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A federal appeals court yesterday overturned a $5 billion punitive damages award against Exxon Mobil Corp. in the worst oil spill in U.S. history -- the 1989 Exxon Valdez disaster -- and ordered a district court to set a new, lower amount.
The court's three-judge panel, handing ExxonMobil a victory by effectively scrapping what was at the time the largest punitive damage award in U.S. history, said that the jury's 1994 decision was excessive under legal precedent set since the case was first decided, Reuters reported.
"The $5 billion punitive damages award is too high to withstand the review we are required to give it. It must be reduced. We therefore vacate the award and remand it so that the district court can set a lower amount," the 9th Circuit Court of Appeals said in its ruling.
Officials at Irving, Texas-based Exxon, which has been battling the $5 billion award for some eight years, issued a brief statement saying the court had "confirmed" their position that the reward was excessive punishment for "a tragic accident that the company deeply regrets."
Lawyers for the plaintiffs said they still expected to win "significant" damages from Exxon, and would lodge fresh appeals if the final dollar amount was deemed too low.
The 1989 Exxon Valdez disaster in Alaska's Prince William Sound marked the worst oil spill in U.S. history as some 11 million gallons of oil fouled local beaches and harmed local fish and wildlife.
In the 1994 trial, a jury ordered Exxon to pay about $287 million in compensatory damages to commercial salmon and herring fishermen, plus $5 billion in punitive damages for behavior that led to the 1989 oil spill.
That award had been repeatedly upheld by both the district court and, last year, by the U.S. Supreme Court, which rejected Exxon's assertion that the award should be set aside because of irregularities during jury deliberations.
In yesterday's decision, however, the San Francisco-based 9th Circuit Court of Appeals took a different tack and agreed with Exxon that the $5 billion figure was excessive and should be reduced.
ExxonMobil operates more than 4,100 convenience stores nationwide