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 5

December 19, 2008
Exxon: Pouring Oil on Troubled Waters -- Part 5
-AKA -
"Billions for Defense; Not One Penny to Pay Our Just Debts"

"The day" finally came.

The day we were going to find out if the Supreme Court was going to hammer Exxon and "correct" the 9th Circuit for halving the jury's award of damages or if, somehow, they were going to find a way to ratify that decision. Or ... some folks who had learned pessimism by being a part (the "victim" part) of this 20 year fiasco, actually believed that the Supremes might reduce it further. Our attorneys, the best in the business, however, had assured us that couldn't happen. That there was no legitimate way for the Supreme Court to lower the award further. That was one option we were not to worry about.

We had several days of anticipation as Supreme Court decisions were handed out over a few day period and ours didn't happen on the first day. Or the second. In fact, it didn't happen until the day the Court was ready to leave [get out of Dodge] for the season.

It wasn't until July of 2008 that the Supreme Court handed down its decision. It made its determination and sent it back to the 9th Circuit for implementation.

[To the tune of American Pie, please:] "That was the day that justice died."

The United States Supreme Court ignored everyone the 9th Circuit had ignored ... jurors, a long-term highly respected judge, the Constitution and common law that it provides we are to follow, the State of Alaska, the earth's environment ... and all of the people who live below the waterline. And then it ignored the 9th Circuit also.
In an announcement that left the hardest of hard-bitten attorneys in numbed shock ... the court chopped the remaining $2.5 billion award down to $507.5 million.

There are no words. It is as manifestly unjust as anything I have ever witnessed the court system doing. It was not only legally wrong, but it was morally wrong. Indeed, it was the first time I have truly believed that the Courts have been so politically packed that they are now simply part of the corpocracy. They are not a check and balance. They are not an independent judiciary. They are bought and paid for politicians. And they have committed an act of overt evil.

Then, just because it could, Exxon took the plaintiffs and rubbed their faces in it one last time. They argued to the 9th Circuit that because the Supremes said that $507.5 million was all that could be awarded ... that meant they didn't have to pay the 20 years of interest on it either.

Plaintiffs and their attorneys were so defeated and destroyed that there was no fight left. We filed pro forma motions with the 9th Circuit explaining that, once again, Exxon was simply flatly wrong legally. But no one's heart is in it. And no one even seems to be able to care how the 9th rules. We are arguing over the pennies to place on our closed eyes after having lost fortunes. It really makes no difference.

For the tiny amounts that the Supremes said we could have; we settled with Exxon for 75% of them. I have no clue what leverage Exxon had left to deny paying the entire amount the Supremes said they had to. But they proved that the courts would do pretty much whatever the Big and Powerful asked for and there was no fight left in any of us. When the elephants play, the grass gets trampled. And we were all, ultimately, the grass.

So the checks are starting to arrive. Little tiny checks. People's lives and livelihoods had been ruined by Exxon beyond hope of repair or salvation. All they were left was the knowledge that at least Exxon was going to have to pay ... and pay enough that they could afford to retire (after 20 years of waiting and scraping and scrimping and taking new jobs at middle age for which they weren't trained, some still trying to eke out a living catching what fish they were allowed by Fish and Game as the Department tried to manage PWS to revive the fish stocks). Many people have been clinging with their fingernails so long to keep from the total financial collapse that just letting go and crashing and burning is better than continuing to try to hold on.

And now, the Courts have stolen their retirement also.

I used strong language above. I speak of the courts committing true evil and stealing from people. I believe that to be true. But I wish to make one point extremely clear here. Although I do believe what the courts did was wrong ... horribly, terribly, immorally wrong, and that the Exxons of the world have "bought" our courts and did prove that they can "buy" [what one might still euphemistically refer to as] "justice"... I do not believe that the individual justices were directly bribed nor do I have any suspicions or accusations about any particular justice or justices who personally "sold" their decision. I don't know what all other criteria the individual justices considered; or indeed, the courts in joint session considered. One may not want to know such things. If you wish to enjoy your meal, stay out of the kitchen! But, largely, although I think they were horrendously, clearly, and demonstratively wrong ... I believe it most likely that the justices believed their votes were "right" and that their decisions were made without substantive improper motivations.

I do not wish, with this series of articles, to accuse either the justices of the 9th Circuit or of the U.S. Supreme court of malfeasance or improper abuse of office.

The Supremes do suffer from institutionalized arrogance. Because they have "the last word" ... ie: there is no where to appeal their decisions. They are very proud of the quote that:

"We are not final because we are infallible; we are infallible because we are final".

These checks won't hurt. Some folks may manage to pay down a credit card bill or even buy a truck. But we ended up, after 20 years, with less than $500 million of the $5 billion that the judge and jury had said was legally ours. Justice delayed is justice denied. Especially when after two decades of injustice, the courts put the decimal point in the wrong place and overtly deny it as well.

