Ok Alaska Joe. I'm back :-) [It was nice to know you missed me!]
My absence had nothing to do with politicians suddenly starting to behave. It was a personal issue. Just about the time of my last post I was rather viciously attacked by a hacker. He had pulled my email out of the ether (or more likely out of his own membership list ... he has several sites on the 'Net and I was, no: I AM, a member. I'll have to drop by one of these days. But by luck of the draw as far as I know, he pulled my email address, hacked the machine and stole the most recent couple months of email. That was critical professional correspondence (that was mixed in with the jokes and the anecdotes people used to send me before I stopped emailing them back). Then a message popped up on my computer telling me I should go here. (Only that time it was a live link to where I'm fairly sure was one of his sites and I think I know which one. He had to grab something there apparently because when we left it was like an antelope on speed. We shot and boomeranged around the 'Net so fast it would ... well, in fact it did, make my head spin! And then we ended back up on his site anyway (I don't think he realized that I realized that I knew where we were even with the dizzying trip to disorient me). We went from the site to what "felt" like an empty field with a very minimal Paypal station at one end and the company that the Hacker used to sell me "verbal books"! Just try to convince someone you didn't receive the product when the Paypal receipt ways "oral ebooks" or whatever! :-D He said he'd sell it to me for $70 and I could go home.
It was worth vastly more than that in many ways, so I said ok. But then instead of getting the product (I didn't really figure this guy was going to read me a book :-) ... I got another bill for $70. We continued this game, he raised it to bigger chunks than $70. When we got to $1,350 I quit. I couldn't possibly afford that ... but there was irreplaceable professional communications in there that I simply HAD to protect. But through a process of scribbling in margins I connected with the "night watchman" who was handling the process for the hacker ... as soon as he realized he asked me if this was one of those ["insert name of hacker here if he ever touches this blog"] deals. I said yes and he made an unremembered comment in disgust. They seemed like an ok outfit if one good person can be extrapolated that far, and he assured me they'd retain all the materials, etc. The next day I found little cracks in Paypal's armor ... it used to be a lot harder to get them to step into the middle of any such disagreement. But I finally got through and they opened an investigation and I got back my money and my emails! And I'd like to think I helped make the Paypal system a little easier to be willing to investigate in a case like that.
Unfortunately. The hacker was furious. And he attacked with major firepower. He is an excellent programmer and if I understand correctly, a "big name" in the hacker world as well. Plus in the little entreprenurial corner of the 'Net he is quite well known ... right on the periphery of the big time players. A guru wannabee. Claims to be an Internet millionaire. And he had some very effective "inventions" that truly may be game changers. Right when I.D. theft and the less enticing parts of Internet shopping are starting to overtake that initial enthusiasm is not when we need a reputation of being full of crooks and hackers. It is the frontier ... that little section of the 'Net ... and I'm a believer in humanity's need for a frontier. Scammers and spammers and Soapy Smith flim-flammers I can handle fine. But this man is a flat out crook. He claims to be a sociopath and accepts "sadistic sociopath" without any suggestion otherwise.
The kind of guy who would build a fire on the back of a turtle and get a huge rush out of watching the turtle bake in his own shell.
He is still here. A year and a half later and he was here virtually any time that I was. And I live on them. He killed off several ... I think we decided 5, but some of them required multiple trips to the shop. I have three hard drives that we had to pull out along the way in case the F.B.I. would like to take them into the clean room and see what all the hacker deleted and destroyed.
He has (despite every possible thing that anyone can think of to do to mine to prevent remote access ... he has it working. My desktop is his desktop. I just sat back last night and watched him move the cursor around and open and close files (and I think delete another batch but I'm not yet certain). Then I found out that he had a group of hackers wandering through all my computers where all of the family's dirty laundry is stored. Then I figured out that they were using my machine(s) for some sort of file sharing ... probably music. Probably the feds will finally show up ... and they'll arrest me for having an illegal music sharing station! :-) But I'm guessing 20 people had access to the depths of my soul (I keep it hidden in my hard drive). And I couldn't service clients with him there. Plus destroyed my time and billing programs. We had and office LAN which he destroyed and replaced with their own which they had the gall to call "Jailbirds R Us". There have been lots of much worse ramifications ... he's gotten his revenge for me messing up his (well -oiled process, I wasn't a unique case! I just have enough mouth to do something about it). Of course that turned out poorly as I lost not 2 months of emails, but 5 YEARS of "can't lose" emails. When he first showed up I tried to back up the system quickly before I had any idea he was "always on" (they have alarms of some sort that alerts them when a victim logs on ... or so I have hypothesized ... and I think I got agreement on that from him). So he wiped out my backup too. Then he destroyed access to the entire company data base (small company, but cranks lots of critical paper) and has probably averaged four of us over that time (not counting staffs). No only were the archive files critical, but all of our current "live" files were destroyed as well (actually I think they are still "there" somewhere. The hacker just destroyed any way to access them.)
So I dropped my blog, I dropped other stuff I was doing on the 'Net. I'm going to have to mend fences with all those friends I used to have but figured they'd never be friends again if the hacker got them ... I was highly contagious!
He ran my out of business. 22 years of a successful professional business and he destroyed it. He cost me nearly TWO (2) YEARS of income. Long story with lots of side paths, but essentially, he wouldn't let me get any work done and would make everything I did do take forever. I can work 4 hours on writing a report ... that he can destroy in 4 seconds. And he did that a lot. I did a lot of my work in the libraries. But he made everything take so long I couldn't charge for it ... I was just hoping that when I finally did get a project finished and to a client that I hadn't ruined a wonderful 20 year relationship because my stuff didn't get to him until three weeks after he absolutely had to have it. It was tough. But I have a small packet that proves much of the stuff I say, and I have lots more (screen shots, etc.) whenever they want it. I had to close it down. I couldn't afford to run it (and it was harder work than ever before because of the hacker).
I've been in touch with the "local" F.B.I. (~120 miles away) and the national folks (the hacker and I are on opposite sides of the country ... local law enforcement won't, probably can't, do anything.) But I hadn't seen much sign of him for awhile (although stuff was done that I was just sure I didn't do!) until last night when he decided to put on a show. My but I hope the federal men were watching! :-)
I do think it is safe now. Or I wouldn't be back here. Besides, I'd be Blogger would be about as good a co-plaintiff as one could have if he really did infect them.
So ... that's why I haven't been on for a year and a half or so. But now, I'm unemployed and broke ... so I can go back to blogging!
PRODIGALS AND SONS AND THINGS
Which brings me to the "other" part of this post. Here we've got two brothers; a good brother who stayed at home to help his mother and father run the modest little farm and never got a chance to "go out and see the world".
But the BAD brother ... the one who took his half of the inheritance and squandered it while traveling and adventuring. He got to see the world! He had the opportunity to do a lot of things that kids that age seem to need to do to get it out of their system. Things that it will be too late to do when one is older. The older brother was ticked off and I was always on his side. Every bit of "fairness" in me screams that the wrong kid got the feast and the calf.
