Cleaning Up: The Story Behind the Biggest Legal Bonanza of Our Time, by David Lebedoff, New York: The Free Press, 321 pages, $25.00
On March 24, 1989, the Exxon Valdez ran aground, slamming into Alaska's Bligh Reef a few minutes after midnight. More than 11 million gallons of oil seeped into Prince William Sound, disrupting aquatic ecosystems and undercutting the livelihoods of thousands of men and women who make their living from the sea.
On September 16, 1994, an Alaska jury hit the Exxon Corp. with a bill for $5 billion. This award was not compensation for the damage the spill had done: The jury had already told Exxon to deliver $286.7 million to commercial and subsistence fishermen injured by the accident. Nor was it a cleanup bill: The company had been sinking money into that project for years, at great expense (and to little effect). Nor was it a statutory fine: This was a civil case, separate from efforts of environmental regulators (more on those later). The award was for punitive damages, above and beyond the costs Exxon had imposed on others; it was a punishment and nothing more. It was the largest such penalty in legal history.
Exxon has appealed the verdict, and the award may be reduced. Either way, some lawyers are going to become very, very rich. I mention this not to engage in the familiar game of shyster-bashing but to raise a point. Most people did not immediately think of their bank accounts when they heard that the Valdez had run aground. That, I suppose, is the difference between attorneys and the rest of us. While we were watching footage of oil-soaked waterfowl, a flock of lawyers was already looking for clients on whose behalf they could sue Exxon. Some were interested in justice; some weren't. All were interested in cashing in, as were the fishing operations, native tribes, and municipalities who hired them.
Today, that interest may seem self-evident, but, as David Lebedoff reminds us in his engrossing Cleaning Up, in 1989 it wasn't. The Exxon case seemed like a simple morality play. On one side, there was a soulless corporation, a company so irresponsible, so starved for profits, that it let a drunk pilot its rig. On the other side, there were helpless birds and cuddly otters. It was big business against the earth, selfishness against the commonweal, evil against good. Or so we were told. The greatest virtue of Cleaning Up is that it clears away those old clichés and shows the competing interest groups at play.
By extension, the book demystifies the whole idea of "environmentalism," of a purely moral movement divorced from self-interest, political influence, and other signs of a social context. In grade school, many of us learned about the Lorax, the selfless Dr. Seuss character who stood up to the developers and spoke for the trees. Not once did our teachers mention that the Lorax charged a fat retainer.
Of course, this does not mean that the plaintiffs were wrong. Libertarians have long argued that the environment should be regulated by the common law and pollution treated as a tort. We have also declared that the pursuit of self-interest can serve the common good. If greed compels lawyers to pursue an errant corporation, that may speak well for greed. (Lady Justice, meet Mr. Invisible Hand.) Certainly, it is hard to muster much sympathy for Exxon. It did behave irresponsibly, and it did injure a lot of people.
One can reach this conclusion even without blaming the company for the behavior of Valdez captain Joe Hazelwood, who wasn't necessarily an alcoholic and might not have been drunk when his ship ran aground. To be sure, he probably was pretty toasted, given that 11 hours after the grounding he had a blood alcohol level of .061--over the legal limit for operating a ship, and far lower than it must have been at the time of the accident. On the other hand, Hazelwood's blood samples were so severely mishandled en route from Alaska to the testing lab in Sacramento that the jury concluded he had not been proven drunk.
Exxon was guilty of cutting its crews to small sizes, perhaps making accidents like the Valdez spill more likely. It also connived to dodge the jury's verdict by coming to an earlier settlement with the Seattle Seven, a group of seafood processors affected by the spill. The Seven received $70 million in exchange for surrendering all claims and--here's the kicker--secretly agreeing to apply for a share of any future punitive damages and then quietly hand the money back to Exxon.
And so, one might conclude, the case--including the massive punitive award--went just as it should. Indeed, on one level, it even demonstrates the power of the common law approach: The jury forced Exxon to compensate the people it hurt and in the process gave it (and other companies) a strong incentive to be more careful.
Yet $5 billion still seems bizarrely high. One might plausibly argue that Exxon shouldn't have to pay punitive damages at all; this was an accident, after all, not a deliberate dump. But the jury found that Hazelwood acted recklessly--not just negligently--on the night of the spill, and reckless behavior is punishable by law.
The distinction is commonsensical: It's the difference between hitting a pedestrian because you were checking your blind spot and hitting him because you were driving on the left side of the road. In the Valdez case, Hazelwood set sail only three hours after drinking, a violation of Coast Guard regulations. Furthermore, he left the bridge at an inappropriate time, leaving the vessel in an underqualified sailor's hands. In the jury's view, this added up to recklessness.
Cleaning Up provides the reader with enough information to come to a different conclusion (Lebedoff himself is neutral on the matter). Consider these mitigating factors. The ship's sailing schedule was changed at the last minute, without the captain's knowledge. Hazelwood's final drink would have been legal had the Valdez left port at the hour originally scheduled; when he ordered his illicit vodka, he didn't know the timetable had changed. A mistake? Yes. Reckless? Since we've no evidence that Hazelwood himself believed he was impaired, I wouldn't say so.