The plaintiff attorneys are brilliant people who are at the top of their game. They had secured one of the greatest of all time verdicts for one of the most deserving groups of victims. This isn't tobacco legislation where people got sick and died because they decided to smoke. This isn't a McDonalds case where the plaintiff put a cup of scalding hot coffee between her legs and then squeezed.

The fishermen and other plaintiffs had done absolutely nothing wrong.

In this situation we had totally innocent plaintiffs, unlike almost all mega-award cases (which somehow seemed to survive this appeal process ... the tobacco companies for example virtually all decided to settle; they didn't have Exxon's "make war not peace; win at all costs and hurt the other side as much as is humanly or, more precisely, corporately possible" mentality).

The plaintiff attorneys had put their political lives and careers (as well as their reputations and financial futures) into this case and had defended it through the most violent of legal storms that could be unleashed by a behemoth that had vastly more money to throw at this than almost anyone in the world. If one could buy "justice", Exxon was going to do it.

In a con job worthy of anything Alice believed before breakfast Exxon tried to convince the world that they had done nothing wrong either! Although many (most?) news outlets were not easily flim-flammed, Exxon clearly has the power and influence even with the media to get its story out.

Exxon argued (argues) that Hazelwood, Captain; or God, An Act of; were the only reckless culpable parties. In English ... the only ones who did anything wrong. So that, therefore, only Hazelwood and God deserved any blame. And if Exxon didn't deserve any blame, they certainly didn't deserve any punishment.

It is important to understand that for legal purposes a corporation is an entity that is legally construed (for essentially all purposes) as a "person". I personally am not convinced of the wisdom of such exalted treatment to an entity that one can create on a piece of paper and the stamp of the appropriate state office in a few minutes, but it is a concept with much history and is well-settled law.

So Exxon, although a corporation, is legally capable of wrongdoing and being punished for such wrongdoing. To carry an analogy much farther than it should go, the Board of Directors, officers and executives are the "brain" of the corporation which sometimes cause it to do things that it shouldn't; much like our brains do with us. So it is the corporation itself, not its officers nor directors, that was found liable for causing damages by its negligent behavior and was assessed punitive damages for its reckless behavior. [Captain Hazelwood was also found liable of these things, but a judgment against him is not worth the paper it is printed on as he has nowhere near sufficient assets to satisfy such a judgment. But Hazelwood and Exxon were found jointly and severably liable which means that each is liable for the entirety of the damages awarded by the jury.]

And it is the corporation which [who? :-)] was trying to make the case to the public (and hiring marketing firms to do so), that the entities at fault were simply God and Hazelwood; not the corporation. But if the corporation was negligent (!), it was not reckless (which is the critical issue regarding punitive damages and such a determination was necessary in order for punitive damages to attach).

Let me be crystal clear here. This is a critical point. We can debate whether we think Exxon was reckless for putting a known drunk at the wheel of an oil tanker. But our decisions are (and should be) irrelevant, because the jury; those whose duty it was to decide and who were in the best position to decide, did decide. Exxon, itself, was reckless. This is no longer solely an opinion, it is a determined matter of law that even the Supreme Court has no legal ability to change.

It was reckless for an additive plethora of reasons, the primary one of which was that they knowingly placed a fully loaded ~1000 foot, 212 ton, tanker filled with 56 million gallons of the worlds ugliest (tarry, high sulphur content, etc.) crude oil under the control of Captain Hazelwood while it traversed some of the most pristine environmentally sensitive areas of the world; at night (it was almost exactly midnight when they missed the gap and hit the reef) ... knowing that he had a substantial drinking problem and a history of incredibly poor judgment. Exxon had paid for Hazelwood's alcohol rehab treatment in 1985, but made no follow-ups of any sort: no post-treatment evaluations or counseling, no monitoring of any sort.

Instead Exxon immediately put him back in command knowing as they admitted at trial that "a captain with a substance abuse problem was a recipe for disaster".

Hazelwood's driver's license (for automobiles, not supertankers ... although one would think if he wasn't considered capable of entrusting an automobile to, it is difficult to imagine that handing him the keys to a crude oil carrying supertanker would be fine) had been revoked or suspended three times between 1984 and 1989 by the State of New York for alcohol violations. In fact, at the time of the spill, his driving license was in suspension because of an arrest in New York for driving under the influence in September of 1988. This information is routinely reported to employers and is generally a requirement that it also be reported to the employer by the drunken driver himself. It is virtually inconceivable that Exxon did not know that at the time they told him to drive one of the largest and potentially most destructive vehicles in the world ... he could not legally drive to the docks to board the vessel.

Exxon senior management was proven to have received multiple and continuing reports between 1985 and 1989 that Hazelwood was continuing to drink to excess openly; indeed publicly. Exxon took no actions of any sort in response to these reports, except that his superiors would drink with him!.