But I got to thinking about it one day. I remember that was Jesus himself who spun that parable. And he was trying pretty hard to convince people that "fair" didn't mean "an eye for an eye". He was trying to bring humanity an entirely new paradigm. In the driest description I can think of ... Jesus was attempting to replace justice with love. It took me a lot of years before I understood why Jesus would sound like an idiot who rewarded bad behavior. It was a dangerous thing to say considering that he was someone who has been looked up to more and used as an example than any other person before or since.
People followed his actions, he set the example that countless people have tried to follow; to "be like Jesus" and to make all decisions the way Jesus would make them. But he probably knew it wasn't really dangerous ... because people wouldn't understand and those few that did wouldn't do anything about it. And those very few that understood and tried to do something about it, would fail miserably.
Upon contemplation, I can see how devoted Christians would have a hard time imagining Jesus being furious with the return of someone very important to him, but that he had expected never to see again. So there must be some other message he is trying to convey.
As I kept getting older (it keeps happening too! :-) I had my own kids and thought about how I would react if my son, the younger of my two kids ...
[All who guessed without even being asked .... you are correct ... the prodigal son that Jesus made famous was the younger son!]
... took his "college savings" out of the bank and disappeared and years had passed and I had no idea whether he was even alive or dead ... and then, as I was knocking on old age's door I see him walking down the road towards home ...
I get it. I understand what Jesus was trying to do. Justice. Equality. Even fairness. Those we think of as the goals. The things to strive toward. The things to do to be a "good person' and even a "good Christian".
And they are wrong.
At least if they purport or wish to "follow Jesus". Nor are they inherently wrong. They might coincidentally be right. But stopped clocks are a couple times a day also. He was much more radical than trying to bring about a fair, just world.
Justice, equality, fairness ... that is what he was trying to get us to understand was not the goal. All those preachers who stand up and talk about how we have to strive for equality, and fairness ... and ultimately this will create "justice" ... which is the "god" of this "missed the boat" Christianity. Plato took Aristotle's hierarchy of good and evil and all the schools in the neighborhood where the Christians were hiding in those days were Platonic schools ... and we ended up with Plato's philosophical world view of simply moving "the Good" to the top of the pyramid and we suddenly have a hierarchical model of good and evil. The Socratic and pre-Platonic Greeks fought this "binding of god into a hierachy (because in Plato's system the hierarchy is what is really God). It was a giant philosophical debate and it set the path of Western history. But the "God is Everywhere" philosophy lost to one where God is a structure that "the Good" is the highest point on the structure. We went from a philosophy that said that a chair that you can sit in is far more perfect than one that exists only in some heaven of ideas. Plato (and picked up by the Christians) thought people were originally defective ... Original Sin. The early Greeks that that was nuts. A new-born infant is absolutely without sin! (Just a good thing they can't throw rocks :-) But Plato won and the Christian kids were taught Platonic philosophy and Christianity caught a couple of great historical breaks and became the dominant Western religion and that is why we are a Platonically based society today still guided primarily by Mosaic law.
Today's Christians pushing democracy and fairness and equality and, ultimately, Justice ... are teaching Mosaic law. The law of symmetry. Of the need for the karmic balance of Yin and Yang. Justice. An eye for an eye.
Jesus came to bring a sword. He was so radical he made the '60s protesters look like Sunday School teachers. He wanted to turn society upside down and shake it like it was a money changers' table in a temple.
We can't dispense justice. Our court systems have proven that even when they really try. Only a perfect, "sinless", person can stone a prostitute ... which was another example of Jesus saying "You will never know all the details and won't even come close to knowing enough of them to know which decision is just ... whatever the decision. If we had only "sinless" people ... we wouldn't have the problem. But we don't and we won't so we do.
"Only your father in heaven can judge people." Come on folks, get this through your heads! I would guess Jesus was often very frustrated :-)
Fairness. Such a positive goal. And it might be. It might be that if you took everything that happened to all the players in a situation starting at least with their birth and understood everything that had happened to each of them since ... then in a dispute between them one might possibly come close on getting "fair" right. Of course the punishment has to exactly match the net wrong that the badder guy did ...
I see why Jesus said that really ... if it needed to be done, only a god could do it.
No. I think what the Barefoot Prophet was trying to tell us was that we have to think beyond the concepts of fairness and justice. They may be important ... or at least nice ... but they may just be totally irrelevant. I'm not advanced enough to understand all he was trying to tell us by any means. In the Stygian darkness with my white tipped cane the best I can do was to think I see that he came to throw out the law of Moses. The Law of Moses was an earth changing event of its own and in its own time. Essentially, the Law of Moses replaced the Law of Might Makes Right. It was a giant evolutionary step from the Law of Power. A step that had guided us for Millenia and had served its purpose wonderfully .... for the incremental step it needed to be.
But my white tipped cane says that Jesus was just trying to get it through our "symmetry rules all" heads that Love trumps Justice. And if he isn't coming back until we are able to understand that ... he's not coming back for awhile.
It trumps fairness too. After thinking a lot about it recently (I have an 18 year old youngest son :-) ... I know!
And this is what I know: my son had done so many bad things and wasted so much of my money and left his brother to do the work of two ... and that I'm getting older and my days are even more precious ...
I know that when I see my son walking down the road to the house after not having even heard of him for years and believing that I would die without ever seeing him again ...
I will run out to greet him joyfully, yelling at anyone handy to kill the fatted calf as I go.
I think everything is working now; but most articles are not yet linked to the menu [until they are, the index tree at the bottom of the page still works]. Thank you for your patience.
"Alaska is a state of mind."
-- Someone famous
Alaska is also a state of the union.
-- Geography 101
But what it is not, is 50 years old.
(To all those who keep saying that it is ... what was here 51 years ago??? :-)
We are celebrating this year!!!
It is the 50th anniversary of Alaska's statehood ... sort of its marriage to the Union after a long engagement (~92 years give or take ... about the length of time I suggest to my daughter would be appropriate in her life :-)
It is amazing to me that we've been a state for 50 years. If I did my math right ... let's see, add the addendums, subtract the mistatements, carry the burdens, divide the sheep and goats ... yep ... that's almost a half of a century! :-)
I remember it well. Well, I remember it. I guess there is a difference. I was a bit young to be aware of all the issues. But I certainly remember spirited debates as to whether we should join up or not.
But this is an anniversary celebration, not a birthday party as (too) many people have called it. This isn't Alaska's 50th birthday.
The village I grew up in had a sign at the edge of town that said "Founded in 1791". We've been around awhile. Just took us some time to decide to formalize things. We'd been living together since Seward's folly. In any event, it was time to get hitched.
We'll be spending some time this year looking back ... over the last 50 and earlier. It is a great excuse to introduce many of you to Alaska through the eyes of those who live here now ... and as best we can, through the eyes of those who built the State, many of whom are still kickin'!
