# Record and brief — Exxon Shipping Co. v. Baker > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385015_0010%3A0 ## Record - **Collection:** Supreme Court brief - **Document type:** Record and brief - **Published:** January 1, 2008 - **Citation:** 554 U.S. 471 ## Text wVVUEnet wi viraeiZ7 No. 07-219 Title. Exxon Shipping Company, et al., Petitioners . Grant Baker, et al Docketed: August 21, 2007 Lower Ct: United States Court of Appeals for the Ninth Circuit Case Nos.: (04-35183) Decision Date: December 22, 2006 Rehearing Denied: May 23, 2007 Questions Presented ~~~Date~~~ meen Proceedings and Orders~~~~~~~~~~~~ ae ~~ Aug 20 2007 Petition for a writ of certiorari filed. (Response due September 20, 2007) Sep 13 2007 Sep 19 2007 Sep 20 2007 Sep 20 2007 Sep 20 2007 Sep 20 2007 Sep 20 2007 Sep 20 2007 Sep 20 2007 Sep 20 2007 Sep 20 2007 Sep 20 2007 Sep 2© 2007 Sep 20 2007 Sep 20 2007 Oct 10 2007 Oct 12 2007 Oct 29 2007 Dec 10 2007 Dec 10 2007 Dec 11 2007 Dec 14 2007 Dec 17 2007 Dec 17 2007 Consent to the filing of amicus briefs in support of either party received from counsel for the petitioners. Brief amici curiae of American Waterways Operators, et al. filed. Brief amici curiae of American Petroleum Institute, et al. filed. Brief amicus curiae of Chamber of Commerce of the United States of America filed. Brief amicus curiae of American Institute of Marine Underwriters filed Brief amicus curiae of Keystone Shipping Co. filed. Brief amicus curiae of American Commercial Lines Inc. filed. Brief amicus curiae of Washington Legal Foundation filed. Brief amicus curiae of International Association of Drilling Contractors filed. Brief amici curiae of Transportation Institute, et al. filed. Brief amici curiae of International Chamber of Shipping, et al. filed. Brief of respondents Grant Baker, et al. in opposition filed. Brief amicus curiae of Maritime Law Association filed. Brief amici curiae of International Association of Independent Tanker Owners, et al. filed. Brief amici curiae of Professors David J. Bederman, et al. filed. DISTRIBUTED for Conference of October 26, 2007. Reply of petitioners Exxon Shipping Company, et al. filed. (Distributed) Petition GRANTED limited to Questions |, 2, and 3(1) presented by the petition. Justice Alito took no part in the consideration or decision of this petition. The time within which to file the joint appendix and petitioners’ brief on the merits ts extended to and including December 17, 2007. The time within which to file respondents’ brief on the merits is extended to and including January 22, 2008. Consent to the filing of amicus curiae briefs in support of either or neither party received fron: counsel for the respondents. Consent to the filing of amicus briefs in support of either party received from counsel for the petitioners. Joint appendix filed (4 volumes). (Statement of costs received). Supplemental joint appendix filed (2 volumes). (Statement of costs received). RUVALE ENE Vee te Dec 17 2007 Dec 20 2007 Dec 21 2007 Dec 21 2007 Dec 24 2007 Dec 26 2007 Dec 26 2007 Dec 26 2007 Dec 26 2007 jan 7 2008 Jan 10 2008 Jan 10 2008 Jan |] 2008 Jan 15 2008 Jan 22 2008 Jan 22 2008 Jan 23 2008 Jan 25 2008 Jan 25 2008 Jan 28 2008 Jan 28 2008 Jan 29 2008 Jan 29 2008 Jan 29 2008 Jan 29 2008 Jan 29 2008 Jan 29 2008 Jan 29 2008 Jan 29 2008 Jan 29 2008 Jan 29 2008 Jan 29 2008 Jan 29 2008 Brief of petitioners Exxon Shipping Company, et al. filed Brief amicus curiae of Chamber of Commerce of the United States of America filed. SET FOR ARGUMENT ON Wednesday, February 27, 2008 Brief amici curiae of Transportation Institute, et al. filed. Brief amici curiae of International Chamber of Shipping, et al. filed. Brief amici curiae of American Petroleum Institute, et al. filed. Brief amicus curiae of Washington Legal Foundation filed. Brief amicus curiae of Product Liability Advisory Council, Inc. filed. Brief amicus curiae of American Maritime Safety Inc. filed. Application (07A575) of respondents for leave to file the brief on the merits in excess of the word limitation, submitted to Justice Kennedy. Record received from U.S.C.A. for the 9th Circuit. (1 envelope) Application (07A575) of respondents for leave to file the brief on the merits in excess of the word limitation granted by Justice Kennedy. CIRCULATED. Brief amici curiae of Alaska Legislative Council, on behalf of Alaska State Legislature, and Former Alaska Governors filed. Brief of respondents Grant Baker, et al. filed. (Distributed) 22 copies of a DVD containing Respondents’ Submission of Select Trial Exhibits received from counsel for the respondents. Record received from U.S.D.C. for the District of Alaska. (1 envelope) Brief amici curiae of U.S. Senators Theodore F. Stevens, and Lisa Murkowski, and U.S. Reprensentative Don Young filed. (Distributed) Brief amici curiae of Trustees for Alaska, et al. filed. (Distributed) Brief amici curiae of Prince William Sound Regional Citizens’ Advisory Council, et al. filed. (Distributed) Brief amicus curiae of Professor Thomas J. Schoenbaum filed. Motion of Alaska for leave to participate in oral argument as amicus curiae and for divided argument filed. Brief amici curiae of National Congress of American Indians, et al. filed. (Distributed) Brief amicus curiae of Professor Arthur Miller filed. (Distributed) Brief amici curiae of Jean-Michel Cousteau and Other Natural Scientists filed. (Distributed) Brief amici curiae of Sociologists, Psychologists, and Law and Economics Scholars filed. (Distributed) Brief amicus curiae of National Fisheries Institute filed. (Distributed) Brief amici curiae of Maryland and 33 Other States filed. (Distributed) Brief amici curiae of American Association for Justice. and Public Justice PC filed. (Distributed) Brief amicus curiae of Pacific Coast Federation of Fishermen filed. (Distributed) Brief amicus curiae of Alaska filed. (Distributed) Brief amici curiae of Former Ship Masters and Expert Mariners, et al. filed. (Distributed) Motion for additional time to argue filed by respondents Grant Baker, et al. RAUWANE ENE VE ae EZ Jan 29 2008 Feb 6 2008 Feb 7 2008 Feb 8 2008 Feb 11 2008 Feb 11 2008 Feb 14 2008 Feb 15 2008 Feb 15 2008 Feb 19 2U08 Feb 26 2008 Feb 27 2008 Brief amici curiae of Experts on Alcohol in the Workplace filed. (Distributed) Application (07A657) of petitioners for leave to file a reply brief on the merits in excess of the word limit, submitted to Justice Kennedy. Petitioners’ opposition to motion of Alaska for leave to participate in oral argument as amicus curiae and for divided argument. Letter, dated February 6, 2008, received from counsel for petitioner. Reply letter of Alaska in support of motion for divided argument filed. Application (07A657) granted by Justice Kennedy of petitioners for leave to file a reply brief on the merits in excess of the word limit. provided that the brief does not exceed 9,000 words. Letter, dated February | 11,2008, from counsel for respondents received. (Distributed). Motion for additional time to argue by respondent GRANTED. Justice Alito took no part in the consideration or decision of this motion. Motion of Alaska for leave to participate in oral argument as amicus curiae and for divided argument DENIED. Justice Alito took no part in the consideration or decision of this motion. Reply of petitioners Exxon Shipping Company, et al. filed. (Distributed) 18 copies of Video Compilation No. 9 (at JA 1295) submitted by counsel for respondents. Argued. For petitioners: Walter Dellinger, Washington, D.C. For respondents: Jeffrey L. Fisher, Stanford, Cal. PETITION FOR WRIT OF CERTIORARI oO) No. 07- Supreme Court, U.S. 07-219 AUG 20 2007 OFFICE OF THE CLERK IN THE Supreme Court of the Anited States EXXON SHIPPING COMPANY, ef ai., Vv. Petitioners, GRANT BAKER, et al., Respondents. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit PETITION FOR A WRIT OF CERTIORARI E. EDWARD BRUCE COVINGTON & BURLING LLP 1201 Pennsylvania Ave., N.W. Washington, D.C. 20004 (202) 662-6000 Attorneys for Petitioner Exxon Shipping Company WALTER DELLINGER (Counsel of Record) JOHN F. DAUM CHARLES C. LIFLAND JONATHAN D. HACKER O’MELVENY & MYERS LLP 1625 Eye Street, N.W. Washington, D.C. 20006 (202) 383-5300 Attorneys for Petitioner Exxon Mobil Corporation if 8 i QUESTIONS PRESENTED An Alaska federal jury awarded $5 billion in punitive damages against Exxon under federal maritime law for the accidental grounding of the tanker EXXON VALDEZ and the resulting oil spill. The award did not punish for harm to the environment, which other proceedings had fully redressed, but only for lost income and similar economic harm to com- mercial fishermen and other private parties. Applying the Due Process Clause, the Ninth Circuit reduced the award to $2.5 billion—still 123 times the compensatory damages awarded and five times what the court found was the total, fully compensated loss to all private economic interests. The questions presented are: 1. May punitive damages be imposed under maritime law against a shipowner (as the Ninth Circuit held, contrary to decisions of the First, Fifth, Sixth, and Seventh Circuits) for the conduct of a ship’s master at sea, absent a finding that the owner directed, countenanced, or participated in that con- duct, 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 Clean Water Act, but has not provided for punitive dam- ages, may judge-made federal maritime law (as the Ninth Circuit held, contrary to decisions of the First, Second, Fifth, and Sixth Circuits) expand the penalties Congress provided by adding a punitive damages remedy? 3. Is this $2.5 billion punitive damages award, which is larger than the total of all punitive damages awards affirmed by all federal appellate courts in our history, within the limits allowed by (1) federal maritime law or (2) if maritime law could permit such an award, constitutional due process? i PARTIES TO THE PROCEEDING Petitioners are Exxon Shipping Company (now known as SeaRiver Maritime, Inc.) and Exxon Mobil Corporation, de- fendants-appellants below. Joseph Hazelwood (the master of the EXXON VALDEZ) was also a defendant-appellant below and is therefore a respondent under Rule 12.6. Plaintiffs-appellees below, who are respondents under Rule 12.6, are Grant Baker, Louie E. Alber, Ahmet Artuner, Jeffrey Bailey, William Bennett, Michael Wayne Bullock, Robyne L. Butler, Albert Ray Carroll, Larry L. Dooley, Mark Doumit, Douglas R. Jensen, Dennis G. Johnson, Don- ald P. Kompkoff, Sr., Josef Kopecky, Daniel Lowell, An- drean E. Martusheff, Carol Ann Maxwell, Jacquelan Jill Maxwell, Robert A. Maxwell, Sr., Michael McLenaghan, Elenore E. McMullen, Leslie R. Meredith, Leonard S. Ogle, Steven T. Olsen, August M. Pedersen, Jr., Mary Lou Red- mond, Joseph David Stanton, Jean A. Tisdall, Darrell Wood, the Alaska Sport Fishing Ass’n, Debra Lee, Inc., Dew Drop, Inc., and the Native Village of Tatitlek. They are representa- tives of a punitive damages class certified by the district court and defined as “all persons who possess or assert a claim for punitive damages” arising out of the grounding of the EXXON VALDEZ and the resulting oil spill, except for cer- tain governmental entities. App. 126a.' RULE 29.6 DISCLOSURE All of the stock of Exxon Shipping Company is owned directly or indirectly by Exxon Mobil Corporation. Exxon Mobil Corporation has no parent corporation and no person or entity owns 10% or more of its stock. ' Citations to “App.” indicate the Appendix to this Petition. Citations to “ER” and “RER” indicate materials available in Appellants’ Joint Ex- cerpts of Record and Appellants’ Joint Rebuttal Excerpts of Record filed in the fizst Ninth Circuit appeal (No. 97-35191). Citations to “DX” indi- cate exhibits admitted at trial. Emphasis is supplied throughout, except where otherwise stated, and internal quotations and citations are omitted. ill TABLE OF CONTENTS Page QUESTIONS PRESENTED......:.:0cssesessscseossssesessosssossecoossonse i PARTIES TO THE PROCEEDING. .......cc.ccssrcsovessessesesscesees ii Fe Be EI ciscsscicecscrncssvasvtonnesessesonsconnecenines il Fe ee PEE vccnccescssesqsesecresessscsctvenssoneocsoneses Vv ca epasbeatsdadendebniensidedeiiedel 1 ii hatirtiiniennenninventsnasendcipinaiiiieniaensemene pestis CONSTITUTIONAL AND STATUTORY PROVI- IID icivitiichvciepnccetineinsiaesnstinnilnpiennnedepvesdne 1 RIOT Uictiicicsicsecsnsinsscnsenscsnesssctivnreenasensventventuomnens | STATEMENT OF THE CASE.............:0:c-ssscscssosssssecssssssnesees 3 i aiitidetsintnsiceisenscstsintiiebenectnyuitnensin 3 I i scccicinienensinisemsntescennscsevennnsvetensh 5 REASONS FOR GRANTING THE PETITION................. 10 I. The Court Should Grant Certiorari to Resolve the Conflict in the Circuits on Whether Maritime Law Permits Vicarious Punitive Damages...................0.0000+ il II. The Court Should Grant Certiorari to Resolve the © Conflict in the Circuits on Whether Maritime Law Permits Judge-Made Remedies When Congress Has Not Authorized Them in Applicable Statutes. .......15 Il. The Court Should Grant Certiorari to Remedy Confusion in the Lower Courts and Make Clear the Permissible Size of Punitive Damage Awards under Maritime Law and under the Due Process 55S IRN a ENGINE LOR ON RO eS 21 REESE CNRS MORNE: CERT SRG RICA I TEE MES 97) 21 ATS SE Tae aS et TN TE ae 27 SE diiivicsbclnvistnsiestouicbionnciegsincsubisipbannainecaicaiiis 30 iv TABLE OF AUTHORITIES Page(s) CASES American Dredging Co. v. Miller, A 2 a icscenisencesepnpspengszecpinioninnesttl 23 BMW of North America v. Gore, Sa iin scensaepnomtinnetipetanegnevnbaiels passim Bogle v. McClure, See ae Re 8 BE Gls BIE a cccvcccescosessovecrenscosonsenseees 28 Bullock v. Philip Morris USA, Inc., 42 Cal. Rptr. 3d 140 (Cal. Ct. App. 2006) ...............004 28 California v. Deep Sea Research, Inc., Sa is seceulieniensnemnaain 10 CEH, Inc. v. F/V Seafarer, Fe Cie cccccevecvssncecencnscnecsensetontios 12, 23 City of Milwaukee v. Illinois, i scssnemneucinnsansbaiintend passim Clark v. Chrysler Corp., Fe ee, BO OG) nc cccccncesocerseccseczesseccsvcceontes 30 Conner v. Aerovox, Inc., Fee Fe CIE ee BOO cncccocsecccccccccvcesssesscetene 18, 19 Dooley v. Korean Air Lines Co., Fe ee I bissccccticccscccccsvecvsssescssscessess 16, 17, 26 Estate of Moreland v. Dieter, a Pt TIE, BIDE ccscninssnrecesvasoncsesioccssossidenns 28 Executive Jet Aviation v. City of Cleveland, i atin nihiintnnhcedeecuionneticcnideitiins 23 Foremost Ins. Co. v. Richardson, II Lorton tnienninscniassoutscecedpeonnseectecepeniciente 22 Gaffney v. Riverboat Services of Indiana, Inc., Pe ae PED Gls Bin ssccicnssvsntsnrsccessccevenscsensobi 22 Greenbelt Co-op Pub. Ass'n v. Bresler, Pe sidan siicinbdinightcsapcecinsiemenitajenpocidhite 13 Vv Guevara Vv. Maritime Overseas Corp., 59 F.3d 1496 (Sth Cir. 1995) (en banc) .............0006 18, 23 Honda Motor Co. v. Oberg, iss srs cncnscssenstccrnesoossonnansotecy 21, 26 Horsley v. Mobil Oil Corp., BS ae GREE Ee. 1999) ...ccccecccceccccccsceccssceves 18, 19, 29 In re Oswego Barge Corp., ET IEEE, BOWE Dacecccoccccccccnceoccescesssecesescccosees 18 In re P&E Boat Rentals, 872 F.2d 642 (Sth Cir. 1989) (en banc) .............00+ 12, 13 In re Paris Air Crash, eR ae EEE ile BDU cccccccccccescoxcvcsscscccosocesoeces 20 Kolstad v. American Dental Ass'n, 527 U.S. 526 (1999)............ OS FEE ere Oe 14 Lake Shore & M.S. Ry. Co. v. Prentice, EEN ll Lee v. Edwards, IEE CE, BDO D a ccccccvesacscscecvcoscsscsocesercesssesee 22 Mason v. Texaco, Inc., 948 F.2d 1546 (10th Cir. 1991)... cece eeceeceeeeeseneeees 10 Mathie v. Fries, IE GE, BID Ph .nccncccoccscovsesccccnsonscncssucoesests 22 McDermott, Inc. v. AmClyde, sen ssn ccesccntncsscnssocoesenscceeoes 10, 23 Middlesex County Sewerage Auth. v. Nat'l Sea Clammers Ass'n, RI A I os sacssccccscccoveccccceceseosessossece 16, 17, 18, 19 Miles v. Apex Marine Corp., a ccssssssenccncosscnesnene passim Miller v. American President Lines, 989 F.2d 1450 (6th Cir. 1993)... cece ccceeeeeees 18, 29 Mobil Oil Co. v. Higginbotham, i sc saciniscepentasionns 16, 17 vi Moragne v. States Marine Lines, Inc., EG ee EE cisitcensicctnsieenesesecsnessernsecemesesoneeee 10, 23 Norfolk Southern Ry. Co. v. Kirby, I a iat sicanscctncsessncpesconiensaniegi 10, 22 Pacific Mut. Life Ins. Co. v. Haslip, Se NE i ciindhcnaptnciencinncemeneceeseescosees 13, 22, 24, 25 Pacific Packing & Nav. Co. v. Fielding, ae ee IG TIT ocas.cnncpdcensvssocenessovecvocsscrcoesete 11 Philip Morris USA v. Williams, A TT Diciriinninecsonavacnncccensstsseseccoscetoecs 27, 29 Protectus Alpha Nav. Co. v. North Pac. Grain Growers, oe eA Re passim Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp., pe | ey: | nr 28 Sisson v. Ruby, i ciiiacia sotatocnenessevenesncieniensnctmnntinn 22 Spectrum Sports, Inc. v. McQuillan, EE 13 Stamathis v. Flying J, Inc., Fee Be Ge EC. 2O0G).....n a cccrencscenserscrccesesecesecesceees 28 State Farm Mut. Auto. Ins. Co. v. Campbell, NE I cc ci cidnlineseliotionennassevcncensnonsee passim Superior Federal Bank v. Jones & Mackey Const. Co., 219 S.W.3d 643 (Ark. Ct. App. 2005) .0.........cccccceeeeeees 28 The Amiable Nancy, is sac ancibcinnt ennetinesinencbanmncnisediniiaa 11 The Golden Gate, | 16 F. Cas. 141 (C.C.N.D. Cal. 1856) .........:..cccccceseereees 11 The Lottawanna, EE ITI ca dascnissctstnsaksstnsicsbapneededvatcnntemieciidial 23 TTS a +, Vii The State of Missouri, ee ee Be ecisiccscccesescessosecevecvsooesavecsessconee 11 TXO Prod. Corp. v. Alliance Res. Corp., ee ick ties steesttassernsncescsccorsscsconees 22, 23, 26 United Int'l Holdings, Inc. v. Wharf (Holdings) Lid., 210 F.3d 1207 (10th Cir. 2000)................0...cccrerccsereeres 10 United States Steel Corp. v. Fuhrman, 407 F.2d 1143 (6th Cir. 1969).............ceceseeeeeenees 12, 13 United States v. Reliable Transfer Co., aces cnsislnisetaiennctentonseoninbens 10 Wahlstrom v. Kawasaki Heavy Indus., Oe FEO Oe Ce TIS ocecnccencccccsccoscossccrcccsscccsssecooes 18 Zazu Designs v. L'Oreal, S.A., Fe Se stresses sncecesesoscocsscccenscnente 26 STATUTES a can EIN ceo aitsnjicscbeniannipeniscenanenstantaaeintsi 4,15, 19 ON SESE aaa ONE Ie a Pete DN CR I EN l IIIT cath cnencsieniicanicncnrtsindicintnanpncindsvinnineineeneitiatiategl 5 acct conic igiclniaeininsaetiohbbiesiiilibieelititiedl 5 II iain ccsesseicinipitcieateinessthinliepastineniineimnidgnennbited 5 SR IIE Siinsidiiciciscvsiticadesentninerndcbeimiettensbenibessssntoneiniinit 5 TINTS di diseclipisdinsdeiccnelanctinsibthigitesdnbitteseineenedeninitnes 5 Clean Water Act (CWA), 33 U.S.C. § 1311 et TI ied ttcintncpeteisiianadnccthensincatmseetesensqntianvennetesosonesenssanooenens ] Oe nc snpessnosasaenscssoseunoennnnnis 4,15 CWA, Fo UBL. © TSTSI MA) ..cccceccccoceccsesessorsccvsessssessosed 4 elas ea ee OI in sccccrecesesncencssenssoneavopeannnees 15 I aT NRA TEI cdincdlicenionsorsanictecrercsnerinotitoncnenianens 20 Sey Se eee We EIT ccnsreveceveccorecccervsensesctorivnnte 15 CPA, Fe CAs 8 Tr FD cscecsccnovcnccecescscsvonccsecseceses 16 al Vili ig Bee Rae 0 Re rveceicenesscrseiniscatenccnsssssnteneecseod 4,15 ay ie eID cerccccsccccensscevscenecostcnatectniioneece 20 ay a le IID socscciiccnincertatscmscontnesisocianstvenseciaes 20 CONSTITUTIONAL PROVISIONS as Gs SINE 7 cnisitcniniceisotcicnstiniteniccitenenlbcsidebissresapietnache l te Be Se 8 eter ee eee eer 22 OTHER AUTHORITIES Restatement (Second) of Torts § 909.............cscccccssseeseeenees 12 ee -- eres PETITION FOR A WRIT OF CERTIORARI Petitioners Exxon Shipping Company and Exxon Mobil Corporation (collectively, “Exxon”) respectfully petition for a writ of certiorari to review the judgment of the United States Court of Appeals for the Ninth Circuit in this case. OPINIONS BELOW The two opinions of the Ninth Circuit and the opinions of Judges Kozinski and Bea dissenting from denial of rehearing en banc are reported at 270 F.3d 1215 and 490 F.3d 1066 and reprinted at App. la-117a and 287a-293a. The district court’s initial opinions on all issues are unreported and re- printed at App. 224a-284a. Its two later opinions on the size of the punitive award are reported at 236 F. Supp. 2d 1043 and 296 F. Supp. 2d 1071 and reprinted at App. 118a-223a. JURISDICTION The Ninth Circuit issued its opinions in this matter on November 7, 2001, and December 22, 2006, and amended the latter opinion on May 23, 2007, upon denial of Exxon’s timely petition for rehearing. App. 285a. This Court has ju- risdiction under 28 U.S.C. § 1254. CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The Fifth Amendment provides: “No person shall be de- prived of life, liberty, or property, without due process of law.” Pertinent provisions of the Clean Water Act (CWA), 33 U.S.C. § 1311 et seq., are given at App. 293a-299a. INTRODUCTION This petition seeks review of what is by far the largest punitive damage award ever affirmed by a federal appellate court. Unlike all the other punitive awards this Court has re- viewed, which arose under state law, this award is purely the product of judge-made federal law and raises important fed- eral questions not limited to whether the amount exceeds the boundaries of due process. Because the oil spill was a mari- time tort, the award was made under maritime law, a species 2 of federal common law which federal judges have responsi- bility to declare and shape in the same manner that state courts declare and shape the common law_of their states, and of which this Court is the ultimate arbiter. The questions pre- sented, of importance to the entire maritime community, must therefore start with whether the award was proper un- der maritime law. It was not. First. The trial court instructed the jurors that if they found the ship’s master had acted recklessly, they were re- quired as a matter of law to impute his recklessness to the shipowner, even if the master’s acts were contrary to the owner’s properly enforced policies. As explained in Judge Kozinski’s dissent, App. 287a-291a, in upholding these in- structions the Ninth Circuit departed from 200 years of mari- time law, and put itself squarely in conflict with decisions of the First, Fifth, Sixth, and Seventh Circuits. Second. Congress established a detailed scheme of penal- ties and remedies for oil spills in the CWA, but did not au- thorize punitive damages. In holding that punitive damages were available, the Ninth Circuit departed from decisions of this Court and other circuits holding that judge-made mari- time law cannot add remedies to those Congress has pro- vided in an applicable statute, including the CWA. The deci- sion also conflicts with multiple maritime-law decisions of other circuits barring judge-made punitive damages where pertinent federal statutes do not authorize them. Third. The Ninth Circuit refused to recognize that sub- stantive maritime law limits the size of the award independ- ently of due process. Indeed, the court said that absent a due process limit, the jury might permissibly have awarded the full $5 billion on the theory that Exxon “ought to have a year without profit” as punishment for the spill. App. 91a. In so holding, the Ninth Circuit ignored maritime law’s core ob- jectives of uniformity, predictability, and avoidance of undue burdens on maritime commerce. It also contradicted deci- sions of other circuits that punitive awards made under fed- eral law must comply not only with outer limits imposed by 3 due process, but also with non-constitutional limits imposed by underlying federal law. The $2.5 billion award in this case vastly exceeds any amount supportable under maritime law. And for reasons including those discussed in Judge Bea’s dissent, App. 292a-293a, the award also vastly exceeds the maximum permitted by due process. STATEMENT OF THE CASE A. Factual Background 1. On March 24, 1989, the EXXON VALDEZ, a modern, well-equipped tanker fully loaded with crude oil, ran aground on Bligh Reef in Prince William Sound, Alaska. The immediate cause of the grounding was the failure of Third Mate Cousins to turr the vessel away from the reef, the last step in a routine maneuver to avoid ice in the ship- ping lanes. The vessel’s master, Captain Hazelwood, in- structed Cousins when and where to make the turn, but then left the bridge—a violation of Exxon’s explicit policy requir- ing two officers to be present. For reasons never explained, Cousins failed to make the turn as instructed, and the ship went aground, spilling 258,000 barrels of oil. App. 61a-64a. Upon leaming of the grounding, Exxon dispatched an emergency response team which successfully prevented the discharge of the remaining 80 per cent of the vessel’s cargo. RER 287-91. Exxon acknowledged responsibility for the spill and initiated a massive cleanup, ultimately spending $2.1 billion on that effort—almost double Exxon’s annual profit at that time from all petroleum operations in the United States. App. 64a; RER 312; DX-6347. Exxon also established a claims program which paid, without litigation and mostly without requiring releases, over $300 million to compensate commercial fishermen, seafood processors, and other persons claiming that the spill had disrupted their busi- nesses. App. 64a. And Exxon undertook comprehensive re- medial measures to reduce the risk of future shipping acci- dents and spills. ER 108-09. 4 2. The State of Alaska sued Exxon for compensatory and punitive damages as parens patriae, and the United States indicted Exxon for violating the CWA, 33 U.S.C. § 1311(a), and other statutes. ER 1, 88. Both governments also sued Exxon for natural resource damages under CWA § 1321(f). App. 70a. Exxon resolved all these claims in a federal con- sent decree and plea agreement entered in October 1991. Exxon paid the governments $900 million for natural re- source damages, and they dismissed or released all pending or potential claims asserted on behalf of the general public, including Alaska’s parens patriae claim for punitive dam- ages. App. 65a; ER 242A. Exxon also pled guilty to certain misdemeanors, including negligent discharge of oil in viola- tion of CWA § 1319(c)(1A), and was sentenced under 18 U.S.C. § 3571(d) to pay a fine of $150 million and restitu- tion to the United States and Alaska of $100 million. App. 103a. The fine was remitted to $25 million in recognition of Exxon’s exemplary post-spill conduct, including its exten- sive remedial measures and payment of $2.1 billion for cleanup and $300 million to compensate private losses. App. 103a; ER 101-13. The net sentence of $125 million exceeded the total of all fines previously imposed by the United States in environmental cases. ER 124. Exxon’s pretrial payments, settlements, and fines exceeded $3.4 billion. App. 100a. At the 1991 sentencing hearing, the Attorney General’s representative affirmed that the criminal sentence by itself “clearly” achieved “adequate deterrence.” ER 155-56. The Attorney General of Alaska concurred, stating that a $150 million fine was “a number which the State can hold up to other polluters ... and that certainly should be sufficient ... to give pause to those who do not show the proper regard for the Alaska environment.” ER 169. The district court agreed, noting that it “says to others in the industry ... that you can expect fines that are off the chart in response to oil spills that are off the chart{,] ... [bJut it also says ... [that] if you live up to your legal responsibilities [after such a spill] ... you will get credit for it.” The court found that “Exxon has ... 5 been a good corporate citizen[,} ... sensitive to its environ- mental obligations[,} ... [who] immediately after the spill ... stepped forward with both its people and its pocketbook and did what had to be done in difficult circumstances, ... [and] will do its utmost to prevent another [spill].” ER 194-97. The court approved the sentence as containing both “an appropri- ate amount of punishment” and “an appropriate element of encouragement of respect for the law.” App. 103a; ER 197. B. Proceedings Below 1. The punitive damage claims were tried in 1994 to- gether with claims by commercial fishermen who alleged that the spill had caused greater economic losses than Exxon compensated in the claims program. (The claims were mostly for business interruption—the State closed the fisher- ies to protect the market reputation of Alaska salmon.) To allow resolution of all punitive damage claims in a single trial, the district court certified a class of all persons who “possess[ed] or assert(ed]” a punitive damage claim arising from the spill. App. 126a. The class asserted punitive dam- age claims under federal maritime law against Captain Hazelwood individually and also against Exxon, Hazel- wood’s employer and the owner of the vessel and cargo. The district court had jurisdiction under 28 U.S.C. §§ 1331, 1332, 1333, 1441, and 1442. For purposes of the trial, Exxon stipulated that the two Exxon entities could be treated as one. Exxon also stipulated that Hazelwood had been negligent in leaving the bridge in violation of Exxon’s two-officer policy. Plaintiffs contended that Hazelwood had been reckless—the required predicate for punitive damages—both by leaving the bridge and by allowing alcohol to impair his judgment before that. Exxon disputed these contentions, but if Hazelwood was impaired on duty, that too violated Exxon’s explicit policy. App. 89a.” ? In separate criminal proceedings, an Alaska jury convicted Hazel- wood of negligently spilling oil, but acquitted him of the more serious charge of operating the vessel while impaired by alcohol. ER 43-45. 