In 1989 (five years before the trial and before Exxon's lawyers and P.R. people got everyone in the company's management "under control", the Chairman of Exxon specifically said that putting Hazelwood in charge of a supertanker was a "gross error"). Not just a negligent mistake, mind you, but he specifically admitted that Exxon had made a "gross error". There are many ways of saying "reckless" for purpose of punitive damages and other legal issues. "Gross error" is one of those equivalent terms. An "error" equates to "reckless" which might make them liable for compensatory damages, but does not make them liable for punitive damages. But "gross error" is the same as "gross negligence" which is the equivalent of "reckless". Therefore, by the admission of Exxon's own chairman ... Exxon fit the criteria for punitive damage liability.

Further, at trial five years later, after having been heavily coached, an Exxon manager testified that Exxon's policies, despite their knowledge of the risk to the public of the "catastrophic" results of a supertanker accident, allowed a relapsed alcoholic to command an oil tanker which left him (the manager), given "Exxon's attitude towards alcohol", with "no policy to protect the safety of the public".

There was other testimony regarding that and other aspects of Exxon's general recklessness in shipping out of PWS (breaking federal fatigue laws, departing into heavy ice conditions at night to save money, etc.).

But I don't need to try to prove that Exxon was reckless. I noted at the beginning of his section that it was reckless as a matter of law that not even the Supreme Court has the power to change. That is because the jury so determined. And once a jury makes a factual determination (which this is construed to be), that issue is not appealable.

The way our system works is often misunderstood. But since the right to trial by jury is paramount, only the jury is allowed to determine facts. [Which makes practical sense as well ... it is only to a jury that factual disputes are presented. Only the jury (and trial judge) hear the testimony and watch the body language of those speaking and are privy to so many things that can't be captured in an electronic record, that it would make no sense to have an appellate court attempt to redetermine the facts of the case.] Additionally, in this case, there was no question but what there were highly competent lawyers and experts on both sides making sure the evidence was properly presented and done so in as favorable a light to their side as possible. And the jury determined that Exxon was reckless.

What is appealable is the "law". That is what the lawyers argue to the judge about and what the judge ultimately includes in his written (and spoken) jury instructions. If the judge was incorrect on the law ... if he made a ruling (regarding an objection to the admission of certain evidence, for instance) that was wrong legally, or if an instruction regarding the law given to the jurors was wrong ... that may be appealed.

But whether Exxon was reckless or not, may not be appealed unless the judge gave incorrect instructions regarding his jury instructions regarding how they are to determine whether conduct qualifies as reckless. No one has seriously argued that the judge got the law wrong on this issue. (I say "seriously" instead of just saying that no one argued it ... because it is possible that Exxon did argue it at some point. But no one took it seriously and no appellate court ever suggested that there was a problem with the formulation of the law.)

Presumably, in fact, that is why the Supreme Court had to leave in the award some amount of punitive damages. They too were bound by the jury's finding of recklessness. (That said, even though they couldn't legally touch the fact that punitive damages were appropriate, in their consideration of "how much?" they effectively did by the back door what they could not by the front.)

The general public, however, was not so bound. Exxon argued vociferously to the media and anyone else outside the courtroom who would listen, that it was not reckless.

There is an old theory that if you can obsfucate an issue sufficiently, then no one really understands what is right and what is wrong and assumes everything is gray and that whatever the courts ultimately decide is probably right. Because we as a nation, perhaps more than any other on earth, respect and honor our judicial system.

Indeed we believe in it in a way that we seldom even think about but that folks from other countries really don't ever seem to understand. Other countries have legislatures to pass laws and an executive branch: presidents or other administrations to carry them out ... but in perhaps no other country is the court system relied upon so strongly, and believed in so fiercely, as the third leg of out government and the one most important for preserving out freedoms and protections from oppression. In the words of the Australian commedian/singer Fred Dagg: "You don't know how lucky you are, mate, you don't know how lucky you are."

Sadly, despite the intellect and apparent nitty-gritty willingness to claw and scratch and give their best fight no matter what the arena, the plaintiff attorneys proved to be idealistic optimists after all. They believed in the system. Even after so many, many years of delay, they too, honestly believed that although the wheels grind slowly, that they grind exceedingly fine and that justice would ultimately prevail. They believed that we were a country of laws and an honorable court system and that raw money and power could not buy justice away from those to whom it belongs if the forces of good gave it their all. I would not be surprised to see the major law firms that have gone so far out on a limb for those below the waterline in this case to be shuttering their offices. Some will stop in the bankruptcy courts that they had practiced in. Others will simply go away.

Because they were wrong.

Exxon proved, gloatingly, to the world, that we no longer live in a country of justice and law. Instead, we live in a corpocracy and the Exxons of the world run it. And they glory in proving that they do.

It is conceivable that a justice was bribed. Exxon certainly had the money and we've seen a lot of outright bribery by oil companies in Alaska. And justices don't make enough money to be above financial temptation. But I have no evidence nor even real suspicions that such happened.

I believe what happened is that the insurance companies finally purchased the judges they want on the bench (judges and justices do not believe in the concept of punitive damages or if they do, they believe they should be severely limited). But they did this ... well ... I am not alleging that they did it in any way that was not legal. There are ways within the system to "purchase judges" without committing a crime.

Continued: