Baker v. Exxon Mobile Corp.

viоlation, plaintiffs must IV First Amendment is, question actually aid in prove that the sum, affirm In I would the district been, religious purposes.” for or has used injunction. a preliminary court’s denial of However, 857, she Id. at 120 S.Ct. 2530. Although failing the district court erred in reject any that secular presumption would apply the test set forth Johnson 859, restrictions were not followed. Id. Controls, 200-01, 499 U.S. at 111 S.Ct. in 120 S.Ct. 2530. Justice O’Connor also 1196, this error was harmless because the dicated that a de minimis diversion would City record shows offered two concerns.6 Id. at raise constitutional government bona fide interests to sustain S.Ct. addition, the lease. this record contains case, from any flowing In our aid showing no of the “governmental indoctri- City truly BRM de to the minimis. necessary judicial nation” for relief from agreed The BRM has to undertake the not an alleged violation of the Establishment expense maintaining inconsiderable opin- Clause under the Court’s shelter, City homeless return for the in Agostini, ions insuring premises paying nec- Mitchell, 138 L.Ed.2d essary repairs.7 appear As it does not 147 L.Ed.2d 660. any that the BRM from receives funds Lastly, even if the district court had erred City, possibility any no there is actual denying the appellants preliminary re- money. Accordingly, diversion of the ma- lief, proper remedy would be a remand jority relatively ventures into the unchart- proceedings further consistent with our determining intangi- ered waters of when opinion. governmental entity ble assistance from a “governmental

amounts to indoctrination.”

I would not embark on this course be-

cause, here, conducting chapel services at

which voluntary, conjunc- attendance is generally providing

tion with ser- homeless

vices, simply does not rise to level of

constitutional concern.

Finally, even if it were determined that

holding voluntary chapel services could indoctrination, government

amount to VALDEZ, In re the EXXON (see course, proper as previously explained II), Part to vacate the district Baker; Seafoods, Inc.; Grant Sea Hawk relief, injunctive

court’s denial of and to Processors, Inc.; Sagaya Cook Inlet parties remand to present allow the Corp.; McMurren; William necessary factual evidence Patrick L. pre- for even a McMurren; King; liminary George William determination that the BRM’s W. Norris; holding voluntary Cranz; chapel might services C. Hunter Richard government Feenstra; amount to Sailing Safaris; indoctrination. Wilderness City may Justice O’Connor wrote: limited obligations "[t]he evi- 7. The well have these by respondents during years lessee, dence amassed regardless identity of the (which discovery began approximately building whether the is leased. years ago) is at best de minimis therefore insufficient inqui- to affect the constitutional ry.” Id. at 120 S.Ct. 2530. Systems Inc.; Rapid Sales, Seafood Ltd.; Marine Enter- Nautilus

Pacific Findlay Abbott, Inc.;

prises, William Plaintiffs-Appellees,

Jr., Shipping Corp.; Exxon

Exxon Mobile Defendants-Appellants.

Co., Valdez, the Exxon

In re Inc.; Seafoods, Baker; Hawk Sea

Grant Inc.; Processors, Sagaya Inlet

Cook McMurren; Patrick L.

Corp.; William George King;

McMurren; W. William Cranz; Norris; Richard Hunter

C. Safaris; Sailing

Feenstra; Wilderness Inc.; Systems Sales, Rapid

Seafood Ltd.; Marine Enter- Nautilus

Pacific Findlay Abbott, Inc.;

prises, William

Jr., Plaintiffs-Appellants, Shipping Corp.; Exxon

Exxon Mobile

Co., Defendants-Appellees. 04-35182, 04-35183.

Nos. Appeals, Court of

United States

Ninth Circuit. 27, 2006. Jan.

Argued and Submitted 22, 2006.

Filed Dec. May

Amended O’Melveny Dellinger, Myers, & hear the matter banc. Walter en The matter DC, LLP, Daum, Washington, and John F. majority failed to receive a of votes of the LLP, O’Melveny Myers Angeles, & Los active judges nonreeused favor of en CA, defendants-appellants, for the cross- RApp. banc consideration. Fed. 35.1 appellees. petition The for rehearing en banc is O’Neill, Benson, Faegre B. & Brian DENIED. MN, Tarshes, Minneapolis, and David C. Tremaine, LLP, Davis, Wright, Anchor- KOZINSKI, Judge, dissenting Circuit AK,

age, plaintiffs-appellees, for the cross- from denying petition the order for appellants.

rehearing en banc: centuries, For two maritime law has protected ship liability owners from for solely based on the fault captain and crew. See Thomas J. SCHROEDER, Before: MARY M. Schoenbaum, Admiralty & Maritime Law Judge, Chief R. JAMES BROWNING and (2005) § 5-17 (“[Ajdmiralty deny pu- cases KLEINFELD, ANDREW J. Circuit fault.”). nitive of imputed cases Judges. The Court first erected this bul- wark in The Order; Nancy, Amiable 3 by Wheat. Judge Dissent Order 546, KOZINSKI; 558-59, by 16 U.S. 4 Judge Dissent Order L.Ed. 456 BEA; Opinion; (1818), explaining Per Curiam Dissent that a ship owner can’t Judge BROWNING. subject “exemplary damages” for the agent actions of its if the owner is “inno-

ORDER transaction, cent of the demerit of this IT IS ORDERED THAT: having it, neither directed nor counte- it, nanced participated nor in it in the Valdez, opinion in In re Exxon 472 slightest degree.” (9th Cir.2006) F.3d 600 is amended as fol- page lows: On delete the full first Dutifully following The Nancy, Amiable paragraph commencing with “There is also we held in Packing & Navigation Pacific a limit on the law of the case doctrine ...” (9th Fielding, Co. v. 136 F. Cir. “... concluding may general- with 1905), damages are unavail ly part be used as of the calculation of against able a ship owner for the reckless harm.” conduct of the captain. abruptly We amendment, With that panel has changed course in Alpha Protectus Navi voted to deny petition otherwise for gation Co. v. North Grain Grow Pacific panel rehearing. ers, Inc., (9th Cir.1985), 767 F.2d 1379 petition panel for DE- rehearing is that, law, held under maritime NIED. against are available an owner for agent The full court the actions of was advised of the his who “was em petition rehearing en banc. A judge managerial in a ployed capacity and court called for a vote on whether to re- acting scope in the employment.” Id. at Wardlaw, Tallman, Judges voting. Ikuta were part recused in this matter and took no in the in our circuit. (Second) maritime ty is rule now Restatement (quoting I, F.3d at 1235-36.3 See Valdez 909).1 § Torts loggerheads рuts us This decision Alpha Protectus between The conflict has consid every circuit that other in In ashore Packing washed and Pacific States Steel issue. In United ered this (Valdez I), 270 F.3d the Exxon Valdez re Fuhrman, 407 F.2d Corp. (9th Cir.2001).2 Following Protectus denied, Cir.1969), cert. Nancy The Amiable consigning Alpha, (1970), L.Ed.2d 542 of his- Packing to the dustbin and Pacific The Amiable followed the Sixth Circuit jury instructed the tory, the district Packing holding Nancy and Pacific reck- for the responsible Exxon was be held liable ship owner cannot if he was “em- captain acts of the less can be shown damages “unless it punitive act- capacity while managerial in a ployed authorized or ratified that the owner See employment.” scope [his] in the ing or after master either before acts of the (internal quota- I, at 1233 270 F.3d Valdez complained ... [or] acts accident omitted). that jury found Once tions unfit and the of an master of were those also recklessly, it was captain acted him.” employing reckless owner was reckless- that Exxon acted to find required followed the The Fifth Circuit Id. at 1148. that panel recognized appeal, the ly. On Rentals, in In re P & E Boat same course conflicts with Alpha Protectus Cir.1989). (5th Pacific In re Inc., F.2d 642 872 duty-bound it was point, Packing; that Alpha, it observed jecting Protectus See United case en banc. call this courts, to The Amia going back admiralty 977 F.2d Hardesty, v. States dam punitive have held that Nancy, ble curiam). banc) Cir.1992) (en (9th In- (per on vicarious based ages are unavailable CEH, Finally, stead, en banc liability. it scuttled the id. See (1st 694, 705 imposition Seafarer, F.3d Alpha’s, Inc. v. that Protectus held F/V Circuit, taking a Cir.1995), the while First liabili- on vicarious damages based punitive Corp. v. Prudential-Bache Kyocera under The Amiable taking account of While no 987, Services, Inc., & 995-96 341 F.3d Trade cases Alpha pointed to state Nancy, Protectus Cir.2003) (enbanc). (9th n. 13 liability based imposing vicarious corporate Amer- reality upon of modern “the panel re- Packing, the overruling nothing ica,” has 3.In but 767 F.2d Pacific Insur- exclusively Mutual ship lied relationship between changed in the Life Pacific 1, 111 S.Ct. Haslip, 499 U.S. import- justify ance Co. captain that owner and I, (1991). law, L.Ed.2d 1 Valdez see maritime ing this innovation into badly panel Schoenbaum, F.3d at 1235-36. The Law Admiralty & Maritime Nancy and The Amiable ("[SJtate the mark. do affect missed law reforms § tort 5-17 damages, awards.”). Packing held The damage admiralty punitive Pacific liability, available are not vicarious responsibility based on always borne the captain has contrast, Haslip was By law. parties, under maritime safeguarding crew and third his decision, holding that state times. a constitutional changed in modern and this hasn’t Co., could, process, im- with due consistent See, Ray law & e.g., v. J. McDermott Boudoin lia- Cir.1960); on vicarious (5th based pose Northern F.2d 84-85 law Kinnear, disputes maritime bility. No one Queen F.3d Inc. dam- constitutionally impose punitive Cir.2002). could (9th ques- The ages such circumstances. under centuries, does. For two it tion is whether the full didn’t come to 2. While this conflict Alpha) (except Protectus every ours in petition for until court’s attention doesn’t, (Valdez nothing the has held the Exxon rehearing after In re Valdez possibly have curiam), Haslip Cir.2006) could said in (9th (per II), 472 F.3d 600 changed that. any I issue in en banc Valdez we can consider what somewhat broader view of constitutes panel’s exposes decision owners of fault, ship endorsed principle every owner’s vessel port facility within our culpability” part jurisdiction that “some level of on the maritime staggeringly huge —a ship required puni- owner is before area —to damages solely for the damages may imposed tive under mari- managerial actions of employees. Because time law. nature of liability, harsh vicarious owners ship protect won’t be able to them- panel’s contrary decision is also against selves our newfangled interpreta- law, the modern drift of maritime which tion of maritime law through hiring careful has reaffirmed its historical reluctance to practices. Accidents at happen ships sea — impose hedonic and sink, collide aground and run be- —often all. See Guevara v. Maritime Overseas cause of serious mistakes captain and Corp., 59 n. 11 Cir. crew, many could, of which with the bene- 1995) (en banc). Apex In Miles v. Marine fit hindsight, be found to have been 19, 31-33, Corp., 498 U.S. centuries, reckless. For companies have (1990), 112 L.Ed.2d 275 a unanimous Su built their seaborne businesses on the un- preme family Court held that of a standing der they subject won’t be seaman couldn’t nonpecuniary recover they if direct- “[n]either damages wrongful a death action it, it, ed nor countenanced nor participated brought general under maritime law. in” wrong, The Amiable Nancy, 16 Courts read barring Miles as nonpe- 559; U.S. at panel opinion has thrown cuniary damages, including ‍‌​‌​‌​​‌​​‌‌‌​​​​​‌​​‌‌​​‌‌‌​‌​​​​​​‌‌​‌​‌‌​‌‌‌​‍punitive dam protection overboard. death, ages, wrongful personal injury This case pеrnicious demonstrates the and other related brought actions on be impact departing from the traditional seamen, half Glynn see Roy v. Al Boat protections of maritime plaintiffs law. The Mgmt. Corp., 57 F.3d 1502-05 & n. here suffered no physical injuries —then- Cir.1995); Guevara, 59 F.3d at only claim was that spill the oil harmed 1503, 150607, 1512, and some have inter their commercial fishing interests. preted nonseamen, Miles as applying to I, Valdez 270 F.3d at 1221. After the Indus., see Wahlstrom v. Heavy Kawasaki accident, Exxon acted as a corpora- model Ltd., (2d Cir.1993). 4 F.3d spent tion—it over billion to remove oil $2 While these cases involve the intersection from the adjacent water and shore and of federal statutes with maritime common million to damaged restore natural law, they confirm Supreme Court’s Furthermore, resources. Id. at 1223. be- Aviation, observation in Executive Jet Inc. jury verdict, fore the ever entered a Cleveland, 249, 270, 409 U.S. 93 S.Ct. compensated plaintiffs for most of (1972), 34 L.Ed.2d 454 that the “long II, their damages. See Valdez experience the law of [of] the sea ... 611-12. Yet jury, perhaps subscribing concerned with ... liability.” limitation of to the maxim that a rising tide lifts all It makes no sense hold that families of boats, took advantage of the vicarious lia- those who are killed and maimed at sea bility instruction to award puni- billions in awards, can’t get punitive or even tive as a windfall to their fellow pain and suffering or loss of consor Alaskans. tium, yet reverse centuries of maritime law to make it easier learned, for businessmen to As Exxon company can volun- recover billions in damages for tarily compensate parties, harmed take ev- harm to their commercial interests. ery step imaginable to tragic undo the its them, economic effects of because the created, sub- still be agents its mess emotional produced award ever severe misconduct largest punitive to the ject because court—all a federal Id. at 614. harm as well.” upheld captain who hiring the misfortune had course, in State Farm plaintiffs Of Moreover, the act. a reckless committed Campbell, Ins. Mutual Automobile Co. limited to are not opinion of this effects 155 L.Ed.2d Ninth in the based and docks shippers (2003), and emotional economic had no knows shipping business Circuit: case, Campbells In that harm also. national, boundaries. circuit, or even Farm for against State brought a claim on notice: put will be everywhere Shippers policy within faith failure settle bad into the waters sail vast your If vessels limits, fraud, infliction of and intentional Circuit, jury shipwreck can the Ninth The emotional distress emotional distress. through punitive your operations not limited Campbells suffered was wrong nothing you did fact and the losses, by their business that caused major turbulence you. Such won’t save plaintiffs suffered. Exxon Valdez come, if at ought the law seascape large poten faced with Campbells were all, Supreme Court. from the cov beyond limits judgment tial insurance seem colleagues don’t my Because gaily company the insurance erage—which have under- that we my concern share their them probably them cost told law and uniformity of maritime mined II, liqui Farm As Valdez house. long-settled contravened damage by paying the all economic dated view the unanimous as well as precedent, Campbells third-party judgment circuits, I dissent. before of our sister Nonetheless, complaint. filed their from the BEA, dissenting Judge, Circuit compensatory million in court awarded $1 rehearing en denying petition order dam punitive million in damages and $25 banc: reversed the Supreme Court ages. The 1 ratio of that a 25 to puni held Judge judgment Kozinski agree

