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Note: After the US Supreme Court ruled that the US$4.5 billion punitive damages award in the 1989 wreck of The Exxon Valdez in Prince William Sound, Alaska which caused a massive oil spill must be reduced to a 1:1 ratio under maritime law, allowing US$507.5 million in punitive damages, the case was remanded regarding interest and appellate costs. The US Court of Appeals for the Ninth Circuit, in an opinion by Schroeder, C.J. awarded post judgment interest from the day of the original judgment and required that each party bear its costs. Kleinfield, J. concurred regarding the award of interest but dissented regarding the award of costs.

The principal item of costs was US$60.6 million in LC fees for a supersedeas LC pending appeal of the US$5 billion punitive damages award. The Dissent explained that "The rationale for a supersedeas bond is that there can be no certainty about who is in the right until the appeals are done; the party that lost should not have to pay the winner until the district court's decision is finally affirmed, but in the meantime, the party that won in district court should not be at risk of the money disappearing." The standby was payable to the clerk of court on a statement to the effect: "'pay as directed in the attached order of the District Court . . . .'"

The Majority concluded that its rule is that each party bears its own costs where there is a mixed judgment as there was in this appeal, it concluded that the application of the rule was appropriate even though the punitive damages were reduced by 90% particularly in light of the malfeasance of Exxon.

The Dissenting Judge stated that "Exxon paid 90% percent of this money, about $54.5 million dollars, for the right to hold onto the $4.5 billion plus interest that the Supreme Court concluded Exxon did not owe. Only 10% percent, about $6.1 million, bought the right to delay paying money that Exxon turned out to owe the plaintiffs. In other words, Exxon had to spend about $6 million to secure money it did owe, and over $50 million to shield money it did not owe, while it pursued its appeals.

. . .

Because Exxon won 90% percent of its case and paid 90% of the $60.6 million to hold onto money it ultimately did not owe, Exxon ought to recover 90% of its allowable supersedeas bond costs. The $60.6 million was the price of Exxon's train ticket to victory. The rules, in place with little change for many centuries, say that a party that wins on appeal is entitled to have the loser reimburse the price of that train ticket."

[JEB]

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