Maritime Law: Alaskan Oil

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After studying the oral arguments in front of the U.S. Supreme Court in Exxon Shipping Co. vs. Baker on Feb. 27 in Washington D.C., Anchorage lawyer Emily Anderson written this question-and-answer guide.

Q: Can the U.S. Supreme Court reduce the $2.5 billion punitive damages award?

Yes. During the oral argument, the court focused almost entirely on whether punitive damages are permissible under maritime law and if so, whether the $2.5 billion award was excessive.

If the court finds that punitive damage awards are permissible, then the amount is at issue. Maritime law is a unique area of federal common law, or judge-made law. In this respect, the Supreme Court has the authority to set standards that could limit punitive damages awards in the maritime law context as it has done with punitive damage awards challenged under constitutional due process.

Q: Why might the Supreme Court justices reduce the punitive damage award?

In the last decade the Supreme Court has endeavored to set limits on punitive damages under the premise that excessive damages violate constitutional due process.’a0

During the years where this case bounced back and forth between the 9th Circuit Court of Appeals in San Francisco and the District Court of Alaska, this was the main issue and ultimately the basis for which the 9th Circuit cut the award.

Now the Supreme Court is looking at the excessiveness of punitive damage awards under the lens of maritime law.

Since this area of maritime law has not really been touched for nearly 200 years, it is unclear whether a different standard should be applied. If in fact, there is a "different standard" it may or may not be more stringent than the constitutional standard. The result could reduce the award. This is what the justices must decide.’a0

Q: Will the Supreme Court reach a decision before June?

Yes. There is always a possibility that a decision will be delivered at some point before the summer recess deadline at the end of June. This largely depends on the complexity of the case and how long it takes for all of the justices to approve the final written opinion.

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