and skilled personnel to inadequate communications and organizational structures.” Id. at 14. One key problem was the lack of preparedness

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for this type of spill. Id. at 1 (“Major problems were encountered because no one had realistically pre-pared to deal with a spill of that magnitude in Prince William Sound.”). Another significant problem was the ineffectiveness of the recovery techniques that were used: “[R]ecovery efforts were . . . hampered by breakdowns in equipment and by techniques ren-dered ineffective by such factors as weather and water conditions.” Id. at 2.

The harms that resulted from the spill have been well-documented. See, e.g., Exxon Valdez Oil Spill Trustee Council, Injured Resources and Services, http://www.evostc.state.ak.us/Publications/injuredre sources.cfm. Although no human lives were lost as a direct result of the spill, four deaths are associated with the cleanup. Exxon Valdez Oil Spill Trustee Council, History, http://www.evostc.state.ak.us/History/ excerpt.cfm. Beaches were heavily oiled by the spill and, to this day, “visually identifiable surface and subsurface oil persists at many locations.” Exxon Valdez Oil Spill Trustee Council, Lingering Oil, http://www.evostc.state.ak.us/Habitat/lingering.cfm. One recent study’s

results indicate that the remaining subsur-face oil may persist with little change for decades, even in sediments that are not an-oxic. Such persistence can pose a contact hazard to intertidally foraging sea otters, sea ducks, and shorebirds, create a chronic source of low-level contamination, discourage subsistence in a region where use is heavy,

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and degrade the wilderness character of pro-tected lands.

Jeffrey W. Short et al., Slightly Weathered Exxon Valdez Oil Persists in Gulf of Alaska Beach Sediments After 16 Years, 41 ENVIRON. SCI. TECHNOL. 1245, 1249 (2007). These losses to the natural environment of Prince William Sound and to those whose livelihoods depended on it have been devastating: “[T]he human and natural losses were immense – to fisheries, subsistence livelihoods, tourism, wildlife.” Exxon Valdez Oil Spill Trustee Council, History, http://www. evostc.state.ak.us/History/excerpt.cfm.

The spill occurred at “just before the most bio-logically active season of the year,” which placed “seaward migration of salmon fry, major migrations of birds, and the primary breeding season of most species of birds, mammals, fish, and marine inverte-brates in the spill’s path.” Exxon Valdez Oil Spill Trustee Council, EXXON VALDEZ OIL SPILL RESTORA-

TION PLAN 30 (1994), available at http://www.evostc. state.ak.us/Policies/restplan.cfm. In other words, a spill of this nature would always be devastating but this particular spill was made even worse because it occurred at nearly the worst time of year in terms of harm to species and those who depended on those species.

Thousands of marine animals were killed by direct oiling; thousands more have been impacted in the long-term by the lingering effects of the spill on future generations of the species as well as on their

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habitat: “Almost two decades after the Exxon Valdez oil spill, it is clear that some resident species injured by the spill have not fully recovered.” See Exxon Valdez Oil Spill Trustee Council, Injured Resources and Services, http://www.evostc.state.ak.us/Publications/ injuredresources.cfm. The most recent report of the Exxon Valdez Oil Spill Trustee Council indicates that Pacific herring are not recovering. EXXON VALDEZ OIL SPILL TRUSTEE COUNCIL, UPDATE ON INJURED RE-

SOURCES AND SERVICES 6 (2006), available at http:// www.evostc.state.ak.us/Universal/Documents/Publications/ 2006IRSUpdate.pdf. The lack of recovery of the herring population is particularly troubling to those in the fishing industry.

“Pacific herring are ecologically and commercially important species in the Sound ecosystem. They are central to the marine food web; providing food to marine mammals, birds, invertebrates and other fish. Herring are also commercially fished for food, bait, [and roe].” Id. at 25. Prior to the spill, the herring population was increasing in Prince William Sound, with record harvests recorded in the late 1980s. Id. The 1989 year class, however, “was one of the smallest cohorts” of spawning adults recorded, and by 1993, the fishery had collapsed with only 25% of the expected adults returning to spawn. Id. As a result of these losses, the herring fishery in the Sound has been closed for 11 of the last 17 years. Id. Although the precise “[r]easons for the population collapse and failure to recovery remain unknown,” EXXON VALDEZ OIL SPILL TRUSTEE COUNCIL, HERRING RESTORATION STEERING

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COMMITTEE BACKGROUND AND STATUS REPORT 1 (2007), available at http://www.evostc.state.ak.us/ Universal/Documents/Publications/HerringCommittee ExecSummary.pdf, at least one study has concluded that “that the start of the herring decline was coinci-dent with the oil spill, and that the decline took place over a 5-year period, rather than the single-year collapse previously reported.” Richard E. Thorne and Gary L. Thomas, Herring and the “Exxon Valdez” oil spill: an investigation into historical data conflicts, 65 ICES J. OF MARINE SCIENCE 44, 44 (2007). Studies continue to examine the impact of the spill on the herring population and how the herring might, if ever, recover. See HERRING COMMITTEE, supra, at 2.

2. After the spill, Exxon faced numerous law-suits. Exxon was indicted by the United States on criminal charges and was sued civilly by both the United States and the State of Alaska. It resolved these claims in 1991 by pleading guilty to three environmental crimes. It also agreed to pay $900 million in natural resource damages as well as $25 million in fines.

Faced with the prospect of thousands of addi-tional individual claims, Exxon set up a program under which it agreed to pay claims resulting from the spill. These settlements, however, did not fully compensate the plaintiffs for their losses. In particu-lar, Exxon’s payments to commercial fishermen and women under these agreements compensated them for losses due to cancelled fisheries in 1989 but did not compensate them (1) for the diminished prices of

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fish in 1989, (2) for the losses associated with the post-1989 harvests, or (3) for the decline in the value of fishing permits and vessels. This litigation – which involves the economic harms to 32,677 commercial fishermen, related individuals and businesses, private landowners, Native Alaskans, municipalities, and others – brought recovery for some, but not all, of the additional economic harm suffered by the plaintiffs. These plaintiffs, however, never recovered for their significant non-economic harm such as the “severe depression, post-traumatic stress disorder, [and] generalized anxiety disorder” that they suffered. Pet. App. 123a.

In the end, the compensable economic harm was calculated by the court of appeals to be over $500 million. Pet. App. 38a. After a reduction by that court, the total punitive damage award amounts to $2.5 billion. Pet. App. 42a.

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SUMMARY OF ARGUMENT

After almost two decades of litigation, Exxon has asked this Court to review the punitive damages awarded as a result of Exxon’s reckless conduct that led to the grounding of the EXXON VALDEZ. Although Exxon has presented this as a complicated case, the issues are straightforward.

This Court should affirm the award because the rule applied by the courts below comports with the

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realities of the modern maritime industry, it is consis-tent with how other industries are treated in similar circumstances, and its results are fair to all maritime businesses. Moreover, this particular award, which amounts to average punitive damages of about $75,000 per plaintiff, is reasonable and consistent with the purposes for punitive damages. Finally, even if Exxon had not waived its Clean Water Act argument, that Act poses no bar to recovery of punitive damages for harms to the private economic interests of the more than 30,000 plaintiffs resulting from the EXXON VALDEZ oil spill.

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ARGUMENT

I. Just as With Land-Based Torts, Punitive Damages May Be Imposed Under Mari-time Law When a Managerial Agent Acts Recklessly.

Federal maritime law presumptively follows the common law applicable to land-based torts. Exxon Co. U.S.A. v. Sofec, Inc., 517 U.S. 830, 835, 842 (1996) (affirming an admiralty judgment that “imput[ed]” the “extraordinary negligence” of an Exxon captain to Exxon, the shipowner). Just as tort law must conform to current conditions and norms, maritime law re-flects the realities and conditions of the times in which it is determined. See, e.g., The Amiable Nancy, 16 U.S. 546 (1818).

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Contrary to Exxon’s contentions, the rules set forth in the RESTATEMENT (SECOND) OF TORTS § 909(c) are simply an example of the adaptive nature of the common law. That section provides that employers are liable for punitive damages for the reckless acts of managerial agents because businesses should hire their managerial agents carefully. See RESTATEMENT (SECOND) OF TORTS § 909 cmt. b (1979) (“Although there has been no fault on the part of a corporation or other employer, if a person acting in a managerial capacity either does an outrageous act or approves of the act by a subordinate, the imposition of punitive damages upon the employer serves as a deterrent to the employment of unfit persons for important posi-tions.”).

Today, most jurisdictions have accepted the logic of the Restatement approach: “[I]n most jurisdictions that have considered the issue of vicarious liability, punitive damages will be imposed upon a principal when a managerial employee commits an act within the scope of employment that, of itself, would justify imposition of punitive damages upon that agent” and that “rule has been applied without considering any fault of the principal in hiring or retaining the mana-gerial agent.” JOHN J. KIRCHER AND CHRISTINE M. WISEMAN, PUNITIVE DAMAGES: LAW AND PRACTICE, § 24:05, at 24-19 (2d ed. 2000). In fact, a slight major-ity of states allow corporations to be liable for puni-tive damages for reckless acts of any employee. RESTATEMENT (THIRD) OF AGENCY § 7.03 cmt. e (2006) (“A slight majority of states hold that punitive damages

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may be awarded against a principal that is vicariously liable on the basis that an employee-agent acted within the scope of employment when committing a tort, without requiring any additional showing of culpability on the part of the employer.”); cf. American Soc’y of Mech. Eng’rs v. Hydro Level Corp., 456 U.S. 556, 575 n.14 (1982) (“A majority of courts, however, have held corporations liable for punitive damages imposed because of the acts of their agents, in the absence of approval or ratification.”).

