Exxon: Pouring Oil on Trouble Waters -- Part 7

December 25, 2008
[Update February 15, 2009]

Exxon: Pouring Oil on Troubled Waters - Part 7
-AKA-
The After Math

There is much much more to the "aftermath" than just the financial aspects. It affects the entire state in so many ways. Even in just the financial realm, the economic "ripple" effect multiplies the damage done to us by the Supreme Court manyfold. We won't even be able to guess at some of the effects; indeed, some probably won't show themselves for years. But we'll cover the primary damages and take a shot at showing some of the ripples.

Doing the (after)math isn't very difficult. The jury awarded the 32,000 Exxon plaintiffs $5 billion in punitive damages to be divided amongst them (the 32,000 plaintiffs) by arcane formulas, but which averaged out to just a little over $150,000 each.

$5 billion / 32,000 = $156,250.

That sounds like a great deal of money, but commercial fishing is a serious, expensive, business. A fully equipped salmon fishing boat can easily cost more than that amount. Gillnets, crab and shrimp pots, long-line gear ... whatever the fishery there is specialized and expensive equipment that must be purchased. So must an ever-increasing amount of electronics (for example, the Fish and Game may open a specific area for fishing ... in order to know for sure that you are in the legal area you used to need a radar and a loran. Those are still used, but now GPS systems are virtual requirements. Then one must have a plethora of communications gear ... often radio systems have special channel crystals so only people within that fishing group can hear the conversation (fishermen often form small groups that work together to find the fish), plus one must have a CB radio since many still talk on those and you need to hear if there is a fish call somewhere, and now, of course, satellite phones are becoming "de rigor" (since much fishing occurs outside the range of cell phones).

Then, in addition to all the "stuff" it takes to actually fish ... one must have a permit to be allowed to do so. The permits in different fisheries vary in price ... and within a fishery vary from year to year as fishing income ebbs and flows. But I have seen fishing permits sell for substantially over 1/2 million dollars. As in $500,000+. Then a captain has to hire a crew ... and buy fuel and ... well, the point is, one must catch a lot of fish just to "break even" and that in the context of the size of the businesses that we are dealing with, $150,000 isn't really much money. I've seen a single herring seine "set" catch well over $150,000 of fish in one "seine-full".

But, on appeal, the 9th Circuit said that was too much and sent it back to Judge Holland who reduced it by a billion and sent it back.

$5 billion - $1 billion = $4 billion.

As someone famously said, "A billion here, a billion there ... pretty soon you're talking real money!" The plaintiff had just had "a billion" taken from them. It was theirs. It wasn't a future possibility of a billion. The jury had awarded it and the Judge had signed the Judgment. That Judgment is a piece of commercial paper much like a promissory note and can be bought and sold. I know of over a dozen sales that plaintiffs made of part of their Judgment (at a discount since the "promissory note" wasn't technically due until the appeals were denied or the 30 day appeal period ran out, and they were desperate for the money that was being withheld from them).

Even that isn't precisely correct; which is always a problem with analogies. The Judgment was due. Generally, to mount an appeal a losing defendant must post a bond or put up cash in the amount of the Judgment which is held in trust for the plaintiffs while the defendant's case is appealed. So the Judgment was due and the money to pay it literally "sitting there". It is just that there was a "hold" placed on the actual payment during the appeal process.

Then after it had been batted about a bit (back to Judge Holland who refused to be part of the scullduggery; back to the appellate court) the 9th Circuit reduced it another $1.5 billion.

$4 billion - $1.5 billion = $2.5 billion.

The incredible shrinking judgment was the wool sweater that was too tight before someone washed it in hot water! And the washing continued.

The U.S. Supreme Court, packed full of Justices who likely make up the lowest total I.Q. of any Supreme Court since we went to nine Justices, blithely ignored the Constitution and common sense (as well as common law), in order to keep the rabble (that's us) from dipping their hands in the king's (that is the giant corporations and insurance companies) treasure chest (a few days worth of Exxon's net income). In a Decision which will eventually be one that is taught heavily in law schools everywhere, they gutted the jury and it's award and knocked the award down nearly another $2 billion!

$2.5 billion -$2 billion = $500 million dollars.

Although it hardly matters, the actual exact number that the Court pulled out of its ... thin air ... was $507.5 million.

Even before the courts slashed the claim like a backstreet hoodlum slicing a throat ... it was too low. What we didn't know in 1989 at the time of the spill ... nor even in 1994 at the time of the trial ... is that 20 years after the spill there are still fisheries in PWS that have not reopened because they haven't recovered from Exxon's destruction of them. As a result, there are fishermen who have not been able to pursue their livelihood for 20 years and, by now, probably never will.

So not only did they lose 20+ years of their livelihood and the culture and lifestyle that went with it (acquired by some just by growing up there; but by others at tremendous personal cost and trauma ... there were midwest farmboys and New York city slickers who had given their all to chase a dream. And that particular dream is a rough one to chase! A dream that turned into a nightmare for all (Exxcept ... the misspelling is intentional ... for Exxon who is loudly gloating at the Christmas present the Supreme's gave them!)

Other aftermaths. Let's see. What did the government do? Alaska has a lot of leverage with Exxon and the oil companies. So, did they lend some muscle to convince Exxon to pay the money the jury told it to pay and not wait until all the claimants were dead? Of course not. They got involved all right. Governments are good at getting involved when they should probably just go away. But they had less ideas on how to clean up an oil spill than New Orleans did about how to deal with a flood! And the feds were totally useless. The State got some cleanup money from Exxon (of course the courts did not take away ... it was only the little guy that the courts decided to kick while they were already down!) Wait! I was talking about the United States of America Federal Court system ... and I used the definition of a bully. Hmm.

Naturally, the cleanup money was largely wasted and, in fact, the entire cleanup was a fiasco (see earlier articles in the series) that almost assuredly did more harm than good (except for P.R. -- both the State and Exxon needed the big cleanup project for P.R. purposes.) But let's be honest. The only thing they were really trying to clean up were their reputations. It was critical to seem to be doing something about it; even if they had no idea what to do. So they washed oiled rocks with scalding hot water, killing off all the microorganisms that had managed to survive the oil itself and which, if they'd been left alone, would have formed the foundation for new growth and recovery. Nature has been at this game a lot longer than man. It has been cleaning up natural oil "spills" and other environmental disasters for a very long time.

But anyway, we got some shiny new taxes (whee) and a whole bunch of "the horse is gone so lets get that barn door closed really good" regulations.

We should finish the math. As mentioned, each fishery and other affected groups of plaintiffs are allocated different percentages of the total recovery and within each group each individual's "claim percentage" differs based on arcane formulas (one of the primary criteria being a person's fishing history compared with others in his or her fishery ... the "highliners" get the biggest percentages. So the "average" that we calculate may well not match anyone's actual check, but we had approximately 32,000 plaintiffs and the Supreme Court determined that the maximum amount of total punitive damages that could be awarded was $507.5 million. (There is a possibility that the plaintiffs will get interest on that ... but Exxon has filed a motion with the 9th Circuit to bar any liability for interest ... despite the fact that it has been ~20 years since the spill and ~15 years since the judgment. And despite the fact that it was Exxon that was the primary cause of the delays. Given, however, that the appelate courts seem willing to do Exxon's bidding no matter how absurd, no one is counting on receiving interest.)

But we're doing math here. The way the Supreme court worded the opinion such that it was arguable that the 9th Circuit had the authority to reduce the award even further. Given that, even if they tried and failed, it would presumably add many more months (at least) to the point where any money actually got distributed. So ... the plaintiff attorneys, already ruined financially and emotionally, settled for 75% of the Supreme Court's imaginary number.

$507.5 million x .75 = $380.625 million

Whee. The 32,000 of us will get over $380 million. But my math is off for some reason. I'm not sure why, but it appears that the settlement number was closer to $383 million. And they now count the plaintiff group at approximately 33,000 people. Given the numbers we're working with, that change is de minimus and not worth tracking down (this from a man who was, briefly, an accountant in an "earlier life" - actually the first year or two after undergraduate school). But see:

$380 million / 32,000 = $11,875.00

$383 million / 33,000 = $11,606.06

For simplicity sake, let's roughly split the difference and figure the average "take" for a plaintiff is $11,740.

