June 25, 2008

Breaking News: The EXXON VALDEZ case is closed

The U.S. Supreme Court cut the $2.5 billion punitive-damages award in the 1989 Exxon Valdez tanker spill to $500 million.

It's over, and let's figure what it means.

In 1994, a U.S. Jury found that Exxon was so wrong and irresponsible in the actions it took that led to the famous accident that it imposed on it $5 billion dollars in punitive damages. The jury decided this figure as it was Exxon's yearly profit at the time. Punitive damages are subjective. They do not represent any real damage but only what the jury thinks is morally proportional to the culpability as well as a good deterrent. One year worth of profit is certainly a decent deterrent. It is certainly not a insufferable burden. Profits are what is left in your hands after you pay all expenses. To create an analogy that would make sense to someone managing a family budget, this is the rough equivalent of what you save during the year after paying all your day to day bills. So this is like punishing a regular family with a fine of a few thousand dollars, maybe maybe 10 thousand dollars. Painful, but certainly not excessive for egregious recklessness.

The amount went through all the stages of appeals. It was reduced to $4B, then to $2.5B dollars, and now, 14 years later, it was finally reduced by the US Supreme court to $500M.

$500M is the profits Exxon-Mobile makes nowadays in 2.5 days. So, the fine was announced Tuesday, and by Friday noon Exxon Moblie will have finished earning the money needed to pay it!!!!

This is the equivalent of fining a regular family $125.

Four judges were ready to strike down the punitive damages completely. I assume judge Souter (the most "left" on the court) was the one who decided the issue because he wrote the opinion, essentially capping punitive damages at 100% economic damages. That basically kills the punitive in "punitive damages".

But rest assure that Barak Obama, if he wins, will push for more liberal judges like Souter.

Is this relevant to this blog? Well, it is a reminder of what politics is really about, including Middle East politics. Never forget that.


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