Factual Background and Legal Framework
Governing Gulf Oil Spill Claims
Alliance for Justice’s First Monday film, Crude Justice paints the picture of the
legal system the victims of the Gulf Oil Spill will encounter as they start down the long
road towards justice. This guide is designed to provide law students with sufficient
resources about the legal issues raised by the film to facilitate substantive discussions
about the problems and brainstorming sessions about solutions.
Section one of this guide provides an overview of the facts surrounding the spill.
Section two provides an overview of the law that will govern damages claims.
I.
FACTUAL BACKGROUND
A.
The Tragedy
On April 20, 2010, the Deepwater Horizon drilling rig exploded in the Gulf of
Mexico, killing eleven workers, gushing an unprecedented amount of crude oil into the
Gulf, and beginning what has evolved into a disaster for our environment. The
Deepwater Horizon rig was owned by Transocean. Cameron International made the
faulty blowout preventer, which, had it functioned properly, could have prevented the
explosion. Halliburton manufactured the cement casings which were intended to prevent
the leakage of gas from the wellhead.
The leak was capped three months later, on July 15, after approximately five
million barrels of oil flowed into the Gulf. The precise location of that oil is subject to
some disagreement, but it is undisputed that oil remains on the surface, some has
evaporated, and an unknown quantity rests on the ocean floor. While the spill was
ongoing, efforts were taken to stem the damage. Fishermen were deployed on “vessels of
opportunity” boats to skim oil from the surface.1 Oil was absorbed using “booms” and
processed from the water.
1
Kimberly Kindy, “Early Cleanup Efforts of Gulf Oil Spill Marred by Communications Woes, Scammers,”
WASHINGTON POST (August 14, 2010).
As part of the clean-up process, BP dumped chemical dispersants into the Gulf
that caused the oil to decompose and dissipate more quickly than expected.2
Unfortunately, the massive volume of dispersants used has resulted in scientists being
concerned over the dispersants’ potential risks to humans and the environment. Indeed,
despite a directive from the Environmental Protection Agency (EPA), BP refused to
switch to less-toxic alternative dispersants.3 There is an ongoing discussion of whether
the dispersants actually helped with the clean-up, or simply made the oil more difficult to
find.4
Several entities have begun investigating the incident. As of Fall 2010, the
Department of Justice has launched civil and criminal investigations. The United States
Coast Guard has begun an investigation into the causes of the explosion. President
Obama established a bipartisan commission which is tasked with considering the causes
of the disaster and developing precautions that can be taken in the future. Both House
and Senate Committees have held hearings into the spill. Additionally, BP released a
report on its own internal investigation on September 8.5 But as the victims of the spill
know, it will take years for the full ramifications to be known, and the struggle to obtain
justice may be long and drawn out.
B.
BP Gulf Coast Claims Facility Trust Fund
After the explosion, BP admitted responsibility and vowed to pay “all legitimate
claims.”6 After negotiations with the Obama Administration, on June 16, BP agreed to
place $20 billion in a Gulf Coast Claims Facility trust fund (“Fund”) to be administered
by Kenneth Feinberg. Individuals and businesses can submit claims to the Fund for
removal costs and other economic damages. Mr. Feinberg will have broad latitude to
determine which claims will be paid and in what amounts. He has repeatedly touted the
fact that he will make decisions independently from both BP and the White House.
Rather than pursue their legal claims in court, many individuals will choose to
settle with BP through its compensation fund. The Fund is unusual, in that the procedural
and substantive process rules are in flux and to be determined by Mr. Feinberg. To date,
he has determined that claims can be made for an emergency advance payment, with no
strings attached and without any obligation to give up a right to sue BP. These
2
Justin Gillis and Campbell Robertson, “On the Surface, Gulf Oil Spill is Vanishing Fast; Concerns Stay,”
NEW YORK TIMES (July 27, 2010).
3
Margot Roosevelt and Carolyn Cole, “BP refuses EPA order to switch to less-toxic oil dispersant,” LOS
ANGELES TIMES (May 23, 2010), available at http://articles.latimes.com/2010/may/23/nation/la-na-oil-spill20100523.
