Exxon Valdez Case Analysis: Common

Exxon Valdez Case Analysis: Common Law vs. Maritime Law Legal Implications for Tort and Claim Liability

Case Details:

The Exxon Valdez a massive oil tanker went aground in Alaska, spilling more than 11 million gallons of crude oil into the sound, doing irreparable damage to the environement and subsequently the thousands of fishery and subsidiary industries in the reqgion and those surrounding the sound. The oil spill was found to be due to the negligence of the captain of the vessel, who was legally drunk. Exxon had knowledge of the captains alcohol problem for more than three years but continued to allow him to navigate huge tankers despite of the known problem. Additionally, Exxon was fully aware of the kind of environmental impact and subsequent ethic of care it had to avoiding such accidents, and the limited resources that were available at the time to cope with such a disaster. The ethic of care being established in civil law, though does not necessarily constitute a maritime tort in maritime law and the scope of liability required countless hours of litigation and appeals.

Initial lawsuits found Exxon in full liability for 5 billion dollars of restitution to be paid to all those individuals who filed against it in various lawsuits and then subsequently accepted the terms of a large class action lawsuit. The company then filed an appeal, claiming that the liability ruling of 5 billion was in excess of liability and the Ninth District Court of Appeals reduced the amount to 4.5 billion dollars, partly ruling in favor of the company but still claiming that the company knowingly endangered lives and property as well as the environment by continuing to allow the captain of the vessel to navigate the Valdez through the area, even when it was fully aware of the potential consequences of its actions.

Background:

Key stakeholders in this case are a vast list of player including but not limited to those associated with Exxon itself. The captain of the vessel. Fisheries and canneries in and around the area, subsistence fisherman who rely on the sound and area surrounding it for their livelihood, secondary tourist and support companies who were negatively effected by the spill in a secondary and primary way with both economic and/or physical damage to shore properties. Additionally, there are many other stakeholders, such as those who found fault in the economic impact of the event on fuel prices that added insult to injury to offset the cost of the clean up on Exxon. (Nixon, 1994, pp. 330-333)

The impact associated with this event is vast as well, given that the economic and environmental effects beyond immediate physical property damage as whole industries closed for production for part or all of the 1989 seasons. Fishermen who worked in the area were unable to continue with their work for the foreseeable future and many held little if any savings to support or sustain their businesses from one season tot the following, State and local agencies that were then required to offer owners and support staff financial necessity payments in the form of unemployment and/or other state funded support where they qualified for such. The state of Alaska for its involvement in the immediate and long-term financial burden of containment and clean up, and of course the large amounts of funds that were needed initially and were provided by Exxon to help resolve the immediate problem. (Greely, 1989, p. 721) Ethical and operational issues such as the known exposure, long-term environmental impact, such as death of marine and costal life are far to vast to even generalize about and there is evidence that the spill is still impacting marine life and coastal environments to this day. (Greely, 1989, pg 721) Operational impact on the key stakeholders, such as fisheries, canneries and fisherman were also vast, and required many years of rebuilding and redistributing of resources, while many of the smaller businesses and independent fishermen simply ceased operations and relocated in an attempt to rebuild their lives. Bankruptcies became a rampant act of resolution, and sentencing for key players at Exxon was limited;

The most common example used by legal scholars in the debate over the promulgation of the Organizational Sentencing Guidelines was the Exxon Valdez oil spill. The ship ran aground on a reef off the coast of Alaska, spilling eleven million gallons of oil and creating an environmental disaster, killing birds, fish and other wildlife. The tanker's captain was indicted and convicted of misdemeanor negligence. Exxon was eventually indicted on five counts of felony and misdemeanor charges. (Recine, 2002, p. 1535)

While Exxon was relatively protected, as they were able to avoid liability and even recoup millions of dollars in costs incurred for cleanup, as was the captain of the vessel who was only convicted a misdemeanor negligence, while others had no legal recourse but to wait out the long process of litigation and appeals on the part of the company in the wake of thousands of damages claims. (Recine, 2002, p. 1535)

Legal analysis:

The legal analysis of the case was confusint to say the least as the U.S. was underprepared for sifting through the situation, with both civil an maritime law becoming an issue as well as the scope of liability that the comapnay had. Was the company responsibvle for a larger assumed ethic of care than other defendants had been in the past, simply by virtue of the magnitude of the case and the ample evidence of willful negligence on the part of company officials? The case in many ways became a groundbreaking case, though it did not come close to answering all the questions associated with it, with the debate between superseding laws, civil and/or maritime and the ethic of care that the company was liable for. In general both maritime and civil laws offer limitations of what is considered reasonable care. In civil law individuals involved in liability cases frequently are allotted the demonstration of limitation on liability, and in maritime law the same can be said of ships/captains/company owners and even whole nations. Yet, this case served as a benchmark where the civil jury and subsequent appeals judges felt there was enough grounds to expand the liability to a greater degree, even though it was still then necessary to limit the number of class action litigate in the case, depending on their involvement and the justifiable impact upon them. There was in fact a moment in litigation when all individuals who did not prove physical damage from the spill could have been excluded from compensatory damages, according to maritime law. (Nixon, 1994, pp. 330-333) Thankfully the court saw fit to hold Exxon accountable for an expanded set of liability, as a result of proof of prior knowledge of negligence on the part of the captain. The analogy below shows the varied differences in these two scenarios. While others still argued grounds for existing liability limitations. (Nixon, 1994, pp. 330-333) second limitation on the duty to exercise reasonable care is that the duty to prevent economic harm is much more limited than the duty to prevent physical harm. If a driver carelessly causes an accident that blocks the Lincoln Tunnel leading into New York, many people will be late for work and have their wages docked, some sales representatives will miss appointments and fail to close important deals, and the coffee shops in Manhattan that sell coffee and donuts to arriving commuters will lose business. The driver clearly has a duty of care to anyone physically injured in the accident, but is she also liable to all these people who suffer only economic injury because of the same act of carelessness? Generally not, because even though the harm that occurs is easily foreseeable, the scope of the potential liability is too great. In some cases, however, there is a duty to prevent economic harm. One important class of cases involves large environmental disasters. When the Exxon Valdez oil tanker broke up off the Alaska coast and spilled millions of gallons of oil, some shore property owners suffered physical damage to their property when the oil washed ashore. Those property owners were direct victims of Exxon's negligence, so Exxon was liable to them for violating its duty of reasonable care. Many more people suffered economic harm without physical damage, though. Fishermen couldn't fish, boat rental agencies couldn't rent their boats to tourists, California motorists paid higher gasoline prices, and so on. Courts engaged in tough line-drawing issues to determine which of these parties Exxon owed a duty of care. (Feinman, 2000, p. 146)

