Deepwater Horizon and the Dark Side of the Stevens Legacy
A few weeks ago, Dan wrote a nice post suggesting that retiring Justice John Paul Stevens has been a principal architect of modern environmental law doctrine. The Deepwater Horizon disaster shows another example of this pattern — although probably not in ways that Stevens’ environmentalist admirers (of whom I am one) are very proud of.
How much will British Petroleum have to pay out in damages for the Deepwater Horizon disaster? Perhaps a lot, but in no small part because of Justice Stevens, a lot less than it otherwise would have — even if, especially if, a court or jury finds the corporation to have acted with gross negligence or conscious disregard of safety.
Why? The answer can be found in BMW v. Gore, a 1996 case in which the Supreme Court, for the first time, found that excessive punitive damages may violate the Due Process Clause and thus pose a federal legal question. Who wrote that opinion, a 5-4 decision? John Paul Stevens.
Now flash forward to 2003, to State Farm Mutual Automobile Ins. Co. v. Campbell. There, the Court per Justice Kennedy, held that in virtually all circumstances, punitive damages exceeding 9.9 times the compensatory damages will violate the Due Process Clause. And there was Justice Stevens, joining the opinion. If Gore established a general principle, and warned that the vast majority of state-court punitive damage judgments would be upheld, State Farm obliterated this restraint — with virtually no real precedent for it to anchor on.
Now, even with a 9.9 multiplier, BP might have to pay significantly, but State Farm changes incentives for companies. No one would argue that tort law should be the primary guardian of the environment, but in an era where companies can tie up regulations for a long time and block legislation, it can form an important backstop — as the public nuisance climate change suits have already demonstrated.
If Stevens is the architect of modern environmental law, this is not one of his more successful building projects.
And a final note: the Court’s conservatives have a pretty good record on this. Scalia and Thomas often talk about federalism, but only in cases where the result would be what they want; in other cases (ahem) their federalism principles go out the window. Not here: they dissented in both State Farm and Gore, even they were probably in ideological sympathy with the defendants. And Richard Posner, in a case involving bedbugs of all things, undermined State Farm before it was even a year old. Good for them.
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About Jonathan
Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic – Land Use, the Environment and Loc…
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I’m all for making BP cover the costs of this accident, but in theory at least that should happen through compensatory damages; punitives are for punishing tortfeasors whose conduct is more reprehensible than any one plaintiff’s damages would suggest (as in the bedbug case, or the tobacco litigation). Here, the damage to the Gulf and to fishermen’s way of life is a pretty good indicator of the enormous scale of the harm; if that damage is measured accurately, BP will be forced to internalize the costs of its actions. A jury could then tack on punitive damages as a further measure of retribution — subject to the limits announced in State Farm, etc. But in theory, those limits in no way restrict a jury’s ability to force BP to pay the full price for its actions here.
(Note, too, that there is a pending legislative effort to raise the statutory limit on oil-spill-related compensatory damages from $75M to $10B precisely so that BP could be held to full account here. The current $75M statutory limit is far more problematic in this situation than the due process limit on punitive damages.)
aleiter — You are right on both counts theoretically, but as a practical matter, I am concerned about what will happen. Yes, there is a pending legislative effort to raise the statutory limit. Any reason to believe that the Republicans will be any more forthcoming on this than on anything else this term? Tort is useful here when the legislature is frozen, as it is in our current partisan environment.
You are also right about the difference between compensatory and punitive damages. But if a suit is successful, then the lawyers will take one-third of the compensatories, leaving the plaintiffs undercompensated. That’s a reason to allow attorneys’ fees, of course, instead of jacking up punitives. But then we get back to our legislative problem again. Moreover, there is always a significant danger of remittitur. Finally, there may be non-monetizable values not amenable to compensatories, which should probably be taken into account on these sorts of things — much of this might have to do with discounting the damage, for example.
But your point is well-taken. I appreciate it.