I damages been award not have damages compensatory should punitive tive However, if punitive even In in this case. constitutionally ed invalid as excessive. that the note appropriate, I damages were stead, considering economic even damages compensatory punitive ratio of harm, remanding, the Su emotional Supreme excessive. The is “a stated preme Court “[pjerhaps has instructed Court compensa of the amount at or near reasonable of the important indicium most Id. damages” appropriate. tory damages award is of a ness S.Ct. the defen degree reprehensibility de- has Supreme Court Although the America BMW North conduct.” dant’s brightline ratio clined to set 1589, 559, 575, Gore, 116 S.Ct. 517 U.S. awards, “in few awards practice, (1996). panel As 134 L.Ed.2d pu- between single-digit ratio exceeding a noted, reprehensibility itself damages, compensatory nitive most, range.” mid is “at conduct here satisfy pro- due degree, will significant (Valdez II), 472 Valdez In re the Exxon Moreover, compensato- “[w]hen Id. cess.” curiam). Cir.2006) (9th 600, (per substantial, a lesser then ry damages correctly concluded panel Importantly, the compensatory ratio, only equal to perhaps no actual conduct caused that “Exxon’s limit of reach the outermost damages, can although it did people,” physical harm (emphasis guarantee.” process harm to the due mere economic “more than cause added). The Supreme Court characterized The resolution of punitive damages has Campbells’s million delayed been because the course of this damages award as “substantial.” Id. at litigation paralleled has the course fol 426,123 then, Surely, S.Ct. 1513. the $513 by Supreme when, lowed Court in compensatory damages million here is 1991, it embarked on a series of decisions damages. Hence, also “substantial” outlining the relationship dam 5:1 adopted by majority ratio seems to ages principles to the due em violate implied the limits the Court for See, bodied e.g., Constitution. Pac. a case where the reprehensibility 1, Mut. Ins. Co. Haslip, 499 U.S. Life conduct of the does not defendant include 1032, (1991); 113 L.Ed.2d 1 TXO physical injury, infliction of nor an assess- Corp. Prod. v. Alliance Corp., Res. ment damage. for environmental Accord- 2711, U.S. 113 S.Ct. 125 L.Ed.2d 366 ingly, I respectfully dissent from denial of (1993) Am., (plurality); BMW Inc. v. of N. rehearing en banc. 116 S.Ct. (1996); L.Ed.2d 809 State Farm Mut. OPINION Auto. Ins. v. Campbell, Co.

PER CURIAM: (2003). 155 L.Ed.2d 585 Intervening Supreme Court decisions have I. INTRODUCTION caused us to remand the matter twice to We look for the puni third time at the the district court for reconsideration of damages imposed tive in this litigation as a punitives light evolving Supreme result of the 1989 grounding of the oil Court law. The opinion, district court’s Valdez, tanker Exxon resulting after our last remand for it to consider the economic many harm to who earned their impact Supreme Court’s decision in livelihood from the resources of that area. published at In re the Exx (In See Baker v. re Hazelwood the Exxon Valdez, (D.Alaska 296 F.Supp.2d 1071 Valdez), (9th Cir.2001) 270 F.3d 1215 2004) [hereinafter District Opin [hereinafter Damages Punitive Opinion It subject ion]. is the appeal. of this /]; Seafoods, Sea Hawk Inc. v. Exxon Corp., Cir., No. Aug. 03-35166 Now, with the guidance of 2003). precluded, was, jury We are as the decisions, Court’s the district judge’s punishing from for befouling Exxon the thoughtful issues, consideration of the region beautiful spilled, where the oil was prior our own in the litigation, decisions we because that punishment already has been trust we are bring able to phase this imposed in separate litigation that has litigation to an end. While agree we been settled. See Damages Punitive much of analysis court, the of the district I, Opinion 270 F.3d at 1242. As we ex required we are to review de nоvo the plained in Damages I, Punitive Opinion district legal analysis court’s in applying plaintiffs’ the punitive damages case was Supreme guideposts. Court’s See Coo saved preemption judicata from and res Indus., per Inc. v. Leatherman Tool because the only private award “vindicates Inc., 424, Group, 532 U.S. 121 S.Ct. interests, economic and quasi-economic not 1678, 149 (2001). L.Ed.2d 674 public interest punishing in harm to While original punitive damages the environment.” plaintiffs’ Id. “The award was billion and in punitive claims for accord with the $5 expressly ex jury’s verdict, cluded consideration harm district court to the envi reduced it ronment.” Valdez, In re the Exxon billion after our first remand. $4 In re 2004). F.Supp.2d (D.Alaska Valdez, the Exxon 236 F.Supp.2d Damages Opinion Punitive by vacated Sea (D.Alaska 2002), supertanker. I, Yet, Hawk, Then, after our sec- 270 F.3d at 1234. dissent No. 03-35166. remand, it an award ignore $4.5 entered our unani- ond claims that we should Opinion, District Court Damages in Punitive billion. mous conclusion out- For the reasons at 1110. F.Supp.2d I, 270 F.3d at Opinion that Exxon’s development in factual further lined spill respect conduct with to the was con- opinion, this analysis of and the effectively treats intentional. The dissent damages to ratio of clude that the ealeulatingly and mali- though Exxon as resulting from the actual economic ciously ship into disaster. steered court’s award in the district reflected spill, rely intervening on the Su- Purporting billion, factor by a material exceeds of $4.5 Farm, State in decision preme Court appropriate under that would be a ratio apply also refuses to our earlier dissent Opinion I and the cur- Damages Punitive re- mitigation that Exxon’s efforts holding analysis. Court controlling Supreme rent of its conduct. reprehensibility duce the Farm, State rejection to a of the bedrock This amounts billion, order a remittitur 1513. We principle of stare decisis. bil- resulting $2.5 State Farm was an insurance contract because, assessing We do so lion. Nothing suggests in it case. misconduct, the reprehensibility Damages Punitive court’s decision to the according important guidepost most Opinion I Supreme improper. in opinion Court’s implicitly hold explicitly did not facts. See id. mitigating are several there no role in determin mitigation plays These include constitutionality of a dam ing the by action taken both prompt a lack of discussion compensate ages and to award. Such up the oil clean losses. These mol- supplant for economic case cannot plaintiffs an insurance contract degree, the to some material lify, at least in the toxic-tort arena express holding Exx- terms of in economic reprehensibility are a factor in as mitigation efforts Dam- Punitive original on’s misconduct. in this sessing I, F.3d at 1242. ages Opinion not be Controlling authority should case. addition, relationship considering Hand As Learned ignored or distorted. and the the size of the award between said, victory gained “a famously once harm, in our earli- we concluded amount pieces chess off the table sweeping opinion that the sub- er Hand, Mr. Jus enduring.” Learned already had costs that Exxon stantial Cardozo, L. tice Harv. Rev. cargo lessen up in clean and loss borne (1939). in the future. the need for deterrence holding that previous We reiterate however, Exx- disagree, at 1244. We Accord- was not willful. Exxon’s conduct that, as a result ultimate contention on’s that cor- damages ingly, punitive Damages Opin- in Punitive two sentences of re- highest degree responds with I, ago and before ion years written five comport with due does prehensibility Farm, in Supreme opinion Court’s falls process when punitive to have Exxon is entitled a fault contin- in the middle of squarely million. than higher at no assessed uum. See id. litigation history of this Because goes to the oth- dissenting colleague

Our history of jurisprudential the recent tracks plac- misconduct was er extreme. Exxon’s analysis is best damages, our punitive charge relapsed alcoholic ing 1074 light thorough 600-01,

made in of a understanding (Scalia, J„ 116 S.Ct. 1589 dis- history. We therefore outline senting) (discussing history pro- of due history hope with what we is sufficient awards) cess review of clarity thoroughness. (citing Seabord Air Line R. v. Seegers, Co. 73, 78, 28, 207 U.S. 28 S.Ct. 52 L.Ed. 108

II. LEGAL AND FACTUAL (1907); Southwestern Tel. & Tel. Co. v. BACKGROUND Danaher, 482, 489-91, 238 U.S. 35 S.Ct. 886, (1915); 59 A. L.Ed. 1419 From Time Accident Waters-Pierce Texas, through 86, 111-12, the First Punitive Oil Co. v. 212 Dam- U.S. 29 ages 220, Award and Denial (1909); Motion 53 L.Ed. 417 Standard New Trial: The Law Missouri, Common 270, Oil Co. Ind. v. 224 U.S. through Supreme Court Deci- 286, 290, 406, 32 S.Ct. (1912); 56 L.Ed. 760 sion in TXO. Louis, Williams, St. I.M. & S.R. Co. v. 63, 66-67, 71, U.S. 40 S.Ct. 64 L.Ed. 139 The Exxon ran aground Bligh Valdez on (1919)). Reef Alaska’s Prince William Sound 24, March 1989. Punitive at that 1991, however, Supreme Court governed by time were general common decided Mutual Insurance Co. Pacific Life law, law principles. At common jury 1, 1032, Haslip, U.S. 111 S.Ct. determined punitives, and the trial (1991). There, L.Ed.2d for the first time judge conducted a limited review to deter era, in the modern the Court conducted a jury’s mine whether the verdict was the substantive review of an award of product passion prejudice, damages. Haslip was an insurance fraud whether the award was one that shocked case, in agent pocketed which the pre- Lettow, the conscience. See Renee B. miums plaintiffs and caused the insurance New Trial Against Verdict Law: 4-5, to lapse. Id. at 111 S.Ct. 1032. The Judge-Jury Early Relations Nine Court upheld damages award America, Century teenth 71 Notre Dame that amounted to four times the award of 505, (1996); L.Rev. 542-51 DeCamp, Paul compensatory damages and 200 times the Beyond State Farm: Due Process Con out-of-pocket costs of the defrauded in- straints on Noneconomic Compensatory 23-24, sured. Id. at 111 S.Ct. 1032. The Damages, 27 231, Harv. J.L. & Pol’y Pub. Court noted that the ratios might be “close (2003); 246-48 Browning-Ferris see also line,” to the but said the award had to be of Vt., Indus. Inc., Inc. v. Disposal, Kelco upheld because it objective “did not lack n. 109 S.Ct. criteria.” Id. The Court therefore con- (1989) L.Ed.2d 219 (affirming district cluded that the damages did not application court’s “grossly Vermont’s “cross line into the area of constitu- and manifestly ju excessive” standard for tional impropriety.” review); dicial Honda Motor v. Oberg, Co. not, time, did at that and has not 432 n. since, any bright defined line of constitu- (1994). L.Ed.2d 336 Although there were has, tional It impropriety. repeatedly, in- dating cases from the Lochner era that dicated See, that there is none. e.g., State had suggested may there be a due 424-25, at 123 S.Ct. 1513. process ceiling punitive damages, on at the time 1989, 1993, of this in In years accident the two Haslip, after the Court had never invalidated an Court major on on another punitive award took dam- grounds that the size of the award ages In violated case. TXO Corp. Production due process. See BMW v. 517 U.S. Alliance 443, Resources Corp., 509 U.S.