"Well," you might think, "it is better than a poke in the eye with a sharp stick and at least it averaged over $10,000 per person!"

Virtually none of the plaintiffs would agree. After spending 20 years anticipating that the average would be about a decimal point farther to the right (somewhat oddly, the interest the judgment was accruing kept the total award fairly close to the original $5 billion even as it kept getting reduced ... until the Supremes got their hands on it), $10,000 is ... pathetic. Even if the courts decide to award interest (don't hold your breath) it won't be significant given the 20 years of waiting and clinging to the ledge by fingernails.

Our lawyers did a superb job, it wasn't they that ... oh. Right. Can't forget that part.

Although they may well have been legally entitled to more given the original contingency contracts that were signed with the fishermen a couple decades ago, the lawyers settled for 20% of the award for attorney fees.

Which means that the average plaintiff received (or will receive) ~80% of the $11,740.

$11,740 x .8 = $9,392. By the rules of grammar and sentence construction it is discretionary whether one uses a comma when between $1000 and $9999. If you had suggested to anyone fifteen years ago that the checks to the individual fishermen would not require a comma, it would have been believed to be extremely ignorant and pessimistic.

But we're not done. We have to go back and fix a "mistake" I made.

The $380 / $383 [hereinafter averaged to $381.5] million dollar number is wrong.

Several years ago a secret deal came to light; one that Exxon had cut with the only substantive sized companies in the plaintiff class (it appears that it was only the individuals and very small businesses that Exxon wasn't willing to settle with and vowed to "whup"). They didn't have any problem cutting what was characterized as an "under the table" deal with the fish processors.

There were seven of them and they were based in Seattle so ended up being known as the Seattle Seven. The deal was cut in 1991, long before verdict in the 1994 trial and in such a manner that the processors agreed not to say anything and to remain as nominal plaintiffs in the legal action but to pay Exxon their share of the judgment (or at least the punitive damages part) if any were forthcoming. When this deal was discovered, the plaintiff attorneys screamed loudly and Judge Holland was not happy. Essentially no lawyer or judge had ever run into a situation such as that. A plaintiff who had already settled with the defendant ... with an agreement to pay the defendant whatever the plaintiff was awarded! It was a real head-scratcher. But the courts eventually ruled that it was lawful (essentially they couldn't find anything that said it wasn't because it was so unusual and strange!)

As a result we have the bizarre situation that of the $383 million, Exxon will, in effect, pay itself $54 million of that ... which for our purposes is the same as not paying it.

$381.5 million - $54 million = $327.5 million.

So, we must do our math again. We'll use an average of 32,500 plaintiffs.

$327.5 million /32,500 = $10,077.

Then we still must take care of the attorneys, so

$10,077 x .80 = $8,062.

That's the thing with whittling. It really doesn't matter how big a stick you start with .... what matters is how much of it you whittle off.

And when you stop whittling. "No!" you say. "They couldn't have reduced any farther." Well, they didn't ... exactly. Not in that case.

In an earlier bout of shafting of the populace in Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955) [believe it or not there are many Supreme Court decisions with which I agree :-)], the Supreme Court reviewed two cases in the process of determining that punitive damages were indeed taxable.

So ... even though they closed up their special "Exxon claim offices" in Anchorage, the I.R.S. is still going to get every drop of blood it can.

Really rough numbers ... I would take a wild guess (certainly not as wild a guess as the Supreme Court did regarding punitive damages percentages but ... :-) that a "reasonable estimate" is that most fisherfolk probably fall somewhere near the 25% marginal tax bracket [ie: from whatever their income would have been in 2008 absent Exxon payments, the "next dollar" would be taxed at the rate of 25%]. That is where a single person earning between $32,551 and $78,850 would fall.

[Note: Lisa Murkowski, Alaska's "appointed by Dad" U.S. Senator did manage to (barely) wrangle some minor tax relief for us. Essentially, we get to income average the money from Exxon ... no, not over 20 years which might make sense, but over 3 years. The way it is paying out in dribbles it may well end up spread over three years anyway. The bill also contains a provision that allows recipients to put up to $100,000 of it into an IRA. The bill was drafted back when people expected there was going to be real money involved (and was only passed because it was piggy backed onto the emergency financing bailout package at the last minute). The thought that most claims are going to be small enough that they could be put entirely into an IRA was not contemplated at the time the bill was drafted!

However. The three year income averaging won't change my rough cut 25% estimate anyway ... and if any of the claimants are in an economic position where they can just set the funds away for retirement ... aren't the claimants I'm concerned about anyway (and there aren't many of them). It is almost funny if one is truly into gallows humor, that the Congress decided to allow people to put the money into an investment account ... at precisely the time when no one in their right mind would! With the stock market ... and everything else(!) in free fall, it is doubtful that provision will be of substantive value to anyone. Actually, I would guess that the vast majority of recipients will be able to "make" between 12% and 20% on their entire claim almost instantly ... by paying down the credit card balances they've had to let rise while waiting for their money from Exxon!

But thanks anyway Lisa.]

So, our hypothethical average fisherperson with a check from Exxon (as distributed by Keller Rohrback, the appointed Claims Administrators) in 2008 of $8,062 would still, in real life, most likely owe a fourth or so of that to Uncle Sam; meaning that they retain 3/4 of it. More math:

$8,062 x .75 = $6,046.

The small claims court limit in Alaska is $10,000. Anything below that is so little money in a court context that the PTB (powers that be) don't figure it is even worth hiring a lawyer for.

While we are having fun with math, let's take one last gander at something.

$6,046 / 20 = $302.

I know that we aren't quite at 20 years (the spill was in March), but we already have that much "range" into the numbers by now ... they are only rough averages at best. But ... if you take the average net award as we calculated it and spread it out over 20 years ... the big famous "terribly destructive of Big Business and Insurance Companies" punitive damage judgment works out to $302 per year for each plaintiff.

For probably the substantial majority of these folks, they've vastly more than $302 of value (fish not caught, interest payments on the replacement gear they had to buy, whatever) each and every year since the spill that was never recompensed in any way.

20 x 365 = 7,300, so

$6,046 /7300 = $.83.

Using rough numbers again, but just assuming 20 years at 365 days a year ... the net amount pocketed by the average claimant works out to less than .83 per day each day since the spill.

And they have the nerve to call that Justice???

It was headline news everywhere when the 1994 verdict came in and Exxon was docked $5 billion in punitive damages. Very few newspapers outside of Alaska paid it any further attention. And now, 20 years later ... the media has a "who cares/old news" attitude. The spill and the trial and verdict were sexy news stories. They got lots of attention.

Now, an entire generation has been born and graduated from high school since the spill. Many people don't know much about it, if anything. Most people were left with the impression that Exxon got spanked big time and huge amounts of $$ flowed into the desolate little "used to be" fishing villages.

If a newspaper mentioned the decision by the Supremes at all it was usually just a squib along with a bunch of other squibs about decisions handed down by the Supremes this year.

There should be public outrage. There should be marching in the streets. There should be protest signs. There should be long emailed-around-the-country petitions. There should be front page stories in the news magazines of the oiled beaches and birds and animals and fiery editorials calling on the country to be very scared at what precious rights were just flushed.

But none of that happened. It all ended with a whimper, not a bang.

Alaskans, particularly the hardiest of them: the trappers, small operation loggers, miners, and fishermen, are not the kind of people to need or want sympathy. Nor do they seek it out. So they aren't making a lot of noise. They mostly grumble into their beer and carry on. Rudyard Kipling in "If For Boys" described their stoicism well:

"If you can make one heap of all your winnings,
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings,
And never breathe a word about your loss;"

Of course I always thought it was a terrible thing to teach kids that it was a good thing to gamble all they own on a roll of the dice ... :-)

There are some people making comments, but not very loudly and they aren't getting much press.

Frank Mullen is both a fisherman and an investment advisor. He hoped to make big bucks both from his claim and from helping other fisherment invest wisely. His reaction:

"Frank Mullen ... said he and other plaintiffs will certainly take the checks. But they won't be happy.

"It's a damn small bone for an old, angry dog is what it is," he said.

While $383 million is a lot of money and will be "a nice infusion for fishermen and communities," it's not much when divided among the 33,000 plaintiffs, he said.

