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Baker v. Exxon Corp.

ELR Citation: 31 ELR 20433
Nos. No. 99-35898, 239 F.3d 985/(9th Cir., 02/08/2001)

The court holds that seafood processors who settled with an oil company in connection with the Exxon Valdez oil spill before the mandatory punitive damages class was certified are entitled to share in the allocation of a punitive damages judgment even though the settling processors assigned their future individual claims to punitive damages to the oil company. In exchange for releasing their compensatory damages and punitive damages claims against the company, settling processors received lump sum payments from the company so that the company could pursue damages for the assigned claims, and, thus, participate in the damages allocation. When the representatives of the class crafted an allocation plan for the percentage allocation of the damages judgment against the company, the representatives excluded the claims of the processors that had been assigned to the company. The company objected, but a district court approved the plan and rejected the company's claims on the basis that the company should not share in the punitive damages.

The court first holds that the company has standing to appeal the district court's judgment without filing a formal motion to intervene as a claimant. The company's shift from defendant to claimant is analogous to a realignment of parties within ongoing litigation. Further, the company is already a party and, thus, falls within the general rule that only parties or those that properly become parties may appeal an adverse judgment. Therefore, there was no reason for the company to file a motion to intervene.

The court then holds that the district court erred in refusing to permit the company to share in the punitive damages award. The issue is controlled by In re Exxon Valdez, 229 F.3d 790, 31 ELR 20220 (9th Cir. 2000), which was a previous decision addressing the oil spill and which held that the oil company may enter into "cede back" settlement agreements that permit the company to recoup damages against itself. Under the cede back agreements, the company settled with individual claimants, who pursued their claims for punitive damages on their own behalf and then, pursuant to the agreement, ceded a portion of these damages back to the company. The assignments at issue here should not be treated differently than the cede back agreements. Both devices performed the identical function, accomplished the same result, and encouraged settlements in this mass tort litigation.

[Prior decisions in this litigation are published at 21 ELR 21068 and 31 ELR 20220.]

The full text of this decision is available from ELR (6 pp., ELR Order No. L-326).

Counsel for Plaintiffs
Brian B. O'Neill
Faegre & Benson
2200 Norwest Center
90 S. 7th St., Minneapolis MN 55402
(612) 336-3000

Counsel for Defendants
John F. Daum
O'Melveny & Myers
400 S. Hope St., Los Angeles CA 90071
(213) 669-6000