4
Amina Khan, “Oil Dispersant Effects Remain a Mystery,” LOS ANGELES TIMES (September 4, 2010).
5
In the report, BP takes some responsibility, but tries to place much of the blame on Transocean,
Halliburton, and other parties. For instance, the report states that the Transocean rig crew “was not
sufficiently prepared to manage an escalating well control situation,” and that “more thorough review and
testing by Halliburton” might have prevented the explosion.
6
Lamar McKay testimony before Senate Energy & Natural Resources Committee (May 11, 2010).
preliminary claims can be submitted until November 23. Preliminary guidelines for these
interim claims were released on August 23.7
In addition to these interim payments, claimants will be able to submit a claim for
a final payment. Victims will have three years to submit claims for final payment, with a
filing deadline of August 23, 2013. Describing the likely terms for final payments,
Feinberg has said, “You take this amount in full satisfaction of your claim, but only if
you waive your right to future litigation.”8 Thus, it appears that by settling with BP,
victims will also waive their right to bring claims against any of the other liable parties.
According to the rules currently in place, applying for a final payment will not obligate
claimants to accept BP’s offer; a claimant may forego the offer for a final payment and
still opt to bring a claim in court. Guidelines have not been issued for final payouts, but
BP documents indicate that the final payment protocols will be “nearly identical” to the
protocols for emergency advance payments.9 The emergency advance payment protocols
specify that interim claims will require less documentation and be reviewed under a “less
rigorous” standard for corroboration than claims for final payments.
The interim payment protocols indicate that geographic proximity to injured
natural resources (i.e. polluted beachfront) will be taken into consideration. This criteria
has been widely criticized for excluding swaths of people and businesses located inland,
or on unpolluted beachfront, that suffered severe economic loss as a result of the spill.
The Florida Attorney General wrote a letter arguing that this provision is contrary to the
Oil Pollution Act.10 Another controversial aspect of the Fund is the possibility of a
provision deducting from final payment amounts individuals earned from BP for oil spill
clean-up by participating in the “Vessels of Opportunity” program. Mr. Feinberg has
recently stated his willingness to reconsider both provisions.11
C.
Legal Challenge to the Drilling Moratorium
A week after the Deepwater Horizon incident, President Obama ordered Secretary
of the Interior Ken Salazar to conduct a 30-day environmental review of the causes of the
disaster and to offer precautions that might prevent a similar disaster from occurring
again. On the basis of that review, at the end of May, Secretary Salazar suspended
drilling operations for deepwater rigs in the Gulf that are “similarly situated” to the
Deepwater Horizon. In effect, the Secretary’s order imposed a six-month moratorium on
33 offshore oil rigs currently in the Gulf as well as any newly permitted deepwater
7
Gulf Coast Claims Facility Protocol for Emergency Advance Payments (August 23, 2010), available at
http://www.gulfcoastclaimsfacility.com/proto_1.php.
8
Neil King Jr., “Feinberg ramps up $20 billion compensation fund,” WALL STREET JOURNAL (June 21,
2010).
9
Ian Urbina, “BP settlements likely to shield top defendants,” NEW YORK TIMES (August 20, 2010).
10
Letter from Florida Attorney General McCollum to Kenneth Feinberg (August, 22, 2010), available at
http://www.myfloridalegal.com/newsrel.nsf/deepwater/372DCA40F3292CB985257785006FDF5C.
11
Campbell Robertson and John Schwartz, “Rethinking the Process for BP Spill Claims,” NEW YORK
TIMES (September 15, 2010).
drilling projects in the region, pending results of the President’s bipartisan commission’s
investigation into the incident.
