Jacob Sullum

Perhaps not surprisingly, the Supreme Court has chosen not to wade once again into this due-process thicket. Instead, it will consider whether federal maritime law, a form of common law dealing with ships at sea, allows punitive damages in a case like this one and, if so, whether it imposes limits on them.

These questions illustrate the fundamental problem with punitive damages: They're not really damages at all; they're punishments. Like criminal penalties, they're supposed to serve the goals of deterrence and retribution. Exxon argues, plausibly enough, that the $3.4 billion it already has paid is "more than enough to deter and punish anyone for anything."

Given the impact that the Prince William Sound disaster had on Exxon's reputation as well as its finances, oil companies have a strong incentive to avoid anything like it in the future. As for retribution, it's a tough concept to understand when it's applied not to culpable individuals such as Joseph Hazelwood but to corporations owned by shareholders who are innocent of any wrongdoing.

In any event, Exxon was already punished, paying the U.S. government a criminal fine prescribed by statute. It should not be punished again for the same conduct under rules that allow fines to be pulled out of thin air.


Jacob Sullum

Jacob Sullum is a senior editor at Reason magazine and a contributing columnist on Townhall.com.
 
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