RICHARD GERRY
GERRY, an attorney with the San Diego firm of Casey, Gerry, Casey, Westbrook, Reed & Schenk, represented 1,000 fishers who were plaintiffs in the Exxon oil spill case.


The recent $5 billion verdict against Exxon in the 1989 Exxon Valdez oil spill off the Alaskan coast has renewed the barrage of media and public condemnation of punitive awards that are far too extravagant and raised the question of jury judiciousness. Such criticism, however, is unwarranted and it ignores the compelling facts of the Exxon case.

To gain initial approval for the trans-Alaska pipeline, Exxon and its six oil company partners promised to use double-hulled tankers, to have pilots and escort tugs during the entire transit of Prince William Sound and to do all other things necessary to prevent a major spill in Prince William Sound. They also promised to have equipment on hand that would clean up a 200,000 barrel spill.

But shortly after approval was granted, these promises were broken. The Exxon Valdez was single-hulled, the pilot got off shortly after entering Prince William Sound, there were no escort tugs and there was no capacity to clean up a spill one-tenth the size of the Exxon Valdez spill. This behavior put in jeopardy one of the last pristine environments in the world, Prince William Sound.

In the case's first phase, the jury found that Exxon acted recklessly in permitting a known drinking alcoholic captain to run its largest ship, a ship operated by a skeleton crew required to work such long hours that many were chronically fatigued.

Exxon had reduced the number of mates on the Exxon Valdez from four to three to save about $100,000 per year. The mate in charge of the vessel
at the time it ran aground was in violation of a federal statute passed in 1913, which required him to have six hours off-duty in the 12 hours before he started watch. The National Transportation Safety Board found crew fatigue to be a contributing cause of the grounding and oil spill. Exxon didn't increase the number of mates back to four until years after the spill, just in time to go to trial.

During an investigation in 1985, Capt. Joseph Hazelwood admitted to drinking aboard ship and returning to the ship drunk. He went through a company alcohol rehabilitation program. Following this, Exxon failed to offer him a shoreside job, but put him back to sea as a captain.

Although Exxon officials testified before Congress and to the jury that Hazelwood was the most highly monitored person in the Exxon fleet, they could not produce one piece of paper to confirm any monitoring at all.

Despite numerous reports to high-level management about Hazelwood's drinking, including one the week before this fateful voyage, no action was taken by Exxon to remove him.

Indeed, at the time of the grounding, Hazelwood had no valid driver's license, having had licenses revoked in two states for multiple drunken driving convictions. Yet, despite the fact that he couldn't legally drive the smallest of cars, Exxon gave Hazelwood the command of its largest oil-laden supertanker. It is little wonder that the jury found Exxon reckless and provided a fine which jurors felt was warranted by the devastation caused by Exxon's failed policies and greed.

Exxon has taken a position that it endeavored to make whole the persons harmed by the spill. That's not true.

After first paying claims, Exxon soon executed an about-face and did everything it could to avoid its liability to those harmed. It unleashed corporate coffers, paying millions in legal defense fees to bring every obstructive motion possible, to hide behind every protective law, while refusing to enter into settlement negotiations with fishermen and other victims.

This policy of delay and refusal to pay for the harm continues today as Exxon makes motions to appeal. Rather than pay just claims (which would be split among as many as 30,000 claimants), Exxon clings to its money and uses it to make a 14 percent internal rate of return. As the jury saw, many of the beaches remain oiled, and Exxon has refused any additional efforts since 1992 to clean things up.

While Exxon has condemned the jury since the $5 billion verdict was entered, Exxon praised the jury in the compensatory damage phase of the case and lauded its members for their meticulous handling of the very complicated issues placed before them. Jurors took five weeks to review the evidence and answer 72 issues presented to them, and awarded only one-third of the damages requested. Now that the jury has finally spoken, Exxon has changed its tune and refuses to accept its decision.

Will the $5 billion verdict destroy Exxon? Exxon's comptroller testified to the jury that Exxon could pay $10 billion to $12 billion without a material adverse impact. Exxon's stock has climbed more than $20 billion since the spill. Exxon generates about $110 billion in revenues each year.

The question is not whether $5 billion in punitive damages will destroy Exxon, but whether it is sufficient punishment to deter its conduct. If the post-spill stock market reaction is any indication, it may not be.

That is, will this verdict be sufficient punishment for the reckless oiling of 1,500 miles of Alaska shoreline, the killing of hundreds of thousands of birds and thousands of otters, seals and other wildlife, and the ruination of the way of life of tens of thousands of Alaska natives and fishermen?

Will it deter Exxon and others?

Corporations, unlike individuals, cannot be put in jail. A corporation can be punished only through its pocketbook. Just as with any criminal defendant, Exxon must be held responsible.

I hope this verdict will cause Exxon and the other oil companies to think twice before they put the environment at risk of permanent damage as aresult of their reckless operations. If this verdict, small in relation to Exxon's size, accomplishes this, then the two purposes of punitive damages, to punish and deter, will have been fulfilled.

Copyright Union-Tribune Publishing Co.