Similarly, leaving the bridge was, in retrospect, a serious misjudgment. The Exxon manual requires a captain to be on the bridge "whenever conditions present a potential threat to the vessel such as passing in the vicinity of shoals, rocks or other hazards presenting any threat to safe navigation." But was leaving reckless? There is a difference between breaking company policy and breaking the law, and it wasn't as though Hazelwood was going below deck to quaff a fifth of whiskey. He had work to do, and if he soberly decided it was safe to leave the ship in his helmsman's hands, one can assume he had carefully considered just what he was doing.
Please note the word soberly. If Hazelwood was legally drunk, that would constitute recklessness. But the jury refused to make such a finding. It's possible, then, that the jury reached the right conclusion for the wrong reasons. Even then, it's hard to justify fining Exxon billions for what was, after all, one worker's mistake. (The company's policy of cutting crew sizes may have been questionable, but it was not reckless in the legal sense.)
The prosecution argued that the captain was not solely at fault--that Hazelwood had a history of alcoholism and that the company should have kept closer tabs on him. But Exxon simply seems to have erred on the side of employee privacy. Many of the people who thought the company did wrong in failing to watch the captain's off-duty drinking would throw a fit if their employers were to keep track of how many beers they downed after hours. Besides, had Exxon done so, one could easily imagine Hazelwood hitting it with a different lawsuit, this one for discrimination. Alcoholism, after all, is a federally protected disability. What legal double binds we weave....
If the common law approach to environmental protection failed, it did so with the punitive damages--not necessarily with the decision to award them at all (on this, clearly, reasonable people can differ) but with their outrageous size. But I'm not willing to write off the jury, which comes off as thoughtful and responsible. Consider its approach to the compensatory damages. The plaintiffs asked for $572 million; Exxon declared that $100 million was a more appropriate figure. An array of well-paid experts testified for both sides, contradicting one another with abandon. So the jurors spent a month carefully considering each piece of evidence, divvying data by geography and by species of fish. They did their own calculations, referring to the experts' testimony when it was useful but refusing to be simply wowed by the aura of expertise. In the end, they produced about as fair a figure as anyone could have computed.
"It may be argued," Lebedoff writes, "that no jury should be asked to decide such technical economic questions, that some other method of dispute resolution should be employed for such abstruse aspects of a case. It is far more difficult to assert that any other method would have done a better job than what was accomplished by those resolute jurors."
He's right. One can disagree with some of the jury's decisions, but one cannot find fault with the jury, or the jury system, itself. If it did a less impressive job computing the punitive award, that can only be because retribution is so much fuzzier than restitution. The first is based on empirical data, the other on an abstract, almost artistic sense of justice. In the jury room, two argued against imposing a punitive award at all. Others proposed figures ranging from $861 million to $13 billion. Two jurors said the penalty should be $3.52 billion, because that was Exxon's net profit the year of the spill. Five billion, Lebedoff writes, was "a compromise figure, with people moving up and down in search of a consensus." It was also about the average size of the company's annual net profit.
A pretty hazy process, yes. But this problem will afflict anyone instructed to compute punitive damages, juror or not. The problem lies in the system's haste to impose punitive awards, not with who it selects to impose them.
Certainly, the methods of the jury--if not always its particular decisions--seem more sensible than the actions of federal and state regulators. While Exxon was fighting the fishermen in civil court, the government charged the company with killing migratory birds without a permit--in essence, hunting without a license. Nothing in the civil trial was as absurd as recasting an oil company as an errant bird hunter. Exxon ended up settling for $1.03 billion. The figure included a $900 million "trust fund" for "restoration," on top of the billions Exxon had already spent trying to clean up its mess.
The key word there is trying. To the extent that the sound has recovered, it has done so almost entirely through natural processes; the human cleanup has been a money pit and little else. The cash has kept a lot of bureaucrats employed, but I suspect it would have done more good in the company's coffers, improving service for Exxon's customers.
Cleaning Up is, for the most part, even-handed and well-written. A lawyer himself, Lebedoff understands the issues at stake and explains them clearly. He relates important details the casual newspaper reader may have missed--for example, the fact that the plaintiffs' law firm, Faegre & Benson, is the kind of establishment operation that usually represents companies like Exxon, not their opponents. He paints colorful pictures of the lead players in the drama: Brian O'Neill, counsel for the plaintiffs; Joe Hazelwood, the most infamous drunken sailor in recent history; and jurors, attorneys, and Exxon executives.
He also includes some amusing side stories, such as the tale of the New York judge who hyperbolically described the Valdez spill as "a man-made destruction that has not been equaled, probably, since Hiroshima." Or the struggle within Faegre & Benson that followed the jury's decision, with every employee jostling for a share of the award. (How exactly did an ecological disaster in Alaska become a Minneapolis lawyer's opportunity to build his dream house?)
There are, of course, problems with the book as well. Lebedoff ignores Exxon's settlement with the government, even though it must have influenced the company's approach to the civil trial. For that matter, he spends too little time describing what went on within the defense camps --not just Exxon's, but that of Hazelwood, who retained his own counsel and was named as a separate defendant. Above all, the publisher could have made things a lot easier on readers by including an index.
But these are relatively small quibbles. The greatest faults in Cleaning Up belong not to the author, but to the government, the legal profession, and Exxon. And, perhaps, to the media, so caught up in treating "environmentalism" as a morality play that it misses half the story. You can't accuse Lebedoff of that.