And it won't inflict much pain on one of the world's richest corporations, Mullen said.

"It's a mere aggravation for a corporation as wealthy as they are," he said. "It's not at all likely to deter them from future environmental degradation."

Other Alaskans who care about the environment are in shock also. Interestingly, there are a surprising number of people (including myself) who have specifically noted that they were "ashamed" of the Court; which I take to be a powerfully good thing about our country and its system and its people. But it is stunts like this one that will make people no longer ashamed ... just disgusted with "business as usual". We're getting very close to that point and, once there, our entire system is in serious jeopardy. And when the house of cards that is our remarkable system of governance falls, it will be because of bought and paid for decisions like this one from a Court of which we all should be deeply ashamed.

Cindy Shogan of the Alaska Wilderness League said, "I'm ashamed at the Supreme Court, ashamed at this decision, and I'm just shocked that, once again, the oil industry wins."

Besides the actual earnings that never happened and the occupation itself and the (fascinating and unique) culture, perhaps the most important thing that I've seen people lose is ... their identity.

Folks who used to stride into fishermen meetings and state their opinions in the booming voices of confidence ... don't show up at the meetings any longer. Many are no longer Prince William Sound [PWS] fishermen. Few have starved. Some have gone to work for the oil companies or government. But there aren't many jobs in PWS outside the fishing industry and those who cater to it. Commuting to Anchorage is a pain. It is expensive. But worst is the loss of self-image.

Big, powerful, commercial fishermen who owned their own boats and gear and were their own bosses, lived in the wilds of Alaska and answered to no man ... became broken bitter shells commuting to 9 to 5 jobs to try to keep bread on the table. The bitterness was largely directed (appropriately) at Exxon (who proved exceedingly adept at rubbing salt in the wounds they created), but over time the bitterness spread until they became bitter at the whole world and ... most inappropriately ... at themselves.

"We Swore We'd Win and We Did - Even Better: You Lost".

Exxon has an attitude problem. Or, perhaps more accurately, much of the world has a problem with Exxon's attitude. It is not one of the Big Three ... no, not that Big Three ... the column on that issue will be coming along shortly. The Big Three oil companies doing business with Alaska: Connoco, Phillips and Tesoro ---

If the world hates a poor loser, it hates a bad winner even more. Though I've lost my share of battles in life without descent into the depths of opprobrium, I'm coming close to being a bad loser on this one. That said ... Exxon is such a bad winner that I won't even seem petty by comparison.

Of course when people lose a million dollars or more it generally isn't considered petty anyway. I don't know that my claim was ever worth anywhere close to that much. I did not have the damages that many others did. I do know that some claims were worth more than that however.

This was not a "judicial decision". Sad as it is to say this about our Supreme Court, this huge win by the anti-punitive damage crowd was a totally political ruling. I am not accusing the Justices of unethical behavior. I believe it is probable that they actually believe that punitive damages should be severely limited or abolished. But the Opinion issued by the Court was political in that Justices who believed in tort reform (curbing punitive damages) have been appointed to the courts largely on purely political considerations and the punitive damages issue was a major litmus test that has been employed by the Presidents who do the appointing.