1075 Damage the Alloca- (1993), Appeal B. The the 2711, 366 L.Ed.2d 125 Decisions in Plan and Our tion $19,000 in jury a award reviewed Court Baker and Icicle. million in damages and $10 compensatory 451, S.Ct. Id. at 113 damages. punitive trial, many of plaintiffs, several Prior to an oil and out of case arose That 2711. entered processors, had into the food sea Id. at scheme. fraud development gas Exxon. Icicle agreements with settlement pro- The case 447-51, 2711. S.Ct. 113 (In Exxon Baker re the Seafoods, Inc. v. plurality, The majority opinion. no duced Cir.2000) (9th 790, Valdez), 229 F.3d places some reiterating that due ]; Baker v. Corp. Icicle Exxon [hereinafter the said that damages, limit Valdez), (In F.3d Exxon re the “grossly excessive” not so award was Baker], Cir.2001) [hereinafter the overturned, invoking thus should be puni- anticipated a sizable agreements The Hаslip. in Id. used standard Icicle, 229 award. See F.3d tive provide declined The Court Baker, 793; at 986-87. 239 F.3d determining guidance any particular millions receiving substantial return exces- “grossly an award would when Exxon, settling plain- the payments from chose plurality The instead Id. sive.” tiffs, agreed separate agreements, two disparity between the dramatic say that of their portion to allocate the punitive loss and actual financial the agreement was Exxon. One so award to Id. award controlling. Icicle, The was not agreement,” award called “cede back Id. upheld. assign- and the other was was F.3d at Baker, award, the future F.3d ment of the background that against It was at 986-87. in 1994. was instructed jury in this case however, court, did not the into account The district told to take jury was during trial. Ici- misconduct, agreements know the reprehensibility cle, the court did at 793. When arising potential of actual or amount them, of the during consideration learn of misconduct, and, additionally, to from plan, damage allocation proposed parties’ factors such mitigating into account take imposed had been punitives and after already fines up costs and the clean verdict, jury’s in accordance District as deterrents. imposed the settlements. frowned on district court at 1081-82. F.Supp.2d Opinion, view, court’s In the at 794. district Id. of mutual product were instructions jury about the have told the Exxon should court, and the district parties effort jury would have so agreements challenged. seriously have not been actually go- much Exxon how known They questioned here damages. pay ing to have looking. forward were, retrospect, quite therefore, court, refused district Id. The re- jury September On any to receive settling plaintiffs permit ver- punitive damages award, billion turned on the $5 dict, imposed time earlier from having some not benefit theory that Exxon should Baker, million. The Id.; 239 F.3d award the settlements. from the appeals accepted pursued two district to enforce Citing Haslip and refusal court’s judgment. district entered involving the cede back one agreements: TXO, court denied the district Icicle, and the 229 F.3d agreement, January of 1995. trial in for a new motion involving assignment agreement, other punitive 575, award of damages. See at id. Baker, 239 F.3d 987-88. 116 S.Ct. 1589. The Court invoked the traditional concepts of due to de- agreement The two different forms of purpose scribe the of the review essentially wеre to have intended same assurance of fair to the notice defendant of allowing keep effect: Exxon to por- some consequences of its conduct. Id. at tion of the eventual ex- 574, 116 S.Ct. 1589. change settling compensatory damage Icicle, claims. In panel this considered the The Court three described factors to be agreement. cede back In a thorough opin- 575, considered. Id. 116 S.Ct. 1589. ion, we held that the agreement cede back The first was the reprehensibility of the was valid and enforceable and that conduct. Id. explained The Court jury quite properly was not told of its reprehensibility is “[pjerhaps the most im- Icicle, existence. 229 F.3d at 800. We portant indicium of the reasonableness of jury reasoned that had the been told of the award,” and said that an agreement, might well compensat- award should enormity” reflect “the by ed for the imposing settlement more (citations omitted). offense. Id. damages. This, turn, Id. The second factor the disparity was be- have frustrated the parties efforts of tween ‍‌​‌​‌​​‌​​‌‌‌​​​​​‌​​‌‌​​‌‌‌​‌​​​​​​‌‌​‌​‌‌​‌‌‌​‍the actual or potential harm to the reach pointed settlements. We out that plaintiffs flowing conduct, from settlements should encouraged, particu- by jury. assessed larly in large class actions like this one. The Court said disparity that the factor unethical, Id. “Far being from cede back was the most commonly cited. Id. at agreements make it easier to administer 116 S.Ct. 1589. The Court reasoned this mandatory class actions the assessment important factor is because it long “has a damages and encourage settle- pedigree” extending English back to stat- ment in result, mass tort As a cases. such utes from 1275 to providing for dou- agreements should typically be enforced.” ble, treble or quadruple damages. Id. at Id. 580-81, 116 S.Ct. 1589. Thus the critical Baker, appeal, The second considered an measure here is the ratio between the assignment Baker, agreement. 239 F.3d punitive award and the amount of harm at 987-88. Following the Icicle reasoning, inflicted on plaintiff, plaintiffs, be- panel reached the same conclusion. fore the court. Id. at 988. The third factor was the difference be- punitives tween the Supreme C. The civil and crimi- Court’s Decision in penalties nal BMW v. Gore. authorized state for conduct. 116 S.Ct. 1589. As the parties beginning were their The Court indicated reviewing courts preparation for the appeal first of thе $5 should use this factor to “accord substan- billion punitive damages award, the Su- tial legislative deference to judgments con- preme Court issued major its first due cerning appropriate sanctions for the con- process/punitive damages decision after duct at issue.” Id. at 116 S.Ct. 1589 TXO. In it decided BMW North (internal omitted). quotations America, Gore, Inc. v. (1996). L.Ed.2d This the defendant had Court’s first attempt engaged in a practice of repainting dam- describe specific factors that a aged cars passing them off as never- should consider in reviewing a jury’s damaged cars with their original paint. to the Court’s law, v. looked BMW Gore plaintiff 563-64, The 116 S.Ct. 1589.

Id. at jurisprudence. was The Court’s these cars one of federalism purchased had who reviewing that courts $4,000 in stressed opinion awarded 565, 116 Id. at punitives. pay in to due million of the need be mindful should $4 Court Supreme Alabama The 1589. legislative judgments S.Ct. deference the million, and the punitives the $2 reduced reprehensibility assessing in states review. for certiorari petitioned (“[A] defendant 583, 116 Id. at S.Ct. conduct. The 567, 116 1589. S.Ct. Id. at determining in engaged reviewing court excessive. punitives were held the Court whether award 585, 116 1589. S.Ct. Id. at defer ‘accord ‘substantial excessive should concerning of the judgments examining reprehensibility legislative ence’ in v. BMW at conduct, Supreme Court for the conduct appropriate sanctions inflicted only harm ”) that the Browning-Ferris, (quoting Gore stressed issue.’ and not economic (O’Connor, J., was by the defendant 301, 109 S.Ct. 2909 U.S. at The 116 S.Ct. 1589. Id. at physical. in dissenting part)). part, in concurring conduct to that the emphasized also any kind of refusing to draw Again of the only the conduct be considered accept line bright between mathematical in the Ala- plaintiff towards defendant ratios, the Court unacceptable able not other case and bama in to 1 ratio BMW the 500 described practice. nationwide of a might part be “breathtaking.” Id. It remanded as Gore Brey- Justice 116 S.Ct. 1589. Id. at inconsistent, further, proceedings, for danger noted the concurring opinion er’s because, where the Court Haslip, unlike mul- punishment defendant subjecting a award, the Court questionable affirmed a Id. at conduct. the same tiple times for this “fully convinced” in BMW was J., concur- (Breyer, 116 S.Ct. Id. “grossly excessive.” award was ring). 585-86, 116 1589. S.Ct. between the Thus, at the ratio looking harm, stressing punitives and Ap- Damages Punitive D. First one, a reasonable must be that the ratio peal. must that the ratio holding the Court was background against It was punitive dam by the ratio of be measured original of the appeal first briefing plaintiff harm suffered to the ages in this damages award billion $5 harm that case, regard to without in that Exxon contended case went forward. by others experienced been might have due violated amount might also the defendant which Gore. described principles, It 1589. S.Ct. Id. responsible. I, 270 F.3d at Damages Opinion Punitive 1 was 500 to a ratio of concluded that not had an court had district Id. grossly excessive. v. Gore before review BMW opportunity to ratio resulted an excessive 1589. Such ap- final and became judgment original its measuring the jury’s improperly from the motion of Exxon’s upon denial pealable damage inflict to the relation punitives in Id. a new trial. rather potential plaintiffs ed on a nation plaintiff before damage award, to the than the from the billion appeal In its jury. challenging the Exxon, in addition chal- damages, amount factor, to the third respect With sup- sufficiency evidence lenged the between relationship jury in- damages; porting under state comparable penalties and the structions; allowability any punitive notice that imposed. would be Dr. public policy, as a matter of mari- transit, Gore’s car was damaged in and judicata; pre- time law and res and the repainted it but did not Dr. tell emption other by fed- Gore repainting about the when it sold eral say, briefing law. Needless to him jury the car. The found that to be appellate extensive. After fraudulent, proceedings $4,000 and awarded in com- stayed were from January Septem- 1998 to pensatory damages for reduced value of parties ber 1998 for pursue a limited car and in punitive million dam- $4 remand, panel argument heard in May ages. Supreme The Alabama cut Court of 1999. million, the award to but the Court held that it was still high deny so as to submission,

While the case was under BMW due of law for lack of Supreme granted Court certiorari notice, because award exceeded the case, another Ninth Circuit in May and justified amounts under three Cooper v. decided Leathemian Tool “guideposts.” The BMW guideposts Group. The Court there held our review (1) degree are: reprehensibility damages was to be de novo. (2) person’s conduct; disparity Cooper, 532 1678. between the harm or potential harm suf- This did ease our task. by

fered the victim and his E. Punitive Damages Opinion I. (3) award; damage the difference between the punitive damage award and opinion We issued first punitives on the civil penalties authorized or imposed damages November, opinion Our in comparable cases. apply We these went detail through the facts of the guideposts three to evaluate whether a Exxon, disaster and the conduct of and of defendant lacked fair notice of the sever- Hazelwood, Captain they because bore so ity award, of a punitive damages on heavily the consideration of the issues stabilize by the law assuring the appeal. uniform Damages I, Punitive Opinion similarly treatment of persons. situated F.3d at 1221-24. opinion In an more 40 pages, rejected than we Captain (internal Id. at 1240-41 quotations omit separate appeal, Hazelwood’s dealt ted). We noted in Cooper v. Leather length some with all of the by issues raised man Group Tool the Supreme Court de Exxon. ultimately rejected We all of them cided that “considerations of institutional except the challenge to the of pu- amount competence” require de novo review of damages. nitive Id. at 1254. punitive damages awards. Id. at 1240 (quoting Cooper, 532 U.S. at Referring to the “unique body of law” 1678). governs punitive damages, we focused on the Supreme two opinions that We went on to observe that the district had been decided after the district court’s court had not reviewed the award under case, decision and we termed them the standards announced in those cases “critical.” Id. at 1239. These were BMW because neither case had been decided and Cooper Gore v. Leatherman Tool the time jury verdict, returned its Group. We said: Exxon had challenged never the amount of BMW, In Court held that a the award grounds on constitutional until punitive damage award violated the Due after jury’s verdict. Id. at Process Clause of the Fourteenth view of the need for de novo review and Amendment because it grossly was so the intervening decisions of BMW v. Gore excessive that the defendant lacked fair and Cooper v. Leatherman Group, Tool voluntari- a defendant amount that [t]he reconsideration remanded judgment general- should ly before pays some ob- provided also Id. We damages. numerator, part of the ly not be used as analyses alternative on possible servations would deter settlements because that the BMW under general poli- judgment. prior “[T]he 1241-46. Id. at factors. Gore settle- courts to cy promote of federal fac- the began with These observations in stronger trial is even the ment before the Su- quoting reprehensibility, of tor class actions.” large scale context in v. Gore admonition Court’s preme 795; Icicle, F.3d at (citing Id. at important the most “[pjerhaps it is that 988). Baker, 239 F.3d at puni- aof reasonableness of the indicium on the relation- a final observation As Id. 1241. We at damage award.” tive damages award punitive between the ship to criminal analogy to the Court’s pointed harm, that out the pointed the we and that nonviolent cases, statement and its costs and other losses up clean substantial than violent reprehensible are less crimes already spill oil had had Exxon from the facts to the an analogy Id. We drew ones. indicat- deterrent We considerable effect. was case, Exxon’s conduct where should, depending on ed such deterrence spill- reckless, nowas intentional but there lower, circumstances, a rather call for the dumping case.” midnight in a oil “as ing of Id. higher ratio. than plaintiffs the agreed with at 1242. Id. We reprehensible was Exxon’s conduct that fac- the third BMW Gore Turning to spill of an oil the risk it knew that of crimi- tor, that the nature we observed through oil huge quantities transporting fines, state and potential which are nal was a Sound, Hazelwood it knew in re- useful might be penalties, federal ob- We Id. 1245. ob- relapsed alcoholic. Id. at We viewing .punitives. however, reprehensibility served, particular- that such are fines “[e]riminal served that damages punitive justify because ly more to informative went amount. Id. looked high Id. then justify such We quasi-criminal.” than are factors, includ- for statutory measure general noted some federal mitigating We of alterna- a number action fines and ing prompt ameliorative discussed the federal Id. We up. guideposts. in clean tive noted spent millions Id. $200,000 to range from $1.03 fines could actual ratio of to the then turned We the ceil- looked as well Id. billion. We by the misconduct caused harm Trans-Alas- liability under the ing of civil Again at 1243. Id. damages awarded. it was $100 Act noted Pipeline ka that it said we analyzing BMW anyone liability who million strict called what we difficult to determine was Id. pipeline. spills oil from is, “numerator,” value of penalties, possible to those In addition used the spill. We caused Id. evaluation penal the actual we looked million jury award of $287 Attorneys by the General case made in the possible numerator one the state of and of States numerators, district United also, as alternative Agreeing with Id. at 1245-46. harm, Alaska. at that which court’s estimates not estab- they did the district court million ranged $418 from $290 time repre- limit, they did noted lish we compensato- noted that if million. Id. We by executive judgment, an adversarial sent used, any liability amounts ry were punish- officers, level appropriate of an should paid settlements voluntarily had Finally, without neces- ment. said that account. We taken into not be sarily exhausting analogies available in the damages litigation. Id. at 1058-60. The field, penalty Congress noted had district court concluded that the actual subsequently amended statute to in- just harm was over million. Id. at $500 crease the amount civil penalties 1060. The district court also concluded conduct, grossly negligent and that that the justi- of this circumstances case maximum penalty under the new here fed- fied a ratio of damages to harm of eral statute be maximum of $786 10 to 1. Id. at 1065. This calculation would million. penalties Id. The federal supported original billion $5 upon the based number barrels of oil award. Id. The district court nevertheless 1321(b)(7). spilled. § 33 U.S.C. reduced the billion, to $4 In suggesting possible guidelines various to conform to what it viewed as our man- to assess whether billion date. Id. at 1068. “grossly imply excessive” did not we any single guidepost be controlling. G. The Appeal, Second Supreme Concluding that the billion high was too $5 Opinion Farm, Court’s in State and to withstand the review required we were our Second Remand. give it under BMW v. Cooper Gore and Not surprisingly, appealed again. v. Leatherman Group, Tool and noting And, not surprisingly, Supreme Court that those cases came down after the dis issued an opinion in punitive still another ruled, trict court had we remanded damages case appeal while the pend was apply process analysis the due required ing. State Farm Mut. Auto. Ins. Co. v. decisions, under those with what hoped Campbell, 408, 123 538 helpful guidance would be S.Ct. from opin (2003). ion. L.Ed.2d Id. at 1241. No district court analy sis of BMW v. Gore was before us and we plaintiffs in State Camp- thus could not have any decided specific bells, were involved in a head-on collision arising issue from any analysis such aris and sued their insurer, automobile State ing from guide posts. its Id. We offered Farm, for bad faith. Id. at 123 S.Ct. only guidance culled from what was then 1513. The claim was based on State controlling Supreme precedent Court rejection Farm’s of an offer to settle the principles general applicable to the calcula Campbells’ limit, policy claims of damage liability. tion Id. Farm’s assurances to them that they had liability no accident, for the State Farm’s F. The District Opinion on our resulting decision to take the case to court First Remand. despite the substantial likelihood of an ex- The district court again did an extensive judgment, cess and its subsequent refusal analysis of the reprehensibility relative to pay an adverse judgment over three Exxon’s misconduct and of the harm it policy times the 413-14, Id. at limits. Valdez, caused. In re the Exxon S.Ct. 1513. The ease was similar to BMW F.Supp.2d at 1054-60. Though noting that Gore only there were plain- two an accurate assessment of the full extent tiffs jury. before the Nevertheless, Id. as plaintiffs’ of the actual harm impossi- was Gore, in BMW v. jury was ble, allowed to the district court attempted to recon- consider the effects of similar but struct that harm unrelat- by adding together the jury’s ed misconduct many potential compensatory plaintiffs damages verdict of million, judgments who cases, $287 were not before related the court. Id. at as payments aswell and settlements made to 123 S.Ct. 1513. judgment Final ap- after plaintiffs before during punitive peal to the Utah Supreme Court was for due likely comport “more tios were mil- compensatory $145 million fact, the Court’s despite Id. process.” Id. at damages. punitive