Given this legal landscape, if Captain Hazelwood had caused an accident and subsequent spill of this sort from a land-based operation under identical circumstances, Exxon would be liable for punitive damages in almost any jurisdiction under identical circumstances. Exxon, however, argues that this case is different, largely relying on anecdotes about the maritime industry from a time gone by. But Exxon has yet to offer any sound explanation as to why modern maritime businesses should be treated differ-ently than modern land-based operations.

Indeed, instead of acknowledging and contem-plating the dynamic nature of maritime business and tort law, Exxon relies on nineteenth-century and early twentieth-century cases to argue that punitive dam-ages are never appropriate in the maritime context no matter what the circumstances. It centers its argu-ment on dicta in The Amiable Nancy, 16 U.S. 546 (1818), a case involving a privateer. Privateer is a term most Americans are unfamiliar with because priva-teers – private warships authorized by a national

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government – went out of existence in the mid-1800s. Unlike Exxon’s modern day transport of oil, priva-teers were permitted to attack the vessels of a de-clared national enemy for profit and not be held liable for what otherwise would have been maritime torts. Accordingly, the maritime landscape that that case envisions was peculiar to the particular setting of the case and does not exist today.

A. Modern Maritime Communications and

Contact with Shore

Early maritime law developed under the premise that once a ship set sail, the captain was out of touch with the shore. When the United States Supreme Court decided The Amiable Nancy, naval ships could only communicate with a rudimentary flag signaling system requiring visual contact. See L.S. HOWETH, HISTORY OF COMMUNICATIONS: ELECTRONICS IN THE UNITED STATES NAVY (1963), available at http://earlyradiohistory.us/1963hw.htm. Without wire-less communication – which was not available until late in the nineteenth century and was not in general use until World War I – vessels operated in complete isolation from developments on the shore. See IRVING E. FANG, A HISTORY OF MASS COMMUNICATION: SIX INFORMATION REVOLUTIONS 90-93 (1997).

As a result, in the 1800s and early 1900s, the lack of communication between the owner and the ship captain usually meant that a ship was operated

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under the sole authority of the captain. Communica-tions and contact between a ship’s crew and those ashore today is much different. It simply is no longer true that ships sail for months with no contact with those left behind. Just as Wal-Mart “has a very advanced information technology system which allows managers in the Home Office to monitor the operations in each of its retail stores on a close and constant basis,” Dukes v. Wal-Mart Stores, Inc., 222 F.R.D. 137, 152 (N.D. Cal. 2004), aff ’d, 509 F.3d 1168, (9th Cir. 2007), a ship’s captain now has the ability to be in contact with the shore at anytime. A shipowner can simply lift a telephone and talk to the ship cap-tain, and she can send the captain a fax or email to which the captain can instantly reply. See Colin Nickerson, For Ships, End of the Dotted (and Dashed) Line, BOSTON GLOBE, Jan. 31, 1999, at A1 (“[A]dvances in communications technology . . . have made e-mail, faxes and crystal-clear phone calls as commonplace on the bridge of a ship in the most remote sea as in a business office.”). In fact, the lowered cost and increased reliability of these technolo-gies means that they are now part and parcel of opera-tions on vessels large and small. See European Space Agency, Low Cost Internet Access at Sea, Apr. 19, 2006, http://www.esa.int/esaTE/SEMMAWNFGLE_index_0. html. Most PCFFA members have access to or use these technologies in operating their businesses.

At the time of the spill, Exxon had many of these technologies at its disposal. In its written response to

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Congress’s question about the communications avail-able on the EXXON VALDEZ, Exxon replied:

[T]he EXXON VALDEZ is equipped with a number of ship-to-shore communications to enable the vessel to communicate with any shore location. These systems include Marsat voice and telex systems, single sizeband radio, VHF Marine radio, HF Radio, cellular telephone, SITOR telex, and facsimile.

SJA249sa. In fact, when the EXXON VALDEZ ran aground, Hazelwood’s supervisor in San Francisco called Hazelwood shortly after the grounding. JA 223-24, 354-55, 872-75. Among other things, they dis-cussed Hazelwood’s plan to try to rock the super-tanker off the reef. Id.

In addition to the ability to communicate on a regular basis in real-time, shipowners and ship captains now have access to a variety of technologies to monitor and carefully guide a vessel. The United State Coast Guard operates vessel traffic centers, scattered along United States coastal waterways, in order to provide active monitoring and navigational advice for ships in near-shore or territorial waters, such as Prince William Sound. United States Coast Guard, Vessel Traffic Services, http://www.navcen. uscg.gov/mwv/vts/vts_home.htm. In addition to the Coast Guard’s system, ships use a variety of their own global positioning system devices and technolo-gies, all of which have led to “an unparalleled capac-ity to remotely track activities at sea.” STEPHEN E. FLYNN ET AL., NAVIGATING THE UNCERTAIN WATERS OF

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THE 21ST CENTURY: THE ROLE OF NEW TECHNOLOGIES IN BUILDING A COMPETITIVE AND SECURE MARITIME INFRASTRUCTURE 87, 91 (1998), available at http:// www.ion.org/ionsite/search/view_abstract.cfm?jp=p&idno=1231. But a shipowner can do more than just track its ship. With the advent of affordable video cameras and reliable wireless transmission of those images, a shipowner can now see what is happening on the ship as well as see what those on the ship see in real time.

For example, cameras can be installed at various places around a ship for monitoring on-ship conduct just as parents have been able to monitor their chil-dren’s activities on nanny cams. In addition, cameras can be mounted at various places on the ship to view the ship’s surroundings and any potential dangers. Images of this sort from a variety of vessels are available to the public at http://maritimematters.com/ shipcams.html.

In short, these communication and navigational technologies have changed the role of a ship captain. As one maritime scholar wrote six years before the EXXON VALDEZ oil spill:

There is no doubt that the traditional deci-sion-making autonomy of masters no longer exists today. Like it or not, masters today are “ship managers” who have relatively few “command decisions” to make. Modern com-munication methods ensure that masters to-day are in constant contact with the owners/

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managers, and it is simply unrealistic to ex-pect masters to disregard proper instruc-tions. Whether such instructions are termed “advice” or “orders” are quite irrelevant. The master is expected to be a key member of a total “management team” and would disre-gard instructions at his own professional risk.

Edgar Gold, Vessel Traffic Regulation: The Interface of Maritime Safety and Operational Freedom, 14 J. MAR. L. & COM. 1, 13 (1983). Exxon, in fact, had recognized this changing role when it began a program to pro-vide its fleet officers with management skills training in 1981 and implemented other measures to trans-form its captains into managers on board. See JA 896-98; SJA 285sa-290sa (Exxon Shipping President Iarossi’s Surrendering the Memories speech).

Like land-based businesses such as Wal-Mart, ship captains and owners can and do stay in contact in real time, even over very long distances. Shipown-ers can monitor the travels of a ship through global positioning systems and other tracking technology; shipowners and captains can communicate by phone (as on that fateful night on the EXXON VALDEZ), fax, and email; and, when necessary, shipowners can observe the ship captain and others on the ship as well as see what those on the ship see through real-time cameras aboard the ship. Because direct contact and communication is as available between shipowner and captain as it is between owner and manager of a land-based operation, there is no justification for

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treating the maritime industry differently than land-based ones.

B. Modern Maritime Cargo

Not only does Exxon fail to acknowledge the very different communications and navigational technolo-gies available to maritime businesses today, it also never acknowledges the very different nature of the cargo that is transported by modern ships. Just as maritime communications are unlike those in the 1800s, the cargo transported by ships, both in size and character, has drastically changed, particularly in the last fifty years.

In the mid-1800s, cotton was the principal Ameri-can export, followed by gold bullion, tobacco, and flour. ROBERT GREENHALGH ALBION, THE RISE OF NEW YORK PORT 400 (1939). Woolen goods, silken goods, cotton goods, and sugar were the principal American imports, followed by coffee and iron. Id. at 401. Spills of these cargos would have been largely environmen-tally innocuous. Indeed, ships carried so few dangerous cargos during most of the nineteenth century that no special regulations were considered necessary. INTERNA-

TIONAL MARINE ORGANIZATION, IMO AND DANGEROUS GOODS AT SEA 1 (1996).

Dangerous cargo was not even mentioned in maritime law until 1894, when the transport of explosive cargo on emigrant ships was prohibited in order to protect ship passengers. Id. International laws that governed for the next several decades were

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likewise directed at preventing the carriage of goods likely to endanger ship passengers. Id. at 3. Until 1948, the types and amounts of dangerous cargo transported by ships were too insignificant to justify more comprehensive regulation. See id.