I am (hopefully) changing from a standard two column chronologically indexed format (like about half or more of the blogs you see :-) to a three column blog organized by subject rather than chronology. Breaking news, or broken news and even totally shattered news, will still appear on the main page. But after that, it will be moved to a subject matter directory which seems to make infinitely more sense than a chronological organization, unless the post was a one-time comment on a one-time news issue and then it probably has no point in continued existence.
I still see no reason for tree view.
I started to use drop-down menus and list all posts in each topic under the menu button, but quickly realized that it would be incredibly intrusive even now; and much more so as articles accumulate (I checked out a bunch of these during this process. Only a few had it done elegantly enough that it "worked" and those were with essentially static subheadings.
But ... I think you'll like the new layout as soon as I get it finished. Please keep checking back
(or subscribe). It won't be long now!
[Update February 15, 2009]
Exxon: Pouring Oil on Troubled Waters - Part 7
The After Math
There is much much more to the "aftermath" than just the financial aspects. It affects the entire state in so many ways. Even in just the financial realm, the economic "ripple" effect multiplies the damage done to us by the Supreme Court manyfold. We won't even be able to guess at some of the effects; indeed, some probably won't show themselves for years. But we'll cover the primary damages and take a shot at showing some of the ripples.
Doing the (after)math isn't very difficult. The jury awarded the 32,000 Exxon plaintiffs $5 billion in punitive damages to be divided amongst them (the 32,000 plaintiffs) by arcane formulas, but which averaged out to just a little over $150,000 each.
$5 billion / 32,000 = $156,250.
That sounds like a great deal of money, but commercial fishing is a serious, expensive, business. A fully equipped salmon fishing boat can easily cost more than that amount. Gillnets, crab and shrimp pots, long-line gear ... whatever the fishery there is specialized and expensive equipment that must be purchased. So must an ever-increasing amount of electronics (for example, the Fish and Game may open a specific area for fishing ... in order to know for sure that you are in the legal area you used to need a radar and a loran. Those are still used, but now GPS systems are virtual requirements. Then one must have a plethora of communications gear ... often radio systems have special channel crystals so only people within that fishing group can hear the conversation (fishermen often form small groups that work together to find the fish), plus one must have a CB radio since many still talk on those and you need to hear if there is a fish call somewhere, and now, of course, satellite phones are becoming "de rigor" (since much fishing occurs outside the range of cell phones).
Then, in addition to all the "stuff" it takes to actually fish ... one must have a permit to be allowed to do so. The permits in different fisheries vary in price ... and within a fishery vary from year to year as fishing income ebbs and flows. But I have seen fishing permits sell for substantially over 1/2 million dollars. As in $500,000+. Then a captain has to hire a crew ... and buy fuel and ... well, the point is, one must catch a lot of fish just to "break even" and that in the context of the size of the businesses that we are dealing with, $150,000 isn't really much money. I've seen a single herring seine "set" catch well over $150,000 of fish in one "seine-full".
But, on appeal, the 9th Circuit said that was too much and sent it back to Judge Holland who reduced it by a billion and sent it back.
$5 billion - $1 billion = $4 billion.
As someone famously said, "A billion here, a billion there ... pretty soon you're talking real money!" The plaintiff had just had "a billion" taken from them. It was theirs. It wasn't a future possibility of a billion. The jury had awarded it and the Judge had signed the Judgment. That Judgment is a piece of commercial paper much like a promissory note and can be bought and sold. I know of over a dozen sales that plaintiffs made of part of their Judgment (at a discount since the "promissory note" wasn't technically due until the appeals were denied or the 30 day appeal period ran out, and they were desperate for the money that was being withheld from them).
Even that isn't precisely correct; which is always a problem with analogies. The Judgment was due. Generally, to mount an appeal a losing defendant must post a bond or put up cash in the amount of the Judgment which is held in trust for the plaintiffs while the defendant's case is appealed. So the Judgment was due and the money to pay it literally "sitting there". It is just that there was a "hold" placed on the actual payment during the appeal process.
Then after it had been batted about a bit (back to Judge Holland who refused to be part of the scullduggery; back to the appellate court) the 9th Circuit reduced it another $1.5 billion.
$4 billion - $1.5 billion = $2.5 billion.
The incredible shrinking judgment was the wool sweater that was too tight before someone washed it in hot water! And the washing continued.
The U.S. Supreme Court, packed full of Justices who likely make up the lowest total I.Q. of any Supreme Court since we went to nine Justices, blithely ignored the Constitution and common sense (as well as common law), in order to keep the rabble (that's us) from dipping their hands in the king's (that is the giant corporations and insurance companies) treasure chest (a few days worth of Exxon's net income). In a Decision which will eventually be one that is taught heavily in law schools everywhere, they gutted the jury and it's award and knocked the award down nearly another $2 billion!
$2.5 billion -$2 billion = $500 million dollars.
Although it hardly matters, the actual exact number that the Court pulled out of its ... thin air ... was $507.5 million.
Even before the courts slashed the claim like a backstreet hoodlum slicing a throat ... it was too low. What we didn't know in 1989 at the time of the spill ... nor even in 1994 at the time of the trial ... is that 20 years after the spill there are still fisheries in PWS that have not reopened because they haven't recovered from Exxon's destruction of them. As a result, there are fishermen who have not been able to pursue their livelihood for 20 years and, by now, probably never will.
So not only did they lose 20+ years of their livelihood and the culture and lifestyle that went with it (acquired by some just by growing up there; but by others at tremendous personal cost and trauma ... there were midwest farmboys and New York city slickers who had given their all to chase a dream. And that particular dream is a rough one to chase! A dream that turned into a nightmare for all (Exxcept ... the misspelling is intentional ... for Exxon who is loudly gloating at the Christmas present the Supreme's gave them!)
Other aftermaths. Let's see. What did the government do? Alaska has a lot of leverage with Exxon and the oil companies. So, did they lend some muscle to convince Exxon to pay the money the jury told it to pay and not wait until all the claimants were dead? Of course not. They got involved all right. Governments are good at getting involved when they should probably just go away. But they had less ideas on how to clean up an oil spill than New Orleans did about how to deal with a flood! And the feds were totally useless. The State got some cleanup money from Exxon (of course the courts did not take away ... it was only the little guy that the courts decided to kick while they were already down!) Wait! I was talking about the United States of America Federal Court system ... and I used the definition of a bully. Hmm.
Naturally, the cleanup money was largely wasted and, in fact, the entire cleanup was a fiasco (see earlier articles in the series) that almost assuredly did more harm than good (except for P.R. -- both the State and Exxon needed the big cleanup project for P.R. purposes.) But let's be honest. The only thing they were really trying to clean up were their reputations. It was critical to seem to be doing something about it; even if they had no idea what to do. So they washed oiled rocks with scalding hot water, killing off all the microorganisms that had managed to survive the oil itself and which, if they'd been left alone, would have formed the foundation for new growth and recovery. Nature has been at this game a lot longer than man. It has been cleaning up natural oil "spills" and other environmental disasters for a very long time.