6 As the master of a tanker, Hazelwood was a “managerial officer or employee” of Exxon as the jury instructions de- fined that term. App. 300a. Over Exxon’s objection, the dis- trict court instructed the jury that “the reckless act or omis- sion of a managerial officer or employee of a corporation, in the course and scope of the performance of his duties, is held in law to be the reckless act or omission of the corporation.” App. 300a. The district court further instructed the jury, again over Exxon’s objection, that this was so “whether or not those acts are contrary to the employer’s [established and adequately enforced] policies or instructions.” App. 301a. Plaintiffs also argued to the jury that Hazelwood was an alcoholic, Exxon knew it, and Exxon had been independently reckless for allowing Hazelwood to serve as master and not supervising him sufficiently. The evidence on all these points was highly disputed. The Ninth Circuit acknowledged that based on the record the jury “could have decided that Exxon followed a reasonable policy of fostering reporting and treatment by alcohol abusers, knew that Hazelwood had ob- tained treatment, did not know that he was an alcoholic, and did not know that he was taking command of his ship drunk.” App. 88a-89a. But the district court’s instructions made it unnecessary for the jury to reach these questions. 2. In the first phase of the trial, the jury returned a verdict that Hazelwood had been reckless. Having been instructed that any reckless conduct of Hazelwood was “held in law” to be reckless conduct of Exxon whether or not contrary to Exxon’s policies or instructions, the jury also duly returned a verdict that Exxon had been reckless. App. 300a. In the next phase, the jury substantially rejected the fishermen’s claims for $800 million in damages based on low fish prices, find- ing that the spill did not cause prices to decline after 1989. ER 460-62. (Exxon’s proof showed that a worldwide salmon glut drove down prices.) After offsetting prior claims pay- ments, the district court entered judgment for $19.6 million in compensatory damages. App. 67a. A state court judgment added $700,000 more, for a total of $20.3 million. App. 32a. 7 In the final phase of the trial, made necessary by the ver- dicts on recklessness, the jury was asked to determine what amount of punitive damages should be awarded against Hazelwood and Exxon. The district court instructed the jury that in determining these amounts, it should not consider harm to the environment because “[a]ny liability for punitive damages relating to those harms was resolved” in the gov- ernment proceedings, App. 96a-97a, a result in any case re- quired by res judicata. App. 73a. After hearing evidence about Exxon’s net worth and income, the jury awarded puni- tive damages of $5000 against Hazelwood and $5 billion against Exxon. The district court denied Exxon’s post-trial motions, App. 224a-280a, and entered judgment for the full $5 billion punitive award. ER 781. Exxon appealed. 3. The Ninth Circuit issued its first opinion in November 2001. App. 57a. The court rejected Exxon’s arguments that no punitive damages were authorized, but with significant caveats. On the propriety of the jury instructions authorizing vicarious punitive damages liability, the court pronounced itself bound by its own earlier decision in Protectus Alpha Nav. Co. v. North Pac. Grain Growers, 767 F.2d 1379 (9th Cir. 1979), but acknowledged that Protectus conflicted with the historic maritime-law rule as well as with modern mari- time decisions of three other circuits. App. 85a-86a & n.84. Addressing whether judge-made maritime remedies could be added to those contained in the Clean Water Act, the court acknowledged that the question was “serious,” “not without doubt,” and “close.” App. 75a, 77a. And while the court would not accept Exxon’s argument that maritime law and due process bar punitive damages when prior sanctions and liabilities have fully vindicated any reasonable public interest in punishment and deterrence, it acknowledged that the ar- gument had “force as logic and policy.” App. 68a. The Ninth Circuit did, however, hold that a $5 billion award could not stand. Applying the due process guideposts announced in BMW of North America v. Gore, 517 U.S. 559 (1996), the court held that Exxon’s conduct was not suffi- 8 ciently reprehensible to justify so high an award because the spill was not intentional, punishment was for economic inju- ries only, “fuel for the United States at moderate expense has great social value,” and the company had spent billions to mitigate harm in the aftermath of the accident. The court fur- ther held that pretrial claims payments and settlements gen- erally should not be included in the harm used to analyze the ratio between punitive and compensatory damages, and that a high ratio was unnecessary for deterrence because the $3.4 billion Exxon had already paid constituted a “massive deter- rent” independent of any punitive damages. Finally, the court noted that the case was “unusually rich” in comparable pen- alties—including the $125 million criminal sanction deemed sufficient punishment and deterrence by the Attorneys Gen- eral of the United States and Alaska—none of which sup- ported a punitive award of $5 billion. App. 95a-104a.’ 4. The Ninth Circuit remanded the case for the district court to determine the size of an appropriate remittitur. The district court, however, declined to follow the Ninth Circuit’s reasoning. It reduced the award to $4 billion, but asserted at the same time that it saw no “principled” basis for any reduc- tion at all. App. 222a-223a. Exxon again appealed, but be- fore any briefs were filed, the Ninth Circuit sua sponte re- manded the case for reconsideration in light of this Court’s decision in State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003). This time the district court increased the award to $4.5 billion, asserting that State Farm presump- tively validated punitive damages of up to nine times the to- tal harm (which the district court calculated to be $500 mil- lion). App. 179a-180a. Exxon appealed for the third time. 5. The Ninth Circuit issued its second opinion in Decem- ber 2006. App. la. The court again reviewed the award under * The court implicitly assumed that the Fifth Amendment due proc- ess analysis applicable to this federal-law judgment would be at least as rigorous as the Fourteenth Amendment due process analysis applicable to the state-court judgment in Gore. Exxon agrees. 9 the Gore guideposts, but this time with a different emphasis seemingly aimed at rationalizing a multibillion dollar award. On reprehensibility, for example, the court emphasized that the spill had physically endangered the crew and rescuers of the vessel, even though no one was injured and none of the crew or rescuers was a plaintiff in the lawsuit. App. 26a-28a. On ratio, the court repudiated its earlier statement that pre- trial payments and settlements should not be included in the harm, stating incorrectly that the facts of State Farm man- dated this change of view. App. 32a-35a, 287a. Accepting the district court’s calculation of $500 million in total losses—and declining to follow State Farm’s admonition that when “compensatory damages are substantial,” even a 1:1 ratio of punitive to compensatory damages may “reach the outermost limit of the due process guarantee,” 538 U.S. at 425—the court held that due process would permit a 5:1 ratio because the tort fell within the “mid range” of repre- hensibility. App. 31a-40a. By this reasoning, the court up- held an unprecedented punitive award of $2.5 billion. Al- though this award was billions more than the applicable (and substantial) legislatively enacted civil penalties for oil spills of this magnitude—the third Gore guidepost—the court opined that State Farm had reduced this guidepost to a mere check on whether legislatures dealt with similar misconduct “seriously.” App. 40a-41la. Finding that legislative penalties for oil spills were serious, the court held this guidepost satis- fied. Judge Browning dissented, and would have affirmed the full award. App. 42a-56a. 6. Exxon filed a timely petition for panel rehearing and rehearing en banc. The court denied it on May 23, 2007, amending its decision to remove its incorrect statement about the facts of State Farm, but not otherwise changing its result or attempting to justify the repudiation of its prior decision. App. 285a-286a. Two judges filed dissents from the denial of en banc review. Judge Kozinski dissented on the ground that the court had unjustifiably departed from 200 years of mari- time precedent prohibiting vicarious punitive damages, in 10 conflict with every other circuit that had considered the is- sue. App. 287a-292a. Judge Bea agreed with Judge Kozinski that punitive damages should not have been awarded against Exxon and dissented on the additional ground that a $2.5 bil- lion award was excessive under State Farm. App. 292a-293a. REASONS FOR GRANTING THE PETITION This record punitive award* unquestionably raises impor- tant issues of constitutional dimension. The Ninth Circuit’s emphasis on concededly unrealized dangers to non-parties, its disregard of State Farm’s admonition against high puni- tive multipliers in cases with substantial compensatory dam- ages, and its trivialization of the third Gore guidepost all raise important and recurring due process questions on which this Court’s guidance is urgently needed. See Part III.B infra. But the award raises equally important issues under mari- time law. Federal courts have a “unique role in admiralty cases,” since the “need for a body of law applicable through- out the nation was recognized by every shade of opinion in the Constitutional Convention.” California v. Deep Sea Re- search, Inc., 523 U.S. 491, 501 (1998). In maritime cases, federal courts have the opportunity and duty to determine the rules of maritime law, consistent with the policies that under- lie the grant of admiralty jurisdiction, in the same way that state courts determine the common law of their states. Nor- folk Southern Ry. Co. v. Kirby, 543 U.S. 14, 22-25 (2004); McDermott, Inc. v. AmClyde, 511 U.S. 202, 207-08 (1994); United States v. Reliable Transfer Co., 421 U.S. 397, 409 (1975). Parts I, Il, and ILA of this petition, therefore, do not in- voke this Court’s authority as the final judge of constitu- tional questions but rather its “traditional responsibility to “ The largest award previously affirmed by a federal appellate court under U.S. law, state or federal, is $58.5 million—a fortieth of this one. United Int'l Holdings, Inc. v. Wharf (Holdings) Lid., 210 F.3d 1207 (10th Cir. 2000). The largest for an unintentional tort is $12.5 million, for wrongful death. Mason v. Texaco, Inc., 948 F.2d 1546 (10th Cir. 1991). 11 vindicate the policies of maritime law.” Moragne v. States Marine Lines, Inc., 398 U.S. 375, 396-97 (1970). This Court has the duty to clarify, shape, and ultimately declare, like a common-law court, the uniform general maritime law appli- cable in the United States to the issue of punitive damages. The decision below creates clear circuit conflicts on mari- time-law questions—the permissibility of vicarious punish- ment, the availability of punitive damages when Congress has not authorized them in applicable maritime statutes, and the substantive maritime-law limits on the size of punitive awards—that are of immense importance to the maritime community, and have significance extending far beyond this case or even oil spills generally. I, The Court Should Grant Certiorari to Resolve the Conflict in the Circuits on Whether Maritime Law Permits Vicarious Punitive Damages. As acknowledged by the panel and detailed in Judge Kozinski’s dissent, the Ninth Circuit’s decision to uphold vicarious punitive liability based on the misconduct of a ves- sel’s master, contrary to the shipowner’s policy and hostile to its vital interests, departs from the maritime-law rule to which every other circuit confronting this issue adheres. In The Amiable Nancy, 16 U.S. 546 (1818), the Court, speaking through Justice Story, its leading maritime-law scholar, held that punitive damages may not be imposed against the owner of a vessel for tortious acts of the master and crew unless the owner “directed,” “countenanced,” or “participated in” the wrong. /d. at 559. The Court reiterated that principle in Lake Shore & M.S. Ry. Co. v. Prentice, 147 U.S. 101 (1893), a non-maritime case, and declared the Amiable Nancy rule to be in accord with “the preponderance of well-considered precedents.” /d. at 107-17. For 150 years, federal courts faithfully applied the rule, and refused vicarious punitive damages in maritime cases. E.g., The Golden Gate, 16 F. Cas. 141, 143 (C.C.N.D. Cal. 1856); The State of Missouri, 76 F. 376, 380 (7th Cir. 1896); Pacific Packing & Nav. Co. v. Fielding, 136 F. 577, 579-80 (9th Cir. 1905). 12 Outside the Ninth Circuit, that rule remains. In United States Steel Corp. v. Fuhrman, 407 F.2d 1143 (6th Cir. 1969), the Sixth Circuit, emphasizing the maritime reality that a ship’s master must have full authority to direct opera- tions at sea, held that “punitive damages are not recoverable against the owner of a vessel for the acts of the master unless it can be shown that the owner authorized or ratified the acts,” or that “the acts ... were those of an unfit master and the owner was reckless in employing him.” /d. at 1148. In Jn re P&E Boat Rentals, 872 F.2d 642 (Sth Cir. 1989) (en banc), the Fifth Circuit held that “punitive damages may not be imposed against a corporation when one or more of its employees decides on his own to engage in malicious or out- rageous conduct.” Jd. at 652. And in CEH, Inc. v. F/V Sea- farer, 70 F.3d 694 (ist Cir. 1995), the First Circuit con- firmed that maritime law bars imposition of punitive dam- ages against an employer for the misconduct of a vessel’s master absent “some level of culpability” on the part of the employer. Jd. at 705. The Ninth Circuit, by contrast, abandoned the maritime rule against vicarious punitive damages in Protectus, supra, a 1985 case in which that court chose to apply instead the new rule of vicarious liability for acts of “managerial” em- ployees proposed by the authors of the Restatement (Second) of Torts § 909. 767 F.2d at 1386. No other circuit has fol- lowed Protectus, and the Fifth and First Circuit decisions in P&E Boat Rentals and CEH expressly rejected it. In the de- cision below, however, the panel declared itself “bound by Protectus,” App. 86a, and confirmed the Ninth Circuit’s con- flict with the First, Fifth, Sixth, and Seventh Circuits on this important point of maritime law. App. 85a n.84. The panel below suggested that Exxon was not in the same position as the owners of THE AMIABLE NANCY be- cause the jury might have found that Exxon was independ- ently reckless for not relieving Captain Hazelwood of his command. App. 83a. But as the court tacitly acknowledged by not ending its discussion there, that point is legally irrele- ee 13 vant in light of the instructions to the jury. The court con- ceded that a jury verdict as to Exxon’s independent reckless- ness could have gone either way, on the basis of highly dis- puted evidence. App. 88a-89a. The instructions, however (quoted supra at 6), required the jurors to find Exxon reck- less if they found Captain Hazelwood reckless, whether or not they reached any conclusion about Exxon’s independent recklessness.