Today more than half of all packaged goods and bulk cargo transported by sea are dangerous, hazard-ous, or harmful to the environment. Id. at 1. The transportation of dangerous cargo is extensively regulated at both the national and international level. See 49 C.F.R. § 173.1 (2007) (discussing the scope of national regulations for the transport of hazardous substances by sea and commenting that they are generally consistent with the International Maritime Dangerous Goods Code). The International Maritime Dangerous Goods Code recognizes nine classes of dangerous goods, which include explosives, gases, flammable liquids, flammable solids or sub-stances, toxic and infectious substances, radioactive materials, corrosives, aerosols, fertilizers, asbestos, and other substances harmful to the marine envi-ronment. IMO, DANGEROUS GOODS, at 9-17.

In addition, with the advent of containerization, a single ship can carry a wide variety of dangerous goods at the same time. See, e.g., Peter MacKay, The Song Remains the Same, THE HAZARDOUS CARGO BULL., Jan. 1, 2005 (discussing sinking of a ship with cargo including insecticides, matches, lead acetate, ammonia, paint and paint thinner, liquid chlorine, and butane propellant aerosols). As the world has industrialized, the transport by sea of a wide variety

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of dangerous cargo has grown exponentially. IMO, DANGEROUS GOODS, at 1.

Spills of dangerous cargo may still be harmful to a ship’s crew and passengers. The real danger, however, is the potentially disastrous consequences to the sur-rounding environment as evidenced by the spill in this case. See Pet. App. 155a (“This is not someone hauling dry cargo, the spilling of which would have minimal impact on the fisheries and other uses of Prince William Sound. Rather, this is an employer deliberately permitting a relapsed alcoholic to continue operating a vessel carrying over 53 million gallons of volatile, toxic, crude oil.”). The acute effects of spills can be enormous, such as the “[a]pproximately 3,500-5,300 sea otters and between 260,000-580,000 birds” that died following the EXXON VALDEZ spill. Danielle Droitsch, Muddy Waters: Clarifying the Line Between Public and Private Recovery of Natural Resource Damages, VT. J. ENTVL. LAW (1998), http://www.vjel. org/essays/roscoe98a.html (citing Summary of Inju-ries to Natural Resources as a Result of the Exxon Valdez Oil Spill, 56 Fed. Reg. 14,687, 14,690-91 (Apr. 11, 1991)). Spills of dangerous cargo can also inflict long-term damage on marine ecosystems by causing critical changes in the environment. See EUROPEAN MARITIME SAFETY AGENCY, EMSA ACTION PLAN FOR HNS POLLUTION PREPAREDNESS AND RESPONSE 44 (2007). Such changes include variation in salinity and pH, and de-oxygenation when materials are broken down in the marine environment. Id. Even biologically inert material can impact the marine environment by

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smothering or by changing the physical nature of an area. Id. Releases of some dangerous substances, particularly metals and organic chemical compounds, can result in incorporation of the substances into biological pathways. Id. at 45.

With respect to oil in particular, it is estimated that “[o]il spills can cause impacts over a range of time scales, from days to years, or even decades.” RAMSEUR, CRS, OIL SPILLS IN U.S. COASTAL WATERS at CRS-3 (2007), available at http://assets.opencrs.com/ rpts/RL33705_20070823.pdf; see also id. at CRS-3 to -6 (detailing the myriad potential impacts of an oil spill). In addition to the environmental harms of an oil spill, many businesses, such as the fishermen in this case, are uniquely harmed by oils spills. See Askew v. American Waterways Operators, Inc., 411 U.S. 325, 333 n.5 (1973) (“ ‘The uncertainty as to the actual extent of the damage done to marine life by oil pollution makes it difficult to estimate the economic effect of such damage, but the importance of the fishing industry within the world’s economy is not in doubt and is steadily increasing.’ ” (quoting Louis Henkin, Issues in Offshore Oil Production, 10 HARV. INT’L L.J. 316, 321-323 (1969))). For example, in November 2004, the Salem Nuclear Plant was forced to halt operations when an oil spill in the Delaware River polluted the cooling water used by the plant. The plant claimed lost profits of $57 million as a result of the shutdown. RAMSEUR, supra, at CRS-6.

The days when ships were primarily loaded with simple cargo of cotton and flour are gone. The modern

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shipping industry regularly transports large quanti-ties of dangerous cargo that have the capacity to cause enormous environmental disasters. The in-creased hazard posed by these ships and the ability of shipowners to monitor a ship’s goings-on in real time make clear that the rule applied by the lower courts is the correct one. That rule encourages shipowners to use the utmost care in choosing captains of their ships, especially those ships that, like the EXXON VALDEZ, carry dangerous cargo.

C. The Rule Applied in This Case Is Fair

to All Maritime Businesses

Any maritime rule regarding punitive damages should treat all maritime operators, large and small, fairly. Exxon, however, advocates a rule that would allow its policies – even though unenforced – and additional management layers to insulate it from liability for punitive damages. Petr. Br. at 26. Requir-ing plaintiffs to demonstrate that Exxon ratified or condoned Captain Hazelwood’s actions is both incon-sistent with the law, WILLIAM MEADE FLETCHER, CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS § 4942, at 640-641 (rev. vol. 2001) (“[m]erely stating or publishing instructions and policies is not suffi-cient to insulate a corporation from liability, and a corporation may be held responsible for acts of its agents even when they violate such policies”), and would serve to advantage large corporate maritime businesses over small ones. The rule applied in this case does not allow Exxon to benefit unfairly from its

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corporate form because the rule treats all maritime businesses the same.

As the United States Court of Appeals for the D.C. Circuit has pointed out:

A corporation . . . , with offices in a number of cities and engaged in widespread activi-ties, necessarily delegates authority to its agents to be used on its behalf. If these agents in the exercise of their delegated au-thority, acting through regular corporate channels, engage in conduct which, except for the corporate nature of their principal, makes out a case for punitive damages, the corporation is not shielded therefrom simply by the absence of explicit authorization or ratification of the particular conduct. A con-trary rule would permit punitive damages against smaller concerns . . . but not against a large corporation whose size and ramifica-tions make express authorization by the top executives of tortious acts of its working-level agents highly unlikely. The question is whether the wanton, reckless or malicious action of the agents or employees can fairly be said to be truly that of the principal.

GMAC v. Froelich, 273 F.2d 92, 94 (D.C. Cir. 1959).

Unlike Exxon, small commercial fishing enter-prises like those run by amici are unlikely to have the resources needed to generate policies or to generate corporate layers between the ship captain and the shipowner. Instead, most family-run commercial fishing businesses consist of only a few members of

25

the family who must spend the majority of their time fishing and selling their fish. They rarely have the time to produce comprehensive written policies on conduct – or anything else for that matter. The ab-sence of any written policies combined with the close nature of the family relationship would make it quite difficult to show that a ship captain who is the daughter of a shipowner was not acting at her fa-ther’s direction, or at the very least acting in a man-ner that was expected by her father.

The rule followed in this case requires all mari-time businesses, big and small, to select ship captains with care because the reckless acts of any ship cap-tain, when that captain is a managerial agent acting within the scope of his or her employment, can sub-ject the shipowner to both compensatory and punitive damages. Because this rule is fair to all maritime businesses, the Court should reject Exxon’s argu-ments to treat it, and other large corporate entities, in a fashion that allows them an unfair advantage.

D. Punitive Damages Under Maritime Law

for Reckless Acts of a Managerial Agent Will Not Threaten Maritime Business

Some amici in support of Exxon at various stages before this Court have claimed that the imposition of vicarious punitive damages might harm the maritime industry, which would in turn damage the American economy. See, e.g., Br. of Amici Curiae Transportation Inst., Int’l Ass’n of Indep. Tanker Owners, Int’l Ass’n

26

of Dry Cargo Shipowners, and Overseas Ship-holding Group, Inc. in Supp. of Petrs. at 11-25 (merits stage); Br. of Am. Waterways Operators et al. as Amicus Curiae in Supp. of Pet. at 3-4, 9 (certiorari stage). Many of these same amici, however, made these same claims when they lobbied Congress to include lan-guage in the Oil Pollution Act of 1990 that would preempt state laws, including state laws that allow for unlimited liability for oil spills.

For example, the American Waterways Operators tried to convince Congress that unlimited liability would “destroy an industry which is so beneficial to American consumers.” Pending Oil Spill Legislation, Hearing on S. 686, S. 1066, and S. 1223 Before Sub-comm. on Envtl. Prot., Senate Comm. on Env’t and Pub. Works, 101st Cong. 128 (July 21, 1989) (statement of Joseph Farrell, President American Waterways Operators). That group further claimed that “any prudent businessman is not going to stay in business facing unlimited liability.” Id. at 58. The American Petroleum Institute complained that unlimited liability would make insurance very expensive or impossible to obtain. Id. at 58 (oral statement of Charles J. DiBona, President, Am. Petroleum Inst.) The American Institute of Marine Underwriters claimed then – as it does now – that the health of the maritime industry depends upon the application of one uniform and comprehensive system of laws. See Hearing on H.R. 1465 – To Establish Limitations on Liability for Damages Resulting from Oil Pollution, To Establish a Fund for the Payment of Compensation

27

for Such Damages, and for Other Purposes Before Subcomm. on Coast Guard and Navigation, House Comm. on Merch. Marine & Fisheries, 101st Cong. 187 (May 11, 1989) (written statement of Am. Inst. of Marine Underwriters); Br. of Am. Inst. of Marine Underwriters as Amicus Curiae in Supp. of Pet. at 7-8. Even claims of harm to national security made it into the Congressional debate on the Oil Pollution Act. See 135 Cong. Rec. H8133 (Nov. 8, 1989) (state-ment of Rep. Lent, R-NY).