But anyway, we got some shiny new taxes (whee) and a whole bunch of "the horse is gone so lets get that barn door closed really good" regulations.
We should finish the math. As mentioned, each fishery and other affected groups of plaintiffs are allocated different percentages of the total recovery and within each group each individual's "claim percentage" differs based on arcane formulas (one of the primary criteria being a person's fishing history compared with others in his or her fishery ... the "highliners" get the biggest percentages. So the "average" that we calculate may well not match anyone's actual check, but we had approximately 32,000 plaintiffs and the Supreme Court determined that the maximum amount of total punitive damages that could be awarded was $507.5 million. (There is a possibility that the plaintiffs will get interest on that ... but Exxon has filed a motion with the 9th Circuit to bar any liability for interest ... despite the fact that it has been ~20 years since the spill and ~15 years since the judgment. And despite the fact that it was Exxon that was the primary cause of the delays. Given, however, that the appelate courts seem willing to do Exxon's bidding no matter how absurd, no one is counting on receiving interest.)
But we're doing math here. The way the Supreme court worded the opinion such that it was arguable that the 9th Circuit had the authority to reduce the award even further. Given that, even if they tried and failed, it would presumably add many more months (at least) to the point where any money actually got distributed. So ... the plaintiff attorneys, already ruined financially and emotionally, settled for 75% of the Supreme Court's imaginary number.
$507.5 million x .75 = $380.625 million
Whee. The 32,000 of us will get over $380 million. But my math is off for some reason. I'm not sure why, but it appears that the settlement number was closer to $383 million. And they now count the plaintiff group at approximately 33,000 people. Given the numbers we're working with, that change is de minimus and not worth tracking down (this from a man who was, briefly, an accountant in an "earlier life" - actually the first year or two after undergraduate school). But see:
$380 million / 32,000 = $11,875.00
$383 million / 33,000 = $11,606.06
For simplicity sake, let's roughly split the difference and figure the average "take" for a plaintiff is $11,740.
"Well," you might think, "it is better than a poke in the eye with a sharp stick and at least it averaged over $10,000 per person!"
Virtually none of the plaintiffs would agree. After spending 20 years anticipating that the average would be about a decimal point farther to the right (somewhat oddly, the interest the judgment was accruing kept the total award fairly close to the original $5 billion even as it kept getting reduced ... until the Supremes got their hands on it), $10,000 is ... pathetic. Even if the courts decide to award interest (don't hold your breath) it won't be significant given the 20 years of waiting and clinging to the ledge by fingernails.
Our lawyers did a superb job, it wasn't they that ... oh. Right. Can't forget that part.
Although they may well have been legally entitled to more given the original contingency contracts that were signed with the fishermen a couple decades ago, the lawyers settled for 20% of the award for attorney fees.
Which means that the average plaintiff received (or will receive) ~80% of the $11,740.
$11,740 x .8 = $9,392. By the rules of grammar and sentence construction it is discretionary whether one uses a comma when between $1000 and $9999. If you had suggested to anyone fifteen years ago that the checks to the individual fishermen would not require a comma, it would have been believed to be extremely ignorant and pessimistic.
But we're not done. We have to go back and fix a "mistake" I made.
The $380 / $383 [hereinafter averaged to $381.5] million dollar number is wrong.
Several years ago a secret deal came to light; one that Exxon had cut with the only substantive sized companies in the plaintiff class (it appears that it was only the individuals and very small businesses that Exxon wasn't willing to settle with and vowed to "whup"). They didn't have any problem cutting what was characterized as an "under the table" deal with the fish processors.
There were seven of them and they were based in Seattle so ended up being known as the Seattle Seven. The deal was cut in 1991, long before verdict in the 1994 trial and in such a manner that the processors agreed not to say anything and to remain as nominal plaintiffs in the legal action but to pay Exxon their share of the judgment (or at least the punitive damages part) if any were forthcoming. When this deal was discovered, the plaintiff attorneys screamed loudly and Judge Holland was not happy. Essentially no lawyer or judge had ever run into a situation such as that. A plaintiff who had already settled with the defendant ... with an agreement to pay the defendant whatever the plaintiff was awarded! It was a real head-scratcher. But the courts eventually ruled that it was lawful (essentially they couldn't find anything that said it wasn't because it was so unusual and strange!)
As a result we have the bizarre situation that of the $383 million, Exxon will, in effect, pay itself $54 million of that ... which for our purposes is the same as not paying it.
$381.5 million - $54 million = $327.5 million.
So, we must do our math again. We'll use an average of 32,500 plaintiffs.
$327.5 million /32,500 = $10,077.
Then we still must take care of the attorneys, so
$10,077 x .80 = $8,062.
That's the thing with whittling. It really doesn't matter how big a stick you start with .... what matters is how much of it you whittle off.
And when you stop whittling. "No!" you say. "They couldn't have reduced any farther." Well, they didn't ... exactly. Not in that case.
In an earlier bout of shafting of the populace in Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955) [believe it or not there are many Supreme Court decisions with which I agree :-)], the Supreme Court reviewed two cases in the process of determining that punitive damages were indeed taxable.
So ... even though they closed up their special "Exxon claim offices" in Anchorage, the I.R.S. is still going to get every drop of blood it can.
Really rough numbers ... I would take a wild guess (certainly not as wild a guess as the Supreme Court did regarding punitive damages percentages but ... :-) that a "reasonable estimate" is that most fisherfolk probably fall somewhere near the 25% marginal tax bracket [ie: from whatever their income would have been in 2008 absent Exxon payments, the "next dollar" would be taxed at the rate of 25%]. That is where a single person earning between $32,551 and $78,850 would fall.
[Note: Lisa Murkowski, Alaska's "appointed by Dad" U.S. Senator did manage to (barely) wrangle some minor tax relief for us. Essentially, we get to income average the money from Exxon ... no, not over 20 years which might make sense, but over 3 years. The way it is paying out in dribbles it may well end up spread over three years anyway. The bill also contains a provision that allows recipients to put up to $100,000 of it into an IRA. The bill was drafted back when people expected there was going to be real money involved (and was only passed because it was piggy backed onto the emergency financing bailout package at the last minute). The thought that most claims are going to be small enough that they could be put entirely into an IRA was not contemplated at the time the bill was drafted!
However. The three year income averaging won't change my rough cut 25% estimate anyway ... and if any of the claimants are in an economic position where they can just set the funds away for retirement ... aren't the claimants I'm concerned about anyway (and there aren't many of them). It is almost funny if one is truly into gallows humor, that the Congress decided to allow people to put the money into an investment account ... at precisely the time when no one in their right mind would! With the stock market ... and everything else(!) in free fall, it is doubtful that provision will be of substantive value to anyone. Actually, I would guess that the vast majority of recipients will be able to "make" between 12% and 20% on their entire claim almost instantly ... by paying down the credit card balances they've had to let rise while waiting for their money from Exxon!
But thanks anyway Lisa.]