° As this Court’s decisions make clear, when it is impossible to know whether the jury imposed liability on a permissible or an impermissible ground, “the judgment must be reversed.” Greenbelt Co-op Pub. Ass'n v. Bresler, 398 U.S. 6, 11 (1970); see Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 459-60 (1993). The conflict with the other cir- cuits is thus squarely presented. The Ninth Circuit’s other stated reasons for abandoning the traditional maritime rule do nothing to explain away or lessen the decisional conflict. The panel relied heavily on this Court’s holding in Pacific Mut. Life Ins. Co. v. Haslip, 499 US. 1, 15 (1991), that vicarious punitive damages are not unconstitutional, but the question is not whether the Con- stitution permits such liability. It is whether maritime law does so. The answer turns on the maritime-law precedents, not on cases interpreting the outer limits of due process. Protectus rested on the idea that “no reasonable distinc- tion can be made between the guilt of the employee ... and the guilt of the corporation.” 767 F.2d at 1386. But as the other circuits have recognized, whatever the merits of that idea when an employee’s acts implement company policy, it is self-evidently untrue when, as here, the employee’s act is forbidden by his employer and hostile to its vital interests. Fuhrman, 407 F.2d at 1148; P&E Boat Rentals, 872 F.2d at 651-52. The Protectus panel also asserted that the Restate- * In fact, jurors told the press they could not determine if Hazelwood was impaired by alcohol, they found him reckless for leaving the bridge, and they followed their instructions by imputing his conduct to Exxon. ER 638-39, 652-54. 14 ment’s provision for purely vicarious punitive damages “bet- ter reflects the reality of modern corporate America.” 767 F.2d at 1386. Since no evidence was taken about the “reality of modern corporate America,” this appears to mean simply that the Protectus panel thought changing maritime law to adopt the Restatement was a progressive thing to do. But as Judge Kozinski pointed out, “nothing has changed in the re- lationship between ship owner and captain that would justify importing this innovation into maritime law.” App. 288a n.1. Moreover, courts take very different positions as to whether vicarious punitive liability is permissible even in land-based cases. Indeed, since the decision in Protectus, this Court itself has expressly rejected the Restatement position as a matter of federal civil rights policy, see Kolstad v. American Dental Ass'n, 527 U.S. 526, 539-46 (1999), just as federal appellate courts other than the Ninth Circuit have re- jected it as a matter of federal maritime policy. In Kolstad, the Court held that implementation and enforcement of good faith policies to prevent misconduct is a defense to vicarious punitive damages for acts of managerial employees. The in- structions in this case stated the opposite. The conflict among the circuits is not only stark, it is of great importance to maritime commerce both nationally and internationally. As Judge Kozinski observed, App. 290a- 29 1a: The panel’s decision exposes owners of every ves- sel and port facility within our maritime jurisdiction— a staggeringly huge area—to punitive damages solely for the actions of managerial employees. Because of the harsh nature of vicarious liability, ship owners won't be able to protect themselves ... through careful hiring practices. Accidents at sea happen—ships sink, collide and run aground—often because of serious mistakes by captain and crew, many of which could, with the benefit of hindsight, be found to have been reckless. For centuries, companies have built their seaborne businesses on the understanding that they 15 won't be subject to punitive damages if they “[nJeither directed it, nor countenanced it, nor participated in” the wrong .... ... Moreover, the effects of this opinion are not limited to shippers and docks based in the Ninth Cir- cuit: The shipping business knows no circuit, or even national, boundaries. Shippers everywhere will be put on notice: If your vessels sail into the vast waters of the Ninth Circuit, a jury can shipwreck your opera- tions through punitive damages and the fact that you did nothing wrong won’t save you. Such major turbu- lence in the seascape of the law ought to come, if at all, from the Supreme Court. Ii. The Court Should Grant Certiorari to Resolve the Conflict in the Circuits on Whether Maritime Law Permits Judge-Made Remedies When Congress Has Not Authorized Them in Applicable Statutes. The decision below further contravenes decisions of this Court and other circuits on the important maritime-law ques- tion of whether judges may create punitive damages reme- dies for conduct already governed by a statutory remedial scheme that does not include punitive damages. In the Clean Water Act (CWA), Congress specifically addressed the pun- ishment and deterrence of maritime oil spills by enacting both criminal and civil penalties. 33 U.S.C. § 1319(c)-(d) (criminal and civil penalties for negligent or intentional dis- charge of oil in violation of § 1311(a)); id. § 1321(b)(6)(B) (alternative civil penalties for unauthorized discharge of oil). Supplemented by 18 U.S.C. § 3571(d) (authorizing criminal fines of up to double third-party pecuniary losses), the penal- ties are substantial. Indeed, the enforcement of these provi- sions by the federal government led to the record fine im- posed on Exxon in this case. The CWA also creates limited liability to the federal government for cleanup costs and natural resource damages, but eliminates the liability limita- tion in cases of “willful misconduct within the privity and knowledge of the shipowner.” 33 U.S.C. § 1321(f). But the 16 CWA does not authorize private punitive damages, even for willful misconduct.® The CWA thus embodies a legislative judgment that cleanup costs, natural resource damages, and potential crimi- nal and civil penalties provide sufficient punishment and de- terrence for oil spills. As such, it implicates the rule— established in an unbroken line of cases beginning with Mo- bil Oil Co. v. Higginbotham, 436 U.S. 618 (1978), and City of Milwaukee v. Illinois, 451 U.S. 304 (1981), and continu- ing with Middlesex County Sewerage Auth. v. Nat'l Sea Clammers Ass’n, 453 U.S. 1 (1981), Miles v. Apex Marine Corp., 498 U.S. 19 (1990), and Dooley v. Korean Air Lines Co., 524 U.S. 116 (1998)}—that when Congress has spoken to an issue of federal tort law, the statute (not judge-made federal common law) determines the scope of the available remedies. In Mobil, this Court held that the Death on the High Seas Act (DOHSA) precluded loss of society damages under maritime law for a death on the high seas because Congress had “limited survivors to recovery of their pecuniary losses.” 436 U.S. at 623. The Court rejected the contention that judge-made maritime law could supplement the statutory remedy provided in DOHSA, holding that “Congress has struck the balance for us.” Jd. “In the area covered by the Statute, it would be no more appropriate to prescribe a differ- ent measure of damages than to prescribe a different statute of limitations, or a different class of beneficiaries.” /d. at 625. In Milwaukee, this Court held that the CWA’s “compre- hensive regulatory program” for water pollution, which pro- hibits the unauthorized discharge of any pollutant, displaced * The CWA provisions applicable to this oil spill are reproduced at App. 294a. After the spill, Congress increased the statutory civil penal- ties for such spills—subject to reduction on account of mitigation efforts, prior penalties, etc., see § 1321(b)(7)-(8), enacted as part of the Oil Pollu- tion Act of 1990—but still did not authorize private punitive damages. 17 a non-maritime federal common-law nuisance remedy for interstate water pollution. 451 U.S. at 317-26. Citing Mobil, the Court held that when Congress has “spoke[n] directly to a question,” judge-made federal law may not supplement the remedies Congress has chosen. /d. at 315. It further held that “when the question is whether federal statutory or federal common law governs,” there is no presumption against pre- emption, contrary to the rule for state law. Rather, “we start with the assumption that it is for Congress, not federal courts, to articulate the appropriate standards to be applied as a matter of federal law.” Jd. at 316-17; see also id. at 315 (“Our commitment to the separation of powers is too funda- mental to continue to rely on federal common law by judi- cially decreeing what accords with common sense and the public weal when Congress has addressed the problem.”). In Sea Clammers, t'is Court held that Milwaukee pre- cluded a common-law nuisance claim for damage to the fish- ing, clamming, and lobster industries allegedly caused by ocean pollution in violation of CWA permits. 453 US. at 21- 22. And in Miles, the Court held that a survival action by the heirs of Jones Act seamen under general maritime law could give no remedies not provided by the Jones Act. 498 U.S. at 32 (“It would be inconsistent with our place in the constitu- tional scheme were we to sanction more expansive remedies in a judicially created cause of action”). The unanimous de- cision in Miles emphasized not only the subordinate role of judge-made federal law in matters addressed by Congress, but also the strong maritime policy of uniformity: We sail in occupied waters. Maritime tort law is now dominated by federal statute, and we are not free to expand remedies at will .... Cognizant of the consti- tutional relationship between the courts and Con- gress, we today act in accordance with the uniform plan of maritime tort law Congress created. 498 U.S. at 36-37. This Court most recently reaffirmed these principles in Dooley, declining, again unanimously, to ap- prove a general maritime law survivorship remedy for pre- 18 death pain and suffering damages not recoverable under DOHSA. 524 U.S. at 121-24. Federal circuit courts outside the Ninth Circuit have faithfully applied these principles. E.g., Conner v. Aerovox, Inc., 730 F.2d 835, 838-42 (ist Cir. 1984) (Milwaukee and Sea Clammers equally foreclose judge-made maritime-law nuisance claims for pollution damage to fishing grounds); Jn re Oswego Barge Corp., 664 F.2d 327, 339-44 (2d Cir. 1981) (CWA forecloses maritime-law negligence claims for government cleanup costs exceeding government’s maxi- mum recovery under the CWA). And multiple circuits have held that these principles bar recovery of puniiive damages under judge-made maritime law when federal statutes do not authorize them. £.g., Miller vy. American President Lines, 989 F.2d 1450, 1454-59 (6th Cir. 1993) (no punitive dam- ages for survivors of Jones Act seamen in maritime wrongful death claim); Wahlstrom v. Kawasaki Heavy Indus., 4 F.3d 1084, 1091-94 (2d Cir. 1993) (no punitive damages for sur- vivors of non-seamen killed in territorial waters); Horsley v. Mobil Oil Corp., 15 F.3d 200, 203 (1st Cir. 1994) (no puni- tive damages for injured Jones Act seamen in maritime un- seaworthiness claim); Guevara v. Maritime Overseas Corp., 59 F.3d 1496, 1500-13 (Sth Cir. 1995) (en banc) (no punitive damages for seamen for shipowner’s failure to pay mainte- nance and cure). As Judge Kozinski accurately noted, the modern cases reaffirm maritime law’s historic reluctance to impose punitive damages at all. App. 290a; see note 8 infra. By contrast, the Ninth Circuit here refused to apply these principles despite its acknowledgement that the CWA pro- vides a “carefully calibrated set of civil penalties for oil spills, generally with ceilings on penalties, even if the spills were grossly negligent or willful.” App. 74a. But the panel’s efforts to distinguish decisions of this Court and the other federal circuits do not withstand scrutiny. The opinion below brushed aside Miles as pertinent only to the “specialized and traditionally limited” tort of wrongful death. App. 75a. In doing so, the opinion not only ignored that this Court, in 19 Milwaukee and Sea Clammers, applied the same rule of def- erence—originally drawn from Mobil—to federal pollution statutes, but put the Ninth Circuit in conflict with other cir- cuits (cited above) that have applied Miles to bar judge-made punitive damages for non-death maritime-law claims. The Ninth Circuit also purported to distinguish Sea Clammers (and Conner) on the ground that the judge-made claims in those cases would have interfered with administra- tive determinations of the permissible amount of pollution. App. 77a. But the operative principle is not merely that judge-made federal law may not interfere with federal ad- ministrative determinations. The operative principle—in all the cases cited above—is that when Congress has spoken to an issue, federal courts applying judge-made federal law are not free to expand the remedies provided by Congress so as to disrupt the balance Congress has struck. In the CWA, Congress plainly spoke to the issue of punishment and deter- rence of oil spills by enacting both criminal and civil penal- ties and various special liability provisions. A judge-made punitive damages remedy literally billions of dollars higher than the penalties Congress has provided not only disrupts the balance Congress has struck but obliterates it. Nor is there any merit to the Ninth Circuit’s novel sug- gestion that Congress should be deemed to have intended the CWA to punish only “public” as distinguished from “pri- vate” harm from oil spills. App. 77a. Nothing in the CWA Suggests or supports such a distinction, and indeed, the pro- visions of 18 U.S.C. § 3571(d) used to authorize the record criminal fine in this case gauged the amount of the fine by reference to the losses incurred by private parties. Moreover, if the court meant that private punitive damages are intended to serve anything other than public interests, its opinion fun- damentally misconceived both the nature and purpose of pu- nitive damages. As Justice Kennedy has written: [Punitive damages plaintiffs] act as private attorneys general to effect the deterrence and retribution func- tions of [punitive damages]. So far is this from being 20 a fundamental personal right that it is not truly per- sonal in nature at all. It is rather a public interest. In re Paris Air Crash, 622 F.2d 1315, 1319-20 (9th Cir. 1980) (Kennedy, J.); see State Farm, 538 U.S. at 417 (puni- tive damages “serve the same purpose as criminal penal- ties”). Under the cases cited above, because Congress ad- dressed the public interest in punishing and deterring oil spills in a duly enacted statute, federal courts are not free to expand on the remedies Congress has provided by awarding punitive damages under judge-made maritime law. ' The Ninth Circuit acknowledged that this question was “serious,” “not without doubt,” and “close.” App. 75a-77a. Its resolution of the issue, however, departs from the princi- ples established in the decisions of this Court and other cir- cuits. For the same reasons expressed in Judge Kozinski’s dissent on vicarious punishment, the issue has immense sig- nificance for the maritime community, not only in pollution cases but in every other area in which the issue of statutory ’ The Ninth Circuit noted that some CWA provisions expressly state that they are not intended to affect other reinedies. App. 76a (citing CWA §§ 1321(0)(1) and 1365(e)). Section 1321(c)(1), however, provides only that that “[nJjothing in this section”—i.e., § 1321, which establishes civil penalties for oil spills and potentially limits liability to the government for cleanup costs and natural resource damages—“shall affect or modify in any way the obligations of any owner or operator of any vessel ... for damages to any publicly owned > privately owned property resulting from a discharge of ... oil.” On iw ‘ce, this provision states only that the section does not affect liability for “damages to ... property” from spilled oil. It says nothing about punitive damages. Section 1365(e) is part of the CWA's “citizen suit” provision. It provides that “[njothing in this sec- tion”—i.e., the citizen suit provision—“shall restrict any right which any person ... may have ... to seek any other relief.” In Milwaukee, this Court confirmed that § 1365(e) means only that the citizen suit provision (i.e., “this section”) does not in and of itself revoke other remedies. 