Congress rejected these unfounded claims and included a provision – typically referred to as the “non-preemption provision” – in the Oil Pollution Act that explicitly preserved the rights of states to impose additional requirements and liabilities. 33 U.S.C. § 2718 (2002). As such, shippers have been exposed to unlimited liability through a non-uniform patchwork of state and federal laws since 1990. Contrary to their claims during the hearings, however, the maritime industry continues to flourish in American waters. There is no reason to think that the same claims from the same groups are any more accurate today than they were in 1989. Accordingly, this Court ought to reject them.

Finally, many shipping amici that supported Exxon at the certiorari stage indicated that – unlike Exxon in this case – they use the utmost care in selecting ship masters. Br. of American Waterways Operators et al. at 7; Br. of Keystone Shipping Co. at 4. So long as they continue to do so, the prospect of any punitive damages is remote at best under the

28

rule applied in this case. Moreover, the Limitation Act, 46 U.S.C. §§ 30501-35012, will likely protect most innocent shipowners from large punitive dam-age awards because, unlike Exxon’s knowledge of Captain Hazelwood’s drinking problem, the Act limits an owner’s liability to the value of its interest in its vessel and cargo where the damage caused by the vessel is “without the owner’s privity or knowledge.” Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 446 (2001); see also Coryell v. Phipps, 317 U.S. 406, 412 (1943) (“One who selects competent men to store and inspect a vessel and who is not on notice as to the existence of any defect in it cannot be denied the benefit of the limitation as respects a loss incurred by an explosion during the period of storage, unless ‘privity’ or ‘knowledge’ are to become empty words.”); Commercial Molasses Corp. v. New York Tank Barge Corp., 314 U.S. 104, 106-07 (1941) (“If, as alleged, over-filling of the stern tanks caused the loss without the privity or knowledge of respondent, it could limit liability.”); Hartford Accident & Indemnity Co. of Hartford v. Southern Pacific, 273 U.S. 207, 214 (1927) (“[T]he great object of [the Limitation Act] was to encourage shipbuilding and to induce the investment of money in this branch of industry by limiting the venture of those who build the ship to the loss of the ship itself or her freight then pending, in cases of damage or wrong happening, without the privity or knowledge of the ship owner, and by the fault or neglect of the master or other persons on board.”); cf. BIO App. 43a (acknowledging Exxon’s privity and knowledge of Hazelwood’s drinking).

29

II. This Particular Punitive Damage Award Is Permissible Under Maritime Law.

Not only is the rule that allowed for the award of punitive damages in this case the correct one under maritime law, but there is also nothing impermissible about the specific punitive damages awarded in this case.

To be clear, the punitive damages award at issue is $2.5 billion. When divided between all class mem-bers, this amounts to an average of roughly $75,000 per plaintiff. This is slightly less than five times the compensatory award to each plaintiff, which amounts on average to roughly $15,500 per plaintiff. This means that, in total, the average award to each plaintiff in the class is less than $100,000.

Nevertheless, Exxon contends that the punitive damages award here is excessive and urges this Court to reduce it because it “contravenes all mari-time law policies.” Petr. Br. at 51. It then proposes several “standards” for the Court to adopt as guides for maritime punitive damages awards. Id. at 51-55. These purported standards, however, largely disre-gard this Court’s prior punitive damage jurispru-dence. Most troubling of all, Exxon’s proposal (and largely its briefing before this Court) ignores entirely the egregious nature of Exxon’s actions with respect to the spill.

“Punitive damages are not awarded for mere inadvertence, mistake, errors of judgment and the like.” RESTATEMENT OF TORTS (SECOND) § 908 cmt.b (1979). Instead, they are only awarded where the

30

conduct is outrageous, id., and they are “aimed at deterrence and retribution.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003). “[P]unitive damages are specifically designed to exact punishment in excess of actual harm to make clear that the defendant’s misconduct was especially rep-rehensible.” Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 54 (1991) (O’Connor, J., dissenting). They “embody [the] social outrage at the action of serious wrongdoers.’ ” Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 432 n.5 (2001) (quot-ing Cass Sunstein et al., Assessing Punitive Damages (With Notes on Cognition and Valuation in Law), 107 YALE L.J. 2071, 2074 (1998)). The EXXON VALDEZ spill certainly qualifies as “especially reprehensible” and “serious wrongdoing.”

As detailed at length in this litigation and several outside reports, books, and articles, the EXXON VALDEZ spill is one of “the largest and most expensive oil spill in U.S. waters to date.” RAMSEUR, CRS, OIL SPILLS IN U.S. COASTAL WATERS at CRS-1 (2007), available at http://assets.opencrs.com/rpts/RL33705_20070823.pdf. Because of its location, it is widely regarded as the worst spill of all time in terms of environmental and economic damage. See Exxon Valdez Oil Spill Trustee Council, History FAQ, http://www.evostc.state.ak.us/ history/faq.cfm. Almost twenty years after the spill, thousands of gallons of oil remain. See Exxon Valdez Oil Spill Trustee Council, Lingering Oil, http://www.evostc. state.ak.us/Habitat/lingering.cfm. In simplest terms, the area affected by the spill has been devastated and,

31

even after nearly two decades of effort, it remains unclear whether it will ever fully recover. See Exxon Valdez Oil Spill Trustee Council, Injured Resources and Services, http:// www.evostc.state.ak.us/Publications/ injuredresources.cfm (“Almost two decades after the Exxon Valdez oil spill, it is clear that some resident species injured by the spill have not fully recovered. The Trustee Council recognizes 30 resources and ser-vices as injured.”); EXXON VALDEZ OIL SPILL TRUSTEE COUNCIL, UPDATE ON INJURED RESOURCES AND SERVICES 6 (2006), available at http://www.evostc.state.ak.us/ Universal/Documents/Publications/2006IRSUpdate.pdf (as of 2006, the majority of species and human ser-vices provided by the area are either still recovering or not recovering at all).

Here, the punitive damages award is entirely reasonable because the spill leading to this devasta-tion was entirely predictable. Exxon retained a known-alcoholic as a captain and on March 23, 1989, allowed that employee to captain its ship containing 53 million gallons of crude oil through an area that only he was licensed to navigate. Pet. App. 26a (“[P]utting the relapsed alcoholic in charge of the tanker is a deliberate act”). The only real surprise here is that such a spill did not occur earlier.

Punitive damages in this instance are particu-larly fitting because maritime law continues to follow a restrictive model of compensatory damages. In general, maritime law does not allow for emotional distress awards or consequential economic damages. See generally Robins Dry Dock & Repair Co. v. Flint,

32

275 U.S. 303 (1927). In this case, for example, plain-tiffs were unable to recover for any damages resulting from price losses in unoiled Alaskan fisheries that occurred due to the stigma attached to catch from the area as a result of the spill. See Exxon Shipping Co. v. Airport Depot Diner, 120 F.3d 166, 167 n.3 (9th Cir. 1997); JA 1155-56. Nor were they able to recover for emotional damages resulting from the spill. Exxon Shipping, 120 F.3d at 167 n.3; Pet. App. 123a; JA 149, 1384-90. As a result, the award of punitive damages in maritime law takes on the more traditional role of compensating for “intangible injuries, compensation which was not otherwise available under . . . [a] narrow conception of compensatory damages.” Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 437 n.11 (2001).

III. The Clean Water Act Poses No Bar To Im-

posing Punitive Damages In This Case.

A. The District Court Did Not Err In Deny-ing Exxon’s Belated Attempt to Claim Clean Water Act Preemption As Un-timely

Exxon’s final challenge to punitive damages is its claim that the Clean Water Act preempts those dam-ages under federal maritime law. The district court denied Exxon’s very tardy attempt to raise this ar-gument thirteen months after the jury verdict on punitive damages. See Pet. App. 73a (Exxon made motion on October 23, 1995); Pet. App. 7a (jury awarded punitive damages award on September 16,

33

1994). That decision was well within the district court’s discretion.

District courts have broad power to manage the cases before them. See, e.g., Kimble v. Hoso, 439 F.3d 331, 336 (6th Cir. 2006) (“With good reason, district courts ordinarily enjoy broad discretion in matters of pretrial management, scheduling, and docket con-trol.”); Laboratory Corp. of America Holdings v. Chiron Corp., 384 F.3d 1326, 1333 (Fed. Cir. 2004) (“District courts are granted broad latitude in managing the cases before them. We decline to find an abuse of discretion when the district court made an informed determination as to how it would manage the litiga-tion pending before it based on sound reasoning and identified facts.”); In re Fine Paper Antitrust Litiga-tion, 685 F.2d 810, 817 (3d Cir. 1982) (“[M]atters of docket control and conduct of discovery are committed to the sound discretion of the district court. We will not interfere with a trial court’s control of its docket except upon the clearest showing that the procedures have resulted in actual and substantial prejudice to the complaining litigant.” (citation and internal quotation marks omitted)); cf. Clinton v. Jones, 520 U.S. 681, 706-07 (1997) (“The District Court has broad discretion to stay proceedings as an incident to its power to control its own docket.” (citing Landis v. North American Co., 299 U.S. 248, 254 (1936))); Ameri-can Federal Group, Ltd. v. Rothenberg, 136 F.3d 897, 905 (2d Cir. 1998) (concluding that denial of untimely post-trial motion was within lower court’s discretion). In this case, Exxon had multiple opportunities to

34

raise its Clean Water Act argument but failed to do so at every turn. The district court was therefore within its discretion to deny Exxon leave to file its late motion.

