270 F.3d 1215 (9th Cir. 2001), 97-35191, In re In Re : The Exxon Valdez v. Hazelwood

Docket Nº:97-35191, to 97-35193 and 97-35235.
Citation:270 F.3d 1215
Party Name:IN RE: THE EXXON VALDEZ, GRANT BAKER, ET AL., AS REPRESENTATIVES OF THE MANDATORY PUNITIVE DAMAGES CLASS, PLAINTIFFS-APPELLEES v. JOSEPH HAZELWOOD, DEFENDANT, AND EXXON CORPORATION; EXXON SHIPPING COMPANY, DEFENDANTS-APPELLANTS IN RE: THE EXXON VALDEZ, GRANT BAKER, ET AL., AS REPRESENTATIVES OF THE MANDATORY PUNITIVE DAMAGES CLASS, PLAINTIFFS-APPEL
Case Date:November 07, 2001
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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270 F.3d 1215 (9th Cir. 2001)

IN RE: THE EXXON VALDEZ,

GRANT BAKER, ET AL., AS REPRESENTATIVES OF THE MANDATORY PUNITIVE DAMAGES CLASS, PLAINTIFFS-APPELLEES

v.

JOSEPH HAZELWOOD, DEFENDANT,

AND

EXXON CORPORATION; EXXON SHIPPING COMPANY, DEFENDANTS-APPELLANTS

IN RE: THE EXXON VALDEZ,

GRANT BAKER, ET AL., AS REPRESENTATIVES OF THE MANDATORY PUNITIVE DAMAGES CLASS, PLAINTIFFS-APPELLEES,

v.

EXXON CORPORATION; EXXON SHIPPING COMPANY, DEFENDANTS,

AND

JOSEPH HAZELWOOD, DEFENDANT-APPELLANT

DANIEL R. CALHOUN; BRADFORD J. CHISHOLM; DAVID P. CLARKE; THOMAS S. MCALLISTER; PHILLIP G. MCCRUDDEN; MICHAEL J. MCCLENAGHAN; GUY PIERCEY; HUGH WISNER; GRANT C. BAKER; LARRY L. DOOLEY; KIM J. EWERS; JOHN W. HERSCHLEB; KENT HERSCHLEB; DAVID B. HORNE; MICHAEL J. OWECKE; GERALD E. THORNE; GEORGE A. GORDAOFF; OLD HARBOR NATIVE CORPORATION; TIMBERLINE, INC.; BARBARA BROWN; JOHN FOGES; JAMIE L. HALLADAY; CHARLES MCMAHON; JENNIFER BRIGGS; TERRI MAST; MARK T. COLES; FRED GALICANO; MIKE HOLLERBEKE; KATHY BRYAN; VINCENT LIBED; ART HUDDLESTON; OPINION ROBERT LOVE; ROXANE VILLAUEVA; MARCELO ROMBAOA; SCOTT HULBERT; BRIAN GILLIS; FRANK MICHAEL CARLSON; ELENOR MCMULLEN; NATIVE VILLAGE OF LARSEN BAY; NATIVE VILLAGE OF CHENEGA BAY, PLAINTIFFS-APPELLANTS

v.

EXXON CORPORATION; EXXON SHIPPING COMPANY; JOSEPH HAZELWOOD, DEFENDANTS-APPELLEES

Nos. 97-35191, to 97-35193 and 97-35235.

United States Court of Appeals, Ninth Circuit

November 7, 2001

Argued and Submitted May 3, 1999

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John F. Daum, O'Melveny & Myers, LLP, Los Angeles, California, for appellant Exxon Corporation.

David M. Heilbron (briefed), McCutchen, Doyle, Brown & Enersen, LLP, San Francisco, California, for appellant Exxon Shipping Company.

Thomas M. Russo (briefed), Chalos & Brown, P.C., New York, New York, for appellant Joseph Hazelwood.

David C. Tarshes (briefed), Davis, Wright, Tremaine, LLP, Anchorage, Alaska, for the appellees.

Brian B. O'Neill (argued), Faegre & Benson, Minneapolis, Minnesota, for the appellees.

Appeal from the United States District Court for the District of Alaska; H. Russell Holland, District Judge, Presiding. D.C. No. CV-89-00085-HRH; CV-89-00095-HRH

Before: Schroeder,[*] Chief Judge, Browning and Kleinfeld, Circuit Judges.

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Kleinfeld, Circuit Judge:

This is an appeal of a $5 billion punitive damages award arising out of the Exxon Valdez oil spill. This is not a case about befouling the environment. This is a case about commercial fishing. The jury was specifically instructed that it could not award damages for environmental harm. The reason is that under a stipulation with the United States and Alaska, Exxon had already been punished for environmental harm. 1 The verdict in this case was for damage to economic expectations for commercial fishermen.