lion rigid bench- “there are no States disclaimer The United 1513. may courts to the Utah that a marks Court remanded 429, 123 S.Ct. strongly indicated Id. surpass,” the award. the Court reduce damages to proportion a ratio of not exceed generally could Farm once in State Supreme Court (“[F]ew 123 S.Ct. to 1. Id. at impor- “most emphasized again single-digit ratio be- exceeding awards aof indicium” tant dam- tween re- relative reasonableness award’s satisfy degree, will significant ages, conduct. defendant’s prehensibility process.”). due 1513; see also 419, 123 S.Ct. U.S. at particular Second, discussed the Court refined significantly Farm Yet State justify factors that would combinations instructing analysis reprehensibility ex- ratios. For or lower relatively higher considerations: specific weigh five courts to act egregious “particularly where ample, physical (1) caused the harm whether only a small amount has resulted (2) ecоnomic; whether opposed injury is where “the damages” or economic harm plaintiffs the causing conduct monetary value or the hard to detect dis- to or reckless “indifference showed been might have harm noneconomic the others;” safety or the health regard of determine,” high in ratios the difficult to (3) the conduct” “target of the whether higher even perhaps and single-digits (4) vulnerable; the financially whether was (quoting BMW Id. might warranted. ac- repeated involved defendant’s 1589). 582, 116 S.Ct. U.S. incident; to isolated opposed as tions dam- compensatory Conversely, “[w]hen the (5) harm caused whether and ratio, substantial, then a lesser ages malice, trickery, or “intentional result of dam- equal to only perhaps deceit, accident.” or mere limit of reach the outermost ages, can not rank did The Court 1513. Id. guarantee.” due however, explain, It did these factors. rele minimized the Finally, the Court plain- in a weighing only one factor a guide, penalties criminal vance support to sufficient may not be tiffs favor particularly they were saying that award, ab- damages punitive Id. at notice. fair determining in helpful award any such makes all factors sence of Indeed, did 1513. Court S.Ct. Id. “suspect.” crimi potential Farm’s analyze State guidepost, second v. Gore’s As to it as a all, characterizing penalty nal potential between harm the ratio penal Id. As civil possibility.” “remote damages punitive plaintiff only that $145 ties, noted the Court im- again award, “decline[d] the Court “dwarfed” damages award million ratio which brightline pose a Id. fine. applicable $10,000 maximum Id. at exceed.” award cannot some provided But it in State opinion Court’s previous in it had district sharper guidance than after the in filed Farm was remand, already cases. had court, first on our award. reviewed in excess that ratios First, it indicated its performed district Because the constitu- raise serious single-digits more the benefit without ra- review single-digit tional questions, guidance provided by focused in payment system instituted claims Farm, ap- remanded the second fully almost compensated plaintiffs for peal summarily for the district court to their economic losses and did so promptly. reconsider the Id. also recognized We that Exxon’s light Hawk, of State Sea Farm. 03- No. prompt payment of compensatory damages should abe substantial mitigating factor our review punitives. Id. H. The Court Opinion District on our appeal, major issues there- Third Remand and this Appeal. how, fore relate to after State time, On remand for the third the dis- assess the reprehensibility of Exxon’s con- court, trict in an assessment similar to that duct and the effect of mitigating fac- opinion remand, its after our first calcu- tors. An important subsidiary issue is the plaintiffs’ lated harm at million. $513.1 extent to which we are give bound to liter- District Court Opinion, F.Supp.2d al effect to the sentences our earlier 1103. Interpreting State holding Farm as opinion concerning subtracting pre- “single-digit multipliers pass constitu- judgment payments harm, from actual tional highly muster for reprehensible con- even though State suggests Farm the miti- duct,” and citing our decision Zhang v. gating factors should be taken into account Seafoods, Inc., American Gem 339 F.3d differently. For the reasons fully more Cir.2003), the district court de- explained in opinion, cided to we do not punitives accept increase from billion the minimal bottom line figure urged by billion. 296 F.Supp.2d $4.5 at 1110. The final Exxon properly rejected award repre- the dis- just sented a ratio trict do, court. however, under 9 to 1. We conclude there is merit to Exxon’s contention that again, Once appealed. plain- punitives should be reduced. appealed, tiffs also seeking to reinstate the jury’s full punitive billion $5 ver- damages In their cross appeal, plaintiffs seek a dict. reinstatement of the original pu- billion $5 nitive

In award. We do not appeal, fully adopt their has focused inten- position sively on either because doing sentences so opin- peg would earlier ion where we punitive of prejudgment noted ratio pay- damages to harm at a ments generally part should not be level of the State only Farm reserves for the “numerator” to deterring avoid pre-judg- most egregious misconduct. There was no ment settlements. Punitive Damages intentional infliction of harm this case. I, Opinion 270 F.3d at 1242. Exxon has addition, In because Exxon’s mitigating ef- argued strenuously in the district court forts after the accident diminish the rela- and to us that of all its settlement and tive reprehensibility of its original miscon- other pre-judgment pay- compensatory duct purposes of reviewing punitive plaintiffs ments to must be subtracted damages, such a high ratio is not warrant- from the over million amount actu- of ed in this case. al harm in the of punitive ratio damages we use to pursuant review III. ANALYSIS the BMW v. Farm factors. Gore/State A. Lessons History. From This would reduce the harm to the rela- tively paltry figure of $20.3 million. history of the experience of the recognized

We in Punitive Damages punitive Court with Opinion Exxon, I that soon after spill, over the last decade-and-a-half reflects an Farm, the Court Indeed, in State course. revolutionary, not a evolutionary, factor important the most stressed Haslip, Court opinion In its first con- particular reprehensibility line bright be a might that there suggested Farm, at U.S. the case. State duct in punitive between of demarcation because, in This is 419, 1513. 123 S.Ct. protec- constitutional comport with foreseeability possible of the assessing the do not. damages that tions, punitive the defendant’s 23, 1032. 111 S.Ct. effects at 499 U.S. Haslip, the re- damages, punitive might line” bear “the say what Although it did with the reality dealing is in viewing court dam- be, ratios it termed fair the need for 1, concept of 4 to traditional damages of ages to consequences of legal 1, possible notice of 200 costs out-of-pocket and to 123 S.Ct. misconduct. one’s to it. Id. close however, cases, the Court subsequent ele- such traditional Perhaps mathematical because rigid a avoided expressly flexible, the Su- ratio its due limit, refining ments of while formula or on the a often taken has not Farm that Court concluding preme in State analysis, reviewing harm of the amount actual damages to task of ratio only has, fact, overturned likely to com more than 10 to was less of their size. because an award with awards two process than with due port by multiple Farm, of them exceeded Each State higher ratio. compensato- way, the than 100 the amount Along the more 123 S.Ct. compensate necessary to to com ry payments efforts reflects experience Court’s in harm caused concepts for the actual plaintiff true tried and with the port v. BMW i.e., misconduct. those notice defendant’s process, in due herent (striking See, Cent. 116 S.Ct. Mullane v. e.g., 517 U.S. and fairness. Farm, ratio); 538 U.S. Co., down a 500:1 Trust Bank & Hanover (striking down (1950); Int'l 123 S.Ct. 94 L.Ed. ratio). Washington, 326 U.S. 145:1 Shoe Co. (1945). 154, L.Ed. 95 Farm Guide- B. Gore/State not- expressly In State posts. had been jury that

ed its concern three identified Gore into effect take account allowed to damages, reviewing punitive for guideposts nation- place have taken may conduct refine important Farm added plaintiffs. State potential thousands wide on (1) repre are guideposts The 422, ments. Farm, 123 S.Ct. 538 U.S. State misconduct, hensibility defеndant’s being a defendant unfairness of 1513. The (3) harm, and (2) punitives ratio of many times hit They statutory penalties. comparable central was the same exclusively applied, rigidly need not remanding. Id. analysis Court’s our sister circuit agree with these for we “[pjunishment explained, Court taken as not be should guideposts multiple “[t]hese possibility bases creates Zimmer jacket.” analytical straight an same for the damages awards Union, 262 Credit Direct Federal man v. non-parties conduct; case in the usual Cir.2001). must, (1st nev We 70, 81 other some judgment bound are not in the context ertheless, them examine 423, 123 S.Ct. obtains.” plaintiff this case. 1. Reprehensibility. The dissent takes issue with compo- two of our BMW Gore nents analysis. Its important guidepost most is the re- reasons, however, are surprising, because prehensibility of Exxon’s misconduct. they contradict Farm, our State holding unanimous 419, 538 U.S. at 123 S.Ct. I, Punitive Damages Opinion Gore, BMW v. (quoting F.2d at 1589). spill In was not prior our intentional nor opinion, we Exxon’s conduct malicious. See defined the relevant Dissent sup- misconduct porting punitive damages as (characterizing Exxon’s conduct as “malicious”). keeping Hazelwood in Then, command with the dissent misapplies knowledge of relapse Hazelwood’s into al- Court’s mandate that we coholism. We said that “Exxon knew Ha- perform must an exacting appellate review alcoholic, zelwood was an knew that he to ensure that “an award of punitive dam- had failed maintain his regi- treatment ages upon is based an ‘application law, ” men and had resumed drinking, knew rather than a caprice.’ decisionmaker’s going he was on board to command its su- Farm, State 538 U.S. at 123 S.Ct. pertankers after drinking, yet let him con- 1513 (citing BMW v. 517 U.S. at tinue to command the Exxon Valdez 1589). 116 S.Ct. through icy and treacherous waters of First, the dissent maintains that the val- Prince Sound.” Punitive Dam- William ue of defendant’s pre-litigation mitigation I, ages Opinion 270 F.3d at 1237-38. We efforts should not affect see no issue, need reconsider this de- because the Supreme Court did not explic- spite Exxon’s invitation to do so. itly provide for such a State calculus To evaluate the reprehensibility of the Farm. Dissent at 1098. Thus, the dissent Farm, misconduct, State refers to sub- five reject the principle of stare decisis (1) (2) harm, factors: the type of whether and the law of the case and overturn our there was disregard reckless for health holding in Punitive Damages I, Opinion (3) safety others, whether there 270 F.3d at thаt Exxon’s voluntary financially were (4) vulnerable targets, compensation to plaintiffs effectuated whether there repeated misconduct good public policy in making injured (5) and whether it involved mal intentional party whole as quickly possible. We ice, deceit, trickery, or rather than mere prepared question the sound- Farm, accident. State 538 U.S. at ness unanimous conclusion in Puni- S.Ct. 1513. tive Damages Opinion I merely because We must also consider fac- mitigating intervening Supreme jurisprudence I, tors. Damages Punitive Opinion in the insurance context did not address the context of particular case, issue. looked to Exxon’s response to the catastro- By here, contrast we have phe, including its prompt cleanup and com- already held that mitigation is both rele- pensatory payments. they We held were vant and conscientious in the toxic-tort factors mitigating the reprehensibility of setting. It would be unwise in reviewing original the misconduct. Punitive Dam- ignore to prompt the ages I, Opinion 270 F.3d at “Repre- 1242. steps of a defendant to take curative action hensibility should be if discounted defen- in a mass tort case. dants act promptly and comprehensively to any they ameliorate harm cause in order The dissent also claims that we-improp- to encourage socially such erly be- beneficial treat factor, BMW’s fifth the fault havior.” Id. analysis, as a dichotomy with two mutually