Exxon’s assertion in its motion was that the Clean Water Act “[d]isplaces,” Petr. Br. at 31, any federal maritime law that might permit the imposi-tion of punitive damages. That is, Exxon has claimed that any right to punitive damages under federal maritime law was extinguished by the passage of the Clean Water Act. This assertion sounds in preemp-tion. See Petr. Br. at 29 (noting “ ‘presumption in favor of preemption of federal common law whenever it can be said that Congress legislated on the sub-ject.’ ” (quoting In re Oswego Barge Corp., 664 F.2d 327, 335 (2d Cir. 1981))).

Rule 8(c) of the Federal Rules of Civil Procedure requires that the defendant plead an affirmative defense where the defendant seeks to “admit the allegations of the complaint but suggest some other reason why there is no right of recovery.” CHARLES ALAN WRIGHT & ARTHUR R. MILLER, 5 FED. PRAC. & PROC. CIV. 3D § 1271 (2007). Based on this logic, it is widely accepted that preemption is an affirmative defense. Id. Moreover, defenses need not extinguish plaintiff ’s entire claim but may simply bar some of the relief requested by plaintiff. See A.D.E. Inc. v. Louis Joliet Bank and Trust Co., 742 F.2d 395, 397 (7th Cir. 1984) (Posner, J.) (holding that partial payment is an affirmative defense and noting that “there are partial as well as complete defenses (e.g.,

35

failure to mitigate damages, avoidable consequences, and, in states that have abandoned contributory negligence, comparative negligence) . . . [and there-fore] there was no need for the rule’s draftsmen to add ‘in whole or part’ ”). Accordingly, if Exxon’s Clean Water Act argument amounts to “an avoidance or affirmative defense” under Rule 8(c), in keeping with the well-known general rule, Exxon waived the defense by never pleading it in its answer and never seeking to amend its answer to include it. WRIGHT & MILLER, 5 FED. PRAC. & PROC. CIV. 3D § 1278 (“It is a frequently stated proposition of virtually universal acceptance by the federal courts that a failure to plead an affirmative defense as required by Federal Rule 8(c) results in the waiver of that defense and its exclusion from the case.”); cf. Blonder-Tongue Lab., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 350 (1971) (“The purpose of . . . pleading [an affirmative defense] is to give the opposing party notice of the [defense] and a chance to argue, if he can, why the imposition of [the defense] would be inappropriate.”).

Even if Exxon was not required to plead this as an affirmative defense, Exxon had a duty to raise the issue before trial and had several opportunities to do so. Exxon could have made this claim when it moved for summary judgment on April 15, 1993, on the basis of the alleged displacement of maritime punitive damages by the Trans-Alaska Pipeline Authorization Act. See JA 4, 63-93. It did not. More critically, Exxon should have presented this issue during briefing for the revised trial plan, which determined the law to be

36

applied to the case at trial. See FED. R. CIV. P. 16(b). It never did so. Instead, Exxon essentially asked to revisit that order in its motion for leave to file its Clean Water Act argument presented to the court two years after the order was entered and more than a year after the Phase III trial concluded. Cf. BIO App. 33a.

Notwithstanding its failure to raise the issue pre-trial, during Phase III of the trial, Exxon might also have attempted to move for judgment as a matter of law under Rule 50(a) asserting that the Clean Water Act barred any punitive damages in the case. See FED. R. CIV. P. 50(a). Again, it did not. Moreover, because it did not, Exxon could not move for judg-ment as a matter of law after the jury verdict. See FED. R. CIV. P. 50(b). But even if Exxon could have made this argument post-trial under Rule 50 without raising it before – a dubious proposition – it missed the stipulated post-trial motion deadline by more than a year. See BIO App. 33a.

In sum, Exxon had ample opportunity to raise this argument over the more than five years it took from filing of the case to Phase III of the trial. In-stead, it waited more than a year after the jury verdict to make its argument. In this complex and complicated case involving over 30,000 plaintiffs, the district court was required to intensively manage the case, including scheduling, in order for it to stay on track. Pet. App. 67a (noting that district court “did a masterful job of managing this very complex case.”). Given Exxon’s extraordinary and unexplained delay

37

in raising this argument, the district court was within its broad discretion to deny Exxon’s motion as untimely.

B. There Is No Merit to Exxon’s Clean

Water Act Preemption Defense

Even if the district court had abused its discre-tion in denying Exxon’s motion, the Clean Water Act poses no bar to the punitive damage award here. Exxon does not dispute that the Clean Water Act does not bar the tort claims asserted by the over 30,000 plaintiffs here. See generally International Paper Co. v. Ouellette, 479 U.S. 481 (1987) (detailing Clean Water Act savings provisions and describing their preservation of several common law actions). Accord-ingly, it must demonstrate that the Clean Water Act “spoke directly to,” Petr. Br. at 30, punitive damages (but not compensatory damages) resulting from the otherwise permissible tort causes of action for which it was found liable. It has failed to make this difficult showing.

As this Court has noted on several occasions with respect to state common law, “unless there is evidence that Congress meant to ‘split’ a particular remedy for pre-emption purposes,” it is assumed that the entire cause of action is available. Int’l Paper, 479 U.S. at 499 n.19; see Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255 (1984) (“Punitive damages have long been a part of traditional state tort law. . . . Congress as-sumed that traditional principles of state tort law

38

would apply with full force unless they were ex-pressly supplanted.”). There is simply no express evidence in the Clean Water Act that Congress in-tended to supplant punitive damages under maritime law. In fact, even if Exxon must only show, as it claims, “a clear and manifest purpose to displace common-law rules,” Petr. Br. at 29 (citations and internal quotation marks omitted), Exxon has pointed to nothing in the Clean Water Act that can be said to embody an intention to displace punishment for private economic harm, the basis for the punitive damages here.

To the contrary, with respect to oil spills, the Clean Water Act specifically preserves much of the law that existed before it was enacted: “Nothing in this section shall affect or modify in any way the obligations of any owner or operator of any vessel, or of any owner or operator of any onshore facility or offshore facility to any person or agency under any provision of law for damages to any publicly owned or privately owned property resulting from a discharge of any oil or hazardous substance or from the removal of any such oil or hazardous substance.” 33 U.S.C. § 1321(o)(1) (2002). As such, the Clean Water Act poses no bar to the award of punitive damages in this case.

--------------------------------- ♦ ---------------------------------

39

CONCLUSION

The judgment of the Court of Appeals should be affirmed.


GLEN H. SPAIN Northwest Regional Director PACIFIC COAST FEDERATION OF FISHERMEN’S ASSOCIATIONS AND THE INSTITUTE FOR FISHERIES RESOURCES PO Box 11170 Eugene, OR 97440-3370 (541) 689-2000

AMY J. WILDERMUTH Counsel of Record UNIVERSITY OF UTAH S. J. QUINNEY COLLEGE OF LAW332 South 1400 East, Room 101 Salt Lake City, UT 84112-0730(801) 581-6833


App. 1

APPENDIX

PCFFA MEMBER ORGANIZATIONS

Commercial Fishermen’s Organization of Morro Bay Santa Cruz Fishermen’s Marketing Association Crab Boat Owners Association Trinidad Bay Fishermen’s Marketing Association Washington Trollers Association Moss Landing Commercial Fishermen’s Association Humboldt Fishermen’s Marketing Association Commercial Fishermen of Santa Barbara, Inc. Half Moon Bay Fishermen’s Marketing Association Salmon Trollers Marketing Association Monterey Fishermen’s Marketing Association Port San Luis Commercial Fishermen’s Association Small Boat Commercial Salmon Fishermen’s Association Federation of Independent Seafood Harvesters Fishermen’s Marketing Association of Bodega Bay California Herring Association Salmon for All

No. 07-219

================================================================

In The



Petitioners,

v.


Respondents.