So, our hypothethical average fisherperson with a check from Exxon (as distributed by Keller Rohrback, the appointed Claims Administrators) in 2008 of $8,062 would still, in real life, most likely owe a fourth or so of that to Uncle Sam; meaning that they retain 3/4 of it. More math:
$8,062 x .75 = $6,046.
The small claims court limit in Alaska is $10,000. Anything below that is so little money in a court context that the PTB (powers that be) don't figure it is even worth hiring a lawyer for.
While we are having fun with math, let's take one last gander at something.
$6,046 / 20 = $302.
I know that we aren't quite at 20 years (the spill was in March), but we already have that much "range" into the numbers by now ... they are only rough averages at best. But ... if you take the average net award as we calculated it and spread it out over 20 years ... the big famous "terribly destructive of Big Business and Insurance Companies" punitive damage judgment works out to $302 per year for each plaintiff.
For probably the substantial majority of these folks, they've vastly more than $302 of value (fish not caught, interest payments on the replacement gear they had to buy, whatever) each and every year since the spill that was never recompensed in any way.
20 x 365 = 7,300, so
$6,046 /7300 = $.83.
Using rough numbers again, but just assuming 20 years at 365 days a year ... the net amount pocketed by the average claimant works out to less than .83 per day each day since the spill.
And they have the nerve to call that Justice???
It was headline news everywhere when the 1994 verdict came in and Exxon was docked $5 billion in punitive damages. Very few newspapers outside of Alaska paid it any further attention. And now, 20 years later ... the media has a "who cares/old news" attitude. The spill and the trial and verdict were sexy news stories. They got lots of attention.
Now, an entire generation has been born and graduated from high school since the spill. Many people don't know much about it, if anything. Most people were left with the impression that Exxon got spanked big time and huge amounts of $$ flowed into the desolate little "used to be" fishing villages.
If a newspaper mentioned the decision by the Supremes at all it was usually just a squib along with a bunch of other squibs about decisions handed down by the Supremes this year.
There should be public outrage. There should be marching in the streets. There should be protest signs. There should be long emailed-around-the-country petitions. There should be front page stories in the news magazines of the oiled beaches and birds and animals and fiery editorials calling on the country to be very scared at what precious rights were just flushed.
But none of that happened. It all ended with a whimper, not a bang.
Alaskans, particularly the hardiest of them: the trappers, small operation loggers, miners, and fishermen, are not the kind of people to need or want sympathy. Nor do they seek it out. So they aren't making a lot of noise. They mostly grumble into their beer and carry on. Rudyard Kipling in "If For Boys" described their stoicism well:
"If you can make one heap of all your winnings,
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings,
And never breathe a word about your loss;"
Of course I always thought it was a terrible thing to teach kids that it was a good thing to gamble all they own on a roll of the dice ... :-)
There are some people making comments, but not very loudly and they aren't getting much press.
Frank Mullen is both a fisherman and an investment advisor. He hoped to make big bucks both from his claim and from helping other fisherment invest wisely. His reaction:
Other Alaskans who care about the environment are in shock also. Interestingly, there are a surprising number of people (including myself) who have specifically noted that they were "ashamed" of the Court; which I take to be a powerfully good thing about our country and its system and its people. But it is stunts like this one that will make people no longer ashamed ... just disgusted with "business as usual". We're getting very close to that point and, once there, our entire system is in serious jeopardy. And when the house of cards that is our remarkable system of governance falls, it will be because of bought and paid for decisions like this one from a Court of which we all should be deeply ashamed.
Besides the actual earnings that never happened and the occupation itself and the (fascinating and unique) culture, perhaps the most important thing that I've seen people lose is ... their identity.
Folks who used to stride into fishermen meetings and state their opinions in the booming voices of confidence ... don't show up at the meetings any longer. Many are no longer Prince William Sound [PWS] fishermen. Few have starved. Some have gone to work for the oil companies or government. But there aren't many jobs in PWS outside the fishing industry and those who cater to it. Commuting to Anchorage is a pain. It is expensive. But worst is the loss of self-image.
Big, powerful, commercial fishermen who owned their own boats and gear and were their own bosses, lived in the wilds of Alaska and answered to no man ... became broken bitter shells commuting to 9 to 5 jobs to try to keep bread on the table. The bitterness was largely directed (appropriately) at Exxon (who proved exceedingly adept at rubbing salt in the wounds they created), but over time the bitterness spread until they became bitter at the whole world and ... most inappropriately ... at themselves.
"We Swore We'd Win and We Did - Even Better: You Lost".
Exxon has an attitude problem. Or, perhaps more accurately, much of the world has a problem with Exxon's attitude. It is not one of the Big Three ... no, not that Big Three ... the column on that issue will be coming along shortly. The Big Three oil companies doing business with Alaska: Connoco, Phillips and Tesoro ---
Of course when people lose a million dollars or more it generally isn't considered petty anyway. I don't know that my claim was ever worth anywhere close to that much. I did not have the damages that many others did. I do know that some claims were worth more than that however.
This was not a "judicial decision". Sad as it is to say this about our Supreme Court, this huge win by the anti-punitive damage crowd was a totally political ruling. I am not accusing the Justices of unethical behavior. I believe it is probable that they actually believe that punitive damages should be severely limited or abolished. But the Opinion issued by the Court was political in that Justices who believed in tort reform (curbing punitive damages) have been appointed to the courts largely on purely political considerations and the punitive damages issue was a major litmus test that has been employed by the Presidents who do the appointing.
By now, after many years of Republican Presidents appointing federal judges, the Federal Bench is filled with those appointees who no longer followed the law or the Constitution (even though they may believe that they do); and to a very large extent, promotion to higher courts is from within the system. You are much more likely to be appointed to a federal appellate court if you were a federal court trial judge ... and the same pattern generally holds with the Supreme Court.
February 15, 2009
So much comes under the heading of "aftermath"! The spill had a greater effect on the State than most people have any conception.
I left this post unfinished as I had to move on to other things. But I promised to come back and "wrap up the aftermath"!
The court appointed administrators continue to dribble out pieces of payments. Why not do it all at once? It seems like it would make sense to just get it over with (!) especially since it is so much less money than they were set to disburse. But I suppose it is just as much hassle to write a check for $5 as it is for $500 and the claims are complex and convoluted. They started out that way ... ~33,000 plaintiffs of several different categories all with varying damages and individual situations that had to be accounted for in the distribution formulas.
But then wait 20 years. When Rip Van Exxon awoke he found that he was an old man and that many of his friends were dead and others had simply disappeared. Alaska is a transcient state. Lots of folks sort of float through here. Maybe stay a few years; have a grand adventure by working as a commercial fisherman in the cold and unforgiving waters of Alaska ... then wander on, or, as the responsibilities of real life beckon they pack up the pictures and diaries of their Alaskan adventure and go home to run the family store.
The "right kind" stay though. Alaskans self-select probably more than in any other state. Firstly because so much of its population is comprised of 1st generation immigrants but primarily because Alaska is so different from any other state. I think the only place I've heard the story more often about than Alaska is Hawaii, and at that it is probably about a toss-up ... but so many people come up for a vacation ... and then simply can't bring themselves to leave.