By now, after many years of Republican Presidents appointing federal judges, the Federal Bench is filled with those appointees who no longer followed the law or the Constitution (even though they may believe that they do); and to a very large extent, promotion to higher courts is from within the system. You are much more likely to be appointed to a federal appellate court if you were a federal court trial judge ... and the same pattern generally holds with the Supreme Court.

~~~~~~~~~~~~~
February 15, 2009
Update

So much comes under the heading of "aftermath"! The spill had a greater effect on the State than most people have any conception.

I left this post unfinished as I had to move on to other things. But I promised to come back and "wrap up the aftermath"!

The court appointed administrators continue to dribble out pieces of payments. Why not do it all at once? It seems like it would make sense to just get it over with (!) especially since it is so much less money than they were set to disburse. But I suppose it is just as much hassle to write a check for $5 as it is for $500 and the claims are complex and convoluted. They started out that way ... ~33,000 plaintiffs of several different categories all with varying damages and individual situations that had to be accounted for in the distribution formulas.

But then wait 20 years. When Rip Van Exxon awoke he found that he was an old man and that many of his friends were dead and others had simply disappeared. Alaska is a transcient state. Lots of folks sort of float through here. Maybe stay a few years; have a grand adventure by working as a commercial fisherman in the cold and unforgiving waters of Alaska ... then wander on, or, as the responsibilities of real life beckon they pack up the pictures and diaries of their Alaskan adventure and go home to run the family store.

The "right kind" stay though. Alaskans self-select probably more than in any other state. Firstly because so much of its population is comprised of 1st generation immigrants but primarily because Alaska is so different from any other state. I think the only place I've heard the story more often about than Alaska is Hawaii, and at that it is probably about a toss-up ... but so many people come up for a vacation ... and then simply can't bring themselves to leave.

Others have had to sell parts of their claim at a dramatic discount just to survive. The buyers generally only bought the cream as they attempted to minimize risk. I've seen a bunch of such deals. Typically, the buyer only bought a small portion of the anticipated claim amount. If by rough numbers the claimant would have a $300,000 claim, the buyer would, for example, buy the "first $50,000" of it. That way, even if it was gutted far worse than anyone could reasonably believe ... the buyer would still be fine. Interestingly since the final result is so far from anything "reasonable", many claimants will end up with nothing and it will be nip and tuck as to whether the buyers even get their investments back!

Then of course there is the "unintentional" parting of the claims as child support enforcement, student loan programs, the I.R.S. and any other government department that believed the claimant owed money slapped liens on the payout. It is another interesting twist that some of these folks won't be getting paid off either. I don't know the mechanism, but I understand that a bunch of I.R.S. workouts, for example, were premised on the filing of liens on the Exxon payments. Now the I.R.S. is going to have to dig a lot harder to get their money out of people who owe it.

Others have judgments against them for bills they couldn't pay which will be offset against their payments. A lot of people won't get a dime ... people that lost their livelihoods ... and a 20 year fight for justice. And with a final spit in the eye they will actually receive a check made out in their names showing that it is the final Exxon payment ... for $0.00. They actually make the checks out that way. I'm sure there is a reason for it and I presume it is the Administrator's decision not Exxon's. But to me it just looks like an insult: adding insult to injury.

Many, many of the claimants have died. So their Estates must be reopened; which is beyond stupid, but par for this course. This is by far the biggest screwed up boondoggle that most of us will ever run into in our personal lives; even those of us whose lives are long since over. But, naturally, if there is an easy way or a messy blundering way ... we are going to find the most awkward possible way to proceed! Even those folks who were "with it" enough to have the probate assign the rights to the Exxon judgment ... which is a perfectly valid thing to do legally and works with any other sort of judgement, are being forced to reopen the probates. Some of those probates are 20 years old! Even the heirs are dead by now. This is one of those ripple effects. Now, whatever heirs of heirs are remaning alive must hire a lawyer and have the court system dig out 15 year old microfiche if they can find it, to reopen the propate, in order to get Grandpa's $3820.00 net claim amount (which was ~$169,000.00 when he died; happily thinking that he had at least left his wife and family in good shape because of the money that they would soon receive). In many cases it simply won't be worth it and others just won't get around to it or bother to do it. Many people don't even know who should do what if the primary heirs are also deceased. And many fishermen types are not very comfortable walking into a lawyer's office to deal with these sorts of matters.

I was contemplating and this interesting piece of trivia occurred to me: This year is the 20th anniversary of the Exxon spill ... and the 50th anniversary of statehood! It is beyond mind-boggling to me that such a huge portion of our "State's" history has occurred post Exxon spill.

But it emphasizes the point that we have been dealing with the "aftermath" for a very long time. We have talked in detail about what the spill and Exxon's reaction as it vies for the title of "Most Socially Irresponsible Corporation" ["MSIC]. Actually it is leading in several categories. They have been suffiently publicly exhuberant about the win they probably will take the "Rubbing Face In It" and have a real shot at the coveted "I Told You So" plaque. Frankly the adding insult to injury bit should make them a lock for the top 2008/2009 corpocracy awards. Not enough information has come to light yet. It is possible that the Halliburtan Iraq Contract will be in the running. Should be an interesting Awards Banquet in any event.

Insult to injury. That was ... after convincing the majority of the members of the Supreme Court that it should take the food away from the mouths of babies so that a corporate giant doesn't lose 6 days worth of profits ... and having the nerve to still call the remaining crumbs "punitive" damages. I'm sure Exxon really feels punished (which is ths purpose of punitive damage awards). If anyone has read this far without realizing that the previous sentence, before the parenthetical aside is pure unadulterated sarcasm, then I think you're on the wrong blog. Where were we? Oh yes, rubbing salt in the wound because they can ... after one of the greatest "wins" in Supreme Court history such that they got the punitive award knocked down to where they really can pay it out of the petty cash/annual party fund account ... they run back to court to try to convince them that there should be no interest on the award. Now that takes chutzpah! But what they have done to people and how they have used their incredible power and infinite patience to tell a jury to stuff it ... has been pretty well covered.

Aftermath. Yeah. The aftermath. Besides the destruction of the exemplary damages lawsuit ... which destroyed much, there is the "other" critical question. Indeed, if it weren't for our empathy towards fellow humans (and our culturally and personally entangled issues regarding money!) ... the damages done to the Sound are perhaps ultimately more important. What's left regarding the aftermath is perhaps the primary and most important ramification. How sound is the Sound? We've had 20 years. It must be pretty much back to pristine, huh? Not.

While it is true that most of the oil is ... gone (evaporated, sank, dissipated, soaked deeply into the sand and China is busy drilling it now, or other) ... that is far from unversal. One thing most people don't realize is how slowly natural "events occur up here in this land of nine months of ice and snow. A twenty year old spruce tree may look like something impressive in California (if well-watered!) Here it is a scrawny sapling barely large enough to use for a Christmas tree. If a tree falls in the forest does anyone hear it? Maybe. But it will still be lying there in 20 years where in Iowa it would have rotted back to humis/soil long ago. Environmental scars heal slower up here. Primarily that is because virtually no progress is made during the winter months. It is like in your own kitchen. You set the cream on the table. It is warm and comfy ... and curdles in about two days; stinks up the entire house by day 4 ... and is a semi-solid mass of spoiled "cheeze" in a week. Yet if you put the same cream in the refrigerator ... it's probably still "good" after that week. Alaska is the refrigerator. Processes that might have deteriorated and broken down the oil in California either don't work up here, or the work for so short a season each year that it takes an enormous amount of time for the land to recover from harms.

First, realize how large an area we are talking about. There are various estimates, but that is the Kenai Peninsula shown in the map and that's a large peninsula. It is difficult to put things into perspective with just a map, so look at it this way. The Kenai Peninsula is larger that ten (10!) It is larger than West Virginia! It is more than double the size of Maryland! And you could put Rhode Island and Delaware in one of the smaller bays and never notice it.

That, my friends, is the size of this oil spill, which, as you can see, due to uncooperative winds, tides and currents, mostly headed for the beaches rather than wander out to sea. There are various extimates for how much shoreline was oiled. But this is a good "middle of the road" estimate: "The great oil slick eventually drifted 500 miles, contaminating 1500 miles of shoreline covering an area 10,000 square miles. If you were to superimpose the length of the area covered by the spill onto the east coast of the U.S. it would stretch from Massachusetts to North Carolina."

Some of us aren't all that conversant in the areas of Massachusetts and North Carolina :-) So let's take the nation's third largest state (behind Alaska and Texas). It runs approximately 800 miles north to south and, I suppose by following the uneven shores, it has a coastline of approximately 840 miles. Again note the above section where is says that 1500 miles of Alaska's shoreline were contaminated by the spill covering an area of 10,000 miles.

Please pay attention here! :-) This is critical to understanding the magnitude of what we were dealing with. The Exxon-Valdez oil spill contaminated 1500 miles of Alaska's shoreline ... and California has a total shoreline of 840 miles. Look again at the map. That's not quite double the amount of shore that California even has! A bit more perspective ... the spill covered an area of 10,000 miles ... an area larger than six (6!) states! The entire state of Vermont is 9,615 square miles!