The Exxon case provides ample opportunity for the redevelopment of federal consumer protection laws, but has subsequently ended with little or no resulting change, as late as 2008 the Supreme Court again reduced the liability of the company to a paltry 507.5 million dollars, taking into consideration amount the company has already paid for compensation as well as clean up of the spill. ("Exxon Valdez Damages Reduced," June 2008, NP) the subsequent attempts to recoup any funds lost by consumers for increased oil prices have failed and as the length of time since the initial spill has broadened the resulting litigation offers consumers little hope that the legal system will change to better accommodate federal consumer protection law in the future. Like most litigations on such complicated issues the company had little to do but show reasonable accommodation, adopt better surface practices and wait out a lengthy period before their liability was reduced substantially by the courts.

Ethical analysis:

The key ethical issues of the case are pretty clear, did the captain knowingly endanger the environment by continuing to retain his position and navigate tankers through the area and did the company know that such was the case. Both ethical dilemmas are clear and were ruled upon by many hours of court time and subsequent appeals, though the final Supreme Court ruling on Exxon's liability for the spill was split 4:4 every other deciding body laid full responsibility on Exxon's lap. ("Exxon Valdez Damages Reduced," June 2008, NP). An additional ethical issue, though much less openly understood or known by the average American is weather it was ethical to pay fishermen large sums of money to use their boats to help in the cleanup, with the inclusion of release of liability contracts that stated they would not seek compensatory damages in the future against Exxon for the disaster itself and any subsequent economic or physical damage it might have done.

As the nation's worst oil spill spread along a thousand miles of Alaska's beaches, the Exxon Corporation was offering fishermen between $2,000 and $5,000 a day for the use of their boats in the cleanup, but they had to sign an agreement to keep their mouths shut. Some Alaskans were shocked by this blatant corporate arrogance, which seemed only to add to the stench of the 10-million-gallon slick. In truth, however, the hush money started fl[n]owing long before Exxon's tanker hit the rocks. (Greely, 1989, p. 721)

In a deontological sense the ethical actions of the Captain are clear as he was likely aware that his impaired judgment, having already experienced rehabilitation and relapsing, that expanded his ethical responsibility. He was also very likely to have been aware of the serious nature of a large environmental disaster, at his fingertips when the accident occurred. This obviously showed a complete disregard for ethical considerations of universal applications of ethics, i.e. do no harm. In a humanistic sense the same is true as his actions would clearly not have helped or aided humanity in any way, but were selfish acts. Consequential theories would also assassinate the Captain as his actions did not result in the desired results, i.e. A safe trip through the sound with his massive ship and cargo. From a deontological perspective, regarding Exxon's involvement and/or negligence in the situation is much more expansive, as is the humanist and consequential perspective. Exxon's actions were clearly an example of the status quo of big business, i.e. make every attempt to limit liability after the fact as apposed to preventing failure in the first place. Exxon knew for more than three years that the captain at the helm of the Valdez had an alcohol problem and had continue to drink (sometimes even on duty) after he had completed rehab is a significant ethical dilemma, as it knowingly place people, the economy and the environment in dire danger with disregard for potential loss. From a consequential perspective the company was negligent in its duties to exercise reasonable care for the whole of the situation it had in its control and the outcome was a massive disaster, not the desired outcome, that had and still has lasting effects. In a legal sense, from a humanistic perspective the if the company had resolved itself to the payment of reparations, beyond limited though expensive clean up of the spill and attempting to limit its own liability it was also at fault. Legal stakeholders had some success in changing the situation to better serve an ethical goal, as the case became a benchmark for change, but it simply pointed out a problem and relied again on existing but limited precedence to support the company rather than the consumer or other hurt parties.

Contributing factors:

The companies culture seriously aided in the development of unethical standards as the don't ask don't tell" policy of not dismissing captains after they have failed to resolve substance abuse issues is in question in a big way. The company culture also helped unethical behavior when it managed to develop countless ways to limit its own liability for the results of the spill by asking people in dire straits, subsistence fisherman, to sign away their rights to later reparations if compensation offered by the company for use of boats did not meet their long-term economic damages for the event. Most if not all of the responses to the situation revolved around corporate liability limitation, rather than real compensation for damages.

Ethical decision factors to consider:

1. Allowing the captain to continue to captain and navigate ships after knowledge of substance abuse issues. Consider the companies policy on such allowance of continued employment. If the policy should have been altered or even followed to begin with.

Consider the scope of awareness, i.e. how many known reported and documented incidences of substance abuse were present for this and other captains or key personnel who have similar problems. In a humanistic sense what is the message to the corporate culture that ignoring such a problem is acceptable? Also what is the impact of this on universal ethical principles i.e. is it better to keep a person with a problem employed through loyalty to the individual with the problem or better to protect the company assets and the environment?