451 U.S. at 328-29. “It most assuredly cannot be read to mean that the Act as a whole does not supplant formerly available federal common-law ac- tions.” /d. Neither section suggests that Congress intended to authorize federal courts to create punitive damages remedies dwarfing the CWA’s careful scheme of criminal penalties, civil penalties, and liability limits. 21 displacement of judge-made punitive damage claims arises. This Court should grant certiorari to confirm that judge- made punitive damages remedies are not available when Congress has already addressed the problem. IIf. The Court Should Grant Certiorari to Remedy Con- fusion in the Lower Courts and Make Clear the Per- missible Size of Punitive Damage Awards under Maritime Law and under the Due Process Clause. A. Maritime Law. In this maritime case, the Ninth Cir- cuit gave no consideration to how the substantive maritime law should affect the permissible size of any punitive dam- age award. Despite Exxon’s express request, the Ninth Cir- cuit affirmatively declined to perform its duty as a maritime court to effectuate the policies of maritime law, to articulate based on those policies the maritime-law rules that should govern punitive damages, and to reduce the award accord- ingly. It held that the only applicable limit on the size of the award was the constitutional one. App. 68a-70a, 90a-91a. The petition should be granted so that this Court, as the ulti- mate arbiter of maritime law, can articulate and clarify the appropriate standards for maritime punitive damage awards. The Ninth Circuit’s conclusion that only the Constitution limits the size of punitive damage awards was contrary to decisions of this Court and of other circuits. In Honda Motor Co. v. Oberg, 512 U.S. 415 (1994), the Court held that common-law judicial review of the size of punitive damage awards is a vital part of the traditional justification for allow- ing juries to make such awards, and that it cannot be omitted consistent with procedural due process. See also Gore, 517 U.S. at 598 (Scalia, J.). As the Second Circuit has said: [E]ven where the punitive award is not beyond the outer constitutional limit marked out ... by the three Gore guideposts, we retain an appellate responsibility to review punitive awards for excessiveness in apply- ing federal statutes .... [T]he appellate function must be exercised, and review of punitive awards for exces- 22 siveness is an especially appropriate context in which the reflective role of a court of appeals follows the of- ten dramatic arena of a trial court. Mathie v. Fries, 121 F.3d 808, 816-17 (2d Cir. 1997); see Lee v. Edwards, 101 F.3d 805, 809 (2d Cir. 1996); Gaffney v. Riverboat Services of Indiana, Inc., 451 F.3d 424, 464 & n.39 (7th Cir. 2006); see also TXO Prod. Corp. v. Alliance Res. Corp., 509 US. 443, 458 n.24 (1993) (non- constitutional state law reasonableness requirements). Individual Justices have also emphasized the power and duty of common-law courts to make rules governing punitive damages. E.g., Haslip, 499 U.S. at 42 (Kennedy, J.) (“We do not have the authority, as do judges in some of the states, to alter the rules of the common law .... Were we sitting as state court judges, the size and recurring unpredictability of punitive damage awards might be a convincing argument to reconsider those rules.”); TXO, 509 U.S. at 472 (1993) (Scalia, J.) (“State ... courts have ample authority to elimi- nate any perceived ‘unfairness’ in the common-law punitive damages regime.”); State Farm, 538 U.S. at 438 (Ginsburg, J.) (“state high courts” could “cap punitive damages”). In maritime cases, however, this Court performs the same func- tion as state high courts do when ruling on state common law. This case thus offers the Court an ideal opportunity to lead by example and show how standards for punitive dam- ages awards should operate in practice. The appropriate standards for the award of punitive dam- ages under maritime law of course depend on the policies underlying the grant to this Court of admiralty and maritime jurisdiction, U.S. Const. Art III, § 2, cl.1, and the ensuing responsibility to shape maritime law. This Court has reiter- ated that the “fundamental interest giving rise to maritime jurisdiction is the protection of maritime commerce.” Kirby, 543 U.S. at 25; accord Sisson v. Ruby, 497 U.S. 358, 367 (1990); Foremost Ins. Co. v. Richardson, 457 U.S. 668, 674 (1982). Maritime commerce entails risks not found on land. Accidents can never be avoided entirely, and mariners must pes 23 often make difficult decisions. Therefore “[tJhrough long experience, the law of the sea ... is concerned with ... limita- tion of liability.” Executive Jet Aviation v. City of Cleveland, 409 U.S. 249, 270 (1972). This Court has also reiterated that maritime law demands the “uniformity and consistency at which the Constitution aimed on all subjects of a commercial character affecting the intercourse of the States with each other or with foreign states.” The Lottawanna, 88 U.S. 558, 575 (1874); American Dredging Co. v. Miller, 510 U.S. 443, 451 (1994). And this Court has referred from time to time to admiralty’s policies of fair compensation for injury, promo- tion of settlement, and judicial economy. Moragne, 398 U.S. at 387; McDermott, 511 U.S. at 211. None of these policies supports enormous punitive dam- ages.* Such awards penalize maritime commerce rather than protecting it; they expand rather than limit liability; they are unpredictable and inconsistent; they have nothing to do with compensation for actual injury; and they impede rather than promote settlement and judicial economy. Because of the unique role of federal courts in shaping maritime law, federal courts are the “proper institutions of our society to undertake th{e] task,” TXO, 509 US. at 472 (Scalia, J.), of specifying, based on maritime policies, the permissible size of maritime punitive damages. The Ninth Circuit’s inability to discern or even acknowledge any substantive maritime-law principles limiting the size of this extraordinary punitive award demon- strates the urgency of the need for this Court to articulate such limits. * Indeed, maritime law has traditionally restricted or disallowed pu- nitive damages. Guevara, 59 F.3d at 1508 n.11; CEH, 70 F.3d at 699-702 Prior to this case, punitive damages were never awarded for an oil spill, while the largest maritime punitive damages award affirmed by a federal appellate court, in Protectus, was $500,000, or 1/14 of the $7 million in compensatories, 767 F.2d at 1381, for a deliberate act that resulted in a death, in stark contrast to the award here, for lost commercial income from an unintentional spill that caused no personal injury. App. 98a. 24 Here the answer is clear. The decision below to uphold a $2.5 billion punitive award is contrary to every maritime pol- icy that this Court or other federal courts have ever recog- nized. Yet the Ninth Circuit did not even consider whether the award was consistent with those policies or with mari- time law. This case accordingly provides a particularly suit- able vehicle for this Court to hold that federal courts consid- ering maritime punitive damage awards must determine whether such awards are consistent with the policies of mari- time law. Exxon submits that a $2.5 billion punitive damages award cannot be a proper exercise of the federal courts’ au- thority to make maritime law when, as here, all the following conditions obtain. ¢ Prior criminal and civil sanctions and other payments have already vindicated any reasonable public interest in punishment or deterrence. In Haslip, this Court recognized that the only proper purpose of punitive damages was to vin- dicate the public interest in retribution and deterrence. 499 U.S. at 19; accord Gore, 517 U.S. at 568. In State Farm, the Court recognized that punitive damages should be awarded only when compensatory damages are not sufficient “to achieve punishment or deterrence.” 538 U.S. at 419; see Gore, 517 U.S. at 584-85 (requiring consideration of whether “less drastic remedies could be expected” to achieve pun- ishment and deterrence). The Ninth Circuit itself acknowl- edged the “force and logic” of Exxon’s argument that puni- tive damages should be limited to what is necessary to achieve deterrence and punishment, and tis: such damages should be precluded when $3.4 billion in prior payments, liabilities, and fines achieved “massive deterren{ce],” and when the Attorneys General of both the United States and Alaska, the authorized representatives of the public interest in punishment, agreed that the record fine imposed was suf- ficient to achieve appropriate punishment. App. 68a. In such circumstances, punitive damages achieve nothing but over- kill; they pile liability upon liability to give a windfall to plaintiffs already fully compensated. The strong maritime 25 policies of uniformity, predictability, and avoiding undue burdens on maritime commerce compel the conclusion that, as a matter of maritime law, no additional punitive damages are reasonable in these circumstances. e Compensatory damages are substantial. Many state courts and state legislatures have now imposed caps on puni- tive damages awards, generally by requiring that they not exceed a fixed multiple of compensatory damages. See Gore, 517 U.S. at 615-16 (Ginsburg, J.). In State Farm, this Court stated that when compensatory damages are substantial, “then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee.” See Part [II.B.1 infra. Because the Court was in- terpreting the Constitution in State Farm, it did not make this principle into a rule applicable in every situation. But if a 1:1 ratio when damages are substantial can reach the “outer limit” of what the Constitution permits, surely that ratio represents the most the Court should permit when it is not marking the outer boundary permissible to a sovereign state in the pursuit of its own policies, but determining for itself, as the ultimate arbiter of maritime law, the correct rule based on federal maritime law and policy. Accordingly the same considerations of “size and recurring unpredictability” that have led state courts and legislatures to impose caps should lead the Court to set a limit here. See Haslip, 499 U.S. at 42 (Kennedy, J.). Enforcing such a limit would of course serve the maritime policies of uniformity and predictability. It would also promote the maritime policies of settlement and judicial economy by creating an incentive for prompt pay- ment of compensation, since compensation paid by way of settlements could no longer be the predicate “harm” for a punitive damages award. © The award is greater than the civil penalties Congress has prescribed for the same conduct. Maritime conduct has long been heavily regulated by Congress, and the statutes in question typically provide an array of substantial civil penal- ties and other punishments for infractions of what Congress 26 has ordained. Even if these enactments were not sufficient to preclude punitive damages altogether, but see Part II supra, respect for the pre-eminent role of Congress in the maritime area means that federal courts should not impose, through punitive damages, civil punishment that results in a total penalty greater than what Congress has prescribed. When Congress has specified by statute the available civil penal- ties, federal courts are “not free” to impose additional civil punishment, and thereby “to rewrite rules that Congress has affirmatively and specifically enacted,” Dooley, 524 U.S. at 122. Aligning punitive awards with statutory civil penalties would also serve the maritime-law policies of predictability and uniformity by ensuring that civil punishment for particu- lar conduct does not vary depending on whether it is im- posed by public authorities or by juries in private lawsuits. e The jury was allowed to consider the net worth of the corporate defendant. Plaintiffs’ evidence in Phase III of the trial was entirely devoted to Exxon’s income and net worth, and the jury was instructed it could consider that evidence in determining the proper size of the award. ER 517-19. Pun- ishment on such a theory is clearly contrary to the maritime policies of predictability and uniformity, since it implies that the punishment of different actors for the same conduct may be different. It rests on an economically irrational founda- tion, a false analogy between the wealth of individuals and corporate net worth, as Judge Easterbrook has explained clearly, Zazu Designs v. L’Oreal, S.A., 979 F.2d 499, 508-09 (7th Cir. 1992), and its effect is to punish companies dispro- portionately based on size, which is directly contrary to the fundamental maritime-law policy of encouraging adequate capitalization for risky activities. Finally, allowing juries to base punishment on corporate net worth invites them to vent “raw redistributionist impulses,” 7XO, 509 U.S. at 468 (Kennedy, J.), lets them “use their verdicts to express bi- ases,” Honda, 512 U.S. at 432, and “provides an open-ended basis for inflating awards.” Gore, 517 U.S. at 591 (Breyer, J.). None of this serves the policies of maritime law. 27 No case illustrates better than this one the need for sim- ple, reasonable, and easily administered standards to con- strain unfettered discretion in the award of punitive damages. See Philip Morris USA v. Williams, 127 S. Ct. 1057, 1062 (2007); Gore, 517 U.S. at 587 (Breyer, J.). Punishment and deterrence, to the satisfaction of the public representatives of the United States and Alaska, were achieved in 1991. Com- pensation for natural resource damages and nearly all private damages was accomplished by 1991 or a few years after. Given those facts, no maritime policy and no principle of maritime law supports a punitive damage award. Even if pu- nitive damages may be awarded in maritime cases where Congress has not provided them by statute, but see Part II supra, it is for the federal courts, under this Court’s leader- ship, to make sure that such awards correspond to what mari- time law and policy permit. Because the courts below failed to provide such standards, for the past 15 years the parties have been litigating almost exclusively the propriety of an additional multibillion dollar windfall to private plaintiffs who were fully compensated long ago. The Court should grant the petition and provide the guidance to the lower fed- eral courts that will prevent another such case. B. Due Process. 