Today's not a good day for Faegre & Benson to say the least. The U.S. Supreme Court vacated the $2.5 billion punitive award in the Exxon Valdez oil spill case, finding it excessive. The court found that under maritime law the most that could be awarded is $507 million.
For those of you keeping the score, the jury originally awarded $5 billion in punitives, which was reduced in the appellate process to the $2.5 billion award. While $500 million is still nothing to sneeze at (well, maybe for an oil company these days it is ...), the new amount has got to be a huge disappointment to Faegre, the other law firms involved and, of course, the approximately 40,000 fishermen they represent. (Although interest will make the award about $1 billion.)
It's worth pointing out that things could have been worse. The justices were equally divided on whether maritime law permits punitives at all for the acts of agent. Possibly fortunately for the plaintiffs, Justice Samuel Alito did not participate.
Here's a quote from the lead Faegre lawyer, Brian O'Neil, on the Wall Street Journal Law blog: “We’re extremely disappointed that the award was reduced. The idea that knowingly putting a drunk in charge of a supertanker through Prince William Sound, Alaska over the course of two years is not reprehensible is a ridiculous position to take.” (Click here for more.)
The case, which has been winding through the legal system for nearly two decades, represents a vast commitment of time and resources for Faegre and the 66 other law firms that were involved. It now appears that the promise of a huge payday was illusory. (The fee agreement was for 22 percent, which would average out to a little less than $3.3 million a firm by my math. Faegre had an important role and likely will a get a substantially bigger cut than that, but it will be lucky if what the firm ultimately gets covers the costs of putting together the PowerPoints for the case. I suspect there will be a lot of cancelled boat orders emanating from Faegre today.)
It's most devestating for the plaintiff fishermen, of course.
UPDATE 6/25: 11:57 p.m.:
The following comes from a Strib story on the fee award:
Faegre represented 2,600 people, the most of any of the law firms involved. The firm now stands to receive roughly $20 million to $25 million in fees out of total attorney's fees of approximately $200 million, according to early calculations. That's a fraction of what it stood to earn after the initial 1994 jury award of $5 billion in punitive damages, which an Appeals Court reduced in 2006 to $2.5 billion. The firm also will get about $4 million in out-of-pocket expenses.