This is the Cato Daily Podcast for Thursday, June 26, 2008. I'm Caleb Brown.

It's been nearly 20 years since the Exxon Valdez disaster.

The Supreme Court this week has finally weighed in on whether certain damages issued following

the disaster were appropriate.

Ilia Shapiro, senior fellow in constitutional studies at the Cato Institute, comments on the High Court's ruling.

The jury awarded $5 billion in punitive damages against Exxon. And remember this is on top of the 2.1

billion that Exxon had already spent on cleanup efforts, another 900 million that had paid in civil

fines to the United States and the state of Alaska, and another 300 million had paid in compensation to private parties. So this suit ties up all the

remaining claims and this particular issue is just on the punitive damages not on the compensation.

Generally what are punitive damages?

They're meant to deter future conduct.

They're as defined by the terms.

They don't compensate in any way. They're just meant to

set an example, sometimes they're called exemplary damages and to punish so as

future defendants don't do that action.

So anyhow, the jury awarded $5 billion on appeal

that was reduced to, again, this is in the state court,

reduced to 2.5 billion, and it came up to the Supreme Court.

The Supreme Court, first of all, and I'll talk about the issue within this later but tied 4.4 because

Justice Alito was recused. They tied 4.4 on the issue of whether Exxon the corporation could be even liable for punitive damages on a theory of derivative liability, meaning Joe Hazelwood, the captain of the Exxon Valdez, was reckless, was the finding. Can Exxon, and he was liable

for punitive damages, can Exxon also be liable for punitive damages even though it was its agent, its manager that was doing

this this harm this recklessness and because Alito was recused and the other justices split evenly, 4.4, what happens is the lower court, the Ninth Circuit's opinion is affirmed summarily without any precedential value.

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