“This Is an Outrage”

by John Delach

From the March 5th edition of The New York Times:


For more than a decade, the New Jersey attorney general’s office conducted a hard-fought legal battle to hold Exxon Mobil Corporation responsible for decades of environmental contamination in northern New Jersey.


But when news came that the state had reached a deal to settle its $8.9 billion claim for about $250 million, the driving force behind the settlement was not the attorney general’ office – it was Gov. Chris Christie’s chief counsel Christopher S. Porrino…


With The Times setting the agenda and leading the charge, Jersey Democratic politicians, environmentalists and activists were empowered. Assemblyman John F. McKeon (D), “The reported settlement is appalling and disturbing…”


Bradley M. Campbell, former Jersey environmental commissioner wrote in an NYT Op-Ed piece that same day: “The decision…to settle an environmental lawsuit…for roughly three cents on the dollar is an embarrassment to law enforcement and good government.”


For the record, this lawsuit involves the sprawling Bayway Refinery originally built by Standard Oil of New Jersey, (Esso) that Esso and Exxon operated for many years. Located in Bayonne and Linden adjacent to the New Jersey Turnpike, this foul smelling location has been the bbrunt of jokes for years.


The late Jean Shepherd once called out to his radio audience one Saturday night, “Listen, right now as I speak, there is a boy and a girl out on a first date traveling down the turnpike just south of Exit 13: she thinks it’s him and he thinks it’s her.”


The state contended that Exxon contaminated 1,500 acres of wetlands, marshes and meadows around the refinery. Judge Michael S. Hogan was believed ready to rule on the amount of damages that Exxon owed when the settlement was reached.


In a rebuttal to these critics, Gov. Christie’s administration stated the actual amount of the settlement is $225 million while noting this amount was, “the single largest environmental settlement with a corporate defendant in New Jersey’s history.” They further debunked Campbell as a “known partisan” who, when a commissioner, stated that this action could reasonably be settled in the hundred millions of dollars.


Eventually, justice will prevail, but what the paper of record and these critics are ignoring is if Judge Hogan rejects this settlement and awards a substantially higher amount to the state, that would only be the beginning of years of further litigation.


Exxon does not take judicial rulings lightly. They are the biggest, baddest battlers on earth and unlike any other entity except Uncle, they have all the time, all the money and all the lawyers they need to fight a judgment for as long as it takes.


Witness the litigation surrounding the grounding of the tanker, Exxon Valdez in March of 1989 that released 11 million gallons of oil into Prince William Sound. Judge H. Russell Holland presided over the suit brought by 32,000 fisherman, Alaska natives, landowners and commercial businesses. In 1994, the jury returned awards for a bit over $500 million in compensatory damages and $5 billion in punitive damages.


Exxon appealed. The Ninth Circuit Court of Appeals ruled the amount of the punitive damages was excessive. But Judge Holland, a Reagan appointee, didn’t think it was that excessive so reinstated the award to the tune of $4 billion.


(That’s when I discovered that the Judge Holland looked like a bearded mountain man, that the H. stood for Hezekiah. This prompted me to coin the slogan, “Never trust your fate to a judge named Hezekiah.”)


The case returned to the Ninth Circuit who admonished Holland to re-consider the award using the Supreme Court’s guidelines. This offended Holland who punted the case back to the Ninth with a battle cry that the Supremes’ views didn’t cut it with his original analysis.


This took the process from 2002 until 2004. In December 2006, the Ninth issued its own ruling setting punitive damages at $2.5 billion. On to Washington, DC and on June 25, 2008, 19 years after the grounding and 14 years after the original judgment, the Supremes voted 5-3 (Justice Samuel Alito recused himself) setting the award at $507.5 million an amount equal to the original compensatory damages. (With interest: $1.515 billion.)


I cannot speak on the merits of the Bayway case. But based on history, may I suggest that before continuing this assault to tar and feather Christie and Porrino, it may be well to consider what would be achieved should New Jersey’s litigation goes forward and at what cost.