Supreme Court Won't Review $112 Million Punitive Award in La. Contamination Case

The U.S. Supreme Court has rejected ExxonMobil's request that it review a $112 million punitive damages award to a Louisiana man who said the oil company contaminated his land with radioactive material.

The high court denied the company's second petition for review of the award without comment.

According to the record, for years plaintiff Joseph Grefer leased his 33-acre tract of industrial property near New Orleans to Intercoastal Tubular Services Inc., which contracted with Exxon to remove scale buildup from oil pipes.

Scale, a residue left over from drilling, contains the naturally occurring radioactive material radium sulfate.

In 1986 Exxon stopped shipping the pipes to Intercoastal for cleaning after learning that some of them contained radioactive material. Intercoastal, however, continued to store pipes on Grefer's property until 1996.

In 1997 Grefer sued Exxon and Intercoastal in Louisiana state court, claiming his property was damaged from the pipes' cleaning and storage.

During a 2001 trial Grefer said Exxon should pay punitive damages for his property damage and because the radioactive contamination posed health risks to Intercoastal employees and the neighborhood at large.

The jury awarded $56 million in cleanup costs and $1 billion in punitive damages. The Louisiana Court of Appeal affirmed the verdict but reduced the punitive damages to $112 million. The state Supreme Court declined to review the case.

In June 2006 Exxon petitioned the U.S. Supreme Court for review.

The company asked the high court to determine whether due process permitted the jury to punish it for the potential health risks its conduct posed to the nonparty pipeline workers and neighboring residents.

The court granted review and directed the appeals court to vacate the punitive damages award in light of its decision in Philip Morris USA v. Williams.

In Williams the Supreme Court held 5-4 that an Oregon jury may have improperly punished tobacco manufacturer Philip Morris for its conduct toward smokers not involved in the case by awarding $79.5 million in punitive damages to a deceased smoker's widow.

On remand in Grefer's case the Louisiana appeals court found that the trial court's jury instructions comported with the Williams ruling because the jury could consider ExxonMobil's alleged disregard for public safety.

The appeals court noted that Exxon did nothing for several months after learning about the contamination because of concerns about financial consequences and litigation.

Exxon petitioned the U.S. Supreme Court Feb. 14 to again review the punitive damages award, and the high court denied review April 21.

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