It is only because Alaska is so large that Exxon has been able to get away with a wave of the hand and talk of a "small percentage" of Alaska's coastline. Compared to anything except Alaska ... the spill was enormous!

And it was a critical 1500 miles of shoreline. That is a huge part of Alaska's ... uh ... fish basket! :-) Tremendous numbers of salmon, crab, shrimp, halibut and many other species were fished heavily, but sustainably. Now, there are some major eco-systems that may never recover and some fish and other marine life [eg: the sub-species of Killer Whale that roamed Prince William Sound] that will become extinct as a result of the spill. We not only can't fish the "at risk" sea creatures sustainably ... it is all we can do to try to keep them sustained without fishing them!

Nor did the oil go away.

Debate re: long term affects

Wildlife decimation

Cleanup etc.

Exxon: Pouring Oil on Trouble Waters -- Part 4

December 17, 2008
Exxon: Pouring Oil on Troubled Waters -- Part 4
-AKA-
"We Don't Care. We Don't Have To Care. We're Exxon!"

During nearly 20 years of waiting (sometimes somewhat desperately) with several "we're going to be cutting checks in the next few weeks" over-optimisms along the way, the fishermen and other plaintiffs in the oil spill litigation never lost hope. I spoke to a great number of them during this time. Many "refused to think about it" because they didn't want to get their hopes up that they would soon be seeing money. Many thought the appeals process would result in a somewhat smaller award. But even the most hard-bitten and cynical of these independent, largely "have no use for government" weather-worn men and women of the world's most dangerous profession [commercial fishing in Alaska held that distinction for many years although modern safety mandates may now have dropped us below logging] still believed. We all believed that, although the wheels may grind slowly they would grind fairly and we would receive the bulk of our money. Particularly for those who died, and even those who went broke and bankrupt or faced other horrendous problems because of the delay in the interim, the phrase "justice delayed is justice denied" was often used.

But I don't believe in the entire 20 years speaking with hundreds of fishermen, claimants and lawyers, did I ever hear anyone suggest that they thought the jury award would ultimately be thrown out. Battered, bruised, a bit leaner ... yeah, we knew the jury verdict/award was in for a rough trip through the appellate process just from Exxon's arrogant pronouncements after the trial when the essentially flatly announced that it simply wasn't going to happen and they'd do whatever it takes to make sure of that. But for a group of people who you would think would be natural cynics and who would have the least faith in "the system" of any group outside of armed fortresses in Montana, the fishermen were remarkably confident that the system would, eventually, bring them justice (in the form of a substantial check!)

In June of 2008, in the case captioned Exxon Shipping Co. v. Baker, Supreme Court Case Number 07-219, the United States Supreme Court utterly destroyed that faith. They also utterly destroyed the entire concept of punitive damages as they had been understood for hundreds of years; and which were thus protections granted to the citizenry by the common law which protections were specifically enshrined in the U. S. Constitution. Although the award was only a pittance to Exxon [equal to ~three weeks of profit in 2006], it was a fortune to the largely ... "economically challenged" ... plaintiff class. The Court destroyed the fortunes of many in order to hand a pittance to a giant corporation. To do so they had to ignore the Constitution, the concepts of common law and the entire concept of punitive damages as it had always been known.

The money meant nothing in itself to a behemoth the size of Exxon, but the law that the case created succeeded beyond the wildest hopes of corporate boardrooms and insurance companies to behead the "punitive damage monster" which was one of the last protections against the malevolent acts of the corpocracy left to the people.

It is conservative chic now to be against punitive damages awards because the insurance companies have spend untold amounts of money to convince people (especially people in legislatures, government executive branches and those who sit on court benches, but the citizenry as well) that punitive damages caused the horrendous increases in insurance premiums. There is not a scintilla of truth to that and many studies have proven that there is no causal connection (other than by convincing people of it, the companies can get away with raising rates and have something to blame it on), or that punitive damage awards had (or have) any statistically substantive effect on either the percentage or actual amounts of money paid as damages. Even insurance companies don't really care about punitive damages. In fact, I would bet a bundle that they like having them in the states where they remain. Because the most profound connection between insurance companies and punitive damages is not in relation to how much insurance companies pay out in jury awards ... but rather as the "fall guy" for how large a premium they can get away with charging for their policies.

Yes ... I believe in the market. But insurance companies are so big and so collusive, and so tied into government, that they have, to a large extent, removed themselves from the actions of the market. That, again, is such a large topic there isn't room to deal with it adequately here. But conservatives ... Constitutional "strict constructionists" ... should be the last people in the world to want the government to intervene and yank yet one more set of protections that "the people" have and that were guaranteed by the Constitution. Those insurance company patsies are simply being used ... and unwittingly, used against their own core philosophies without being aware of it.

As noted earlier in this series, the jury awarded $5 billion dollars in punitive damages against Exxon to be paid [by mind-numbingly complex formulations] to the members of the plaintiff class ... in 1994. Exxon, true to its promise (hmm ... that is almost an oxy-moronic sentence, but it is accurate), appealed the case to the 9th Circuit Court of Appeals.

The trial court had ordered interest on the award at 6.9% until it was paid, so the fishermen and their lawyers weren't too bothered by Exxon's appeal to the 9th Circuit. Of course, that was because they expected to win it.

But that was just the beginning of the whittling and the incredible delays. Well, the delays didn't begin, they "continued". It had already taken five years after the spill to get a verdict in 1994. It took another seven (!) years (although no one seems to understand why) for the 9th Circuit to rule on it; throwing the verdict out as "excessive" in 2001 in the 9th Circuit Appellate decision 490 F.3d 1066.

The 9th Circuit sent it back ("remanded it") to trial court judge Holland for "reevaluation". Holland did a masterful job defending the initial verdict, but presumably to avoid directly contradicting the higher court and hoping that he would be able to end it once and for all, in December of 2002 he reinstated the punitives at four billion. Again ... we were expecting that it would get whittled at a bit. No one was greatly surprise nor greatly distressed. Indeed, we were proud of Judge Holland for sticking to his guns and not knocking it down much more substantially. The checks would soon be in the mail ... not.

Exxon marched it back to the 9th Circuit. The 9th Circuit sent it back to Holland saying, in effect "try again". Holland, to whom the fishermen should build a monument (if they had any money to build with which they don't), was close enough to retirement that he simply refused to be bullied. He knew that it was a fair verdict and that $4 billion was, if anything given Exxon's size, too small of an award! Thus he flatly refused to kow-tow to the judicial overlords and after drafting another masterful decision demonstrating the appropriateness of the existing award, in January of 2004 he reinstated it at $4 billion (plus the $2.25 billion in compensatories plus interest). When it comes time to build statues in Alaska he deserves one. Unfortunately, because his magnificent work was trashed by the appellate courts he won't get one. But he did exactly what the law and judges are supposed to do and he had the nerve to not back down to the power of the Appellate Justices when they "strongly suggested" that he change his mind (so that he would take much of the heat for a judgment that the Justices will, hopefully, be ashamed of for the rest of their lives). He refused to compromise his principles, beliefs or The Law, which the good judges of his generation truly believed to be an honorable thing. He believed in the concept of stare decisis upon which our entire legal foundation rests. He is the sort of judge that should have been promoted to the appellate courts.

He wasn't.

Why it took so long it seems impossible, in retrospect, to understand. But Exxon marched it back to the 9th Circuit and in January of 2006 claimed to the court that the award should be cut to $25 million! The plaintiff counsel and legal experts across the country were aghast, but reassuring. Virtually no one believed that it would get hammered further.

By this point, the IRS had special offices set up in Anchorage to make sure they got their cut of the substantial payments that even the IRS and other branches of the federal government believed would soon be forthcoming. In fact ... those special IRS offices had been set up for years. I don't know when they finally disbanded them. The law firm of Keller-Rohrback that had been appointed to handle the disbursing of the funds had their humongous data base system set up. Percentages for individual claimants had been argued about, fought about, hammered out and finally finalized. The arguments now were that Exxon should not be allowed to continually pointlessly delay the day of reckoning. So many of the original plaintiffs had died that it had become an abuse of process to continue to allow the delays.

But delay was the name of the game. Certainly Exxon in the oily blackness of its heart seemed to believe so. But, unbelievably, the 9th Circuit, after yet another set of mind-numbing procedural morasses, in December of 2006 essentially told the very Honorable Judge Holland (and the jury who devoted months of their lives to the case, the State of Alaska itself, and, most of all, those fishermen and others who had lost their livelihoods, their cultures and their ways of life) ... in the most polite terms descriptively plausible ... to "stuff it". On its own, the 9th Circuit simply bypassed Judge Holland and slashed the punitive damage award from $4 billion to $2.5 billion.

It was a mindlessly vicious thing to do and amounted to no less than outright theft.