1. “[P]}unitive damages should only be awarded if the defendant’s culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or de- terrence.” State Farm, 538 U.S. at 419. And “[w]Jhen com- pensatory damages are substantial, then a lesser ratio, per- haps only equal to compensatory damages, can reach the outermost limit of the due process guarantee.” Jd. at 425. Here Exxon paid $3.4 billion in cleanup costs, natural re- source damages, claims payments, fines, and penalties— more than enough to deter and punish anyone for anything. Under the State Farm test, no “further sanctions” are neces- sary “to achieve punishment or deterrence.” The compensa- tory damages awarded came to $20.3 million—a figure that is “substantial” by any standard, especially given that $1 mil- ie 28 lion was held “substantial” in State Farm, id. at 412, 426. The Ninth Circuit calculated “harm” at $500 million and used that as the predicate for punitive damages, yet still thought it appropriate to use a 5:1 “ratio” and approve an award of $2.5 billion. As Judge Bea recognized in his dis- sent, App. 293a, this is entirely inconsistent with this Court’s teaching that in such circumstances a 1:1 ratio “can reach the outermost limit of the due process guarantee.” 538 U.S. at 425. Indeed, the Ninth Circuit’s reasoning was exactly back- wards. The ratio prong of Gore and State Farm is not an ex- cuse to multiply large compensatory damages to manufacture an even larger punitive award. Rather, the overriding princi- ple is that an award should be no greater than what is rea- sonably necessary to punish and deter, and a large compen- satory award, like large cleanup costs, fines, and penalties, itself provides punishment and deterrence and thereby re- duces the need for an award of punitive damages. Taking Haslip, Gore, and State Farm together, the point is clear. Yet many lower courts have ignored this Court’s message. They continue to resist the concept that they should give meaning- ful consideration to what is necessary overall to punish and deter, not simply find a “ratio” based on reprehensibility and * Some courts have followed State Farm faithfully, limiting punitive damages to a 1:1 ratio when compensatory damages are substantial, even in cases of intentional and egregious wrongdoing. E.g., Estate of More- land v. Dieter, 395 F.3d 747, 757-58 (7th Cir. 2005) (beating and death); Stamathis v. Flying J, Inc., 389 F.3d 429, 443 (4th Cir. 2004) (defama- tion and malicious prosecution). Others, like the Ninth Circuit here, have permitted much higher ratios, effectively ignoring State Farm. E.g., Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp., 345 F.3d 1366, 1371-72 (Fed. Cir. 2003) (3.33:1 ratio based on $15 million in compensa- tories); Bogle v. McClure, 332 F.3d 1347, 1359, 1362 (11th Cir. 2003) (4:1 ratio based on $3.5 million in compensatories for emotional dis- tress); Bullock v. Philip Morris USA, Inc., 42 Cal. Rptr. 3d 140, 176 (Cal. Ct. App. 2006) (33:1 ratio based on $850,000 in compensatories); Supe- rior Federal Bank v. Jones & Mackey Const. Co., 219 S.W.3d 643, 653 (Ark. Ct. App. 2005) (17.6:1 ratio based on $175,000 in compensatories). 29 multiply that by whatever “harm” the plaintiff can persuade them occurred. The cases are in disarray, and there is a clear need for further guidance from the Court. See note 9 supra. 2. The Ninth Circuit’s use of a 5:1 ratio depended on its conclusion that Exxon’s conduct was in the “mid range” of reprehensibility. App. 31a. Of course this entire analysis was flawed, since the court assumed that the jury found that Exxon’s own conduct, as opposed to Hazelwood’s, was reck- less. See Part I supra. There was thus a complete disconnect between the conduct the Ninth Circuit considered reprehen- sible and the facts the jury’s instructions required it to find. For all anyone knows, jurors agreed on none of the “facts” the Ninth Circuit recited. Even leaving that critical defect in reasoning aside, the Ninth Circuit’s reprehensibility discussion had few points of contact with this Court’s analysis in Gore, 517 U.S. at 576- 77, or State Farm, 538 U.S. at 419. The panel did acknowl- edge that the spill was not intentional, that there was no fraud or trickery, and that plaintiffs were not financially vul- nerable “targets.” App. 29a. It conceded that injury to the plaintiffs was solely economic, but invented a “non- economic injury” of “loss of livelihood”—even though no “livelihood” was lost since Exxon voluntarily paid compen- sation quickly and, as the jury verdict showed, fairly. It con- ceded that plaintiffs’ health and safety were never at risk, but pointed to the theoretical danger to the crew of the Exxon VALDEZ, none of whom was injured, and none of whom was a member of the plaintiff class. App. 26a. This was an im- proper attempt to “adjudicate the merits of other parties’ hy- pothetical claims” in the guise of reprehensibility analysis, State Farm, 538 U.S. at 423, and to punish Exxon for harms, not even real ones, to persons not before the court, see Philip Morris, 127 S. Ct 1057. (Remarkably, the Ninth Circuit in- creased punitive damages against Exxon based on hypotheti- cal injury to the VALDEZ crew, whereas if any seamen had actually been injured, Miles, Miller, and Horsley would have barred punitive damages based on those injuries, see Part II 30 supra.) The pane] pretended that Exxon was guilty of re- peated misconduct, App. 29a, although there was clearly only one spill and only one decision to let Hazelwood re- sume command. Correctly analyzed, reprehensibility here was in a very low range, and did not come close to justifying a multiple of five times $500 million. 3. Finally, the Ninth Circuit’s decision conflicts with State Farm and Gore, and with decisions of other circuits, e.g., Clark v. Chrysler Corp., 436 F.3d 594, 607 (6th Cir. 2006), because it failed to give any weight at all to the third guidepost this Court has identified for assessing the constitu- tionality of a punitive damages award—comparable civil penalties. According to that guidepost, a reviewing court must give “substantial deference to legislative judgments conceming the appropriate sanctions for the conduct at is- sue.” Gore, 517 U.S. at 583. In State Farm, the Court made plain that only civil penalties should be considered, not criminal ones. 538 U.S. at 428. Combined federal and state civil penalties for this oil spill could not have exceeded about $80 million, and therefore an award of $2.5 billion could not conceivably be justified under this guidepost. Even though it recognized that this case was “unusually rich in compara- bles,” App. 101a, the Ninth Circuit ignored all of them, hold- ing that the third guidepost imposes mo quantitative con- straint on punitive damage awards. According to the Ninth Circuit, this guidepost addresses “only ... whether or not the misconduct was dealt with seriously under state civil or criminal laws.” App 41a. Having concluded that the state and federal governments take oil spills “seriously,” the Ninth Circuit refused to accord any deference whatever to the “leg- islative judgments concerning appropriate sanctions for the conduct at issue,” let alone the “substantial deference” that Gore requires. 577 U.S. at 583. In other words, the Ninth Circuit wrote the third guidepost out of the law. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted, E. EDWARD BRUCE COVINGTON & BURLING LLP 1201 Pennsylvania Ave., N.W. Washington, D.C. 20004 (202) 662-6000 Attorneys for Petitioner Exxon Shipping Company Dated: August 20, 2007 WALTER DELLINGER (Counsel of Record) JOHN F. DAUM CHARLES C. LIFLAND JONATHAN D. HACKER O’MELVENY & MYERS LLP 1625 Eye Street, N.W. Washington, D.C. 20006 (202) 383-5300 Attorneys for Petitioner Exxon Mobil Corporation APPENDIX TABLE OF CONTENTS APPENDIX A: In re the Exxon Valdez (9th Cir. Dec. 22, 2006, as amended May 23, 2007).........csvessssssssssessecesssseeeeneen APPENDIX B: In re the Exxon Valdez (9th Cir. Nov. 7, 2001)....... APPENDIX C: In re the Exxon Valdez, Order No. 364, On Second Renewed Motion for Reduction of Puni- tive Damages Award (D. Alaska Jan. 28, 2004)..... APPENDIX D: In re the Exxon Valdez, Order No. 358, On Re- newed Motion for Reduction of Punitive Dam- ages (D. Alaska Dec. 9, 2002).............scscssssssesessesees APPENDIX E: In re the Exxon Valdez, Order No. 267, On Exxon’s Motions for Judgment and for New Trial on Punitive Damages’ Claims (D. Alaska i Ser I cle tcchetindaleh acercihehhtndeinidiaphitalinandbetvesinens APPENDIX F: In re the Exxon Valdez, Order No. 265, On Exxon’s Motion for Judgment on Punitive Damages Claims (Phase I Issues) (D. Alaska Jan. NERC ea ee aE APPENDIX G: In re the Exxon Valdez, Order No. 264, On Exxon’s and Hazelwood’s Motions for a New Trial on Plaintiffs’ Punitive Damages Claims (Jury Instructions) (D. Alaska Jan. 27, 1995)......... 258a APPENDIX H: In re the Exxon Valdez, Order No. 196, On Mo- tion in Limine to Exclude Evidence of or Com- ment upon Exxon Defendants’ Total Wealth, Net Worth, Earnings, Cash Flow, or Other Indicia of Financial Condition (D. Alaska March 31, 1994)...... APPENDIX I: In re the Exxon Valdez (9th Cir. May 23, 2007), Order Amending Opinion, Denying Rehearing, and Denying Rehearing En Bane.................ccscceeeeeeee Opinion of Kozinski, J., dissenting from denial I a tins thintincciniesidtitcticsniteinniuniascnrenoie Opinion of Bea, J., dissenting from denial of IIE sicsictincotncthnsetviscarkisntiniaitsaeescsatinmesionsiois APPENDIX J: Relevant Criminal and Civil Penalties of the Clean Water Act (in force March 24, 1989).............. APPENDIX K: Jury Instructions on Vicarious Liability for Pu- I aio scsinesissidstsLahaaloiepaiiiapabetngabiesionhimialiai APPENDIX L: Special Verdict Form for Phase I of Trial.................. la APPENDIX A United States Court of Appeals For The Ninth Circuit. In re: The EXXON VALDEZ, Grant Baker; Sea Hawk Sea- foods, Inc.; Cook Inlet Proces- sors, Inc.; Sagaya Corp.; William Mcmurren; Patrick L. Mcmurren; William W. King; George C. No. 04-35183 Norris; Hunter Cranz; Richard DC.No Feenstra; Wildemess Sailing Sa- -20.00N0S faris; Seafood Sales, Inc.; Rapid. “Von Systems Pacific Ltd.; Nautilus Marine Enterprises, Inc.; William Findlay Abbott, Jr., Plaintiffs-Appellees, v. Exxon Mobile Corp; Exxon Shipping Co., Defendants-Appellants. Appeal from the United States District Court for the District of Alaska H. Russel Holland, Chief Judge, Presiding Argued and Submitted January 27, 2006-San Francisco, California Filed December 22, 2006 [As amended May 23, 2007] Before Mary M. Schroeder, Chief Judge, James R. Browning and Andrew J. Kleinfeld, Circuit Judges. Per Curiam Opinion; Dissent by Judge Browning. i 2a COUNSEL Walter Dellinger, O’Melveny & Myers, LLP, Washington, D.C., and John F. Daum, O’Melveny & Myers LLP, Los Angeles, CA, for the defendants-appellants, cross-appellees. Brian B. O’Neill, Faegre & Benson, Minneapolis, Minnesota, James vanR. Springer, Dickstein Shapiro LLP, Washington, DC, for the plaintiffs-appellees, cross-appellants. OPINION PER CURIAM. I, INTRODUCTION We look for the third time at the punitive damages im- posed in this litigation as a result of the 1989 grounding of the oil tanker Exxon Valdez, and the resulting economic harm to many who earned their livelihood from the resources of that area. See Baker v. Hazelwood (In re the Exxon Valdez), 270 F.3d 1215 (9th Cir. 2001)[hereinafter Punitive Damages Opinion I\; Sea Hawk Seafoods, Inc. v. Exxon Corp., No. 03-35166 (9th Cir., Aug. 18, 2003). We are precluded, as the jury was, from punishing Exxon for befouling the beautiful region where the oil was spilled, because that punishment has already been imposed in separate litigation that has been set- tled. See Punitive Damages Opinion I, 270 F.3d at 1242. As we explained in Punitive Damages Opinion I, the plaintiffs’ punitive damages case was saved from preemption and res judicata because the award “vindicates only private economic and quasi-economic interests, not the public interest in pun- ishing harm to the environment.” /d. “The plaintiffs’ claims for punitive damages expressly excluded consideration of harm to the environment.” Jn re the Exxon Valdez, 296 F. Supp. 2d 1071, 1090 (D. Alaska 2004). The resolution of punitive damages has been delayed because the course of this litigation has paralleled the course followed by the Supreme Court when, in 1991, it embarked on a series of decisions outlining the relationship of punitive damages to the principles of due process embodied in our 3a Constitution. See, e.g., Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991); ZXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443 (1993) (plurality); BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996); State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003). Intervening Supreme Court decisions have caused us to remand the matter twice to the district court for reconsideration of punitives in light of evolving Supreme Court law. The district court’s opinion, after our last remand for it to consider the impact of the Supreme Court’s decision in State Farm, is published at Jn re the Exxon Valdez, 296 F. Supp. 2d 1071 (D. Alaska 2004) [hereinafter District Court Opinion]. It is the subject of this appeal. Now, with the