1085 (and lives the disrupted Inlet Cook Lower conduct Exxon’s finding options: exclusive claimants livelihood) of of thousands reprehensible, grossly thus and intentional 296 Opinion, Court District years.” large to a thus and it accidental finding at 1094. F.Supp.2d 1100-01. Dissent excusable. degree acknowledge We analysis. con- recognized is not This has Supreme Court The to intended not was conduct economic Exxon’s as well as causing emotional duct allowing was neither but spill, than an oil con- reprehensible cause more can be harm super- to command alcoholic See relapsed harm. economic causing mere duct at 1088. Majority accident.” 116 “mere n. at 576 tanker 517 U.S. v. BMW in the falls malfeasance v. reckless it cited Blanchard There 1589. S.Ct. accidental between (1853), a continuum affirm- of Morris, middle case Ill. 36 15 the Accordingly, conduct. individu- intentional against and ing a $700 anal- reprehensibility only of the subfactor harm fifth physical no caused who als repre- low nor high neither mental supports harm, used ysis but of economic Exxon. of part on the hensibility it. extort to torture the Co., has reserved Court Supreme Arco Products LLC In Bains of constitutional (9th Cir.2005), echelons held upper we F.3d ratio) done conduct (a 9 to harassment” “intentional, repeated ethnic Thus, an intentions. most vile be the reprehensibility with the level increased applica- court’s district of the Swin also affirmance merely economic. yond case, where in this ratio ‍‌​‌​‌​​‌​​‌‌‌​​​​​‌​​‌‌​​‌‌‌​‌​​​​​​‌‌​‌​‌‌​‌‌‌​‍of such Corp., tion v. Potomac ton but reckless was Cir.2001). conduct intentional (9th gratuitous, defendant’s requisite intentional, transgress it made victims oppression mental as conduct, though boundaries constitutional reprehensible “highly to date. them explained has 777. or limb.” threatening to life Co American Parenthood Planned In State specific to the now turnWe Activists, 422 F.3d alition of Life These subfactors. reprehensibility Farm threat” a “true Cir.2005), held that ap more a 5 ratio to demonstrate though even reprehensibility increased process. due with comports propriately threat out, because not carried was intimidate, eco versus Physical intended was Type a. Harm — reducing beyond went component nomic Economic. trying or income wealth victim’s harm, State type To evaluate practices their away from victims drive whether to consider us instructs Farm de Parenthood Planned Our medicine. to eco- opposed physical was harm “the citation s with consistent cision physi- producing conduct nomic,” because upholding older decisions approval reprehensible. is more cal harm torture, fear, “mental based awards 419, 123 S.Ct. the threat caused mind” agony that Exx- found court district case the 575-76, n. BMW, violence. physical actual no caused on’s than more but caused people, harm concluded The district them, because economic mere spill to oil by the caused distress mental pro- misconduct of its effects economic owners who property fishermen We well. harm as emotional severe duced high- justified economically harmed were explanation court’s district agree Exxon and reprehensibility, of level er gallons 11 million spilling “the distress emotional urges Sound Prince into William oil crude were not jury. before the Because our displayed a reckless disregard for the review must de be Cooper novo under health safety others. State Indus., Inc. v. Leatherman Tool Group, 538 U.S. at 123 S.Ct. 1513. We con- Inc., 424, 436, 149 clude this subfactor also militates toward (2001), L.Ed.2d 674 we are not bound greater reprehensibility. When Exxon the district court’s rationale. The cases trusted an officer it knew was incompetent discussed above show that dam- to command the Exxon Valdez through the ages can^—-and traditionally do—consider treacherous waters of Prince William the effects of the tortfeasor’s conduct on Sound, Exxon acted with reckless disre- mentality, victim’s just not pocket- his gard for the health and safety of all those book. hand, On the they other may not go vicinity. far, so not, and we need as to justify The Exxon Valdez grounding created accidentally causing grave physical risk of harm for the mental distress. State crew Farm states that and those who had come to its damages for mental rescue. distress generally The district include a element, found that something so as including simple mental in punitive distress an dam- electro-static discharge could ages may duplicative. ignited U.S. at the crude oil and incinerated 123 S.Ct. 1513. everyone in vicinity. District Court Opinion, 296 F.Supp.2d

What at 1095. comes to We something near the same agree therefore case, result in this with the district though it court that not in cases, most Exxon is acted with the entirely reckless disregard foreseeable dis- ruption to way health tens safety peo- thousands of others when it put in ple live their if giant lives oil tanker person were command not competent per- aground run spill its cargo. When form role. tens of of people thousands have to change argues that State Farm requires way they make their living, their men- ignore us to Exxon’s disregard of po- tal distress is comparable not to a BMW tential harm to the crew and rescuers be- owner, or even a large number of BMW they cause are not plaintiffs to this litiga- owners, being distressed because their tion. Exxon misreads State Farm. State cars were scratched or dented during ship- Farm disapproved punishing defendants ment and repaired without their knowl- for conduct in other states which it edge. Anyone setting an oil tanker loose might be lawful. 421-22, 538 U.S. at on the seas under command of a relapsed Likewise, we had held alcoholic has to know that he is imposing White v. Ford Motor Company, before this massive risk. Though spilling the oil State Farm down, came jury’s that a puni- accident, putting the relapsed alco- tive damagеs award based on holic extraterrito- charge of the tanker is a deliberate rial (plaintiffs lawyer act. The had made a massive disruption of lives is “send them a message” entirely predictable argument giant when a address- oil tank- ing conduct) er goes nationwide astray. Thus, violated reprehensi- principles bility goes considerably federalism beyond established in BMW v. mere Gore. imposition careless economic Cir.2002). harm. 1013-14 These cases do prohibit consideration b. Reckless Disregard Health and potential harm to individuals merely Safety Others. they because plaintiffs. See 538 The second subfactor we consider as- U.S. at 123 S.Ct. 1513. The lesson is sessing reprehensibility is whether Exxon that the award in the litigation other

1087 repre- the thereby increased rescuers, and the context analyzed in been “should Hazel- putting in conduct hensibility of its only.” guidepost reprehensibility the n. in command. 574 wood Gore, at U.S. Id.; BMW therefore Farm State 1589. Targets. Financially Vulnerable c. risk to the at to look appropriate it is holds State conduct Exxon’s found analyzing reprehensibility. court The district others 1513. S.Ct. at subsistence Farm, financially vulnerable harmed Opinion, Court District fishermen. consider- against warn Farm does State not dis- does Exxon 1095. at F.Supp.2d defendant, or acts ing dissimilar fi- were fishermen subsistence that pute “independent acts is described what its reckless or that nancially liability was vulnerable which upon acts the from that contend It them. does 1513. S.Ct. harmed actions Id. premised.” when cases only fraud applies “[a] because is this this factor explained The finan- intentionally con- defrauds for the punished be a defendant should defendant not be- the sick for such as targets, plaintiff, the cially harmed vulnerable that duct or business.” the not individual do believe unsavory we elderly. While ing an or however, Here, limited, agree there S.Ct. we so is Id. subfactor safety of the aiming threatened or that conduct of intentional the kind be some must conduct the same rescuers and did not that crew the the vulnerable targeting of con- is the and plaintiffs, the harmed that here. occur this underlies that duct analysis reprehensibility purpose The a re- placing knowingly litigation: of enormity” of the “the is to determine the Exxon charge of alcoholic lapsed view accepted fense, “reflects which Farm in State prohibition Valdez. blameworthy wrongs are more some that acts does considеring dissimilar against others.” than into account taking because here apply not “target The notion res- and the crew harm potential intent element some connotes ing” con- the same for Exxon punishes cuers categories individuals particular harm haveWe plaintiffs. harmed duct Parenthood, Planned of individuals. See, example, before. point made were plaintiffs (holding 958-59 422 F.3d Accident v. Provident Hangarter Life defen because financially vulnerable n. Co., 373 F.3d Insurance plain scare attempted to threats dants’ compa- analyzed Cir.2004), where which jobs on quitting into tiffs lawsuit single-plaintiff ain policies ny-wide Exxon depended). livelihoods plaintiffs’ warning Farm's distinguished target subsistence intentionally did We acts. considering dissimilar against fishermen. legally suffi- in State “unlike said this con- in this case conclude Defendant’s We between existed nexus cient materially affect our corporate policies does sideration widespread allegedly Exx- reprehensibility ben- plaintiffs] [the assessment the termination conduct. on’s efits.” same conduct Accordingly, where Action. Repeated d. all can all, risk to risked found court district assessing repre- factor as a considered repeatedly Exxon because repetitive err did not The district hensibility. super- its command Hazelwood allowed disre- recklessly recognizing he knew after it years three tankers crew safety of physical garded 1088

had resumed drinking. District Court Exxon’s knowing disregard of the interests Opinion, F.Supp.2d at 1096. As the fishermen, commercial subsistence fish- district observed, so, Exxon did even ermen, processors, fish cannery workers, though Exxon fully aware of the tre- tenders, seafood brokers and others de- mendous risk of harm that it entailed. Id. pendent on Prince William Sound for their “Over and over again, Exxon did nothing livelihoods, cannot be regarded merely prevent Captain Hazelwood [from sail- accidental. ing] into and out Prince William Sound time, At the same we must acknowledge with a full load of crude oil.” that Exxon acted with no intentional mal Exxon argues that the relevant conduct ice the plaintiffs. towards We have consis is the grounding, the knowledge of tently treated intentional conduct as more Hazelwood’s incapacity to command. That reprehensible than other forms of conduct is not consistent with description subject to punitive damages. See Zhang, the relevant misconduct in Punitive Dam- 339 F.3d 1043; Bains LLC v. Arco аges Opinion (and I as putting leaving) Co., Products (9th Cir. Captain Hazelwood in command. Punitive 2005); Southern Union Co. v. Southwest Damages I, Opinion 270 F.2d at 1237-38. Corp., Gas 415 F.3d Cir. The district court’s finding of repetitive 2005). case, In this however, as we have misconduct was not clearly erroneous. already recognized, “as bad as the oil spill Parenthood, Planned 422 F.3d at 954. It was, Exxon did spill the oil pur militates in favor of reprehensi- increased pose.” Punitive Damages I, Opinion bility. F.3d at 1242-43. While reprehensibili ty of Exxon’s

e. produced Intentional eco Malice Mere Acci- nomic harm to dent. thousands of individuals is high, the conduct did not result in inten Putting Captain Hazelwood in command tional damage to anyone. This subfactor of the supertanker was knowing and reck- thus against militates viewing Exxon’s mis less misconduct. We agree with the dis- conduct as highly reprehensible. Id. trict court that this misconduct was not “mere accident.” District Court Opinion, f. Mitigation Reprehensibility. F.Supp.2d at 1096. In assessing reprehensibility, points Exxon we must out that relieving Hazel- not only take into wood of account reprehensi- command would have denied Ha- bility of the original misconduct, zelwood an employment but we opportunity on the have held that basis of alcoholism must also take into theoretically sub- jected account what has been done disability to mitigate discrimination the harm lawsuit. While the misconduct caused. concerns may Pu- nitive been appropriate Damages I, Opinion considerations in 270 F.3d at its 1242; risk, evaluation of see Swinton, they also do not justify F.3d at 814-15 the dangers its (discussing weight decision created to post- relevance of livelihoods of tens of tort mitigation evidence). thousands of individu- As we said in als. Spilling the oil accident, was an Punitive Damages I, Opinion but mitigation is putting a relapsed alcoholic in charge of considered “in order to encourage supertanker was not. anyone And such doing socially beneficial behavior.” Punitive so would they know imposing were Damages I, tre- Opinion 270 F.3d at 1242. mendous risk on a tremendous Here, number of Exxon instituted a system of volun- people who could not do anything about it. tary payments to plaintiffs and it under- Calculating The Harm. a. agree We cleanup efforts. prompt

took spent “Exxon before: said we court case, what the district figure with the In this many compensate to plaintiffs dollars to of the harm represent millions used to mitigat- thereby Opin- spill, the oil District after million. people was $513.1 Calculating reprehensi- the and at 1103. ion, F.Supp.2d to them ing the harm to be proved plaintiffs Id. to harm conduct.” the bility of its total to considera- because, in addition difficult losses, spill caused other the ble economic Reprehensibility. Evaluation g. of easily quantifiable, undeniable, not if of in control alcoholic relapsed a Placing The district at 1094. id. harms. reprehensible highly figure supertanker harm the eventually calculated the result, disrupted Exxon verdict As conduct. compensatory adding the on depend who people the of the to of trial phase of thousands lives second from the livelihoods, settlements, their and other Sound judgments, Prince William actual their and as crew its own obtained endangered plaintiffs various and recoveries years, of three span Id. 1099-1101. spill. at the of the Over result rescuers. Cap- relieved have and should Exxon could the district that dispute does not Exxon supertank- of command of tain Hazelwood harm is million finding of $513.1 court’s same At the do so. ers, did not but it actu- fundamentally a valid measure not act however, did Exxon time, However, it by-the spill. caused al harm else; anyone or plaintiffs toward malice figure we that should disagrees damage plaintiffs’ to not intend did Exxon puni- of the ratio part of use as ultimately the emotional them or cause livelihoods we review as that harm damages to tive loss. economic with the went that grief guidepost. the second that, be- contention principal Exxon’s higher inis Thus, Exxon’s in the figure establishing the harm fore in the but reprehensibility, of realm of dol- millions ratio, first deduct must post- Exxon’s addition highest realm. figure from the and costs payments lars of harm mitigate the to efforts grounding caused harm total actual representing reprehensi- materially to reduce serve us sub- Exxon would spill. by the They misconduct. original bility of repre- million about $493 sum tract a purposes reprehensibility reduce through plaintiffs to paid amounts senting most, range. to, a mid our review program voluntary claims then would Exxon settlements. other to Punitives. Harm 2. Ratio of repre- to figure reduced use that have us the ratio assessing total sent re as guidepost, BMW second to harm. punitives Farm, is the by State refined iterated harm, argument to central harm, to the potential or us brings “ratio This between focuses Exxon appeal. makes plaintiff opinion prior Farm, language State award.” I where we Opinion Damages аt this review Punitive of our goal 1513. S.Ct. formulating discussion said, lengthy in a the measure that is to “ensure guidepost to pursuant ratios propor possible reasonable is both punishment voluntarily defendant amount plain “[t]he of harm the amount tionate generally should judgment pays recov before general tiff and numerator, because part be used ered.” generally deter pri- settlements million $287 in compensatory damages, judgment.” 1244. Exx- and the ratio of billion $5 dam- on contends this now means assess- ages to million in ing the ratio of harm punitives after damages is 17.42 to The district court we should ignore the total determined “total harm range could harm in favor a figure that in fact more from $287 million to million,” $418.7 closely approximates Exxon’s remaining produces which a ratio between 12 to 1 post-judgment liability for compensatory and 17 to 1. This ratio greatly exceeds damages. to 1 ratio that the Supreme Court called to “close the line” in If we were to Mu- adopt Exxon’s interpreta- Pacific tual Ins. Co. [, Haslip tion of 499 U.S. at that sentence Life as binding now, us 23, 111 S.Ct. 1032]. the measure of harm would be a meager $20.3 million. amount Applying the defendant ratio of volun- close tarily to 1 pays to 1 that Exxon before judgment asserts is appropriate, should generally not be contends we used cap part should as punitive damages numerator, because $25 million. Under would deter Exxon’s theory, prior even using a settlements to ratio of judgment. 9 to which “[T]he general approaches policy highest of federal pro- allowable courts to under mote punitive settlement before trial damages would be even capped stronger in the $182.7 context million. This large would be scale limit, actions,” class even though such as this one. reckless- [Cf. Icicle, ness led to 795; more than F.3d at Baker, million in $500 harm. said, We F.3d discussing 988]. the nature of the relationship punitive between damages and Punitive Damages Opinion I, 270 F.3d at harm: 1243-44. The “reasonable relationship” is in- The district rejected the proposi- trinsically somewhat indeterminate. tion that voluntary payments judg- before