--------------------------------- ♦ ---------------------------------



--------------------------------- ♦ ---------------------------------

BRIEF AMICUS CURIAE OF THE NATIONAL FISHERIES INSTITUTE IN SUPPORT OF RESPONDENTS

--------------------------------- ♦ ---------------------------------

JOHN R. HILLSMAN MCGUINN, HILLSMAN & PALEFSKY

535 Pacific Avenue San Francisco, CA 94133

(415) 421-9292 Attorneys for Amicus Curiae



i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ................................... ii

INTEREST OF AMICUS CURIAE........................ 1


ARGUMENT........................................................... 4

I. The General Maritime Law Sets No Spe-cial Limits on Punitive Damages ................ 4

II. Punitive Awards Serve the Same Interests in Admiralty as They Do at Law – Pun-ishment and Deterrence .............................. 9

III. To Determine Whether the Punitive Award in this Case Protected Maritime Commerce and Served the Traditional Purposes of Punishment and Deterrence, the Court Should Consider Whether Exxon Was Re-quired to Pay for All of the Far-Flung Harm Its Misconduct Caused...................... 10

IV. Under-Deterrence Will Occur in this Case Unless the Court Affirms the Award of Punitive Damages........................................ 12

CONCLUSION ....................................................... 14

ii


Page

FEDERAL CASES

In re Amtrack etc. v. Warrior & Gulf Nav. Co., 121 F.3d 1421 (11th Cir. 1997)..................................8

Atlantic Sounding Co. v. Townsend, 496 F.3d 1282 (11th Cir. 2007).................................................9

BMW of North America v. Gore, 517 U.S. 559 (1996) .................................................................10, 11

CEH, Inc. v. F/V Seafarer, 70 F.3d 694 (1st Cir. 1995) ..........................................................................5

Churchill v. F/V Fjord, 892 F.2d 763 (9th Cir. 1988), cert. denied, 497 U.S. 1025 (1990) ................5

Cooper Industrial, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001) ..............................9

Day v. Woodworth, 54 U.S. 363, 13 How. 363, 14 L. Ed. 181 (1852) ................................................10

Exxon Shipping Co. v. Airport Depot Diner, 120 F.3d 166 (9th Cir. 1997) ..........................................13

In re Exxon Valdez (Order No. 189), 1994 U.S. Dist. LEXIS 6009 (D. Alaska 1994)........................12

Gamma-10 Plastics, Inc. v. American President Lines, 32 F.3d 1244 (8th Cir. 1994)...........................5

Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974) .......10

In re Glacier Bay, 865 F. Supp. 629 (D. Alaska 1991) .......................................................................14

Glynn v. Roy Al Boat Management Corp., 57 F.3d 1495 (9th Cir. 1995) ..........................................8

iii


Page

Guevara v. Maritime Overseas Corp., 34 F.3d 1279 (5th Cir. 1994) ..................................................8

Lake Shore & S.M. Railway v. Prentice, 147 U.S. 101 (1902)..........................................................9

Louisiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019 (5th Cir. 1985) ........................................12

The Ludlow, 280 F. 162 (N.D. Fla. 1922).....................5

Marine Navigation Sulphur Carriers, Inc. v. Lone Star Industries, Inc., 638 F.2d 700 (4th Cir. 1981) .................................................................14

In re Marine Sulphur Queen, 460 F.2d 89 (2nd Cir. 1972) ...................................................................5

Miles v. Apex Marine Corp., 498 U.S. 19 (1990) .........................................................5, 6, 7, 8, 9

Miller v. American President Lines, 989 F.2d 1450 (6th Cir. 1993) ..................................................8

Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978) .........................................................................6

Moragne v. United States Lines, Inc., 398 U.S. 375 (1970) ..................................................................4

Morrison v. The John L. Stephens, 17 F. Cas. 838 (N.D. Cal. 1861)..................................................6

Muratore v. M/S Scotia Prince, 845 F.2d 347 (1st Cir. 1988)............................................................5

Nautilus Marine, Inc. v. Niemela, 170 F.3d 1195 (9th Cir. 1999).................................................13

iv


Page

Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14 (2004)............................................................2

In re Oriental Republic of Uraguay, 821 F. Supp. 934 (D. Del. 1993)..............................................12, 14

Pac. Mutual Life Insurance Co. v. Haslip, 499 U.S. 1 (1991)............................................................10

Pino v. Protection Maritime Insurance Co., 490 F. Supp. 277 (D. Mass. 1980) ....................................5

Protectus Alpha Navigation Co. v. North Pacific Grain Growers, 767 F.2d 1379 (9th Cir. 1985) .....5, 9

Pruitt v. Allied Chemical, 523 F. Supp. 975 (E.D. Va. 1991) ..................................................13, 14

Ralston v. The States Rights, 20 F. Cas. 201 (E.D. Pa. 1836) ..........................................................6

Robins Dry Dock, Robbins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927).......4, 12, 13, 14, 15

The Sea Gull, 21 F. Cas. 909 (C. C. Md. 1865) ............4

Sea-Land Services v. Gaudet, 414 U.S. 573 (1974) .........................................................................5

The Seven Brothers, 170 F. 126 (D.R.I. 1909) ..............5

Slaven v. B.P. America, Inc., 786 F. Supp. 853 (C.D. Cal. 1992) .......................................................14

Steamboat Co. v. Whilldin, 4 Har. 228 (Del. 1845) ..........................................................................6

In re Taira Lynn Marine Ltd. No. 5, LLC, 444 F.3d 371 (5th Cir. 2006) ..........................................13

v


Page

TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 442 (1993)......................................11

Union Oil Co. v. Oppen, 501 F.2d 558 (9th Cir. 1974) ..................................................................13, 15

Vaughan v. Atkinson, 369 U.S. 527 (1962) ..................8

Wahlstrom v. Kawasaki Heavy Inds., Ltd., 4 F.3d 1084 (2nd Cir. 1993)..........................................8

Yamaha Motor Corp. v. Calhoun, 516 U.S. 199 (1996) .........................................................................7

STATE CASES

Baptiste v. Superior Court, 106 Cal. App. 3d 87, 164 Cal. Rptr. 789 (Cal.App. 1980), cert. de-nied sub nom. Chevron Shipping Co. v. Bap-tiste, 449 U.S. 1124 (1981) ........................................9

People Express Airlines v. Consolidated Rail Corp., 100 N.J. 246 (1985) ......................................13

Poe v. PPG Industries, 782 So. 2d 1168 (La. App. 2001) .............................................................7, 8

Weason v. Harville, 706 P.2d 306 (Ak.Sup.Ct. 1985) ..........................................................................9

vi


Page

FEDERAL STATUTES

Clean Water Act (“CWA”), 33 U.S.C. §§ 1251-1387 ...........................................................................6

Death on the High Seas Act, 46 U.S.C.S. §§ 30301 et seq....................................................... 7-8

Jones Act, 46 U.S.C.S. § 30104 ....................................8

OTHER AUTHORITIES

Force, “The Curse of Miles v. Apex Marine Corp.: The Mischief of Seeking ‘Uniformity’ and ‘Legislative Intent’ in Maritime Personal Injury Cases,” 55 LA. L. REV. 745 (1995) .................8

Polinsky and Shavell, “Punitive Damages: An Economic Analysis,” 111 HARV. L. REV. 869 (1998) .................................................................11, 12

Robertson, “Punitive Damages in American Maritime Law,” 28 J. MAR. L. & COM. 73 (1997) ...........................................................4, 5, 8, 10

1 Schoenbaum, The Law of Admiralty, § 5-17, p.243 (4th ed. 2001).................................................10

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Amicus National Fisheries Institute (“NFI”) is the nation’s leading seafood industry advocacy or-ganization. It is committed to both the sustainable management of the nation’s fisheries and the respon-sible stewardship of the marine environment. The NFI’s nearly 400 members come from the East Coast, West Coast, and Gulf Coast, as well as Alaska and Hawai’i. They range from small, family-owned fishing vessels to large, nationally traded corporations, and include such diverse representatives of business, education and government as Wal-Mart Stores, Bumble Bee Foods, Gorton’s Seafoods, Seattle Fish Co., Kona Bluewater Farms, Chesapeake Fish Co., Trident Seafoods Corp., Outback Steakhouse, Long John Silvers, The University of Florida, The Oregon State University Seafood Lab, the California Fisher-ies and Seafood Institute, the New York Sea Grant, the North Carolina State Department of Agriculture, the Gulf Oyster Industry Council, the University of Maryland, the Virginia Polytechnic Institute, the Alaska Sea Grant College Program, the Northwest Fisheries Organization, and the U.S. Department of Commerce.

1 This brief is being submitted with the consent of the parties. It was prepared on behalf of the NFI by its undersigned counsel. It was not authored, in whole or in part, by counsel for any party. No person or entity other than the NFI, or its counsel, made a monetary contribution to the preparation or submission of the brief.

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The seafood handled by NFI members is caught throughout U.S. territorial waters and out on the high seas. Initial processing typically occurs offshore, either aboard the fishing vessel that made the catch, or upon sea-going tenders that sail with the fleet. Secondary processing generally occurs in shoreside plants. Wholesalers and distributors collect the processed seafood, and share it out to stores, restau-rants, fish mongers and other retailers all over the country. Those retailers, in turn, sell their allotments directly to the consuming public. The NFI represents members from every link in that chain. This water-to-table diversity gives it an unusual perspective on all three questions for certiorari, but enables it to speak with particular authority on question No. 3. That is the question to which this brief will primarily address itself. The NFI would specifically like to answer Petitioners Exxon Shipping Co.’s and Exxon Mobil Corp.’s (collectively referred to as “Exxon”) argument that this Court will not serve the “ ‘fundamental interest giving rise to maritime jurisdiction’ ” – “ ‘the protection of maritime commerce’ ”2 – unless it further reduces the punitive damage award which the Ninth Circuit has already halved.

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2 Brief of Petitioners at 46 quoting Norfolk Southern Ry. Co. v. Kirby, 543 U.S. 14, 25 (2004).