A group of energy companies sued the government in federal court in New
Orleans, seeking a preliminary injunction that would prevent the moratorium from taking
effect. On June 22, 2010 in the case Hornbeck Offshore Services v. Salazar, Judge
Martin Feldman of the Eastern District of Louisiana granted the plaintiffs’ request and
lifted the moratorium.12 Judge Feldman concluded that the government’s moratorium
was “blanket,” “generic,” and “punitive,” and would clearly harm the plaintiff industries
and the region.13 On appeal, the Fifth Circuit Court of Appeals upheld the ruling. On
July 12, the Obama Administration issued a new, more limited drilling moratorium, but
that too was struck down by Judge Feldman on September 2. That decision has been
appealed.
II.
LEGAL FRAMEWORK
Hundreds of lawsuits against BP, Transocean, Halliburton, and Cameron
International have already been filed. Those proceedings were consolidated into
multidistrict litigation (MDL) before United States Eastern District of Louisiana Judge
Carl Barbier for pretrial proceedings.
Regardless of whether victims choose to pursue justice through the BP fund or the
courts, they will have to grapple with the problem of unknown damages. As victims of
the Exxon Valdez spill learned, the full environmental ramifications of a catastrophe of
this magnitude, or of future health impacts, can take decades to appreciate. In both the
courts and before the Fund, claimants will have to put a figure on their lost profits and
other economic damages based on the information available at the time they make their
claims.
Federal statutes set forth the damages available to those who have suffered
physical or economic injury from the spill and govern the procedures claimants must
abide by in order to recover damages. The most important of these statutes are: the Oil
Pollution Act, which governs economic damages, the Jones Act, which creates an action a
seaman for physical injury or death suffered by a seaman in the course of employment
against his/her employer; the Death on the High Seas Act, which applies to those killed
on the high seas; and the Limitation of Liability Act, which may restrict the damages
available against the owner of a vessel.14
In the absence of a controlling statute, general maritime law will cover most
remaining claims. Additionally, the Supreme Court’s landmark decision of Exxon
12
Hornbeck Offshore Services v. Salazar, No. 10-1663 (E.D.La. June 22, 2010).
Id. at 21.
14
Some employees may also be eligible to file claims under the Longshore and Harbor Workers’
Compensation Act.
13
Shipping Co. v. Baker, 128 S. Ct. 2605 (2008), will have a direct impact on the
availability of punitive damages.
A.
Oil Pollution Act of 1990 (“OPA”)
1.
What does OPA do?
The Oil Pollution Act of 1990 (“OPA”) was passed in response to the Exxon
Valdez oil spill in Alaska and was intended to address deficiencies in the legal system
revealed in the wake of that disaster.15 Specifically, it was designed to ensure the
availability of adequate federal resources to respond to a spill and to expand the scope of
compensable damages available to those impacted by the spill. OPA amended the Clean
Water Act and lays out a comprehensive framework governing the liability, limitations
on damages, and defenses that may arise from an oil spill. After OPA, liability limits
were raised, and the scope of damages was expanded.
2.
Who does OPA cover?
OPA applies to vessels, onshore drilling facilities, deepwater ports, pipelines, and,
as relevant in the Deepwater Horizon incident, to offshore facilities including “mobile
offshore drilling units.” The Act requires responsible parties to provide evidence of
financial responsibility sufficient to cover the party’s maximum liability. “Responsible
parties” include those that held a lease, permit, or other right of use or easement for the
oil drilling facility. Courts have interpreted the “responsible party” provision broadly.16
So far, the government has identified BP, who leased the rig, as a responsible party, but it
is possible that others, including Transocean, Halliburton or Cameron International could
face liability under OPA. Third parties can be treated as the responsible party if an act or
omission on their part caused the spill and the responsible party acted with due care.
3.
What liability does OPA involve?
OPA creates strict liability for a variety of damages resulting from an oil spill. These
damages include:


15
The complete removal costs, whether incurred by the government or individuals.
Natural resource damages,17 totaling the cost of restoring, rehabilitating,
replacing, and/or acquiring the equivalent of the damaged natural resources; the
diminution in value pending restoration; and cost of assessing the damages. State
See “Oil Pollution Act Overview,” Environmental Protection Agency website:
epa.gov/oem/content/lawsregs/opaover.htm.