guidance of the Supreme Court’s decisions, the district judge’s thoughtful consideration of the issues, and our own prior decisions in the litigation, we trust we are able to bring this phase of the litigation to an end. While we agree with much of the analysis of the district court, we are required to review de novo the district court’s legal analysis in apply- ing the Supreme Court’s guideposts. See Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 436 (2001). While the original punitive damages award was $5 billion and in accord with the jury’s verdict, the district court reduced it to $4 billion after our first remand. Jn re the Exxon Valdez, 236 F. Supp. 2d 1043, 1068 (D. Alaska 2002), vacated by Sea Hawk, No. 03-35166. Then, after our second remand, it en- tered an award of $4.5 billion. District Court Opinion, 296 F. Supp. 2d at 1110. For the reasons outlined further in the fac- tual development and the analysis of this opinion, we con- clude that the ratio of punitive damages to actual economic harm resulting from the spill, reflected in the district court’s award of $4.5 billion, exceeds by a material factor a ratio that would be appropriate under Punitive Damages Opinion I and the current controlling Supreme Court analysis. See State Farm, 538 U.S. at 425. We order a remittitur of $2 billion, resulting in punitive damages of $2.5 billion. We do so be- cause, in assessing the reprehensibility of Exxon’s miscon- duct, the most important guidepost according to the Supreme 4a Court’s opinion in State Farm, there are several mitigating facts. See id. at 419. These include prompt action taken by Exxon both to clean up the oil and to compensate the plaintiffs for economic losses. These mollify, at least to some material degree, the reprehensibility in economic terms of Exxon’s original misconduct. Punitive Damages Opinion I, 270 F.3d at 1242. In addition, in considering the relationship between the size of the award and the amount of harm, we concluded in our earlier punitive damages opinion that the substantial costs that Exxon had already borne in clean up and loss of cargo lessen the need for deterrence in the future. Jd. at 1244. We disagree, however, with Exxon’s ultimate contention that, as a result of two sentences in Punitive Damages Opinion I, writ- ten five years ago and before the Supreme Court’s opinion in State Farm, Exxon is entitled to have punitive damages as- sessed at no higher than $25 million. See id. Our dissenting colleague goes to the other extreme. Exxon’s misconduct was placing a relapsed alcoholic in charge of a supertanker. Punitive Damages Opinion I, 270 F.3d at 1234. Yet, the dissent claims that we should ignore our unanimous conclusion in Punitive Damages Opinion I, 270 F.3d at 1242, that Exxon’s conduct with respect to the spill was not intentional. The dissent effectively treats Exxon as though it calculatingly and maliciously steered the ship into disaster. Purporting to rely on the intervening Supreme Court decision in State Farm, the dissent also refuses to apply our earlier holding that Exxon’s mitigation efforts reduce the reprehensibility of its conduct. This amounts to a rejection of the bedrock principle of stare decisis. State Farm was an insurance contract case. Nothing in it suggests that this court’s decision in Punitive Damages Opinion I was improper. The Supreme Court did not explic- itly or implicitly hold that mitigation plays no role in deter- mining the constitutionality of a punitive damages award. Such a lack of discussion in an insurance contract case cannot supplant our express holding in the toxic-tort arena that mitigation efforts are a factor in assessing the punitive dam- Sa ages award in this case. Controlling authority should not be ignored or distorted. As Learned Hand famously once said, “a victory gained by sweeping the chess pieces off the table is not enduring.” Learned Hand, Mr. Justice Cardozo, 52 Harv. L. Rev.. 361, 362 (1939). We reiterate our previous holding that Exxon’s conduct was not willful. Accordingly, a punitive damages award that corresponds with the highest degree of reprehensibility does not comport with duc srocess when Exxon’s conduct falls squarely in the middle of a fault continuum. Because the history of this litigation tracks the recent jurisprudential history of punitive damages, our analysis is best made in light of a thorough understanding of that history. We therefore outline that history with what we hope is suffi- cient clarity and thoroughness. Il. LEGAL AND FACTUAL BACKGROUND A. From the Time of the Accident through the First Punitive Damages Award and Denial of Motion for New Trial: The Common Law through the Supreme Court Decision in TXO. The Exxon Valdez ran aground on Bligh Reef in Alaska’s Prince William Sound on March 24, 1989. Punitive damages at that time were governed by general common law principles. at common law, the jury determined the punitives, and the trial judge conducted a limited review to determine whether the jury’s verdict was the product of passion and prejudice, or whether the award was one that shocked the conscience. See Renee B. Lettow, New Trial for Verdict Against Law: Judge-Jury Relations in Early Nineteenth Century America, 71 Notre Dame L.Rev. 505, 542-51 (1996); Paul DeCamp, Beyond State Farm: Due Process Constraints on None- conomic Compensatory Damages, 27 Harv. J.L. & Pub. Pol’y 231, 246-48 (2003); see also Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 278 n. 24 (1989) (affirming district court’s application of Vermont’s “grossly and manifestly excessive” standard for judicial review); Honda Motor Co. v. Oberg, 512 U.S. 415, 432 n. 10 (1994). 6a Although there were cases dating from the Lochner era that had suggested that there may be a due process ceiling on pu- nitive damages, at the time of this accident in 1989, the Su- preme Court had never invalidated an award on grounds that the size of the award violated due process. See BMW v. Gore, 517 U.S. at 600-01 (Scalia, J., dissenting) (discussing the history of due process review of punitive damages awards) (citing Seaboard Air Line Ry. v. Seegers, 207 U.S. 73, 78 (1907); Southwestern Tel. & Tel. Co. v. Danaher, 238 U.S. 482, 489-91 (1915); Waters-Pierce Oil Co. v. Texas, 212 U.S. 86, 111-12 (1909); Standard Oil Co. of Ind. v. Missouri, 224 U.S. 270, 286, 290 (1912); St. Louis, LM. & S.R. Co. v. Wil- liams, 251 U.S. 63, 66-67 (1919)). In 1991, however, the Supreme Court decided Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1 (1991). There, for the first time in the modern era, the Court conducted a substantive review of an award of punitive damages. Haslip was an insurance fraud case, in which the agent pocketed the premiums and caused the plaintiff's insurance to lapse. Jd. at 4-5. The Court upheld a punitive damages award that amounted to four times the award of compensatory damages and 200 times the out-of-pocket costs of the defrauded insured. Id. at 23-24. The Court noted that the ratios might be “close to the line,” but said the award had to be upheld because it “did not lack objective criteria.” /d. The Court therefore concluded that the punitive damages did not “cross the line into the area of constitutional impropriety.” Jd. The Supreme Court did not, at that time, and has not since, defined any bright line of constitutional impropriety. It has, repeatedly, indicated that there is none. See, e.g., State Farm, 538 U.S. at 424-25. In 1993, two years after Haslip, the Court took on another major punitive damages case. In 7X¥O Production Corp. v. Alliance Resources Corp., 509 U.S. 443 (1993), the Court reviewed a jury award of $19,000 in compensatory damages and $10 million in punitive damages. Jd. at 451. That case ‘arose out of an oil and gas development fraud scheme. Jd. at 447-51. The case produced no majority opinion. The plurality, 7a reiterating that due process places some limit on punitive damages, said that the award was not so “grossly excessive” that it should be overturned, thus invoking the standard used in Haslip. Id. at 462. The Court declined to provide any par- ticular guidance in determining when an award would be “grossly excessive.” Jd. The plurality chose instead to say that the dramatic disparity between the actual financial loss and the punitive award was not controlling. /d. The award was upheld. Jd. It was against this background that the jury in this case was instructed in 1994. The jury was told to take into account the reprehensibility of the misconduct, the amount of actual or potential harm arising from the misconduct, and, additionally, to take into account mitigating factors such as the clean up costs and fines already imposed as deterrents. District Court Opinion, 296 F. Supp. 2d at 1081-82. The instructions were the product of mutual effort of the parties and the district court, and have not been seriously challenged. Jd. They are not questioned here and were, in retrospect, quite forward look- ing. On September 16, 1994, the jury returned a $5 billion punitive damages verdict, having some time earlier imposed a compensatory award of $287 million. The district court ac- cepted the punitive award and entered judgment. Citing Haslip and TXO, the district court denied Exxon’s motion for a new trial in January of 1995. B. The Appeal of the Damage Allocation Plan and Our De- cisions in Baker and Icicle. Prior to trial, several plaintiffs, many of the sea food processors, had entered into settlement agreements with Exxon. Icicle Seafoods, Inc. v. Baker (In re the Exxon Valdez), 229 F.3d 790, 792 (9th Cir. 2000) [hereinafter Icicle]; Baker v. Exxon Corp. (In re the Exxon Valdez), 239 F.3d 985, 986 (9th Cir. 2001) [hereinafter Baker]. The agreements anticipated a sizable punitive damages award. See Icicle, 229 F.3d at 793; Baker, 239 F.3d at 986-87. In return for receiving substantial 8a millions in payments from Exxon, the settling plaintiffs, in two separate agreements, agreed to allocate a portion of their punitive award to Exxon. One agreement was a so called “cede back agreement,” Jcicle, 229 F.3d at 793, and the other was an assignment of the future award, Baker, 239 F.3d at 986-87. The district court, however, did not know of the agree- ments during trial. Jcicle, 229 F.3d at 793. When the court did learn of them, during consideration of the parties’ proposed damage allocation plan, and after the punitives had been im- posed in accordance with the jury’s verdict, the district court frowned on the settlements. /d. at 794. In the district court’s view, Exxon should have told the jury about the agreements so that the jury would have known how much Exxon was actually going to have to pay in punitive damages. Jd. The district court, therefore, refused to permit the settling plain- tiffs to receive any of the punitive damages award, on the theory that Exxon should not benefit from the settlements. /d. ; Baker, 239 F.3d at 987. Exxon pursued two appeals from the district court’s refusal to enforce the agreements: one in- volving the cede back agreement, Icicle, 229 F.3d at 793, and the other involving the assignment agreement, Baker, 239 F.3d at 987-88. The two different forms of agreement were intended to have essentially the same effect: allowing Exxon to keep some portion of the eventual punitive award in exchange for settling compensatory damage claims. In Icicle, this panel considered the cede back agreement. In a thorough opinion, we held that the cede back agreement was valid and en- forceable and that the jury quite properly was not told of its existence. Icicle, 229 F.3d at 800. We reasoned that had the jury been told of the agreement, it might well have compen- sated for the settlement by imposing more damages. Jd. at 798. This, in turn, would have frustrated the efforts of parties to reach settlements. We pointed out that settlements should be encouraged, particularly in large class actions like this one. Jd. “Far from being unethical, cede back agreements make it 9a easier to administer mandatory class actions for the assess- ment of punitive damages and encourage settlement in mass tort cases. As a result, such agreements should typically be enforced.” Jd. The second appeal, Baker, considered an assignment agreement. Baker, 239 F.3d at 987-88. Following the Icicle reasoning, this panel reached the same conclusion. /d. at 988. C. The Supreme Court’s Decision in BMW v. Gore. As the parties were beginning their preparation for the first appeal of the $5 billion punitive damages award, the Supreme Court issued its first major due process/punitive damages decision after TXO. In 1996, it decided BMW of rth America, Inc. v. Gore, 517 U.S. 559 (1996). This was the Supreme Court’s first attempt to describe specific factors that a court should consider in reviewing a jury’s award of punitive damages. See id. at 575. The Court invoked the tra- ditional concepts of due process to describe the purpose of the review as an assurance of fair notice to the defendant of the consequences of its conduct. Jd. at 574. The Court described three factors to be considered. /d. at 575. The first was the reprehensibility of the conduct. Jd. The Court explained that reprehensibility is “[p]erhaps the most important indicium of the reasonableness of a punitive dam- ages award,” and said that an award should reflect “the enormity” of the offense. /d. (citations omitted). The second factor was the disparity between the actual or potential harm to the plaintiffs flowing from that conduct, and the punitive damages assessed by the jury. The Court said that the disparity factor was the most commonly cited. Jd. at 580. The Court reasoned this factor is important because it “has a long pedigree” extending back to English statutes from 1275 to 1753 providing for double, treble or quadruple damages. Jd. at 580-81. Thus the critical measure here is the ratio between the punitive award and the amount of harm inflicted on the plaintiff, or plaintiffs, before the court. — The third factor was the difference between the punitives 10a and the civil and criminal penalties authorized by the state for that conduct. Jd. at 583. The Court indicated that reviewing courts should use this factor to “accord substantial deference to legislative judgments concerning appropriate sanctions for the conduct at issue.” Jd. at 583 (internal quotations omitted). In BMW v. Gore, the defendant had engaged in a practice of repainting damaged cars and passing them off as never-damaged cars with their original paint. Jd. at 563-64. The plaintiff who had purchased one of these cars was awarded $4,000 in compensatory damages and $4 million in punitives. Jd. at 565. The Alabama Supreme Court reduced the punitives to $2 million, and the defendant petitioned for certiorari review. Jd. at 567. The Supreme Court held the pu- nitives were excessive. Jd. at 585. In examining the