Don't Hurt the Profits

The Supreme Court of the United States passed what I consider to be a supremely unimpressive dictum yesterday when it announced that the total punitive damages amount for Exxon Mobil for the Exxon Valdez oil spill back in 1989 has been reduced from it's original $5 billion award to around $500 million. Now granted that $500 million is still a tremendous amount of money, but when you divide it up among those who are named in the original case as beneficiaries, you end up with people earning approximately $15,000 which is down from approximately $75,000 earlier.

Now one can argue all day as to whether a difference of approximately $60K is worth quibling over given the fact that 20% of those who stood to earn something from punitive damages case are now deceased, but it's the principle which I'm more in support of. At the time of the original case going to court, the award determined by a jury was $5 billion which represented the total profits for the company over one year. Even if one assumes an average inflation rate of 2% per year and assumes that Exxon's profits remain around $5 billion per year, that still only means that the total award due to those bringing the case would still only be around $7.3 billion that they would have to pay today. That out of record profit postings of $47 billion. Forty-seven billion!!!

When you finally get into numbers that big in terms of profit, isn't 15% of that marginal to be paid out to those whose livelihood was ultimately ruined by the oil spill? 33,000 fishermen residents, and governments in Alaska were adversely affected by the spill and continue to be so even today. Exxon complains that they have already paid $3.4 billion in reparations to the region and have taken great pains to ensure that they avoid any future disasters that could potentially ruin the environment but still, here they are quibbling over such a minor amount that it probably means nothing more to them than a moral victory.

And do they have any right to claim a moral victory? They ruined the environment and the area in which the spill occurred and they paid to support the clean-up effort. So what? Isn't that something they should have done anyways? Unless you're a two-year-old, cleaning up a mess you make is ulimately your own responsibility and no one elses. From my point of view, what they paid to clean up their mess has no bearing on how much they pay to the people whose lives they ruined to say nothing of the environmental impact they unleashed on the region. Though the decision by the Supreme Court was split with many of the judges abstaining or excusing themselves due to vested interests (some of them have investments in Exxon) they took a stance that ultimately looks to allow Exxon to get off scott free. The reduced $500 million award is 1% of their total profits for 2007. It's a shame and a travesty.