16
See Kiern, Lawrence, “Liability, Compensation, and Financial Responsibility Under the Oil Pollution
Act of 1990: A Review of the First Decade,” 24 TUL. MAR. L. J. 481, 517- 522 (2000).
17
See 15 C.F.R. 990 for the National Oceanic and Atmospheric Administration regulations regarding
Natural Resource Damage Assessments.




and federal trustees,18 acting on behalf of the public, are responsible for
calculating these damages and overseeing a plan for the resources’ restoration.
The trustee’s calculations create a rebuttable presumption in court.
Damages to property, including direct injury and economic loss stemming from
destruction of property.
Loss of subsistence use (use for survival) of natural resources.
Loss of government revenue and cost of providing increased public services.
Lost profits and impairment of earning capacity.
Recovery for removal cost is unlimited. However, the remaining categories of
damages described above are subject to a $75 million cap, unless the incident was
proximately caused by the responsible party’s gross negligence, willful misconduct, or
violation of an applicable safety regulation. The $75 million cap also does not apply if a
responsible party fails to report the incident, to reasonably cooperate, or fails to comply
with an order under subsection (c) or (e) of 33 U.S.C. 1321. Interest on damages is not
subject to the cap.
OPA does not provide for punitive damages, although no Supreme Court decision
has directly addressed whether OPA’s failure to provide for punitive damages would
preempt the application of punitive damages under general maritime law.19
A responsible party has a complete defense to liability if the incident was caused
by an act of war, an act of God, an act or omission of a third party (so long as there was
no contractual relationship between the parties and the responsible party acted with due
care).
4.
What Procedures does OPA Establish for Bringing a Claim?
OPA sets forth a number of procedures for recovering from a responsible party.
Within 15 days of being designated as a “responsible party,” the responsible party must
advertise the procedure by which claims can be presented and identify the procedure by
which claims can be made for short-term damages.20 Importantly, OPA is clear that a
payment for short-term damages shall not preclude recovery for damages not reflected in
partial claim.21
18
In this case, federal trustees include agencies such as the National Oceanic and Atmospheric
Administration, the U.S. Fish & Wildlife Service, the Bureau of Land Management, the National Park
Service, and other agencies. State trustees include
19
In Exxon Shipping Co. v. Baker, the Supreme Court held that the fact that the Clean Water Act (OPA’s
predecessor) did not provide for punitive damages did not prevent the application of punitive damages
under general maritime law. But see South Port Marine, LLC v. Gulf Oil Ltd., 234 F. 3d 58 (1st Cir. 2000),
holding that OPA was meant to be the exclusive law governing oil spills and punitive damages were not
available.
20
33 U.S.C. § 2714(b)(1) (1990).
21
33 U.S.C. § 2705(a) (1990).
With certain exceptions, all requests for removal costs or damages must be made
first to the responsible party.22 If the responsible party denies liability or the parties do
not reach a settlement agreement within 90 days, only then can the claimant sue the
responsible party in court.23 Alternatively, after trying to settle with the responsible
party, a claimant may elect to seek compensation from the Oil Spill Liability Trust Fund
(see below).24
OPA establishes a three year statute of limitations for most actions.25 OPA does
not preempt states from establishing their own regulatory frameworks to impose
additional liability or requirements.26
5.
The Oil Spill Liability Trust Fund
In addition to creating a framework for liability, OPA also created the Oil Spill
Liability Trust Fund (“OSLTF”), to ensure the availability of federal funds for future oil
spills should the responsible party be unable or unwilling to pay for cleanup and claims.
The OSLTF can be used to pay costs of oil removal, natural resource damage assessment
and restoration, individual claims for damages, and other administrative expenses.27 It is
funded by a number of different sources including damages recovered for damaged
natural resources and various taxes,28 and it is administered by the Coast Guard’s
National Pollution Funds Center (“NPFC”).