The numerator is “the harm likely to ment should not generally be used as part result from the defendant’s conduct.” of the calculation of harm. But prior Gore, [BMW v. U.S. at 116 decision did not constrain the analy- ratio S.Ct. 1589]. The denominator is the sis so firmly as Exxon contends. We did amount of punitive damages. Because say that voluntary payments before the numerator is ordinarily arguable, ap- judgment could not be considered in calcu- plying a mathematical bright line as lating the numerator for purposes of com- though that were objective measure paring the numerator with the amount of of how high go can award; we said they “generally” would give a false suggestion of preci- could not. Considerations of settlement, sion. That is one reason why the Su- critical to our analysis Icicle, 229 F.3d preme Court has emphasized that it is on bear due concerns at not possible to “draw a mathematical the heart of BMW’s discussion. Whenever bright line between the constitutionally a defendant governed by a board is sued acceptable and the constitutionally unac- for conduct egregious enough create a ceptable that would fit every case.” genuine risk of punitive damages, those [BMW v. U.S. at 116 making its litigation decisions try have to S.Ct. 1589].... predict may what happen in court. Although it is difficult to determine may Some recommend obdurate resis- the value of the harm from the spill oil tance, and may some recommend settle- in the bar, case at the jury ment, awarded or prejudgment payments even on limit million argu- $25 making settlement, each without but $493 million was $513 where recom- Those predictions. based ments For judgment. before paid million predict reasonably can mending payment its to a tortfeasor notice purposes as hammered be entity will half causing a risk, million liability accep- obstinately resisted if it hard good too obviously be would loss billion pre- their And responsibility. any tance im- buy full cannot A defendant true. be Criminal reasonable. diction by paying from munity somewhat always been penalties dam- likely amount re- accepted who for those lenient more judgment. before ages see United judgment, prior sponsibility Gonzalez, secondary issues some also States There constitution- Cir.1990) concerns (upholding One calculating harm. relating 3E1.1), § Lines Pipe Alyeska of U.S.S.G. ality made payments punish- of version civil us to set but a asks damages are Exxon Corporation. Service prac- makes no It wrongdoing. co-defen- original for its ment that million off $98 future those Corpora- all to disarm Lines Service Pipe tical sense Alyeska dant some accept to claims. boards plaintiffs’ their want of who in settlement paid tion benefit all the including out cutting by companies, responsibility of oil consortium A to get. Alyeska would with firms Exxon, their contracted had After the area. spill in any oil to respond far however, to how limit, ais There sued disaster, plaintiffs Valdez Exxon in both goes responsibility acceptance to response its negligence Alyeska guilty defendant No criminal contexts. all claims settled eventually spill, and in the resulting ordinarily wrong a serious dam- including punitive Alyeska, against reasonably as- could lengthy imprisonment argument Exxon’s million. ages, $98 imprison- no receive he would that sume rep- payment million that this $98 is here guilty. pleaded promptly he if at all ment Alyeska’s attributable harm resents reasonably could board no defendant’s And recklessness, and Exxon’s not negligence, escape all could the defendant that predict to calculate used be should therefore compen- predicted by paying punishment deter punish designed While judgment. before satory conduct. harmful own should prepayments “generally” harm, Exx- why of the calculation part major as reasons used two There I, F.3d First, Opinion Damages correct. is not Punitive position on’s arithmetic mechanical is attributable spill is not 1244, that oil by the caused harm is not limit Exx- nine to one limit, principles. as the law just tort under Exxon See limit. alcoholic relapsed arithmetic knowingly placed mechanical 1513; 425, 123 S.Ct. mil- loaded supertanker aof control 962; Parenthood, so, 422 F.3d it did When oil. Planned gallons lions Due from risk Bains, at 776-77. foreseeable accepted limit the tanker that captain considerations choice its fore- reasonably spill, wrongdoer could an oil causing what accident an ways. both see, aggravate works might and that further Alyeska (Second) Torts Restatement harm. too argument goes Therefore, Exxon’s fact, e.2 In 447(c),1cmt. 433(a) c, cmt. §§ analysis, in Exxon’s produce, It would far. a su- not make does negligent manner a third intervening act of "The fact which another harm to perseding cause ain or is done itself negligent person Stevens, William Exxon, President of finding. Since Exxon has already agreed testified before Congress that Exxon knew that the $98 million does not represent Alyeska was not prepared to spill contain a harm Alyeska, attributable to Exxon is not of the size by caused the Exxon Valdez. warranted in asserting this is what it Because Exxon could be held liable for this represents now. risk, foreseeable the district court properly Exxon also contends that some mil- $34 included the harm by caused Alyeska’s lion included in the district court’s harm response as the natural consequence of the finding should not properly be considered caused Exxon. harm at all. This figure represents an Second, the situation Exxon now com- apparent million $9 overpayment by the plains of is strictly of its own making. In Trans-Alaska Pipeline Liability Fund, 1994, the Supreme Court held $13.4 million from the Phase IV settlement proportional fault governs rule calculation Exxon claims is already accounted for else- of nonsettling defendant’s liability for com- where in the district court’s calculations, pensatory damages in maritime torts. See and $11.5 paid million to Native corpora- McDermott, Inc. v. AmClyde, 511 U.S. tions and municipalities for environmental 128 L.Ed.2d 148 up. clean (1994). Instead of following McDermott, We Exxon agreed conclude that with plaintiffs the million proceed overpay- ment, if pro a tanto inadvertently rule with respect included to co- in the district defendants’ court’s findings, settlements governed.3 still should be subtracted from Exxon apparently the thought it total harm. more advan- Because Exxon does not tageous at the time to specify have the where the $98 million $13.4 million double- deducted from the final counting compensatory is reflected parts in other of the damage award after fact, rather than district calculation, court’s however, we are have the jury make a proportionate fault unable to determine from our own review negligent actor’s conduct is a substantial fac- "[NJotwithstanding the rule proportion- of about, tor in bringing (c) if ... the interven- ate McDermott, shares set out in Inc. v. ing act is a consequence normal of a situation AmClyde, credit Aleyska for the settlement by created the actor’s and the man- ... shall be deducted from the that sum ner in which it is done is not extraordinarily would, in the absence of stipulation, this be negligent.” the aggregate amount of any judgment or judgment plaintiffs favor of ... and the 2. "The 'extraordinarily words negligent’ de- liability of Exxon and Shipping compen- for note the fact that of ordinary men experience satory damages any plaintiffs and all judgment, reasonable looking at the mat- herein ter shall by after the be event reduced taking aggregate into account the prevalence sum $98 of of that million.... parties negligence,’ express- 'occasional ly which is recognize one of life,' agree incidents of human that the sum of would not regard it as extraordinary is not necessarily million a fair of measure person’s third intervening act should what would be Alyeska's proportionate been negligent done in the manner in which it share liability plaintiffs[,] par- but the was done. Since person’s the third action is ties entering are Stipulation into this product a of the negligent conduct, actor's order to avoid the alteration of their trial there good is reason holding for responsi- him preparation that would result from a last- effects, ble its for though even it be done in a overturning minute parties’ of the assump- negligent manner, unless the nature of tion pro that[the approach] tanto negligence altogether is unusual.” govern at trial and requiring from litigation Alyeska's proportionate share.” 3. The stipulation parties between the reads in part: relevant even double- perhaps ratios and gle-digit be includ- they might where record of the process due comply with may to con- ratios digit failed Therefore, has ed. act has egregious reduced particularly “a figure should where that this us vince of eco- amount only a small the harm. resulted from injury “the is damages” where nomic paid million Exxon Finally, the $11.5 monetary value or the to detect hard early its up, like for clean plaintiffs have been might the noneconomic com- prospective plaintiffs’ settlement (quoting to determine.” difficult losses, factor rele- mitigating ais mercial this BMW whether judgment about vant to 1589). ra- single-digit Conversely, lower appropriate. award is proper might mark tios, as 1 to settlements the earlier even low Like mitigating is as its influence of due where limits place the outer in our over- to be considered circumstance are substantial. ratio’s reasonable- all determination ratio here strongly suggests Id. This however, part does, represent It ness. high. is too ac- Exxon is for which total harm In helpful. decisions also own Our countable. Parenthood, guid- we used Planned attempt sum, court’s district to construct Farm from State ance adding actual harm approximate determining “rough framework” settle- judgments, various together damages to appropriate ratio al- Exxon had ments, liabilities We held 422 F.3d at 962. harm. Subtract- was sound. acknowledged ready eco- “significant there are where cases Pipeline Trans-Alaska million ing the $9 “par- but behavior damages” nomic the dis- overpayment Liability Fund to to up ratio ticularly egregious,” overlooked, we inadvertently trict the limits good proxy for as a “serves a total harm supports this record conclude Farm, (citing State Id. constitutionality.” purposes million of component $504.1 1513). In cases 123 S.Ct. at 538 U.S. punitives. to the ratio of harm analyzing economic significant with however, behavior,” a sin- egregious “more Evaluating the Reasonableness b. “might be than 4 to higher ratio gle-digit Punitives. Harm to Ratio Zhang, 339 (citing Id. constitutional.” remand, the district our second After Bains, at 776- 1043-44; F.3d F.3d original punitive dam reduced the court 77). there in cases where Finally, billion. to $4.5 billion ages $5 economic “insignificant” to harm yielded a punitive This we egregious,” “particularly is behavior million After our 1. $9 of 8.77 to ratio may not ratio single-digit that “the said that ratio figure, to the adjustment Id. constitutionality.” proxy good a bor proportion 1—-a at 8.93 now stands into case fit of this constitutional circumstances presumption dering on Farm, in the Planned of cases See State the second class questionability. reckless Parenthood framework. of thousands the livelihood to risk decision ex- Farm, Court In State in command relapsed alcoholic by placing exceeding awards that “few plained by its while mollified supertanker, of a between single-digit ratio policies, up and clean settlement prompt significant damages, Moreover, egregious.” “particularly satisfy process.” due will degree, well within loss is million high sin- Relatively range “significant” economic damages. more than 5 1to would violate due Thus, Parenthood, under Planned ap- standards under current con trolling Su- propriate ratio would be above 4 to 1. preme Court and Ninth Circuit authority. Our review of the reprehensibility and 3. Comparable Penalties. mitigation under the first guidepost of re- however, prehensibility, compels third us to BMW v. con- Farm Gore/State clude the award guidepost should be comparable toward the legislative low- penal- er end of that range. Our cases ties. have Given emphasis on this factor in generally high reserved digit single ratios we went to lengths some for the most egregious forms intentional Punitive Damages Opinion I to extrapo- misconduct, such as threats of violence and late the comparable penalties that would intentional racial discrimination. See be imposed under state and federal law for Zhang, 339 F.3d at 1044 (upholding a ratio spill, highest being approximately of 7:1 racism); Bains, for intentional billion $1.03 dollars. F.3d at 776-77 (remanding for district Farm, however, State the Supreme set a ratio between 6:1 and 9:1 for Court stated that “need not long dwell racism); intentional Planned Parenthood guidepost.” 538 U.S. at 963 (remitting to a 9:1 428, 123 S.Ct. case, 1513. In that the com- violence). ratio for threats of Exxon’s con- parable penalties were not particularly in- case, duct in this inexcusable, while did not formative: comparable civil penalty any involve intentional conduct that would was easily “dwarfed” the punitive normally be required to support award, and as to penalties, criminal damagés award with a high single-digit explained that although their exis- ratio. tence “does have bearing on the serious- Here mitigating factors also come into ness which a State views the wrongful play. Exxon instituted prompt efforts action,” they had utility” “less “[w]hen clean up spill and to compensate the used to determine the dollar amount of the plaintiffs for their economic harm. As we award.” Id. observed, earlier if a defendant acts In our own circuit’s more post- recent promptly to ameliorate harm for which BMW Gore and cases, State Farm is responsible, the size of a punitive dam- generally attempted to quantify ages award should be reduced encour- legislative penalties. We only looked age socially beneficial behavior. Punitive to whether or not the misconduct was Damages Opinion I, 270 F.3d at 1242. dealt with seriously under state civil or Moreover, the costs that Exxon in incurred See, criminal laws. e.g., Planned Parent- compensating the plaintiffs and cleaning hood, 422 F.3d 963. In several recent up spill the oil have already substantially decisions we have not discussed served the factor purposes deterrence, of lessen- at all. See Co., Southern ing Union the need 415 F.3d high for a damages at 1009-11 Cir.2005); award. Id. Hangarter, at 1244. F.3d 1014-15. may This be because Thus, Exxon’s conduct was particularly legislative judgments, jury verdicts, unlike egregious and significant involved econom- do represent an individualized assess- ic damages. Nevertheless, its conduct was ment reprehensibility. not intentional it promptly took steps to ameliorate Here, the harm it caused. the matter of spilling With inoil naviga- these considerations in mind, we conclude ble water has clearly quite been taken that a punitive damages to harm ratio seriously by legislatures, Congrеss with this is 121 S.Ct. spill, specific statute after enacting a damages already appropriate limit on having law federal and state Pu- legal prevailing in this case under the penalties. substantial authorized I, Thus, we do not remand Damages Opinion precedent. nitive may of what the limit third Thus, further consideration Gore/ 1245-46. protracted litigation It time factor, be. is Farm legislative substantial State to end. our conclusion supports penalties, merits substan- reckless conduct Exxon’s AND REMANDED. VACATED damages.

