On June 25, 2008, the U.S. Supreme Court overturned a federal appeals court decision that upheld a $2.5 billion punitive damages award against ExxonMobil. The Court held that the award was excessive under federal common law; it reduced the award to $500 million. The case arose in the aftermath of the 1989 Alaska oil spill caused by the grounding of the Exxon Valdez. The decision was a victory for WLF, which had filed a brief urging the Court to reduce the size of the award. The Court agreed with WLF that punitive damages awards that exceed the amount of compensatory damages are generally inappropriate in cases decided under federal law; the decision does not affect punitive damages awarded by State courts. The Court was evenly divided on– and thus did not rule on– an additional Exxon argument: federal maritime law bars any punitive damages award in cases, as here, in which there was no finding that the wrongful act was either intentional or reckless.
Exxon Shipping Co. v. Baker