Others have had to sell parts of their claim at a dramatic discount just to survive. The buyers generally only bought the cream as they attempted to minimize risk. I've seen a bunch of such deals. Typically, the buyer only bought a small portion of the anticipated claim amount. If by rough numbers the claimant would have a $300,000 claim, the buyer would, for example, buy the "first $50,000" of it. That way, even if it was gutted far worse than anyone could reasonably believe ... the buyer would still be fine. Interestingly since the final result is so far from anything "reasonable", many claimants will end up with nothing and it will be nip and tuck as to whether the buyers even get their investments back!
Then of course there is the "unintentional" parting of the claims as child support enforcement, student loan programs, the I.R.S. and any other government department that believed the claimant owed money slapped liens on the payout. It is another interesting twist that some of these folks won't be getting paid off either. I don't know the mechanism, but I understand that a bunch of I.R.S. workouts, for example, were premised on the filing of liens on the Exxon payments. Now the I.R.S. is going to have to dig a lot harder to get their money out of people who owe it.
Others have judgments against them for bills they couldn't pay which will be offset against their payments. A lot of people won't get a dime ... people that lost their livelihoods ... and a 20 year fight for justice. And with a final spit in the eye they will actually receive a check made out in their names showing that it is the final Exxon payment ... for $0.00. They actually make the checks out that way. I'm sure there is a reason for it and I presume it is the Administrator's decision not Exxon's. But to me it just looks like an insult: adding insult to injury.
Many, many of the claimants have died. So their Estates must be reopened; which is beyond stupid, but par for this course. This is by far the biggest screwed up boondoggle that most of us will ever run into in our personal lives; even those of us whose lives are long since over. But, naturally, if there is an easy way or a messy blundering way ... we are going to find the most awkward possible way to proceed! Even those folks who were "with it" enough to have the probate assign the rights to the Exxon judgment ... which is a perfectly valid thing to do legally and works with any other sort of judgement, are being forced to reopen the probates. Some of those probates are 20 years old! Even the heirs are dead by now. This is one of those ripple effects. Now, whatever heirs of heirs are remaning alive must hire a lawyer and have the court system dig out 15 year old microfiche if they can find it, to reopen the propate, in order to get Grandpa's $3820.00 net claim amount (which was ~$169,000.00 when he died; happily thinking that he had at least left his wife and family in good shape because of the money that they would soon receive). In many cases it simply won't be worth it and others just won't get around to it or bother to do it. Many people don't even know who should do what if the primary heirs are also deceased. And many fishermen types are not very comfortable walking into a lawyer's office to deal with these sorts of matters.
I was contemplating and this interesting piece of trivia occurred to me: This year is the 20th anniversary of the Exxon spill ... and the 50th anniversary of statehood! It is beyond mind-boggling to me that such a huge portion of our "State's" history has occurred post Exxon spill.
But it emphasizes the point that we have been dealing with the "aftermath" for a very long time. We have talked in detail about what the spill and Exxon's reaction as it vies for the title of "Most Socially Irresponsible Corporation" ["MSIC]. Actually it is leading in several categories. They have been suffiently publicly exhuberant about the win they probably will take the "Rubbing Face In It" and have a real shot at the coveted "I Told You So" plaque. Frankly the adding insult to injury bit should make them a lock for the top 2008/2009 corpocracy awards. Not enough information has come to light yet. It is possible that the Halliburtan Iraq Contract will be in the running. Should be an interesting Awards Banquet in any event.
Insult to injury. That was ... after convincing the majority of the members of the Supreme Court that it should take the food away from the mouths of babies so that a corporate giant doesn't lose 6 days worth of profits ... and having the nerve to still call the remaining crumbs "punitive" damages. I'm sure Exxon really feels punished (which is ths purpose of punitive damage awards). If anyone has read this far without realizing that the previous sentence, before the parenthetical aside is pure unadulterated sarcasm, then I think you're on the wrong blog. Where were we? Oh yes, rubbing salt in the wound because they can ... after one of the greatest "wins" in Supreme Court history such that they got the punitive award knocked down to where they really can pay it out of the petty cash/annual party fund account ... they run back to court to try to convince them that there should be no interest on the award. Now that takes chutzpah! But what they have done to people and how they have used their incredible power and infinite patience to tell a jury to stuff it ... has been pretty well covered.
Aftermath. Yeah. The aftermath. Besides the destruction of the exemplary damages lawsuit ... which destroyed much, there is the "other" critical question. Indeed, if it weren't for our empathy towards fellow humans (and our culturally and personally entangled issues regarding money!) ... the damages done to the Sound are perhaps ultimately more important. What's left regarding the aftermath is perhaps the primary and most important ramification. How sound is the Sound? We've had 20 years. It must be pretty much back to pristine, huh? Not.
While it is true that most of the oil is ... gone (evaporated, sank, dissipated, soaked deeply into the sand and China is busy drilling it now, or other) ... that is far from unversal. One thing most people don't realize is how slowly natural "events occur up here in this land of nine months of ice and snow. A twenty year old spruce tree may look like something impressive in California (if well-watered!) Here it is a scrawny sapling barely large enough to use for a Christmas tree. If a tree falls in the forest does anyone hear it? Maybe. But it will still be lying there in 20 years where in Iowa it would have rotted back to humis/soil long ago. Environmental scars heal slower up here. Primarily that is because virtually no progress is made during the winter months. It is like in your own kitchen. You set the cream on the table. It is warm and comfy ... and curdles in about two days; stinks up the entire house by day 4 ... and is a semi-solid mass of spoiled "cheeze" in a week. Yet if you put the same cream in the refrigerator ... it's probably still "good" after that week. Alaska is the refrigerator. Processes that might have deteriorated and broken down the oil in California either don't work up here, or the work for so short a season each year that it takes an enormous amount of time for the land to recover from harms.
First, realize how large an area we are talking about. There are various estimates, but that is the Kenai Peninsula shown in the map and that's a large peninsula. It is difficult to put things into perspective with just a map, so look at it this way. The Kenai Peninsula is larger that ten (10!) It is larger than West Virginia! It is more than double the size of Maryland! And you could put Rhode Island and Delaware in one of the smaller bays and never notice it.
That, my friends, is the size of this oil spill, which, as you can see, due to uncooperative winds, tides and currents, mostly headed for the beaches rather than wander out to sea. There are various extimates for how much shoreline was oiled. But this is a good "middle of the road" estimate: "The great oil slick eventually drifted 500 miles, contaminating 1500 miles of shoreline covering an area 10,000 square miles. If you were to superimpose the length of the area covered by the spill onto the east coast of the U.S. it would stretch from Massachusetts to North Carolina."
Some of us aren't all that conversant in the areas of Massachusetts and North Carolina :-) So let's take the nation's third largest state (behind Alaska and Texas). It runs approximately 800 miles north to south and, I suppose by following the uneven shores, it has a coastline of approximately 840 miles. Again note the above section where is says that 1500 miles of Alaska's shoreline were contaminated by the spill covering an area of 10,000 miles.
