Victims, law firms to get much less in Exxon Valdez case

The grueling legal and environmental odyssey for Alaska fishermen and the Minneapolis law firm of Faegre & Benson came to a climactic conclusion Wednesday when the U.S. Supreme Court sliced punitive damages from the 1979 Exxon Valdez oil spill to $507 million -- a tenth of what a jury awarded 14 years ago.

Under Wednesday's ruling, Alaska plaintiffs will get about $15,000 each in punitive damages, compared with $75,000 each they stood to get before the ruling.

"I'm shocked," said Brian O'Neill, Faegre's lead attorney on the case, which included 32,000 victims of the spill who were represented by 62 law firms. "There now are 32,000 people who will never be able to financially put their lives together again and 32,000 people who no longer believe in the U.S. judicial system."

The ruling not only greatly reduces the payouts to residents along Prince William Sound in Alaska, but it also cuts into the money the law firms will get.

Law firms worked on the case for nearly two decades.

Faegre represented 2,600 people, the most of any of the law firms involved. The firm now stands to receive roughly $20 million to $25 million in fees out of total attorney's fees of approximately $200 million, according to early calculations. That's a fraction of what it stood to earn after the initial 1994 jury award of $5 billion in punitive damages, which an Appeals Court reduced in 2006 to $2.5 billion. The firm also will get about $4 million in out-of-pocket expenses.

The court ruled that punitive damages against Exxon were excessive in comparison with actual economic losses of $507 million from the massive oil spill.

That didn't sit well with O'Neill, who has devoted most of his legal career to battling Exxon in this case. "The court made up the 1-to-1 ratio [actual to punitive damages] just to help Exxon. It's sad for our clients," O'Neill said.

Justice Ruth Bader Ginsburg wrote in a dissent that the court was engaged in "rulemaking" that "should have been left to Congress."

Minneapolis attorney David Lebedoff, who wrote an award-winning book about the case, "Cleaning Up," said he thought the Supreme Court would reduce the punitive damages, but not by such an amount.

"The one thing we know for certain is that this case took far too long," said Lebedoff, who practices at the firm of Gray Plant Mooty. "The jury came in with a verdict 14 years ago. It was cruel and unusual punishment to make the fishermen wait 14 years."

Faegre's attorneys also had to wait 14 years; some retired in the interim. Managing partner Tom Morgan said the firm adopted a policy 10 years ago dealing with allocation of fees for active and retired members of the firm.

"This is good news for companies concerned about reining in excessive punitive damages," said Tom Donohue, the group's president and CEO, in a written statement. "For years, the chamber has argued that punitive damages are too unpredictable and unfair, and today the court agreed."

O'Neill said he is going to Alaska on Friday to visit with his clients.

"They'll be heartbroken and pretty angry," O'Neill said.