A claimant wishing to bring a claim before the Fund must first try to settle the
claim with the responsible party, as described above. The claimant may then file an
action in court, or submit a claim to the OSLTF (the claimant make an election of
remedies and can submit a claim only to OSLTF or in court). All the same damages
available under OPA are available through the Fund. The NPFC can pay a claim in full,
deny the claim, or make a settlement offer. A denial of the claim can be appealed
pursuant to the Administrative Procedures Act. If the claimant accepts a settlement offer,
he/she is precluded from bringing any subsequent action to recover costs or damages that
are the subject of the claim.29 All rights that are the subject of the claim are then
subrogated to NPFC, which can bring a claim against the responsible party.30 Recovered
sums are deposited into the Fund.31
22
33 U.S.C. § 2713(a) (2004).
33 U.S.C. § 2713(c) (2004); see Boca Ciega Hotel, Inc. v. Bouchard Transp. Co., 51 F.3d 235, 240 (11th
Cir. 1995) (“[T]he clear text of § 2713 creates a mandatory condition precedent barring all OPA claims
unless and until a claimant has presented her claims in compliance with § 2713(a) [and § 2713(c)].”).
24
33 U.S.C. § 2713(d) (2004).
25
33 U.S.C. § 2717 (1990).
26
33 U.S.C. § 2718 (1990).
27
33 U.S.C. § 2712(a) (2004).
28
26 U.S.C. § 9509(b) (1990); 33 U.S.C. § 2706(f) (1990).
29
33 C.F.R. 136.115(a) (1998).
30
33 U.S.C. § 2715(a) (2004).
31
33 U.S.C. § 2715(c) (2004).
23
Additionally, OPA requires that the President establish a loan system under the
Fund to provide interim assistance to fishermen and aquaculture producer claimants
during the claims procedure.32 The U.S. Attorney General is charged with bringing an
action against any responsible party to recover compensation paid out by the Fund.33
B.
Death on the High Seas Act (“DOHSA”)
Another statute implicated by the oil spill is the Death on the High Seas Act
(“DOHSA”), which provides a wrongful death action for individuals who die as a result
of neglect, a wrongful act, or default at least three nautical miles from the shore of the
United States.34 DOHSA will be one of the applicable statutes governing the wrongful
death claims on behalf of the eleven workers who lost their lives in the explosion, which
occurred 50 miles (43.45 nautical miles) off the coast of Louisiana.35
DOHSA creates a cause of action against the negligent party for pecuniary
(economic) losses recoverable by the decedent’s family members.36 These damages
include things like lost earnings, loss of services, and funeral expenses. Non-pecuniary
damages, such as emotional damages and damages for loss of society, damages for predeath pain and suffering, or punitive damages, are not available under DOHSA.37
Testimony has been taken in Congress on the hardship this poses on the families who lost
their loved ones.38 A DOHSA claim must be brought by the personal representative of
the decedent, for the benefit of the decedent’s spouse, parent, child, or dependent relative,
with damages apportioned in proportion to the loss sustained by each.39 Negligence on
the part of the decedent cannot be a bar to recovery, but may, at the discretion of the
court, reduce the amount awarded.40 Actions filed under DOHSA are governed by the
three year statute of limitations applicable to all maritime torts.41
32
33 U.S.C. § 2713(f) (2004).
33 U.S.C. § 2715(c) (1990).
34
46 U.S.C. § 30302 (2006). In 2006, Congress recodified DOHSA within Title 46, and references to
DOHSA before 2006 are made to 46 U.S.C.A. app. § 761 et seq.
35
Matthew L. Wald, Clarifying Questions of Liability, Cleanup and Consequences, N.Y. TIMES, May 6,
2010.
36
46 U.S.C. § 30303 (2006).
37
Miles v. Apex Marine Corp., 498 U.S. 19, 31 (1990). In some circumstances, wrongful death damages
under DOHSA may be supplemented by damages for pre-terminal pain and suffering under remedies such
as a survival action or under the Jones Act.