Please pay attention here! :-) This is critical to understanding the magnitude of what we were dealing with. The Exxon-Valdez oil spill contaminated 1500 miles of Alaska's shoreline ... and California has a total shoreline of 840 miles. Look again at the map. That's not quite double the amount of shore that California even has! A bit more perspective ... the spill covered an area of 10,000 miles ... an area larger than six (6!) states! The entire state of Vermont is 9,615 square miles!
It is only because Alaska is so large that Exxon has been able to get away with a wave of the hand and talk of a "small percentage" of Alaska's coastline. Compared to anything except Alaska ... the spill was enormous!
And it was a critical 1500 miles of shoreline. That is a huge part of Alaska's ... uh ... fish basket! :-) Tremendous numbers of salmon, crab, shrimp, halibut and many other species were fished heavily, but sustainably. Now, there are some major eco-systems that may never recover and some fish and other marine life [eg: the sub-species of Killer Whale that roamed Prince William Sound] that will become extinct as a result of the spill. We not only can't fish the "at risk" sea creatures sustainably ... it is all we can do to try to keep them sustained without fishing them!
Nor did the oil go away.
Debate re: long term affects
Exxon: Pouring Oil on Troubled Waters -- Part 6
How The Grinch Stole Christmas
For many years ... nearly 20 actually, the "standard" birthday or Christmas wish was "May Exxon come in this year!"
For the first Christmas in the lifetime of some young adults ... that will not be a Christmas wish this year.
We never knew; we never even seriously considered the possibility. Hardly anyone truly doubted; even those who gruffly claimed "Ah we'll never get nuthin; the courts are part of the "system" and the Exxons of the world run the 'systems'. The courts will never make Exxon pay what they owe us". Even that was essentially just bluster to cover up how deeply they cared.
Other than a handful of the crazy paranoids, we knew better. We knew the judicial system and the justice system were just different names for the same thing. To the utter shame of our country thousands of victims involved now know that was extremely naive. In addition to being bad simply because it was immoral, unethical and illegal; it also fed the rapidly growing disgust by the citizenry with the government, and; (particularly in Alaska the ramifications are especially critical) the mistrust, distrust and beliefs that they are an (illegal) trust with Big Oil. It may well be that Exxon will yet rue the day when they decided as a "matter of principle" to fight their victims with every possible weapon at their disposal; to throw so much money and lawyers at it the plaintiffs would be buried; to call in all chits, favors, lobbying benes and fight this in as dirty a "take no prisoners" and salt the earth battle as can be conducted.
But that day will do none of the current victims any good.
Because now, it, the unthinkable, the unbelievable, the life-shatteringly tragic has happened. [Nope, that is not hyperbole ... for many, many people their Exxon claim was their primary asset. And the only one that would give them a chance at a retirement that didn't solely consist of social security and food stamps].
This Christmas ... the first since 1989 ... we have no magical, mysterious "Exxon claim" keeping the holiday spirit alive. "Do you have a claim?" was a regular question; especially this time of year because we always hoped that someday we'd be able to buy that [fill in the blank] that we really couldn't afford "until Exxon comes in".
I don't know if pride goeth before a fall or not. But it certainly does at times after one. Through no fault of their own ... after a decade, certainly after two decades, people could not maintain the positive self-image that had seen them through so much of the rough, wild, hard ... but ultimately, intensely fulfilling life they led before Exxon dumped oil on them.
All many now lived for, wrapped in their bitterness, was making Exxon pay for destroying their lives and life styles. They believed ... these men who trusted nothing but their own two hands ... somehow had faith in our judicial system.
It is a sad thing to watch faith die.
But die it most certainly did, even among the most pro-court plaintiffs. It may have hit them the hardest because they really believed that the Court was above simple theft and now they know it is not. The Supreme Court stole our money. They "redistributed" it as President-Elect Obama likes to say. But the Supremes took from the poor to give to the rich. Sort of the "anti-Robin Hood". The Court will get away with it because there is no one to stop them. And it will not technically be considered "theft" because the Supremes are the ones who ultimately define all legal terms. But make no mistake, it was stolen.
This is how it happened. This is how the Grinch stole Christmas:
I mentioned how the "pro-court" plaintiffs were taken and shaken by this decision. Sadly, I think the same realization has happened to the plaintiff lawyers who devoted their careers to this. I think they really believed in the system and (essentially all the main players that I met were that rare breed of top notch lawyer who truly believed they were doing good with their "life's work" and who truly -- believed in our justice system and honestly believed that right would prevail and that we would ultimately win (and not because they were being paid on a contingency basis and probably made 5 cents/hour for their time on this case over the 20 years since the spill). They apologized on behalf of the courts (!) to the fishermen for this process taking so long. As "officers of the court" as all attorneys are, they are part of the system.
It may be difficult for those who had no faith in the judicial system anyway (and who probably figured all lawyers to be crooks :) to believe the plaintiff lawyers who were sharp enough and had been practicing long enough that they were intimately familiar with the system truly had faith. Maybe I'm the naive one here, but I'm convinced that Brian O'Neill (and the entire law firm of Faegre & Benson - who were my attorneys) were honestly embarrassed that "their system" (the judicial system of which they are a part) took so long to render unto the victims what was the victims'. They never apologized because they thought the judgment might be in jeopardy. Oh, everyone knew it might get cut a bit ... and even the 50% cut that the 9th Circuit gave us was somehow ... acceptable because the interest the award had accrued by then offset the cut! :-)
But I don't believe that Brian or any of the main plaintiff attorneys believed there was a realistic possibility that the punitives would be hacked to the bone. As difficult as it is for the cynics to believe ... I honestly think that Brian and others believed ... both in the system and that we would get the majority of our jury award (and that those two propositions were necessarily intertwined.)
I haven't talked to Brian since the Supremes did their dirty work, but is fairly well assured that this is no longer true.
The "anti-punitive damage" crowd (primarily, though certainly not entirely, conservative Republicans) has been in control of the strings long enough that their political appointments to the Federal Court Bench were finally wielding the primary power. This is the George Bush "crowd" (and by that I am not pointing fingers solely at either George Bush individually for the totality of the damage; it goes back many years before them and included many people besides them). But it is made up of the people who favor "tort reform" which is just another euphemism for destroying punitive damages. Aside from the rare actually bribed judge or legislator, they believe this because the insurance companies and Big Business have scared the doctors, business people of all kinds and others with their demonstrably false malarkey. They contribute heavily to the campaigns of those who oppose punitive damages and who, when in office, will appoint judges and justices to the Federal Bench who agree with that litmus test. To a large degree federal judges "advance" from within. So, you appoint a pile of District court judges who agree with your litmus test and in a few years a lot of them are sitting on federal Appellate courts and some even make the Supremes. [Seven of the nine current Supreme Court Justices were appointed by Republican presidents (four by the Bushes), the other two by Clinton.]