Even though it was simple politically motivated theft that the "strict constructionists" of the Constitution have to make illogical exceptions for ... at least it was over. At least the checks would be in the mail soon. Keller-Rohrback did a test run of the plant sending the tiny compensatory damage checks to those who still "had some coming". With a sort of communal resigned sigh, the plaintiff class, litigants and attorneys both, accepted that half a loaf was better than nothing and that for the sake of closure, we needed to just accept it and get on with our lives. Exxon had already proven that justice delayed is justice denied (especially for the substantial percentage of claimants who had died over the intervening 17 years) and ... that Exxon had enough muscle that it could flex it and cause this delay and by doing so thereby making their point and proving it.

And then, in a move that shocked even the battle hardened veterans of this war; the attorneys who had fought and battled this fight for most of their careers and whose (substantial) law firms would barely break even if that after all they had gone through (and the public has a low opinion of lawyers? Well, now that I mention it I'm not very fond of the Exxon 3-piece suit goons, but the plaintiff lawyers went above and beyond) ... Exxon appealed the award to the U.S. Supreme Court. The reaction was mostly that everyone was infuriated. Plaintiffs' lead attorney, the awesome Brian O'Neill was literally "shocked". We all knew beyond any doubt that the United States of America's Supreme Court ... was not going to hear a drunk driving case.

It was just yet another delay tactic. But ... we reminded ourselves that we were at least getting 6.9% interest which at that time wasn't bad at all, and resigned to wait a few more months until the Supremes turned down the case. [Unlike many appeals, there is no appeal of right to the U.S. Supreme Court. They have absolute discretion on what cases to hear.]

Then there was a sound, a rustle in the wind, and oven doors opened wide and flames of the underworld leaped out. The Grinch stole Christmas once again. The Supremes actually decided to hear the case! It was absurd. It was beyond absurd. And every legal professor and scholar of note agreed. There was obviously no way that they were going to reduce the award further. Ahh. Perhaps this was a backhanded way of scolding the 9th Circuit for cheating the poor, the fisherfolk, the Native cultures, those who lived below the waterline [when the Titanic sank, the people in the expensive berths above the waterline almost all survived; those in the cheap berths below the waterline largely perished]. The 9th Circuit had wrongly ignored the jury, the judge and the law and had tossed those who lived below the waterline into the oiled ocean at the behest of one of the richest, most powerful corporations. Maybe we had it wrong. Maybe the Supremes were going to slap down the Grinch and we'd have Christmas after all.

We could wait another year. We'd waited this long.

Continued:

Exxon: Pouring Oil on Trouble Waters -- Part 3

December 15, 2008
Exxon: Pouring Oil on Troubled Waters -- Part 3
-AKA-
Being Exxon Means You Never Have To Say You're Sorry

Oil ... $$$$$$$ ... Black Gold!

The centerpiece of international politics, wars and economics. A sizable portion of the world's population believes we are at war in Iraq because of it. A song that I quite enjoyed when there was a small handful of us loudly proclaiming that we would be nuts to go to war with Iraq; one that I copied and passed out freely before George W's "shock and awe", was entitled "How Did Our Oil Get Under Their Sand?".

We have it (oil ... we're a little light on the sand). Indeed, we have so much of it we can apparently afford to dump it in the ocean.

In the minds of most people when they think of oil, they envision the stuff they pour into their car engines. And, of course they are correct. That is refined motor oil. But crude oil, the unrefined hydrocarbon gunk that is pumped out of the ground and, at one time was attributed to decayed dinosaurs, is not something you'd want in your car. Nor in your boat. Nor in your fishing pots or nets. And most certainly not in the seafood meal at the fancy restaurant.

Nor is all oil the same; not even all crude oil. The oil that Captain Hazelwood and Exxon decided to return to nature had made a remarkable journey even before it so abruptly ended.

The oil had arrived in the port of Valdez after being pumped from deep, deep wells nearly a thousand miles to the north in Alaska's North Slope Prudhoe Bay fields and travelling completely across the state (which is the most difficult, by far, of all states to travel across) via one of the world's engineering and construction marvels: the Alaska pipeline. The Port of Valdez is a deep water port, ice free (by Alaskan terms) year round, and able to handle the giant oil tankers that transported the Black Gold to the energy starved world.

Alaskan oil [somehow appropriately] is heavy, tarry stuff that requires [like many Alaskans :-)] a lot more "refining" than most. It is not the clean "sweet" oil found in backyard wells in Texas. Nor is it the stuff that Jed Clampett could find bubbling up in his backyard woodlot. Our oil is thousands of feet below the surface and for whatever reason, largely decided to locate itself in some of the most inhospitable places on earth.

Alaska's North Slope holds vast reserves of oil. As anyone who has followed the news at any time in the last few decades knows, there is a terrific and ongoing battle regarding extraction from the ANWR portion of the North Slope between the Luddites who hide behind the much cooler sounding title "environmentalists" on one side and Sarah's "drill, baby, drill" contingent on the other. This topic deserves vastly more in-depth treatment than I can give it here, but may well be a follow-on column since oil is such a "hot" topic these days in any event.

I personally am in no hurry. Even if alternative energy forms were found and oil was essentially replaced as a fuel, it has sufficient other uses that it will always remain of high value. I'd just as soon leave it in the ground as a bank account for my grandchildren. My objections however have nothing to do with environmental concerns. There are none remaining of note. That is simply a phony excuse by the Luddites. The existing oil operations in the North Slope have had no negative environmental impact. The caribou and other wildlife seems quite attracted to the spectacle (face it ... they are bored with thousands of miles of featureless tundra as their lifetime view) and it has not had any negative effects on the environment whatsoever.

No ... the only time our Alaskan crude oil has harmed the environment was when a drunk sea captain decided to see if his boat was tougher than the rocks of Bligh Reef [it wasn't].

And that harm to the environment was real. It wasn't the "pretend harm" that the greenies use to scare people into opposing drilling. This was real harm. And it not only harmed the environment dramatically (twenty years later and it still hasn't recovered ... biological processes operate much more slowly in this cold climate), but it harmed, even more dramatically, the people who made their living off that environment. And those who made their living off the people who made their living off of the environment.

For those of you just joining us, the brief synopsis is that a drunken Captain (who Exxon had put through alcoholic rehab previously and absolutely knew that he had relapsed badly; indeed he couldn't legally drive even a car - his license was suspended for his third DUI since the rehab only a few years before the accident) was given command of a massive oil tanker and, without bothering to tell anyone, apparently tried to slip through a channel where no oil tanker belonged. And then, he and his bottle went down to his stateroom to do "paperwork" while leaving control of the vessel in the hands of a third mate who was not certified to run the tanker in Prince William Sound (PWS), although he was in the open ocean. For reasons that will never be known, it didn't make it. It appears that when they first scraped the reef a drunken Hazelwood staggered into the wheelhouse and screamed "hard right". Unfortunately he was drunk (and perhaps dyslexic?). If he'd yelled "hard left" we may never have heard of the Exxon Valdez.

As it was, it (in the Captain's inimitable slurred radio report) "fetched up" on the reef and was apparently leaking some ... cargo. That "hard right" caused unfathomable destruction of wildlife and pristine habitat. The spill killed an estimated 350,000 to 390,000 seabirds, in addition to 3,500 to 5,500 sea otters, 300 harbor seals, 250 bald eagles, 22 killer whales and billions of salmon and herring eggs (along with countless other flora and fauna).

It also caused unfathomable loss and damage to those who lived there and were "married" to the land, the sea, and its abundant resources.

This happened in 1989.

No, I didn't mistype. My fingers didn't slip. I didn't get confused. It truly has taken nearly 20 years to pry any money out of them.

Let me give you a move visceral feeling for how long ago Exxon oiled us and then postponed the day of reckoning. In 1989, we had the Exxon Valdez Oil Spill. On June 3 of that year, we also had the Tiananmen Square Massacure. Seems we've had several Chinese governments and entire major philosophy changes since then! :-)

The world moves right along unless you are Exxon with your foot on the brake.

Indeed, Alaska has only been a State for 50 years! For 20 of those we've been living with the never-ending saga of the Exxon Valdez.

In 1989, on November 9 ... the Berlin Wall fell. "No", you say, "that couldn't be! That was more like half a century ago." Well, the Exxon spill was 1/5 of a century ago. But yes ... before such major changes in the world ... the Exxon Valdez had already attempted to cut a new channel through Bligh reef.

In 1989, gasoline was $1.29 a gallon. The mimimum wage was $3.35. A dozen eggs were 96 cents; a loaf of bread, 69 cents! Oh and before serious competion with the internet which should have lowered it's price (!), the cost of a first class stamp was $.25!

It seems like it was a different age, a different era. And it was! Exxon managed to delay through the passing of years, decades, a century and a millenium. It is difficult to believe that the Supreme Court of 1989 (or 1994) would have sliced and diced the exemplary damages award so viciously. [Truefully, even though I understand that this Court is the most conservative in a very long time ... I still find it difficult to believe that even they would do ... what they did!]

Exxon is so big and so powerful and so unbelievably arrogant that they were able to "leverage" that power to keep the money out of the hands of the fishermen for all this time ... and Exxon has now succeeded in keeping most of the money out of the hands of the fishermen forever.

"The check's in the mail."

Exxon claimants [as all the prevailing plaintiffs in the Exxon-Valdez lawsuit are called] have been waiting nearly 20 years to hear those words; nearly 15 years since the jury verdict awarding us, in addition to modest compensatory damages, a $5 billion punitive damage award.

But, the checks aren't for anything close to that. Actually, ignoring interest [as Exxon still hopes to be able to do] and many other variables, we are roughly a decimal point off. In other words, if your share, according to the only people legally qualified to know and therefore to decide; the jurors, was say $100,000, then your "check" would be for ~$10,000. If the jury [and convoluted formulas that were subsequently applied] said your claim was worth $10,000, then your check is for ~$1,000.