38
http://judiciary.house.gov/hearings/pdf/Jones100527.pdf
39
46 U.S.C. § 30302 (2006).
40
46 U.S.C. § 30304 (2006) (“In an action under this chapter, contributory negligence of the decedent is
not a bar to recovery. The court shall consider the degree of negligence of the decedent and reduce the
recovery accordingly.”).
41
See 46 U.S.C.A. § 30106 (2006) (“Except as otherwise provided by law, a civil action for damages for
personal injury or death arising out of a maritime tort must be brought within 3 years after the cause of
action arose.”).
33
C.
Jones Act
The Merchant Marine Act of 1920 (“Jones Act”)42 provides a cause of action
against an employer for a seaman injured or killed in the course of employment because
of the employer’s negligence.43 The Jones Act is not the exclusive cause of action and
does not preclude additional pre-existing remedies, such as a cause of action against the
vessel owner for unseaworthiness pursuant to general maritime law or a claim under
DOHSA.44 The Jones Act provides that a claim may be brought by the injured seaman,
or, if the seaman dies from the injury, by the personal representative of his estate.
In a wrongful death claim, only pecuniary damages are recoverable. Damages for
loss of society are not available in a Jones Act wrongful death action.45 In a claim
brought by a Jones Act seaman, there may be recovery for pain and suffering and mental
anguish in addition to pecuniary damages. Punitive damages are available only when an
employer willfully and wantonly disregards its maintenance and cure obligation.46 Loss
of consortium damages are not available.47
D.
Limitation of Liability Act
The Limitation on Liability Act of 1851 (“LLA”) says that a vessel owner is only
liable for the value of the vessel and cargo, so long as harm caused was not caused by
negligence within the privity and knowledge of the vessel owner. The Act was passed in
the mid-nineteenth century to help U.S. ship owners compete with foreign shippers from
countries that limited liability. The law was famously used as a defense by the owners of
the Titanic after that ship sank. Most legal experts agree that OPA claims are not subject
to limitations under LLA, though the limitation does apply to personal injury and
wrongful death claims.
42
46 U.S.C. § 30104 (2008).
“Seaman” is a term of art in maritime law. Whether an employee qualifies as a “seaman” is a factspecific inquiry that looks at whether an employee contributed to the function of the vessel or the
accomplishment of its mission, whether the employee’s contribution was limited to a particular vessel or
group of vessels, whether the employee’s contribution was substantial in duration and nature, and whether
the employee was regularly exposed to the hazards of the sea. Chandris, Inc. v. Latsis, 515 U.S. 347
(1995); McDermott Int’l, Inc. v. Wilander, 498 U.S. 337 (1991).
44
46 U.S.C. § 30301 et seq. (2006); see Doyle v. Albatross Tanker Corp., 367 F.2d 465, 467 (2d. Cir. 1966)
(noting that the lower federal courts agree that “both statutory remedies may be availed of for the purpose
of recovering damages for the wrongful deaths of seamen caused by occurrences on the high seas, and that
the action in admiralty created by the Death on the High Seas Act may be pursued by the personal
representative of a deceased sailor as well as the action at law provided for in the Jones Act.”).
45
Miles v. Apex Marine Corp., 498 U.S. 19, 32 (1990). The Court assumed that Congress intended to
incorporate the liability restrictions present in the Federal Employers’ Liability Act (FELA), 45 U.S.C. §§
51-60 (1939), into the Jones Act because of the similar language in the two statutes.
46
Atl. Sounding Co. v. Townsend, 129 S. Ct. 2561 (2009).
47
Murray v. Anthony J. Bertucci Constr. Co., 958 F.2d 527 (5th Cir. 1991).
43
The statute states that an owner is liable only for the value of “the vessel and
pending freight.”48 In the case of injury or wrongful death, that amount can be raised
based on the vessel’s size to $420 per ton.49 The Act states that a vessel owner can
initiate a petition for limitation of liability within six months of an incident, if it deposits
with the court an amount equal to the owner’s potential liability, and that doing so has the
effect of terminating other claims against the owner.50
Transocean, the owner of the Deepwater Horizon rig, has filed an action to cap its
liability at $27 million. That figure is calculated by adding the value of the sunken rig
(now zero, as it sits at the ocean bottom) to the value of its “pending freight,” which is the
money owed to Transocean by BP for the lease of the rig. Transocean’s action with
respect to the cap has raised ire amongst commentators in part because the company
received $267 million in insurance compensation after the rig sank, potentially making
this disaster highly profitable for the company.51
E.
