Punitive Damage Award Limited to 1:1 Ratio

19 years ago, an Exxon supertanker spilled millions of gallons of crude oil off the coast of Alaska. After trial, the jury awarded $287 million in compensatory damages and $5 billion in punitive damages against Exxon. The Ninth Circuit remitted the punitive damages award to $2.5 billion, which was still nearly nine times the amount of compensatory damages awarded.

Recently, the Supreme Court held in Exxon Shipping Co. et al. v. Baker et al., (No. 07-219), that the punitive damages award against Exxon was excessive and should be limited to an amount equal to compensatory damages. The decision is not a constitutional ruling and arises only in the context of maritime law. However, the Court seems to be sending a signal that punitive damage awards are out of control and is trying to provide a workable guideline in numbers rather than words.The final footnote of the opinion suggests that “the constitutional outer limit may well be 1:1.”

For more discussion, read this article on SCOTUS blog.  --Counseller/nc