Case summary 5.4 In re Exxon Valdez, 296 F. Supp.2d 1071 (D.C. Alaska 2004)
1. Is it ethical to try to bankrupt a company by means of lawsuit?
Bankrupting a company by means of lawsuit can be regarded as unethical and an abuse of the
legal system. It however depends on the severity of the unethical acts. Using a law suit to recover
owed damages is not unethical. It is always important to consider how much the employees and
customers are affected by bankrupting the company. However, if it’s the least harmful choice,
then the company can be bankrupted.
2. Should appellate courts be able to reduce punitive damage awards?
Yes, appellate courts should be able to reduce punitive damage awards especially if the award is
unfair to the defendant. This would make sure that there are ceilings for punitive damages and
there is predictability for the outcomes of litigation.
3. Is a $5 billion punitive damage award excessive against a company as large as Exton?
Yes. Considering that the compensatory damages that the jury awarded was $507.5 million
which resulted to a ratio of 10: 1.
