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U.S. Supreme Court Declines Louisiana Punitive Damages Appeal

Mealey Publications
April 23, 2008

WASHINGTON, D.C. — The U.S. Supreme Court on April 21 declined without comment an appeal by ExxonMobil Corp. of a $112 million punitive damages award in a Louisiana property damage lawsuit (ExxonMobil Corp. v. Joseph Grefer, et al., No. 07-1055, U.S. Sup.).
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This was the second time ExxonMobil appealed the award to Joseph Grefer and family for contamination of their property with naturally occurring radioactive material (NORM) in scale removed from oil exploration equipment. The Supreme Court previously remanded for reconsideration an August 2006 ruling by a Fourth Circuit Louisiana Court of Appeal panel awarding the Grefers $56 million in compensatory damages and $112 million in punitive damages (Joseph Grefer, et al. v. Alpha Technical, et al., No. 02-1237, L.A. App., 4th Cir.; 2007 La. App. LEXIS 1602). The February 2007 remand was issued a week after the Supreme Court ruled on punitive damages in Philip Morris USA Inc. v. Mayola Williams (127 S.Ct. 1057; 166 L. Ed.2d 940; 2007 U.S. LEXIS 1332). The Louisiana panel reduced the punitive damages from $1 billion to $112 million in March 2005.

The Grefers sued Intracoastal Tubular Services Inc, ExxonMobil and Alpha Technical Services Inc. in August 1997 (No. 97-15004, Civil Dist., Orleans Parish, Div. A). Only ITCO and ExxonMobil remained in the case for trial, which concluded after five weeks with a jury award of $56 million in compensatory damages and $1 billion in exemplary damages.

The Louisiana appellate panel said in March 2005 that ExxonMobil abandoned ITCO, a subcontractor cleaning ExxonMobil equipment on the leased Grefer property.

“Exxon executives had been warned that NORM posed a human safety hazard to anyone exposed to it, but they waited nine months to send the warning letter to the contractors and to meet with ITCO,” the panel said. “Exxon’s delay in notifying ITCO of the danger was wanton and reckless.

“Here we found that Exxon’s failure to disclose the NORM hazard to ITCO in a timely manner demonstrated the reprehensibility of its conduct, a factor we can consider in awarding exemplary damages to the Grefers. Although Exxon’s delay in disclosing the NORM hazard did not cause the Grefers physical harm, it increased their economic damages by allowing the continual accumulation of NORM scale on their property.”

Copyright 2008, LexisNexis, Division of Reed Elsevier Inc. All rights reserved.

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