Exxon Shipping Co. v. Baker, 128 S. Ct. 2605 (2008)
Under the Supreme Court’s recent decision in Exxon Shipping Co. v. Baker, 128
S. Ct. 2605 (2008), if punitive damages are awarded against BP or any of the other
potentially liable parties, the punitive damages will not be allowed to exceed the
compensatory damage award. Following a 19-year legal battle, during which one in five
of the plaintiffs died, a divided Supreme Court dealt a blow to the victims of the Exxon
Valdez oil spill by creating a new rule restricting the liability of a wrongdoer like Exxon
or BP.
In Exxon, the jury awarded a group of 32,000 plaintiffs just over $500 million in
compensatory damages and $5 billion in punitive damages. The high punitive damage
award was based Exxon’s alleged reckless behavior of leaving a recovering alcoholic
known to have relapsed in charge of the tanker on the day of the accident. The Ninth
Circuit Court of Appeals cut the punitive damages award in half, but that vast reduction
did not satisfy the Supreme Court. In a 5-3 decision, the Court held that punitive
damages cannot exceed compensatory damages in maritime cases, creating a new “1:1
ratio” rule52—and leaving tens of thousands of people affected by the oil spill with only a
tenth of what the jury had awarded them. The reduced punitive damages award
amounted to approximately $16,000 per plaintiff.
Dissenting in part, Justice Stevens criticized the majority’s ruling and argued that
“Congress, rather than this Court, should make the empirical judgments” expressed in the
majority’s “rigid formula,”53 rather than “embarking on a new lawmaking venture.”54
48
46 U.S.C. § 30502.
46 U.S.C. § 30506(b).
50
46 U.S.C. § 30511.
51
Roger Parloff, “BP’s Gulf Coast oil spill – a legal primer,” CNN MONEY (June 6, 2010).
52
554 U.S. 471, 128 S. Ct. 2605 (2008). Justice Alito did not participate in this case.
53
128 S. Ct. at 2638 (Stevens, J., dissenting).
54
Id. at 2635.
49
Justice Stevens maintained that evidence that Congress had affirmatively chosen not to
restrict the punitive damages in this kind of case “favors adherence to a policy of judicial
restraint.”55 Notably, the majority acknowledged that the new 1:1 rule amounted to
judge-made law, “subject to the authority of Congress to legislate otherwise if it disagrees
with the judicial result.”56 And in fact, there are multiple bills pending in Congress that
would eliminate the limitation set by the Exxon decision. Senate Bill 3345, the Big Oil
Polluter Pays Act, would remove the 1:1 cap on punitive damages established by the
Exxon decision. Senate Bill 375, the Fairness in Admiralty and Maritime Law Act would
eliminate the ratio and would also amend the Death on the High Seas Act, the Limitations
on Liability Act, and the Jones Act to allow victims to recover more damages.
The Exxon decision left open the possibility that the 1:1 ratio may not apply in
cases in which the tortfeasor was motivated by financial gain. The majority noted that
Exxon’s behavior was “worse than negligent but less than malicious,” and that a different
rule may apply in cases involving the “most egregious conduct” like maliciousness or
reckless profiteering.57 In such cases, the Court suggested that it would apply a 3:1 ratio.
Current litigation over the Gulf oil spill will test this theory. A lawsuit brought by
Corliss Gallo, a Louisiana landowner whose property was degraded by the Gulf oil spill,
is suing BP, Transocean, Cameron, and Halliburton, alleging that the 3:1 ratio should
apply because the companies knowingly took risks for the purpose of increasing profit.
55
Id.
128 S. Ct. at 2619.
57
Id. at 2631.
56