tial BROWNING, Judge, dissenting: Circuit IV. CONCLUSION damages I Because believe reasons, foregoing For “grossly in this case is not exces- award known placing in a misconduct reckless sive,” reviewing I affirm. super- a in command of relapsed alcoholic award, of a our sole size tanker, millions of barrels loaded with imposition its does not duty is ensure resource oil, navigate pristine process. Where an lies violate due award Prince William Sound waters of abundant process, of due as this within the bounds sanc- and warrants severe was reckless does, figure a may not substitute one however, not, did The misconduct tions. fairly one we consider more reasonable for range the highest sanctions at warrant by jury properly awarded reviewed process analysis, the due allowable under Therefore, respect- a district court. I most in the Court’s explained fully dissent. Farm. opinion State recent Review Punitive 1. Due Process imposition puni- The district court’s Damages billion, after entered tive of $4.5 Constitution, pu- comport To with due remand to reconsider our Farm, nitive award must strike of State represents damages light goals the state proper balance between very range, and is not war- highest at the a defen- and retribution and with the Su- deterrence It is not consistent ranted. free from Farm or dant’s process right due State opinion Court’s preme Farm arbitrary punishment. See State pri- important the most tenets of Campbell, I Mut. Auto. Ins. Co. Damages Opinion opinion Punitive 416-17, L.Ed.2d mitigation reprehen- relating to Exxon’s (2003). deter- Supreme Court has ratio sibility. a one to one Although upset point is at the limit the mined balance upper marked excessive,” rea- “grossly becomes more and award egregious here far that, the extent an award soning An considerably higher “[t]o ratio. justifies excessive, legitimate furthers no grossly ratio of representing depri- arbitrary 1 and constitutes purpose to сonsistent to harm of 5 is punitives Id. at 417, 123 S.Ct. property.” vation of with both. Mut. Ins. Co. Pac. (citing 1513 Life the court is judgment The district 1032, 1, 42, 113 111 Haslip, 499 S.Ct. U.S. VACATED, the matter is remanded and (1991)). 1 L.Ed.2d that the district with instructions notes, ante at 1082- majority the But as further reduce to 83, shown little inclination the Court has billion. We $2.5 award to amount concretely. more to the de novo stan- “grossly excessive” define pursuant have decided Leatherman, Farm, 424, at S.Ct. U.S. 123 See 538 imposed of review dard 1096 Am.,

1513; 1589; BMW N. Inc. v. 517 116 Prod. Corp. S.Ct. TXO Alli- 559, 582, 1589, 443, 458, Corp., 116 S.Ct. ‍‌​‌​‌​​‌​​‌‌‌​​​​​‌​​‌‌​​‌‌‌​‌​​​​​​‌‌​‌​‌‌​‌‌‌​‍134 L.Ed.2d ance Res. U.S. U.S. 509 113 (1996). 2711, (1993)). it 809 While has several times S.Ct. 125 L.Ed.2d 366 We possibility establishing at the a 4 should let this hinted award of punitive damages to 1 benchmark ratio stand unless the BMW factors indicate damages, it has certainty product to never some that was the caprice See State or that explicitly imposition done so. 538 bias such its 425, BMW, (citing right at 1513 violates Exxon’s to process.1 U.S. 123 S.Ct. due 1589; 581, at Haslip, “Assuming procedures 517 U.S. 116 S.Ct. that fair fol- were 1032). 23-24, lowed, 111 judgment at S.Ct. In a is a product 499 U.S. that of that stead, strong the one constitutional limit entitled presumption is to a Indeed, generally has is that of validity. persuasive identified found there are double-digit and mul single-digit between reasons for suggesting presump- (“[F]ew irrebuttable, tipliers. See id. awards tion virtually exceed should be TXO, ing single-digit a ratio between so.” 509 U.S. at 113 2711 S.Ct. (internal a compensatory damages, signifi (plurality opinion) to citations omit- ted). degree, satisfy cant process.... will due Single-digit multipliers likely are more No procedural concerns present process, comport with due while still outset, that, at might here weaken the achieving goals the State’s of deterrence “strong presumption validity” which retribution, than awards with ratios in BMW, this is entitled. See 517 U.S. (internal

range 500 to 145 to 1.” 1[or] 586-87, J., at 116 (Breyer, S.Ct. 1589 con- omitted)). citations TXO, curring) (citing 509 U.S. 113 2711; 40-42, Court’s reluctance to S.Ct. Haslip, es- U.S. at 111 499 limit, 1032); a tablish more or to adopt concrete S.Ct. see also id. 116 S.Ct. (“In any categorical approach, cases, other sort of 1589 most will ratio be that in such counsels cases as one at within a constitutionally acceptable range, bar, judicial to police justified function is “[t]he remittitur will be not basis.”). range, point.” Mathias v. jury thorough, Accor received al- Inc., Lodging, Econ. prescient, most punitive damages instruc- Cir.2003) BMW, 582-83, (citing tions.2 although And large is a i.e., majority correctly recognizes, 1. The "appropriate,” ante at and the non-environmen- 1072, that a that an tal, determination award is countervailing "Alaska-oriented” interests "grossly de excessive” is reviewed novo. plaintiffs; puni- jury cautioned the Indus., Cooper Group, Inc. v. Leatherman Tool tive must have rational basis in tire Inc., 424, 436, relationship record and bear reasonable review, (2001). L.Ed.2d 674 er, De novo howev- harm; jury admonished only applied to determine the constitu- and, arbitrary; perhaps importantly, most upper punitive damages tional on a limit they alerted them that could take Exxon’s given award in a If case. the award does not mitigation efforts into account when deter- ceiling, exceed this we owe deference to the mining both whether were jury. determination of the district court and and, so, warranted if the size of the award. 433-34, (noting See id. Valdez, F.Supp.2d In re Exxon award, within substantive limits on an (D.Alaska 2004). Considering jury establishing precise has discretion in number). Cooper give BMW State reign does not us free Farm were decided after pick trial, were, number would have jury chosen these instructions indeed had jury we sat as the or district court. notes, 1075, majority the ante at "in retro- spect, quite looking.” forward explained 2. The district court the retributive purposes and deterrent of

1097 ed, federal no that the Plaintiffs’ collection of and state there is indication corporation, damages award result- claims arise out harm to of this all “Alaska size “emphasis fisheries, business,[and] on the improper from an ed Alaska Alaska trial, TXO, see wrongdoer” at wealth property” caused Exxon’s hav- conduct or from an U.S. at 113 S.Ct. 509 ing “a nexus the grounding direct with jury to attempt by Plaintiffs or the “make Reef Bligh Exxon Valdez on in Prince factors, such as up for the failure other Valdez, See In re Exxon William Sound.” ” BMW, 517 at see U.S. ‘reprehensibility,’ 296 at F.Supp.2d 1090-91. J., (Breyer, 116 1589 concur- S.Ct. Thus, engaging before the multi-fac- ring).3 analysis tored introduced BMW Furthermore, impli Exxon’s Farm, important in State it is to reiterated punishing strong cates a state interest any note are not faced here with that we deterring its future reckless behavior the major present constitutional concerns constitutional review must repetition. Our in those cases. in the context damages consider at these state interests. See id. Analysis Guidepost 2. fairly can (“Only when an award S.Ct. agree I much ma- Although with of the ‘grossly excessive’ in categorized as jority’s analysis under BMW and State does it enter the relation these interests Farm, agree it all. Despite I cannot that violates Due zone arbitrariness repre- clear from thе Court that guidance Process Clause of Fourteenth Amend factor, majori- hensibility is critical added)). In both ment.” State (emphasis 1083, 1088-89, ty, gives defining ante at BMW, the guidepost Farm Court’s weight entirely to a consideration of its entirely separate en analysis was not It engages, own ante at creation. then deavor, gave instead structure to its but 1093-94, very in what to be the appears concern that the defendants’ constitutional “categorical approach” by judg process rights due were violated BMW, consistently rejected. has punishment for con incorporating ments An appropri- U.S. at 1589. S.Ct. awarding properly duct before in question ate of the award evaluation Farm, 538 U.S. 419- court. See State constitutionally permis- it is demonstrates (discussing out-of-state sible. plaintiffs’ conduct and conduct unrelated BMW, 568-73, injuries); (a) Reprehensibility (describing out-of-state con S.Ct. 1589 duct). In most recent its gave opinion, Supreme Court direct contrast, is no concern

In stark there evaluating reprehen- instruction courts scope appropriate here state sibility. This puni- interests has been exceeded. correctly majority As pursuant imposed award

tive was notes, 1080-81, must five circumscribed, weigh ante strong, properly but (1) solely whether the was As the court not- factors: state interests. district award, Exx- contrary, is evidence in entered on Indeed to the there comparing this award record court that 'the full on’s treasurer advised the suggests the wealth in a manner payment Judgment would capricious an instance of was neither nor corporation impact or its on the material Valdez, over-deterrence. See re Exxon ”). quality.' credit (“[A]fter judgment F.Supp.2d at 1105-06 1098 (2) the con duct showed See United States v. Bad

economic, Marriage, whether (9th Cir.2006) (noting for F.3d that a disregard indifference to reckless (3) may an it previously reexamine issue safety, health and whether the others’ vulnerable, “intervening controlling decided if authori- financially target conduct’s was (4) ty appropriate”). makes reconsideration repeated the conduct involved whether actions, (5) and whether the resulted in Puni- mitigation When we considered from intentional malice or mere accident. I, Opinion Damages tive Supreme Court Farm, State 538 U.S. at 123 S.Ct. precedent provided guidance limited inexplicably, though, 1513. Somewhat In State analysis. reprehensibility majority adds to the State Farm factors Farm, however, Supreme Court ex- mitiga- post-tort one its own plained that use specific creation — courts should five (“We tion. See ante at also must reprehensibility. factors to evaluate factors.”); id. at 1088. mitigating consider Although 1513. I agree mitigation do not should be in State mitigation there was evidence of reprehensibility analysis. considered in a Farm, id. the Court Furthermore, majority, unlike be- I mitigation did include as one of the five State Farm factors that all weigh lieve analysis. in reprehensibility factors finding in favor that Exxon’s reckless such explicit guidance, Given this omission reprehensible. conduct was highly particular acquires significance sug- gests prior we reconsider our statement (i) Mitigation explained below, mitigation.4 about As upon I find that including reconsideration agree I cannot majority’s asser mitigation reprehensibility analysis in the tion we must post- consider Exxon’s neither law good good policy. is nor mitigation evaluating tort in the reprehen sibility misconduct. See original of its Aside single mitiga- from a mention I, ante majority The Damages Punitive 1083-84. is correct tion majority’s previously that when we approach considered Exx supported by Supreme neither conduct, we on’s suggested mitigation precedent Court nor our own precedent. should be part repre considered as Swinton Potomac majority The cites See Baker v. hensibility analysis. Corp., Hazelwood Cir.2001), sup- F.3d as ( Valdez), Swinton, re the Exxon like Punitive port, though even (9th Cir.2001) I, Pu Damages Opinion prior [hereinafter was decided Damages Opinion nitive However, State Farm. Therefore, /]. did not have the subsequent our Punitive decision Supreme benefit Court’s most re- I, Damages Opinion analysis cent and comprehensive repre- decided significantly hensibility. Furthermore, which Swinton did not refined the punitive damages juris Court’s mitigation consider whether warrants re- prudence. analysis reprehensibility duction im- in State Farm our analysis posed by Rather, differs from a jury. analysis I, Opinion Punitive Damages and, in question limited of whether the dis- tervening controlling authority, gives us in excluding trict court erred evidence reason to prior approach. reconsider our mitigation employment efforts an dis- majority suggests part reprehensibility State Pann analysis is distin- in State Farm is guishable dispute designed because the range concerned to evaluate a broad of con- duct, nothing insurance opinion contract rather than a toxic tort. in the indicates this Howеver, ante only applies the five- framework to insurance cases.