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SUMMARY OF ARGUMENT

This brief will argue four main points.

1. The general maritime law sets no special limits on punitive awards. Although punitive dam-ages are no more common in admiralty than they are outside it, they have historically been available in any case involving actual malice, criminal indiffer-ence, a reckless disregard for the rights of others, or gross negligence.

2. “Smart,” “vindictive,” or “exemplary” damages were used to compensate intangible injuries until well into the 19th century, but today punitive awards generally serve the same two interests in admiralty as they do at common law; they are levied to punish past wrongs and deter future wrongdoing. In pollu-tion cases like the one at bar, moreover, they are specifically imposed to protect the marine environ-ment and preserve its bounty for everyone.

3. To achieve those objectives in this case, and to serve the fundamental purpose of protecting mari-time commerce, this Court should consider whether the traditional tenets of admiralty law have allowed Exxon to escape liability for much of the far flung economic harm which the Exxon Valdez oil spill caused. Where the governing compensatory regime allows corporate wrongdoers like Exxon to escape full liability for all the damages its egregious conduct has caused, under-deterrence will result, undesirable conduct may be encouraged, maritime commerce will

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be damaged, and the environment will not be fully protected.

4. Under-deterrence will result unless the Court affirms the punitive award in this case because, with very narrow exceptions, the well-settled maritime rule in Robins Dry Dock3 permitted Exxon to escape liability for any economic damages that did not flow from direct physical contact with the oil it spilled onto Prince William Sound.

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ARGUMENT

I. The General Maritime Law Sets No Spe-cial Limits on Punitive Damages

The long and storied history of punitive remedies in American maritime law has been told well and in great detail elsewhere – particularly in University of Texas Law Professor David Robertson’s exhaustive monograph on the subject, “Punitive Damages in American Maritime Law,” 28 J. MAR. L. & COM. 73 (1997). As this Court has repeatedly pointed out, “it better becomes the humane and liberal character of proceedings in admiralty to give than to withhold the remedy, when not required to do so by established and inflexible rules.” Moragne v. United States Lines, Inc., 398 U.S. 375, 387 (1970), quoting The Sea Gull,

3 Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927).

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21 F. Cas. 909, 910 (C. C. Md. 1865); see also Miles v. Apex Marine Corp., 498 U.S. 19, 36 (1990); Sea-Land Services v. Gaudet, 414 U.S. 573, 585 (1974). Far from establishing any special rules prohibiting or limiting “punitive,” “exemplary,” or “vindictive” damages, the general maritime law of the United States has, as Professor Robertson put it, “firmly recognized” the availability of such damages whenever “the defendant was guilty of gross negligence, or actual malice or criminal indifference which is the equivalent of reckless and wanton misconduct.”4 In re Marine Sulphur Queen, 460 F.2d 89, 105 (2nd Cir. 1972); see also Gamma-10 Plastics, Inc. v. American President Lines, 32 F.3d 1244, 1254 (8th Cir. 1994) (“Under maritime law, punitive damages are warranted where the defendant has acted with ‘reckless or callous disregard for the rights of others or for conduct which shows gross negligence or actual malice or criminal indifference.’ ”).5

4 Robertson, 28 J. MAR. L. & COM. at 98. 5 E.g. CEH, Inc. v. F/V Seafarer, 70 F.3d 694, 701 (1st Cir. 1995) (intentional destruction of property); Muratore v. M/S Scotia Prince, 845 F.2d 347, 354 (1st Cir. 1988) (intentional infliction of emotional distress); Churchill v. F/V Fjord, 892 F.2d 763, 772 (9th Cir. 1988), cert. denied, 497 U.S. 1025 (1990) (collision caused by intoxication); Protectus Alpha Navigation Co. v. North Pacific Grain Growers, 767 F.2d 1379, 1385 (9th Cir. 1985) (intentional destruction of property); Pino v. Protection Maritime Ins. Co., 490 F. Supp. 277, 281 (D. Mass. 1980) (tor-tious interference with employment rights); The Ludlow, 280 F. 162, 163 (N.D. Fla. 1922) (malicious and unlawful arrest); The Seven Brothers, 170 F. 126, 127 (D.R.I. 1909) (intentional


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In short, if there is anything inherently distinc-tive about the use of punitive damages under judge-made maritime law, it is the long history which such damages have enjoyed in that body of jurisprudence. Exxon hopes to hide from that history behind this Court’s ruling in Miles v. Apex Marine Corp., 498 U.S. 19, 36 (1990). Arguing that Congress itemized and codified all the federal remedies available in marine pollution cases when it passed the Clean Water Act (“CWA”), 33 U.S.C. §§ 1251-1387, Exxon cites Miles for the proposition that, when an Act of “Congress has spoken directly” to the question of what damages are recoverable in a particular maritime context, “ ‘the courts are not free to “supplement” Congress’ answer so thoroughly that the Act becomes meaningless.’ ” 498 U.S. at 31, quoting Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 625 (1978).

But as the Louisiana State Court of Appeal summed up when it rejected an argument identical to the one Exxon is making here, “Miles . . . does not . . . signify a call for universal uniformity of maritime tort

property damage); Ralston v. The States Rights, 20 F. Cas. 201, 210 (E.D. Pa. 1836) (reckless steamboat racing); Steamboat Co. v. Whilldin, 4 Har. 228, 233 (Del. 1845) (grossly negligent collision). One admiralty court has awarded punitive damages for “a clear breach of contract caused either by the grossest carelessness, or by reckless cupidity.” Morrison v. The John L. Stephens, 17 F. Cas. 838, 840 (N.D. Cal. 1861) (in which the owners of a steamship forced a married couple to berth with a stranger in a stateroom for which the couple had paid extra to reserve solely for themselves).

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remedy, but rather emphasizes the importance of uniformity in the face of applicable relevant legisla-tion.” Poe v. PPG Industries, 782 So. 2d 1168, 1173 (La. App. 2001) (original emphasis). To borrow a pertinent quote from this Court’s decision in Yamaha Motor Corp. v. Calhoun, which permitted a “nonsea-farer” to pursue a state wrongful death remedy for a fatality which occurred on navigable, territorial waters, it is only when “Congress has prescribed a comprehensive tort recovery regime” that there is “no cause for enlargement of the damages statutorily provided.” 516 U.S. 199, 215 (1996). Whatever Exxon might suggest, neither the CWA nor any other Fed-eral statute prescribes such a regime here.6

6 Since Exxon’s misuse of Miles bears on the second ques-tion for certiorari, and threatens to distract us from the third question – which is the focus of this brief – we will not belabor it, except to note that this Court did not address the issue of punitive damages in Miles. To quote the Louisiana State Court of Appeal’s decision in Poe once again:

The Supreme Court in Miles expressly stated that it was granting certiorari on only two issues, whether or not a non-dependent parent or a deceased seaman can recover for loss of society under the general maritime law, and whether the estate of a decedent is entitled to recover for the future lost earnings of a seaman. The Court’s decision did not address the denial of the right of the seaman’s mother to recover non compen-satory punitive damages. The Supreme Court in Miles did deny recovery for loss of society, which is a form of nonpecuniary relief. The Court was trying to ensure a uniform scheme of recovery regardless of whether a wrongful death action was brought under the Death on the High Seas Act, 46 U.S.C. § 761, [currently codified


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as 46 U.S.C.S. §§ 30301 et seq.], the Jones Act [currently codified as 46 U.S.C.S. § 30104] or general maritime law. Those statutes provide only for pecuniary relief.

Poe v. PPG Industries, 782 So. 2d 1168, 1172 (La. App. 2001). The holding in Miles has produced some confusion among the lower courts. Cantilevering their decisions on what they describe as this Court’s “analytical framework,” a feat which Professor Robertson has called “something akin to sleight of hand,” 28 J. MAR. L. & COM. at 164, the Fifth, Sixth, and Ninth Circuits have extended the holding in Miles to deny punitive recovery to seamen killed or injured in the course of their employment. See, e.g., Miller v. American President Lines, 989 F.2d 1450 (6th Cir. 1993) (Jones Act case); Guevara v. Maritime Overseas Corp., 34 F.3d 1279 (5th Cir. 1994), reversed in part on reh’g, 59 F.3d 1496 (1995) (maintenance and cure case); Glynn v. Roy Al Boat Management Corp., 57 F.3d 1495 (9th Cir. 1995) (same); see also Wahlstrom v. Kawasaki Heavy Inds., Ltd., 4 F.3d 1084 (2nd Cir. 1993) (general maritime wrongful death case); In re Amtrack etc. v. Warrior & Gulf Nav. Co., 121 F.3d 1421 (11th Cir. 1997) (same). These are the lower-court holdings on which Exxon’s Miles argument are built. But as Professor Robertson explained, the rickety analytical bridge which these decisions hammered together hangs from “unexamined lower-court assumptions that punitive damages are ‘non-pecuniary’ and that all non-pecuniary damages issues in seamen’s Jones Act and unseaworthiness cases demand like treatment.” 28 J. MAR. L. & COM. at 163. Seamen, after all, are the peculiar wards of admiralty. E.g., Vaughan v. Atkinson, 369 U.S. 527, 532 (1962).

