THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, September 17, 1994 TAG: 9409170304
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: ANCHORAGE, ALASKA LENGTH: Medium: 68 lines
Exxon Corp. was ordered to pay $5 billion in punitive damages Friday to commercial fishermen, Alaska natives, property owners and others harmed by the 1989 Exxon Valdez oil spill.
The federal jury also ordered the tanker's captain, Joseph Hazelwood, to pay $5,000.
The 11-member jury returned the verdict after more than 12 days of deliberations.
The plaintiffs in the class-action lawsuit - an estimated 12,000 to 14,000 people - had asked for $15 billion, based on Exxon annual reports pegging the company's average yearly profits at $5 billion.
Exxon lawyers urged the jury not to award punitive damages. They said that the oil giant had learned its lesson in spending $3 billion to clean up the spill and to settle lawsuits filed by the state and federal governments in the aftermath of the nation's worst oil spill.
Exxon is expected to appeal. Exxon lawyer Patrick Lynch called the verdict shocking.
``It's hard to understand based on the records, the nature of the accident and efforts Exxon made to make good since then,'' Lynch said.
Brian O'Neill, a lawyer for the plaintiffs, said, ``Even for a large company like Exxon, this amount of money is enough to change their behavior.''
The largest damage award in a civil case was $11.12 billion to Pennzoil Co. The judgment against Texaco Inc., over its unethical tactics in trying to break up a merger between Pennzoil and Getty Oil Co., later was reduced to $5.5 billion in an out-of-court settlement.
The plaintiffs in the Exxon case claimed that the spill, which smeared 11 million gallons of crude oil across Prince William Sound, reduced property values and damaged fishing and hunting grounds.
The judge will set up a process to determine exactly who is eligible for punitive damages and how the money will be divided up.
Ken Duffus, a Cook Inlet salmon fisherman from Eagle River, said he expects a long, drawn-out appeals process. `I'll believe it when I see the check in the mail,'' he said.
Just before the verdict was announced, Exxon's stock was trading at $58.75 per share. After the verdict, it rose to $60.25.
Investors apparently had expected a bigger award and figured Exxon could handle it.
The penalty could put a crimp in Exxon's oil searching and pumping budget in the short term, said George Gaspar, oil industry analyst at brokerage Robert W. Baird & Co.
``In the intermediate and longer term the company will get over it. But $5 billion is $5 billion and I don't care how big you are, it has to hurt,'' Gaspar said.
The verdict, which could be reduced on appeal, could give the rest of the oil industry an incentive to get on with replacing older tankers with double-hulled models, Gaspar said.
The plaintiffs had alleged that Hazelwood ran the ship aground while he was drunk and that Exxon knew he had a drinking problem and still left him in charge of tankers. Hazelwood was acquitted in 1990 of operating the tanker while drunk.
KEYWORDS: LAWSUIT VERDICT CLASS ACTION SUIT EXXON VALDEZ by CNB