And for this we waited 20 years?

Actually, the checks aren't in the mail yet. Presumably they will be soon.

The folks that will be receiving money in this first "round" are those claimants who had no issues of any sorts attached to their claims [eg: judgments against them, IRS liens, child support liens, probate issues (since so many of our original claimants have died), assignments (so many people were so broke they were forced to sell part or all of their Exxon claim to speculators for a small percentage of its worth. Of course, they may look like geniuses now ... , or other]; and had gone through all the stacks of paperwork properly and along the way filled out the proper forms to have the Claims Administrator [the law firm of Keller Rohrback] directly deposit the funds to their bank accounts.

But given the history of this situation, that's really close to "the check's are in the mail".

In 1994 a major trial was held in federal court with approximately 32,000 plaintiffs and a jury, who by all accounts took their job very seriously. After four weeks of testimony and argument and four days of significant deliberation and balancing Exxon's claim that they didn't deserve to be punished any further, primarily because of all the money they had already spent cleaning up their mess, against the reality of what happened, the jury concluded that Exxon needed to both finish reimbursing the actual "out of pocket or never in pocket" type losses (compensatory damages) which was never much at issue. It also made the finding of primary importance that Hazelwood AND Exxon were reckless (ie: "grossly negligent"). Although this point seemed unassailable and crystal clear to everyone but Exxon, it was so dear and the attorneys had fought so long and so hard to get to that point that the lead plaintiff attorney actually had tears when the announcement was made. He had done it.

The finding meant that Exxon was liable for punitive damages and, given the size of the company it was expected that they would be "significant" [the relevant standard being focused on company size and income since the purpose is "punishment" and an award of $10,000 might punish a small mom and pop, but wouldn't be noticeable to Exxon]. Generic formulations yielded nearly absurd results because Exxon was SO huge and profitable that in order for it to "feel" the punitive damages award, the number would have to be staggering.

If one wishes to swat a two year old child for doing something he shouldn't have, it doesn't take much to accomplish that goal. If you swat an elephant with the same force and power ... it would notice you no more than it would a mosquito. In fact, it would probably be more bothered by a mosquito.

Exxon was, and Exxon-Mobil is, an elephant compared even to other elephants.

Instead of shooting for an absurd number that would actually be fitting under the circumstances, plaintiff counsel determined to ask for something that, given Exxon's size, was clearly reasonable and, therefore, presumably appeal-proof. They asked for fifteen billion. The jury gave them five. This was far less than the purpose of punitive damages would dictate as it was but a small percentage of Exxon's annual profits and a pittance compared to Exxon's overall value. It may not have been something that Exxon could pay out of the petty cash annual party fund, but neither would it have a substantive negative effect on the company. This discrepancy (between the value of the award and the value and profits of Exxon) has only increased with time.

As Brian O'Neill, the plaintiff lead attorney said shortly after the initial verdict::

"With a company as large as Exxon that thinks it is above the law, you need to take a substantial bite out of their butt before they will change their behavior. We want to change Exxon. We want to make the Exxons of the world aware that they are responsible the same way that you and I are responsible. It is really a great day. It took five years to bring it about, but we got there."

Indeed, all that was true and for the first time in five years in some of the economically devastated towns and villages, it was the first day of sunshine in half a decade. Despite all the suffering, the loss of culture, the loss of livelihood, the psychic pain that could never be healed ... it was a large enough verdict that there was sunshine and some smiles again. Even though the award was fairly small in terms of the size of award compared to size of company that would be required for "punishment", Exxon was so huge that, in absolute terms, this was a tremendous award; it would arguably be the second highest sustained jury award on record.

There was only one little problem. The award was not sustained.

In a display of corporate arrogance unmatched in modern times (well, perhaps, other than Enron giving top management huge bonuses just before closing their doors), Exxon vowed that as a matter of principle, and because it thought that people should be grateful to it (for all the work it did cleaning up the spill) instead of suing it, it would make sure the fishermen and other plaintiffs never received anything anywhere close to an award of that magnitude.

Exxon succeeded beyond its wildest dreams and beyond the wildest nightmares of the plaintiffs and their attorneys. They made certain that the lesson for all to see was NOT that "the Exxons of the world were made aware that they are responsible the same way that you and I are responsible". Instead, Exxon set out to prove, and ultimately did so with resounding success that the Exxons of the world are NOT responsible the same way that you and I are responsible. They boldly and "in your face" demonstrated that O'Neill was absolutely correct in saying that Exxon believed that were above the law ... and they successfully proved that, indeed, they were.

There is an old African proverb that says: "When elephants play, the grass gets trampled." You have to give O'Neill and his firm credit though. They stuck with us the whole time and fought tooth and nail every inch of the way. It is a tragically sad commentary on our system that even with powerful law firms on our side, that we didn't manage to rise much above the level of the grass. The elephants in the world have gotten so big that there is almost nothing able to control them. They've been paying lobbyists for so long (and as we have been discovering in Alaska, the Big Oil boys have been cutting out the middle man when convenient and paying the legislators directly) that they managed, by the back door, to pack the courts as well.

At most ... we got up off the ground by sheer brute force and transformed ourselves from grass to mosquitoes.

We buzzed around them. We even bit them. But ultimately we had about as much effect as one would expect a mosquito to have in dealings with an elephant. We were naive. All of us, including the Federal District Court Judge Holland who maintained his honor by telling the 9th circuit to shove it when they ordered him to knock the punitives down. Our hot-shot lawyers were naive. The fishermen were naive. "Oh, come on ... the United States Supreme Court is not going to take a drunk driving case!" Unless, that is, you have a Court that has been picked as they rose through the system by litmus test on such things as "tort reform", which is phony lingo for "taking away rights guaranteed by the U.S. Consitution but not admitting to it". 20 years of naivete. Even more than the money (and that is saying a fair bit), I think all of us on the side of right, truth and justice are more upset by a 20 year spanking than anything else. We are embarrassed that we actually believed our "judicial system" was in the business of dispensing justice. Even I fell for it and I had a Superior Court judge tell me once to always remember that the courts are in the business of judgments; not justice.

And that there was a huge difference between the two.

Which is something we have all now (even the most stubborn of us) finally learned.

Harken back to Brian O'Neills' statement following the verdict, above. This is what he said after the Supremes gutted it:

"I feel bad for all the claimants, that they're not going to get enough money to put together their lives again. I feel bad for all the claimants because they're not going to get the satisfaction knowing that there was a just punishment administered to Exxon. And I feel bad for all of the claimants because the judicial system has let them down. It just isn't fair."

Part 4 of This Series May be Viewed Here:

Exxon: Pouring Oil on Trouble Waters -- Part 2

December 13, 2008
Exxon: Pouring Oil on Troubled Waters -- Part 2
-AKA-
"The Wreck of the Exxon Valdez"

By: Captain Heavyfoot
[With apologies to Gordon Lightfoot :-)]

The legend lives on from the fishers on down,
Of the Big Sound 'twas made in Prince William.
The ocean, it's said, was their butter and bread,
But oil tar on the sandwich just killed 'em.

Tanks topped with black crude, and with vodka home-brewed,
The famed Exxon-Valdez was quite loaded.
The Captain was too, yet silent his crew,
When they poured both the Captain and cargo aboard her.

Captain Hazelwood had been drinking at two separate bars or more prior to their scheduled departure. There was sworn testimony that he had consumed at least five double-vodkas (enough to knock out anyone who wasn't an alcoholic). He didn't get even a breathalzyer test until 11 hours after the accident, but working backwards from the booze in his blood at that time they calculated that at the time of the accident he was three times the legal limit for driving a car.

Indeed, he wasn't licensed to drive a car ... his license had been suspended for (yet another) DUI. He had completed a rehab program three or four years before the accident and had wracked up three or four DUIs in that period of time! Not only were his superiors aware that he had badly relapsed, but they had actually been drinking with him not long before the accident!

In any event, shortly after the Exxon Valdez pulled away from the dock at 9:12 p.m. and having successfully passed through the Valdez Narrows, the master pilot who was specially hired for such tasks, left the ship. It was a beautiful evening on the water. The seas were calm, visibility was good and the ship had all the latest and most sophisticated of navigation equipment. The official story was that there were icebergs in the normal shipping lanes, so Captain Hazelwood instructed the man at the wheel to take the ship slightly outside the shipping lanes and around the ice. Experts agreed however that such story simply didn't hold together -- they were too far off course with too many ways, both through equipment and visual observation, to not be able to tell.

In fact, it was apparent that they weren't just skirting an iceberg or two, but indeed, whether to avoid icebergs or to make up lost time, or just to shorten the voyage, they almost certainly attempted to follow the old steamship passage and "shoot the gap" between Bligh Reef and Reef Island. This is an incredibly dangerous maneuver for a ship the size of an oil tanker. Authorities at the time likened it to flying under the Golden Gate Bridge. Yes, it can be done. Yes, it has been done before. But it is dangerous and absolutely not recommended nor approved. (There were rumors that for years tankers had snuck through there on occasion but no one had ever actually caught them at it. It was universally agreed, however, that such would be a stupid and dangerous maneuver.) Even so, at that point, Hazelwood then left the bridge in the control of a third mate and was down in his cabin "doing paperwork" through this trickiest part of the passage.