The plaintiffs here were almost entirely compensated for their damages years ago. The punitive damages at issue were awarded to punish Exxon,2 not to pay back the plaintiffs. Among the issues are whether punitive damages should have been barred as a matter of law and whether the award was excessive. The law began changing shortly after judgment, and important aspects of this opinion are controlled by a Supreme Court decision that came down only last term, Cooper Industries, Inc. v. Leatherman Tool Group, Inc.3

Facts

Bligh Island and Bligh Reef have been known to navigators for a long time. Captain George Vancouver charted and named the island on his third voyage to the North Pacific on the Discovery in 1794.4 The Bligh Island Reef has long been mapped on U.S. Coast and Geodetic Survey maps, shortened to Bligh Reef by the Coast and Geodetic Survey in 1930.5 Captain William Bligh and Vancouver had been officers together sixteen years earlier, on the Resolution, when Captain James Cook, among the greatest navigators in history, explored Alaska and the South Pacific.6

Captain William Bligh is infamous from Fletcher Christian's mutiny on the Bounty.7 The infamy was refreshed in 1989, the 200th anniversary of the mutiny on the Bounty, by Captain Joseph Hazelwood of the Exxon Valdez.

On March 24, 1989, the oil tanker Exxon Valdez ran aground on Bligh Reef in Prince William Sound, Alaska. It has never been altogether clear why the Exxon Valdez ran aground on this long known, well-marked reef. Because we are reviewing a case that resulted in a jury verdict, we interpret the evidence, and state our account, most favorably to the parties successful at trial.8

The vessel left the port of Valdez at night. In March, it is still dark at night in

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Valdez, the white nights of the summer solstice being three months away. There is an established sea lane that takes vessels well to the west of Bligh Reef, but Captain Hazelwood prudently took the vessel east of the shipping lanes to avoid a heavy concentration of ice in the shipping lane, which is a serious hazard. Plaintiffs have not claimed that Captain Hazelwood violated any law or regulation by traveling outside the sea lane. The problem with being outside the sea lane was that the ship's course was directly toward Bligh Reef.

Bligh Reef was not hard to avoid. All that needed to be done was to bear west about the time the ship got abeam of the navigation light at Busby Island, which is visible even at night, some distance north of the reef. The real puzzle of this case was how the ship managed to run aground on this known and foreseen hazard.

There was less than a mile between the ice in the water, visible at night only on radar, and the reef. Captain Michael Clark, an expert witness for the plaintiffs, testified that an oil tanker is hard to turn, more like a car on glare ice than a car on asphalt:

Q: Let's talk a minute about how you turn one of these vessels. Now, this we're talking about a vessel here that's in excess of 900 feet long, all right? Over three football fields.

What's it like to turn one of these?

A: Well, it's not like turning a car or a fishing boat or something. There is a -as you are traveling in one direction and you put the rudder over, even though the head of the vessel will turn, your actual direction of travel keeps going in the old direction. Sort of like you're steering a car on ice; you turn the wheel and you just keep going in the same direction. Eventually you'll start to turn and move in the direction you're headed for.

Q: Okay. Is it just as easy as turning a car?

A: No.

Q: And does it make any sense to try to compare changing course in one of these vessels fully laden to that of turning a corner with a car?

A: No.

Q: To make it turn on a vessel, there has to be a rudder command given?

A: Yes.

Q: And once you give that rudder command, is that the end of the turn?

A: No. No, you have to watch and make sure that the rudder command is made as you ordered it and to make sure that it's having the desired effect.

Q: Is there anything else that has to be done in order to put it on the course that you want it on?

A: Yes, you usually have to give counter rudder to slow the turn down.9

Considering the ice in the water, the darkness, the importance of turning the vessel away from Bligh Reef before hitting it, and the tricky nature of turning this behemoth, one would expect an experienced captain of the ship to manage this critical turn.

But Captain Hazelwood left the bridge. He went downstairs to his cabin, he said, to do some paperwork. A special license is needed to navigate the oil tanker in this part of Prince William Sound, and Captain Hazelwood was the only person on board with the license. There was testimony that captains simply do not leave the bridge during maneuvers such as this one and that there is no good reason for the captain to go to his cabin to do paperwork at such a time. Captain Hazelwood left the bridge just two minutes before the turn needed to be commenced, which

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makes it all the more strange that he left at all.

Before leaving, Captain Hazelwood added to the complexity of the maneuver that needed to be made: he put the vessel on autopilot, which is not usually done when a vessel is out of the shipping lanes, and the autopilot program sped the vessel up, making it approach the reef faster and reducing the time during which error could be corrected. As Captain Hazelwood left, he told Cousins, the third mate, to turn back into the shipping lane once the ship was abeam of Busby Light. Though this sounds plain enough, expert witnesses testified that it was a great deal less clear and precise than it sounds.

Captain Hazelwood's departure from the bridge, though unusual, was not inexplicable. The explanation put before the jury was that his judgment was impaired by alcohol. He was an alcoholic. He had been treated medically, in a 28 day residential program, but had dropped out of the rehabilitation program and fallen off the wagon. He had joined Alcoholics Anonymous, but had quit going to meetings and resumed drinking. Testimony established that prior to boarding his ship, he drank at least five doubles (about fifteen ounces of 80 proof alcohol) in waterfront bars in Valdez. The jury could have concluded from the evidence before them that leaving the bridge was an extraordinary lapse of judgment caused by Captain Hazelwood's intoxication. There was also testimony that the highest executives in Exxon Shipping knew Hazelwood had an alcohol problem, knew he had been treated for it, and knew that he had fallen off the wagon and was drinking on...

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