1099 potential This damages. allows tortfeasors id. 815. We suit. See crimination behavior, in generalized engage risky to create a to safe the in that case refused any- or employment they liability context knowledge rule in the can minimize for Instead, 814-15. See id. at by where else. any resulting prompt payment of the district to the discretion of we left it cripples It the damages. foreseeable also relevancy mitigation of decide the courts to retribution, it state’s interest as allows case-by-case a basis. efforts on tortfeasor, jury, rather than the reprehensibility of its recharacterize the expressly rejected the idea that We also misconduct after a tort has been commit- categori- Court endorses the Cooper, ted. U.S. at of dam- mitigation cal relevance Cf. (“We id. at do ages (recognizing “imposition calculations. See of in BMW and interpret language punitive damages is an of expression [the post- of Cooper relying condemnation”). as on evidence jury’s] moral overturning remediation for occurrence Nonetheless, majority insists that awards; rather the punitive damages including mitigation in the reprehensibility to have been re- appears simply good is it analysis public policy because history litigation full counting a socially encourages beneficial conduct. proceed- complete picture of the give a company Ante posi- at 1088. A in Exxon’s mitigation by a ings.”). post-tort While tion, however, already significant has in- may may not relevant to a or defendant its Had up centives to clean mess. and in jury’s of whether determination up prompt not taken action clean the oil damages, what amount compensate injured spill parties, see majority’s to the gives support Swinton no 1072-73, ante at the actual harm caused is position mitigation properly consid- million could well exceeded the $504.1 reprehensibility analy- part ered as in our figure we use the numerator ratio insis a constitutional review. if analysis. Specifically, See ante at 1093. Additionally, majority’s approach gallons of oil left billion were indefi- eleven policy, a for makes little sense as matter Sound, in- William nitely Prince goals directly it to the twin runs counter jured parties were without resources punitive dаmages: deterrence and retribu- anew, their both economic and start lives tion. This grown. social harm would have (“[Pjunitive damages serve S.Ct. 1513 liability not would have increased Exxon’s function; they are aimed deter- broader only but also compensatory damages, for retribution.”); Theodore Eisen- rence damages. Greater actual berg, Damage Perspective, Awards larger dam- harm translates to (2001) Forest L.Rev. Wake ages higher ceiling numerator and (“[A] voluntary wrongdoing party’s —to Thus, miti- award. truly voluntary after payments extent the calcula- already reflected in gation ‘caught’ payment does being —remediation and in compensatory damages tion propriety punishing reduce jury’s punitive review the constitutional mitigation in deterring.”). including While award. damage analysis doubtlessly the reprehensibility Moreover, I not convinced the ma am remediate, increases incentive to ultimately encourage jority’s approach will undermining the expense does so Kay to settle. Franklin defendants majori- and retribution. The deterrence Cf. pro Corp., 884 F.2d Cir. ty’s minimizes deterrence cre- approach 1989) “overriding (noting public is an ating limiting punitive there post-tort means settlement). promoting interest” in In- Court. I agree majority that the stead, first, second, I fear it has the unintended conse- fourth suggest factors6 highly quence giving reprehensible tortfeasor defendants a conduct was without way litigation capable supporting to reduce the risk a substantial However, injured award. I reaching parties. agree a cannot with settlement analysis factor, concerning the fifth past precedent, the threat wheth- Under of a er “the harm result significant was the of intentional award creat- malice, deceit, trickery, or or a for mere acci- strong pay ed incentive defendants to Farm, dent.” State 588 U.S. at injured exchange parties in for a release or S.Ct. majority recognizes, 1513. As the arrangement.5 majority’s ap- similar put relapsed Exxon’s decision to a alcohol- however, proach, allows defendants to limit inic charge supertanker of a constituted exposure punitive damages by their tak- knowing misconduct, and reckless which ing ones, steps, unilateral even token intentionally was neither malicious nor remediate harm. I am concerned this will mere accident. Ante at 1088. However, frequently protracted lead to litiga- more faced with fit does not tion, injured parties will not necessarily squarely in category either mentioned mitigation be satisfied with defendants’ ef- Farm, State majority arbitrarily deter- forts, and will have defendants less incen- mines weighs against this factor high re- agreements. tive to reach settlement prehensibility because Exxon “did not spill Thus, policy implications support legal Id, the oil purpose.” at 1088. I cannot appropriate conclusion that it is not to add agree with this conclusion for two reasons. Farm factors. mitigation to the State First, if we read this State Farm factor (ii) Factors Farm to recognize only two categories of con- Because I see for the majority’s duct, no basis the fact that Exxon’s acts fall mitigation inclusion of our due neither category suggest could this is I reprehensibility analysis, consider only factor, neutral weighing neither for nor by the five against factors outlined high reprehensibility. However, if case, 5. In this the certification of a mandato- cussion. majority classified as neutral ry punitive factor, damages class meant that individ- the third target whether "the of the plaintiffs ual could reduce the ultimate vulnerability,” conduct had financial see State Farm, by releasing award their 538 U.S. at 123 S.Ct. 1513. As Valdez, admits, claims. See In re Exxon 229 F.3d majority by ante at reckless- (9th Cir.2000) ("Claims ly placing "relapsed charge alcoholic in aof easily disposed by could be ex- supertanker,” knew that it was "im- releases, changing payment plain- but a posing a risk tremendous on a tremendous tiff's release of its of the lump- slice future people number of who could anything not do merely sum award reduced about it.” only many Not were peo- of those sharing number of claimants ple “financially by being vulnerable” virtue of itself.”). damages pie, pie the size fishermen, they subsistence par- but were also However, plaintiffs several nonetheless used ticularly specific vulnerable to the risk im- looming punitive damages award as a posed on them Exxon. See In re Exxon bargaining chip by allocating portion Exxon a Valdez, Thus, F.Supp.2d at 1094-95. I any they might receive. See ante at suggests find this indeed factor Exxon's highly reckless reprehensible. conduct was BMW, See 116 S.Ct. 1589 ("To sure, I by majority’s am not analy- convinced injury, infliction of economic factor, sis of the agree third but I do especially that it target financially ... when plays vulnerable, relatively role small in this case аnd penal- can warrant a substantial therefore ty.”). does not warrant extended dis- BMW, penalty.” a substantial majority is correct that we must deter- Exxon’s conduct is more mine whether U.S. at S.Ct. 1589. other,7 I category to one

similar (b) Ratio malice, it is to “intentional believe closer trickery, or than to “mere acci- deceit” guidepost, the second Under dent.” State analyze must “the disparity between 1513; Dictionary Law Black’s cf. potential actual or harm suffered ed.1999) (7th as, (defining malice inter plaintiff and the award.” damages “[rjeekless alia, of the or of disregard law id. I See at 123 S.Ct. 1513. While person’s legal rights”). jury a held agree majority’s with “calculation of merely for responsible spilling not Exxon harm,” “numerator,” analysis, or ante at oil, knowingly giving rather for com- but 1093,1 conclusion, agree cannot with its id. supertanker “carrying a mand of over 53 at prohibits that the Constitution a toxic, volatile, oil” gallons million crude majori- ratio above 5 in this case to 1. The In re relapsed Exxon to alcoholic. ty arrives at this constitutional limit Valdez, F.Supp.2d 296 at 1097. Exxon did through First, steps. two it uses the years full knowledge for three so “rough framework” Planned Parent- the tremendous risk of serious to the Columbia/Willamette, hood Inc. v. health, safety, of many peo- and livelihood Activists, 422 American Coalition of Life ante This ple. See at 1086-87. cannot (9th Cir.2005), at the 949 to arrive fairly an accident. be described as Given that ratio appropriate conclusion in con- the extreme recklessness Exxon’s greater this case is above to no but duct, I the fifth mili- would conclude factor However, than 9 1. Ante at to 1093-94. it in favor of Exxon’s finding tates behavior proper then cannot asserts ratio be Swinton, reprehensible. Accord highly much than 4 to greater 1 because Exxon’s (holding that 270 F.3d conduct conduct not and was intentional because was, most, disregard reckless which attempted mitigate the harm it easily safety, health “consti- others’ agree Ante at 1094. I cannot caused. highly reprehensible justify- conduct tutes with this. award”). significant punitive damages ing Parenthood, In Planned we established

Thus, majority, unlike I find that all “rough guide three-tiered framework” fac- reprehensibility five of State Farm’s in an ratio.8 determining appropriate us reckless suggest tors Exxon’s case, Applying Planned Parenthood to endangerment in this case-—the malicious majority concludes 4 to benchmark property and livelihood of thоusands appropriate is based its determination highly, extremely, if not of Alaskans —was “signifi- “warranting] damages the economic are reprehensible capable assertion, signifi- Contrary majority’s damages the economic are to the ante at Where suggest I do it views Exxon’s con- egre- “particularly cant the behavior not but Rather, largely duct as a excusable accident. I gious,” of less 1 is warrant- a ratio than finding in this factor “militates note Parenthood, ed. 422 F.3d at 962. If Planned viewing highly against Exxon’s misconduct as significant but are economic majority reprehensible,” ante greater egregious,” “more a ratio behavior misconduct as it treats reckless Finally, might acceptable. than be Id. 4 to treat an This is consis- accident. insignificant but if the economic majority’s with the own statement that tent egregious,” ra- "particularly the behavior is reprehensibility "the of Exxon’s conduct that single digits may appropriate. beyond tios produced of in- economic harm thousands high dividuals is ...” Id. Nor, mind, my majority cant.” at 1093-94. As an initial Ante does find matter, majority’s of eco- support Zhang assessment v. American Gem Sea Inc., (9th Cir.2003), foods, nomic focuses on a number de- 339 F.3d 1020 Co., significant void of An its context. award is Bains LLC Arco Products 405 F.3d Cir.2005). large, numerically upheld not because it is but That approaches compen- rather full in the 7 range Zhang, because award sation plaintiffs for the harms. See State remanded for a similar award Bains— 123 S.Ct. 1513 both for intentional racial discrimination (“The compensatory says award in this case employment little if context — substantial;[the plaintiffs] nothing constitutionality were award- about the of this ed for a half year endangerment million and a for the reckless complete emotional distress. This was tens of property livelihood of thou I compensation.”). am not people. any given convinced sands of While it true a compensatory damages award that is more if reprehensible intention $10,000 equates reckless, per plaintiff to a mere al necessarily than if it does not actually way in the “substantial” the Su- follow that all intentional conduct is more preme Court uses the term. at reprehensible id. than all reckless conduct. Cf. (providing, example Indeed, 123 S.Ct. 1513 as an because we first are the court to damages, “small” economic where resulting cases review an for misconduct injury the hard to fully type here, was detect оr not harm of the at in and scale issue nature). economic in ' I unhelpful find it to note that cases to “have generally high single- date reserved majority Even if the were correct digit ratios for the egregious most forms of damages the economic in awarded this misconduct, intentional such as threats of case are “significant,” Planned Parent- violence intentional racial discrimina hood still support does not a 4 to 1 bench- Instead, tion.” ante at every See mark in this case. In Parent- Planned in indicator this suggests ease that Exx hood, we to remit refused the award to leaving on’s reckless for three 1 conduct— less than a 9 ratio all because not years a known alcoholic in command of a plaintiffs damages the quantifiable, were supertanker in upon treacherous waters not all compensated, of it was and the which thousands people depend plaintiffs —is likely were to incur further costs. egregious enough support an award 422 F.3d at All three are true here Swinton, within the 9 to 1 range. Accord as spill well. The disrupted oil the social at (upholding 818-20 28 to fabric of the plaintiffs’ community. See In despite ratio recognizing that the conduct Valdez, re Exxon 296 F.Supp.2d at 1094. involved issue no acts or threats of type This of harm is not easily quantifia- and, therefore, violence “[did] amount Moreover, plaintiffs’ recovery ble. in to the worst kind of tortious conduct a this case was limited to It economic harm. commit”). can defendant compensate therefore did not plaintiffs for harm attributable to “social increased One final consideration convinces me conflict, disruption psychologi- cultural the 8.93 to ratio in case does not cal Finally, stress.” Id. there subject is evidence indicate that Exxon has been to a plaintiffs have incurred substantial fur- “grossly excessive” Thus, ther costs. id. See it cannot be award.

said in this Court appropriate reiterated that it is large case are or sufficiently compre- so purposes consider for of ratio calculation they caused, hensive warrant a only lower the actual harm but the potential award. harm that a defendant’s miscon- pursuit and in foreseeably undisputedly caused. dure of the could duct circumscribed, (describing strong, properly state S.Ct. 538 U.S. in requiring punishing as consid- interests Exxon for its mis- guidepost second conduct, any harm and in be- potential deterring “the actual or similar eration added) BMW, in by Exxon it (emphasis (citing havior waters continues suffered” 1589)); frequent. large, accord it While award is 517 U.S. TXO, what must addresses be characterized extremely reprehensible harm (“Taking potential account of the misconduct. simply allowing con- no might result from the defendant’s There is excuse for calculating punitive damages relapsed pilot was alcoholic to supertanker duct waters, any years much expressed views we less for three consistent omitted)). (internal As the treacherous and Haslip.” citation treasured waters 1086-87, majority recognizes, knowing ante at Prince William Sound. Exxon’s decision to do so was potential from Exxon’s decision a malicious one risk, ultimately Hazelwood at massive keep placed in command seri- ously injured, and fore- the property Exxon Valdez both massive and livelihood despite But of such tens of thousands of There is propriety Alaskans. seeable. consideration, in every of harm us rea- calculation indication award before behavior, only sonably addresses that explicitly incorporates egregious this case actual, potential, nothing suggests and not record estimate Valdez, bias, I passion, caprice. In re 296 resulted from harm. See Exxon Thus, 1103; if with court’s agree at 1093. therefore the district F.Supp.2d ante principled jury’s punitive assessment there is no anything, harm. which this be re- potentially undervalued the means award should Valdez, In re duced. See Conclusion Accordingly, at 1110. and with F.Supp.2d Farm and its In accordance I respect, dissent. subject required predecessors, appellate award to “exacting [de novo] it is “based review” order ensure law, application rather than

upon an caprice.” See 538 U.S.

decisionmaker’s (internal quotation 123 S.Ct. 1513 LAMBRIGHT, Leonard Joe omitted) BMW, 517 U.S. at (quoting marks Petitioner-Appellant, J., concur- (Breyer, 116 S.Ct. 1589 empower But that does not ring)). review SCHRIRO, Arizona B. Director of Dora own, more perhaps to substitute our us Corrections, Department of fairly finely-tuned, award for one that was Respondent-Appellee. already range lies within the awarded No. 04-99010. BMW, 517 constitutional awards. See (noting S.Ct. 1589 Appeals, States ‍‌​‌​‌​​‌​​‌‌‌​​​​​‌​​‌‌​​‌‌‌​‌​​​​​​‌‌​‌​‌‌​‌‌‌​‍Court of United “constitutionally most awards fall within a Ninth Circuit. ” added)). acceptable range (emphasis 3, 2007. April Argued Submitted thorough analysis After and concerned May 11, Filed award, I conclude of this July Amended imposition that its not violate does right process. constitutional to due proce- fair

award was levied as a result of

Case Details

Case Name: Baker v. Exxon Mobile Corp.

Court Name: Court of Appeals for the Ninth Circuit

Date Published: May 22, 2007

Citation: 490 F.3d 1066

Docket Number: 04-35182, 04-35183

Court Abbreviation: 9th Cir.