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Court strikes down Exxon Valdez award

SAN FRANCISCO, California (CNN) -- A federal appeals court Wednesday struck down a $5 billion punitive damage award against Exxon for its involvement in the 1989 Alaskan oil spill, the worst in U.S. history.

In ruling the damage award was excessive, the 9th U.S. Circuit Court of Appeals cited a recent Supreme Court decision that restricted punitive damage awards determined by several factors, including a 4-to-1 ratio between the damage award and the actual harm inflicted on plaintiffs.

The appeals court said the $5 billion decision was actually a 17-to-1 ratio, and instructed a lower court to reduce the amount.

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Wednesday's ruling deals with the Exxon Valdez oil spill, when 11 million gallons of crude oil poured into the pristine waters of Prince William Sound after the oil tanker Exxon Valdez ran aground.

Plaintiffs -- commercial fisherman, Alaska natives, property owners and others -- had sought damages as a result of the massive spill.

Reacting to Wednesday's ruling, lead plaintiff attorney David Oesting told CNN, "In essence what they've done is spend 29 months deciding to remand it to district court."

He added, "What's most important is that every other technical legal argument by Exxon against the damages was rejected ... and the only issue is quantification of the amount."

The appeals court decision, he said, is "a serious misreading of Supreme Court jurisprudence." He stated that "every Supreme Court decision says there is no mathematical bright line" to determine punitive damage awards, and the 4-to-1 ratio suggested by the Ninth Circuit is arbitrary.

The original $5 billion award was the result of a district court jury verdict in a lawsuit brought by the plaintiffs who claimed financial harm. The original lawsuit was heard in U.S. District Court in Anchorage from May to September of 1994. Plaintiffs argued for no less than $5 billion and no more than $15 billion in punitive damages.