No one has suggested a justification in policy or prin-ciple for treating seamen worse than other maritime plaintiffs. Nor has anyone argued that it makes sense for the maritime law to be more restrictive of punitive liability than the prevailing land-based law.

Robertson, 28 J. MAR. L. & COM. at 164; see also Force, “The Curse of Miles v. Apex Marine Corp.: The Mischief of Seeking ‘Uniformity’ and ‘Legislative Intent’ in Maritime Personal Injury


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II. Punitive Awards Serve the Same Interests in Admiralty as They Do at Law – Pun-ishment and Deterrence

Admiralty “courts proceed, in cases of tort, upon the same principles as courts of common law, in allowing exemplary damages.” Lake Shore & S.M. Ry. v. Prentice, 147 U.S. 101, 107 (1902). “Until well into the 19th century, punitive damages frequently oper-ated to compensate for intangible injuries, compensa-tion which was not otherwise available under the narrow conception of compensatory damages preva-lent at the time.” Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 437 n.11 (2001). But today, punitive damages in admiralty primarily “serve the purpose ‘of punishing the defendant, of teaching him not to do it again, and of deterring others from following his example.’ ” Protectus Alpha Navigation Co. v. North Pacific Grain Growers, 767

Cases,” 55 LA. L. REV. 745 (1995). As a consequence, the Elev-enth Circuit recently rejected the unexamined lower-court assumptions on which Exxon cantilevers its arguments, and stood by its traditional holding that punitive damages are fully available in seamen’s cases. Atlantic Sounding Co. v. Townsend, 496 F.3d 1282 (11th Cir. 2007). There are pre-Miles State court decisions to the same effect still standing. See, e.g., Baptiste v. Superior Court, 106 Cal. App. 3d 87, 95-104, 164 Cal. Rptr. 789, 792-98 (Cal.App. 1980), cert. denied sub nom. Chevron Shipping Co. v. Baptiste, 449 U.S. 1124 (1981); Weason v. Harville, 706 P.2d 306, 310 (Ak.Sup.Ct. 1985). The cases are thus in conflict. The decision in this case could help resolve that conflict by rejecting Exxon’s arguments and underscoring the limited scope of the holding in Miles.

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F.2d 1379, 1385 (9th Cir. 1985); see also Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 22 (1991); Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974); see gen. Robert-son, 28 J. MAR. L. & COM. at 74-75; 1 Schoenbaum, The Law of Admiralty, § 5-17, p.243 (4th ed. 2001).

It follows that “the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct.” BMW of North America v. Gore, 517 U.S. 559, 575 (1996). Subject, of course, to the limitations imposed by constitutional due process, a punitive award “should reflect ‘the enormity of his offense.’ ” Id. quoting Day v. Woodworth, 54 U.S. 363, 13 How. 363, 371, 14 L. Ed. 181 (1852). This, in turn, requires a careful consideration of the harm the defendant has caused.

III. To Determine Whether the Punitive Award

in this Case Protected Maritime Commerce and Served the Traditional Purposes of Punishment and Deterrence, the Court Should Consider Whether Exxon Was Re-quired to Pay for All of the Far-Flung Harm its Misconduct Caused

Since the Briefs of the Petitioners and Respon-dents have thoroughly addressed the “guideposts” which this Court has developed for assessing punitive awards, we will not revisit those guideposts here. It is enough for our purposes to note that:

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[B]oth State Supreme Courts and this Court have eschewed an approach that concentrates entirely on the relationship between actual and punitive damages. It is appropriate to consider the magnitude of the potential harm that the defendant’s conduct would have caused its intended victim if the wrongful plan had succeeded, as well as the possible harm to other victims that might have re-sulted if similar future behavior were not de-terred.

TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 442, 460 (1993) (original emphasis); see also BMW of North America, Inc. v. Gore, 517 U.S. 559, 581 (1996) (“the proper inquiry is ‘whether there is a reasonable relationship between the punitive dam-ages award and the harm likely to result from the defendant’s conduct as well as the harm that actually has occurred’ ”) (original emphasis). This principle is especially important in the case at bar.

In a 1998 study underwritten by Exxon, Stanford Law and Economics Professor A. Mitchell Polinsky, and Harvard Law Professor Steven Shavell used economic reasoning to provide a relatively simple set of principles for determining how and when punitive awards will best meet their objectives of punishing past wrongdoers and deterring future wrongdoing. Polinsky and Shavell, “Punitive Damages: An Eco-nomic Analysis,” 111 HARV. L. REV. 869 (1998). Their study concluded, inter alia, that:

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[A] crucial question for consideration is whether injurers sometimes escape liability for harms for which they are responsible. If they do, the level of liability imposed on them when they are found liable needs to exceed compensatory damages so that, on average, they will pay for the harm that they cause. This excess liability can be labeled ‘punitive damages,’ and failure to impose it would re-sult in inadequate deterrence.

Id. at 873-74. We respectfully urge the Court to consider that question in this case.

IV. Under-Deterrence Will Occur in this Case

Unless the Court Affirms the Award of Pu-nitive Damages

In Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927), this Court laid down “a bright-line rule of limitation which discards traditional precepts of foreseeability and . . . relies instead on whether the alleged pecuniary loss resulted from physical harm arising from the defendant’s negligence.” In re Orien-tal Republic of Uraguay, 821 F.Supp. 934, 939 (D. Del. 1993). This rule, in turn, has been generally applied to marine pollution cases, id.; see also, Louisiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019 (5th Cir. 1985) (en banc), and was specifically applied by the district court to the case at bar. See, e.g., JA 132.

The clarity provided by the Robins rule has not come without a price:

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The physical harm requirement capriciously showers compensation along the path of physical destruction, regardless of the status or circumstances of individual claimants. Purely economic losses are borne by innocent victims, who may not be able to absorb their losses.

People Express Airlines v. Consolidated Rail Corp., 100 N.J. 246, 254 (1985); see also Pruitt v. Allied Chemical, 523 F.Supp. 975, 982 (E.D. Va. 1991). That was certainly the case here. See Exxon Shipping Co. v. Airport Depot Diner, 120 F.3d 166, 167 n.3 (9th Cir. 1997) (refusing to reinstate claims for various eco-nomic injuries and emotional damages on ground they were too remote); see also Pet. App. 115a-16a; JA 118-16, 1384-90.

Admiralty courts faced with the widespread ruin which inevitably flows from a dramatic marine spill like this one have recognized a narrow and well-defined exception to the Robins Rule, for commercial fishermen, in deference to “the public’s deep disap-proval of injuries to the environment and the strong policy of preventing such injuries.” Union Oil Co. v. Oppen, 501 F.2d 558, 569 (9th Cir. 1974). But that exception is sui generis, and does not extend to many other maritime plaintiffs – indeed, it does not even extend very far along the water-to-table processing chain that binds together the members of the NFI in particular, and the seafood industry in general. See, e.g., In re Taira Lynn Marine Ltd. No. 5, LLC, 444 F.3d 371, 378-80 (5th Cir. 2006); Nautilus Marine,

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Inc. v. Niemela, 170 F.3d 1195, 1196-97 (9th Cir. 1999); Marine Navigation Sulphur Carriers, Inc. v. Lone Star Industries, Inc., 638 F.2d 700, 702 (4th Cir. 1981); Slaven v. B.P. America, Inc., 786 F. Supp. 853, 861 (C.D. Cal. 1992); In re Glacier Bay, 865 F. Supp. 629, 638 (D. Alaska 1991); Pruitt v. Allied Chemical Corp., 523 F. Supp. 975, 979-80 (E.D. Va. 1981).

As In re Oriental Republic of Uruguay lamented, when it pondered the effect of the Robins Rule in a Shipowners’ Limitation case arising out of a marine oil spill in Delaware: “Obviously the number and variety of different forms of economic harm arguably resulting from [the] negligent discharge of oil into the Delaware River are limited only by the boundaries of human imagination.” 821 F.Supp. at 939. That la-ment is truer and more poignant still in this case. It may thus not go too far to suggest that the Robins Rule has enabled Exxon to escape liability for the lion’s share of the harm this spill caused.

It necessarily follows that the well-settled deter-rence objective of punitive awards in admiralty will not be served unless this Court upholds the award which the Ninth Circuit has already halved.

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CONCLUSION

“[T]he fishing industry is clearly part of tradi-tional maritime activity; and to assert otherwise would amount to a repudiation of much of maritime

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history.” Oppen, 501 F.2d at 561. Yet Exxon’s repre-hensible conduct put hundreds of maritime busi-nesses into bankruptcy or dire financial straits. Many of those businesses had no right to compensatory damages under Robins, and will have no indication that the law either recognizes their predicament or intends to deter future such calamities unless Exxon is punished for this spill. Exxon, by contrast, has assured the district court that paying even the $5 billion jury verdict “would not have a material impact on the corporation.” SJA 334 sa. The special princi-ples of admiralty law, and that law’s well-established interest in protecting maritime commerce, call upon this Court to reject Exxon’s arguments and affirm the decision of the Court of Appeals.


MCGUINN, HILLSMAN & PALEFSKY 535 Pacific Avenue San Francisco, CA 94133 (415) 421-9292

JOHN R. HILLSMAN Attorneys for Amicus Curiae

January 29, 2008