reprehensibility of the conduct, the Su- preme Court in BMW y. Gore stressed that the only harm in- flicted by the defendant was economic and not physical. Jd. at 576. The Court also emphasized that the conduct to be con- sidered was only the conduct of the defendant towards the plaintiff in the Alabama case and not other conduct that might be a part of a nationwide practice. Jd. at 572. Justice Breyer’s concurring opinion noted the danger in subjectirig a defendant to punishment multiple times for the same conduct. Jd. at 593 (Breyer, J., concurring). Thus, in looking at the ratio between the punitives and the harm, and in stressing that the ratio must be a reasonable one, the Court was holding that the ratio must be measured by the ratio of punitive damages to the harm suffered by the plaintiff in that case, without regard to harm that might have been experienced by others and for which the defendant might also be responsible. /d. at 580. It concluded that a ratio of 500 to 1 was grossly excessive. Jd. at 583. Such an excessive ratio resulted from the jury’s improperly measuring the punitives in relation tc the damage inflicted on a nation of potential plaintiffs rather than the damage to the plaintiff before that jury. Id. at 573. lla With respect to the third factor, the relationship between the punitive damages and the comparable penalties under state law, BMW vy. Gore looked to the Court’s federalism juris- prudence. The Court’s opinion stressed that reviewing courts should be mindful of the need to pay due deference to the legislative judgments of states in assessing the reprehensibil- ity of conduct. Jd. at 583 (“{[A] reviewing court engaged in determining whether an award of punitive damages is exces- sive should ‘accord “substantial deference” to legislative judgments concerning appropriate sanctions for the conduct at issue.””) (quoting Browning-Ferris, 492 U.S. at 3019 (O’Connor, J., concurring in part, dissenting in part)). Again refusing to draw any kind of mathematical bright line between acceptable and unacceptable ratios, the Court described the 500 to 1 ratio in BMW v. Gore as “breathtak- ing.” Jd. It remanded for further, not inconsistent, proceedings, because, unlike Haslip, where the Court affirmed a ques- tionable award, the Court in BMW was “fully convinced” that this award was “grossly excessive.” Jd. at 585-86. D. The First Punitive Damages Appeal. It was against this background that briefing in the first appeal of the original $5 billion punitive damages award in this case went forward. Exxon contended the amount of the award violated due process principles, as described in BMW v. Gore. Punitive Damages Opinion I, 270 F.3d at 1241. The district court had not had an opportunity to review BMW y. Gore before its original judgment became final and appeal- able upon denial of Exxon’s motion for a new trial. Jd. In its appeal from the $5 billion award, Exxon, in addition to challenging the amount of the punitive damages, chal- lenged the sufficiency of the evidence supporting punitive damages; the jury instructions; the allowability of any puni- tive damages as a matter of public policy, maritime law and res judicata; and the preemption of punitive damages by other federal law. Needless to say, briefing was extensive. After appellate proceedings were stayed from January 1998 to 12a September 1998 for the parties to pursue a limited remand, this panel heard argument in May of 1999. While the case was under submission, the Supreme Court granted certiorari in another Ninth Circuit case, and in May 2001, decided Cooper v. Leatherman Tool Group. The Court there held our review of punitive damages was to be de novo. Cooper, 532 U.S. at 436. This did not ease our task. E. Punitive Damages Opinion I. We issued our first opinion on punitives damages in No- vember, 2001. Our opinion went in detail through the facts of the disaster and the conduct of Exxon, and of Captain Hazelwood, because they bore so heavily on the consideration of the issues on appeal. Punitive Damages Opinion I, 270 F.3d at 1221-24. In an opinion of more than 40 pages, we rejected Captain Hazelwood’s separate appeal, and dealt at some length with all of the issues raised by Exxon. We ultimately rejected all of them except the challenge to the amount of punitive damages. Jd. at 1254. Referring to the “unique body of law” that governs puni- tive damages, we focused on the two Supreme Court opinions that had been decided after the district court’s decision in the case, and we termed them “critical.” Jd. at 1239. These were BMW v. Gore and Cooper v. Leatherman Tool Group. We said: In BMW, the Supreme Court held that a punitive damage award violated the Due Process Clause of the Fourteenth Amendment because it was so grossly excessive that the defendant lacked fair notice that it would be imposed. Dr. Gore’s car was damaged in transit, and BMW repainted it but did not tell Dr. Gore about the repainting when it sold him the car. The jury found that to be fraudulent, and awarded $4,000 in compensatory damages for reduced value of the car and $4 million in punitive damages. The Alabama Supreme Court cut the award to $2 million, but the Court held that it was still so high as to deny BMW 13a due process of law for lack of notice, because the award exceeded the amounts justified under the three “guideposts.” The BMW guideposts are: (1) the degree of reprehensibility of the person’s conduct; (2) the disparity between the harm or potential harm suffered by the victim and his punitive damage award; and (3) the difference between the punitive damage award and the civil penalties authorized or imposed in compara- ble cases. We apply these three guideposts to evaluate whether a defendant lacked fair notice of the severity of a punitive damages award, and to stabilize the law by assuring the uniform treatment of similarly situated persons. Id. at 1240-41 (internal quotations omitted). We noted that in Cooper v. Leatherman Tool Group the Supreme Court de- cided that “considerations of institutional competence” re- quire de novo review of punitive damages awards. /d. at 1240 (quoting Cooper, 532 U.S. at 440). We went on to observe that tle district court had not re- viewed the award under the standards announced in those cases because neither case had been decided by the time the jury returned its verdict, and Exxon had never challenged the amount of the award on constitutional grounds until after the jury’s verdict. Jd. at 1241. In view of the need for de novo review and the intervening decisions of BMW y. Gore and Cooper v. Leatherman Tool Group, we remanded for recon- sideration of punitive damages. Jd. We also provided some observations on possible alternative analyses of punitive damages under the BMW v. Gore factors. Jd. at 1241-46. These observations began with the factor of reprehensi- bility, quoting the Supreme Court’s admonition in BMW vy. Gore that it is “[p]erhaps the most important indicium of the reasonableness of a punitive damage award.” Jd. at 1241. We pointed to the Court’s analogy to criminal cases, and its statement that nonviolent crimes are less reprehensible than violent ones. Jd. We drew an analogy to the facts of this case, where Exxon’s conduct was reckless, but there was no inten- 14a tional spilling of oil “as in a midnight dumping case.” Jd. at 1242. We agreed with the plaintiffs that Exxon’s conduct was reprehensible in that it knew of the risk of an oil spill in transporting huge quantities of oil through the Sound, and it knew Hazelwood was a relapsed alcoholic. /d. at 1242. We observed, however, that such reprehensibility went more to justify punitive damages than to justify such a high amount. /d. We noted some mitigating factors, including prompt amelio- rative action and the millions spent in clean up. Jd. We then turned to the ratio of actual harm caused by the misconduct to punitive damages awarded. Jd. at 1243. Again analyzing BMW v. Gore, we said that it was difficult to de- termine what we called the “numerator,” that is, the value of the harm caused by the spill. Jd. We used the jury award of $287 million in compensatory damages as one possible nu- merator and also, as alternative numerators, the district court’s estimates of harm, which at that time ranged from $290 mil- lion to $418 million. Jd. We noted that if compensatory li- ability were used, any amounts Exxon had voluntarily paid in settlements should not be taken into account. We said that {t]he amount that a defendant voluntarily pays before judgment should generally not be used as part of the numerator, because that would deter settlements prior to judgment. “[T]Jhe general policy of federal courts to promote settlement before trial is even stronger in the context of large scale class actions.” Id. at 1244 (citing Icicle, 229 F.3d at 795; Baker, 239 F.3d at 988). As a final observation on the relationship between the punitive damages award and the harm, we pointed out that the substantial clean up costs and other losses to Exxon from the oil spill had already had considerable deterrent effect. We indicated such deterrence should, depending on the circum- stances, call for a lower, rather than a higher ratio. Jd. Turning to the third BMW v. Gore factor, we observed that the nature of criminal fines, which are potential state and 15a federal penalties, might be useful in reviewing punitives. Jd. at 1245. We observed that “[c]riminal fines are particularly informative because punitive damages are quasicriminal.” Jd. We then looked to the general federal statutory measure for fines and discussed a number of alternative guideposts. Jd. We noted the federal fines could range from $200,000 to $1.03 billion. Jd. We looked as well at the ceiling of civil liability under the Trans-Alaska Pipeline Act and noted it was $100 million in strict liability for anyone who spills oil from the pipeline. Jd. In addition to those possible penalties, we looked at the actual penal evaluation made in the case by the Attorneys General of the United States and of the state of Alaska. Jd. at 1245-46. Agreeing with the district court that they did not establish a limit, we noted that they did represent an adver- sarial judgment, by executive officers, of an appropriate level of punishment. Jd. at 1246. Finally, without necessarily ex- hausting available analogies in the penalty field, we noted that Congress had subsequently amended the statute to increase the amount of civil penalties for grossly negligent conduct, and that the maximum penalty here under the new federal statute would be a maximum of $786 million. Jd. The federal penalties are based upon the number of barrels of oil spilled. 33 U.S.C. § 1321(b)(7). In suggesting various possible guidelines to assess whether the $5 billion was “grossly excessive” we did not imply that any single guidepost would be controlling. Con- cluding that the $5 billion was too high to withstand the re- view we were required to give it under BMW v. Gore and Cooper v. Leatherman Tool Group, and noting that those cases came down after the district court had ruled, we re- manded for it to apply the due process analysis required under those decisions, with what we hoped would be helpful guid- ance from our opinion. Jd. at 1241. No district court analysis of BMW v. Gore was before us and we thus could not have decided any specific issue arising from any such analysis arising from its guideposts. Jd. We offered only guidance l6a culled from what was then controlling Supreme Court precedent and general principles applicable to the calculation of damage liability. Jd. F. The District Court Opinion on our First Remand. The district court again did an extensive analysis of the relative reprehensibility of Exxon’s misconduct and of the harm it caused. Jn re the Exxon Valdez, 236 F. Supp. 2d at 1054-60. Though noting that an accurate assessment of the full extent of the plaintiffs’ actual harm was impossible, the district court attempted to reconstruct that harm by adding together the jury’s compensatory damages verdict of $287 million, judgments in related cases, as well as payments and settlements made to plaintiffs before and during the punitive damages litigation. Jd. at 1058-60. The district court con- cluded that the actual harm was just over $500 million. Jd. at 1060. The district court also concluded that the circumstances of this case justified a ratio of punitive damages to harm of 10 to 1. Jd. at 1065. This calculation would have supported the original $5 billion award. Jd. The district court nevertheless reduced the punitive damages to $4 billion, to conform to what it viewed as our mandate. Jd. at 1068. G. The Second Appeal, the Supreme Court's Opinion in State Farm, and our Second Remand. Not surprisingly, Exxon appealed again. And, not sur- prisingly, the Supreme Court issued an opinion in still another punitive damages case while the appeal was pending. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003). The plaintiffs in State Farm, the Campbells, were in- volved in a head-on collision and sued their automobile in- surer, State Farm, for bad faith. Jd. at 413. The claim was based on State Farm’s rejection of an offer to settle the Campbells’ claims at the policy limit, State Farm’s assurances to them that they had no liability for the accident, State Farm’s resulting decision to take the case to court despite the sub- stantial likelihood of an excess judgment, and its subsequent refusal to pay an adverse judgment over three times the policy 17a limits. Jd. at 413-14. The case was similar to BMW vy. Gore in that there were only two plaintiffs before the jury. Jd. Nev- ertheless, as in BMW v. Gore, the jury was allowed to consider the effects of similar but unrelated misconduct on many po- tential plaintiffs who were not before the court. Jd. at 415. Final judgment after appeal to the Utah Supreme Court was for $1 million in compensatory and $145 million in punitive damages. /d. at 412. The United States Supreme Court re- manded for the Utah courts to reduce the award. Jd. at 429. The Supreme Court in State Farm once again emphasized that the “most important indicium” of a punitive damages award’s reasonableness is the relative reprehensibility of the defendant’s conduct. Jd. at 419; see also BMW v. Gore, 517 U.S. at 575. Yet State Farm significantly refined the repre- hensibility analysis by instructing courts to weigh five spe- cific considerations: (1) whether the harm caused was physical as opposed to economic; (2) whether the conduct causing the plaintiffs harm showed “indifference to or a reckless disregard of the health or safety of others;” (3) whether the “target of the conduct” was financially vulner- able; (4) whether the defendant’s conduct involved repeated [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385015_0010%3A0. Public record. Not legal advice.