Neither Exxon nor Hazelwood ever admitted that was what they were attempting. The normal shipping lanes out there are extremely wide, deep and forgiving. Anyone could drive a tanker through that part of the journey. But they were over a mile and a half outside the shipping lanes and just barely missed the shortcut gap. Either they were horrendously screwed up (to be a mile and a half off course) which makes no sense, or that is exactly what they were trying.

The poor crewman left at the wheel didn't know what to do. Indeed Third Mate Gregory Cousins was not even certified to operate a ship in PWS and, indeed, it was flatly illegal for him to be at the wheel. (Of course it was also illegal for Hazelwood to be drunk!) It was widely reported at the time although such reports dropped out of sight quickly, that Hazelwood had put the ship on autopilot and instructed Cousins to contact him when they reached a certain point. Despite the fact that this was known as a treacherous area for large vessels; and that they were operating outside the normal shipping lanes, there were no guide boats or tugs and purportedly no one but a rudimentary computer was directing the massive ship. No one who wasn't there knows for sure what actually happened that night. There were also reports that a drunk Hazelwood had made his way back to the bridge and ordered a "hard right" when he should have ordered a "hard left". That isn't the official story either, but the micro-computer in the auto pilot was at least sober and probably would have been the preferred option to the drunk captain. Even so, "computer" is too fancy of a concept for it. The computer you are using to read this article is hundreds of times more intelligent.

If true, one of the largest a 211,500 ton, 988 foot long, fully loaded oil tanker was being controlled by a machine with the approximate I.Q. of a fancy toaster.

And it went crunch.

It shuddered to a halt, engines still running full bore driving it further into the "sandbar" as Exxon likes to call the rocks of the well-charted Bligh Reef that ripped the thin single hull like a sardine can. In the version of the story where he hadn't already made it to the bridge yelling "hard right", Hazelwood stumbled to the bridge, uttered a few choice words, and then tried "rocking" the huge vessel off the rocks by jamming it full throttle forward, full throttle reverse, as you might try to drive you car out of a mudhole. Unlike your car and the mudhole, however, these manuevers acted to rip the holes in the hull much wider and allow much more oil to escape than would have otherwise. Finally, after failing to dislodge it and after the crew inspected things, he slurred into the radio that they had "fetched up" on a reef and were "evidently leaking" some of their cargo.

Truer understatements were seldom more understated.

The "little bit" of "cargo" that leaked was nearly 11 million gallons of tarry black Alaskan crude oil. It fouled 1300 miles of mostly pristine Alaska shoreline and covered 11,000 square feet of ocean.

Although there is a minor error or two, this is an excellent dynamic one-page pictoral "overview" of PWS and the spill.

Part 3 of This Series May be Viewed Here:

Headliner

December 5, 2008
Headliner

And so she goes. Just when I am convinced that I'm going to stop talking about Sarah Palin for awhile (because there are other very important things happening in the world and my writing time is limited) ... she goes and does something that makes it impossible to ignore her.

I'm not the only one having this problem. The national media, who would probably much prefer that she hole up in an igloo someplace, find that they can't avoid talking about her either. There are at least two reasons for this. One is that she keeps doing newsworthy things that are simply not things that people in the news business can ignore and, secondly, she simply has an uncanny grip on our imagination. This appears to be true even among the pundits who claim they can't stand her.

We start to write about Obama's economic policy is shaping up [2 + 2 = what?!?] and we realize that it is critically important, will have tremendous impact on the country's present and future, affects all of us dramatically ... and is highly boring; both to us and to our readers.

Then along comes Sarah Palin. On her way to meet with the President-elect, she takes a brief side-trip at the behest of a desperate Senator about to lose his seat and a Party desperate to not let the Democrats get a 60 vote majority. She then, spending less than a day on it, personally causes the election of the Senator and saves the Republican party. Having answered their call when they asked her to lend her "star power" and succeeding beyond all reasonable or rational expectations, she then she meets the new President to-be and a bunch of admiring Governors, dusts off her apron and scoots back to continue "fixin' up" a state that is, aside from her, in total political melt-down shambles. And, of course, to fix up another pot of moose stew for her hubby and kids.

And we realize that we have "just one more" Palin column in us demanding to get out. And our fingers start talking about her.

The thing is ... both (reasons) are true. She has that "I can't stay away fromness" that is so rare, and when that sort of charisma is contained in a beautiful woman we're all helpless: male, female, black, white, liberal, conservative, Palin-politics haters and Palin-politics lovers. It makes no difference. It is the Princess Di effect. Back in the day ... even stuffy people who wouldn't stoop to admitting knowing who Princess Di was couldn't help but to surreptitiously read the "entertainment magazines" at the checkout stand if they had her picture on it.

But unlike Princess Di or Paris Hilton or Britney Spears who were famous mostly for being famous, Sarah Palin is also legitimately important and is famous for doing valuable newsworthy things. It is a remarkable combination.

She isn't some "famous for being famous" celebrity out looking for a "cause" so she can actually do something important. Palin got famous by doing things that were important.

Nor is she important because of who she married. Princess Di would never have raised a headline if she hadn't "married well" :-) Frankly, although she has neither the beauty nor the charisma of the "crowd" I'm discussing, to a lot larger extent than supporters would ever want to admit, the same is probably true of Hillary Clinton.

Nor is Palin important because she is a knock-out. That just happens to come with the package. But she would be just as legitimately important if she ... well ... if she wasn't.

But Palin has become such a phenomenon, she tops the charts at search engines and YouTube and anywhere people go, that it has even the mainstream media types scratching their heads and continuing to write, in addition to "newsworthy stuff" she does, about her popularity itself. That "phenomenon" has become a newsworthy event in it own right which is something I cannot recall ever happening to a vice presidential candidate on the losing ticket!

Quickly now ... who was Bob Dole's running mate? That isn't what's happening to Sarah. In 20 years the question about the 2008 election will be: "Now who was the presidential candidate that Palin was running with? It's right on the tip of my tongue ..."!

This is particularly mind-boggling because of the image that the punditocracy attempted to paint of her during what they all seemed to believe was her "15 minutes of fame". Even following the election the media claimed that Sarah had lost votes for McCain!

Um. Uh ... media people? Knock, knock. Excuse me, but if she is so toxic then why did Saxby Chambliss beg her to come save him and why did the Republican National Party beg her to save Chambliss to save them from a 60 seat Democratic majority in the Senate?

And more to the point ... why did she succeed so dramatically?

You don't suppose that it is at all possible that it was the pressosphere who ripped Palin so badly before people had a chance to know otherwise that cost McCain those votes do you?

"I can't overstate the impact she had down here." So says the Senator who was about to be unseated in the run-off election. This election was crucial to the Republican party because it appeared likely that if Martin beat Chambliss ... the Democrats would have a filibuster-proof majority. Similarly, and for the exact same reason, the race was just as important to the Democrats. So all the big guns were unholstered. John McCain went down and campaigned for Chambliss ... but no one noticed. Mike Huckabee went down and stumped for him; as did Governor Romney and Rudy Giulani and essentially everyone who was anyone in the Republican party (and who, btw, are all in contention for being the "party leaders" and starting to jockey for possible 2012 presidential runs; which btw, polls now show Republicans care most that Palin runs in the next presidential election! ) ... but nobody noticed. "I went to see Mitt Romney a week ago and I think there were only about 100 people there." said one somewhat awed audience member interviewed after a huge "many thousands of people" Palin rally for Chambliss.

Al Gore went down and campaigned for Jim Martin. So did Bill Clinton. President-elect Obama taped phone messages and a radio ad and turned over his awesome vote-gathering machinery ("probably 100 or more of the Obama people came down"). Even the rapper Ludacris came down to help Martin. But nobody noticed.

Then, on the last day of the campaign, Palin swung by. She only did four short rallies in one day. And the entire world noticed.

Suddenly, Georgia was on everyone's mind. "When she walks in a room, folks just explode," Chambliss gushed after whomping Martin. "And they really did pack the house everywhere we went. She's a dynamic lady, a great administrator, and I think she's got a great future in the Republican Party."

And he kept gushing. He was grateful to all who helped ... but he made it crystal clear that it was Palin's appearance that "really did allow us to peak and get our base fired up". She has (another) serious fan in the Senate now. And the Republican National Committee isn't likely to ever think of her as a light-weight again.

She has done a better job of changing her "media-created" image (which is a remarkably difficult thing to do ... just ask Dan Quayle how to spell potato) in the few weeks since she has been out from under the thumb of the McCain staff than I can remember ever happening.

You have to hope that McCain had intelligent enough people working for him that they are now realizing what an incredibly dumb thing they did by keeping her under wraps. They bought into the ditz image also and were embarrassed that their boss had done something so foolish, so they tried to hide her as though they were ashamed to have McCain associated with her. If they had turned her loose ... well, we'll never know ... but I've a hunch that if they had ... it may well have been the vice-president elect who was drawing those huge crowds for Chambliss last week.