They do this because they believe that punitive damage awards hurt the giant multi-national corporations (say, for example, companies like Exxon) that contribute so heavily to their campaigns and they hate anything that dips its hand into the pocket of Big Oil because ... well, you get the idea. The fact that the Bushes are, in fact, oilmen themselves didn't help their objectivity any either.
Bizarrely this is largely brought to you by people who decree that they are "strict constructionists" and who want only "strict constructionists" on the bench! They want judges and justices who follow the law, not make it. The inherent absurdity of this position is unclear to these people.
All "common law" is judge made law! That's what it means (although I'd bet well over half of the "strict constructionists" who, of course, believe in the Common Law, don't understand that is just another term for "judge-made law!") We are a "common law" nation (as opposed to many "civil law" countries where the bench has to follow the specifics of the vastly complex codified laws). In our country, Louisiana is the only example of a civil (code-based) legal system, which is a relic of their French heritage.
Our forefathers waged their "lives and sacred fortunes" so that we may have the benefit of a Constitution that enshrines "judge made law" because they knew that was so critical to protecting our liberties. Again, this "judge made law" is the "common law" ... no matter how many times I say it, there is a large contingent who will refuse to understand because they have been fighting to uphold the common law and to stop the judges from making law! Their lives have been devoted to riding a Push-Me Pull-You and they are incapable at this point in understanding what they are doing.
In civil-law countries (most of Europe, for example; indeed, most of the rest of the "civilized" world) the judiciary is generally a rubber stamp rather than a "balance of power" or third branch of government. This balance of power was so crucial to the Founding Fathers ensured that the protections of the common law were specifically provided for in the Constitution. In other words ... a strict constructionist should believe in judge-made law by definition!
Those folks who couldn't say enough bad about the French when France decided not to slaughter their young in exchange for oil for the U.S. ... (unknowingly ... which is a nice way of saying ignorantly) want us to adopt France's legal system(!)
The Founders were very careful and very specific:
U.S. Constitution; 7th Amendment: In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law."
But that all got tossed. Those who are in the pocket of the insurance companies (whether they know it or not) and are in favor of Tort Reform and getting rid of punitive damages dislike opinions like, for instance, Roe v. Wade because the justices "made up" law [the law of privacy that they found written between the lines in the Bill of Rights to the U.S. Constitution ... but which is specifically provided for in the Alaska Constitution]. But in deciding that punitive damages should equal a certain percentage of the compensatory damage award ... the Supreme Court simply pulled that number out of the thin air without even a pretense of any other justification but that it seemed fair. [This is "strict constructionism"???] The Justices made far more law in the Exxon v. Baker case than they ever did in Roe v. Wade.
Very briefly, the Supreme Court's terrible "made-up law" in this case was to decide that punitive damages can only be within a range of damages tied to percentages of the recoverable compensatory damages.
The Court focused on the fact that the punitive damage award in this case was so large compared to historical standards. If size is a legitimate legal issue/consideration/criteria, then what they should have focused on was how large the companies are compared to historical standards!
The Supreme Court made a gross error that effectively destroyed many lives (except that, as noted previously regarding their infallibility), when it is the Supreme Court they don't make errors. Instead, they make "bad law". Yet legal scholars can certainly debate and determine whether it was a rotten decision even if it can't be an error since they have the power to change the common law and are not bound by stare decisis. (It is, however, Court policy to follow it unless they specifically determine that the earlier decisions were in error ... or that the world has changed so much that they no longer apply). The Court does not typically go around just ignoring the precedents set by earlier Supreme Courts, but gives them the utmost deference possible.
For hundreds of years the common law was generally interpreted to hold that the size of a punitive damage award should be based not on the size of the accompanying compensatory award, but on the size and profitability of the tortfeasor [the one who wrongfully causes the damages]. This Court switched those considerations. Even if I had nothing to do with the Exxon claims I could tell that this was bad law. In essence it is a "Get Out of Punitive Damages Card" that is valid only for giant corporations and insurance companies.
The Supreme Court completely abrogated the existing and ancient concept of punitive damages.
The theory of punitive damages is completely different from that regarding compensatory damages. The amount of compensatory damages is calculated by attempting to determine what the negligent acts of the wrongdoer have cost the victim and then come up with a number that tries to make the victim "whole". It is irrelevant whether the tortfeasor (wrongdoer) is rich or poor. What counts is the value of the damage (s)he caused.
Punitive damages are an entirely different concept. When a wrongdoer's behavior is so bad , so grossly negligent(or even intentional), or so "reckless" [or as often stated "so recklessly indifferent to the lives and property of others"], then our society, through the courts, developed within the "common law" a mechanism to punish these wrongdoers. It is not a criminal action. That differs in too many ways to explain at the moment. Indeed, about the only thing they have in common is their joint goal of punishing the wrongdoers. One reason it developed as part of the civil law goes back to that determination that a corporation is a "person" for legal purposes ... yet one cannot jail a corporation. Another mechanism for punishment was required.
For those reasons and others, the doctrine of punitive damages was created (by the English courts, before the founding of this country). Determining a standard for when they should apply, although responsible for the death of forests from the trees harvested to write books, articles and treatises arguing the point, is fairly straightforward, (although it may not have seemed so clear originally, it has, by now, had a few centuries of honing and clarifying).
If a wrongdoer did something so bad that it was bad enough or reckless enough that it "shocked the conscience" [eg: a classic example: turning the keys to a loaded oil supertanker over to a drunk who couldn't even legally drive a Ford pickup (as previously mentioned he'd lost his driver's license sue to drunk driving) and telling him to take it through one of the world's most pristine and productive waters in the world ... at night] then they would be liable to pay punitive damages as punishment for their recklessness.
The more difficult question lay in determining "how much" once it was determined that a company was indeed liable for punitives. It would make no sense to tie that award to the amount of damages done. Suppose an Exxon officer, while on company time at the annual Christmas party had imbibed a bit too much and wanted to see how big a splatter a balloon filled with crude oil would make when dropped from the 38th floor of Exxon's U.S Headquarters. Suppose further that, although accidental, the balloon landed on someone knocking them over, giving them a slight neck joint problem which resulted in medical bills and slight but permanent nerve damage in the neck (as well as soaking their clothes with oil). Ultimately in our example, suppose these actions resulted in a jury verdict against Exxon (as well as the balloon dropper personally), with the jury determining that the victim was damaged in the reasonable amount of $15,000. Suppose also that the jury decided that since all of the officers and directors were at the party and had all encouraged the balloon dropper, that the company had shown recklessness to a degree that warranted punitive damages.
If those damages were tied to the amount of the compensatory award of $15,000; even assuming that it was a multiple of it: say three times the comps. That $45,000 punitive damage judgment could come out of Exxon's next year's Christmas party fund and the whole thing would remain a big joke. If it had been George's Shoe Store that had rented a room on the 38th floor of a hotel for their annual Christmas party and all five of their employees had shown up, and everything else happened identically, the $45,000 punitive damage award (particularly on top of the $15,000 compensatory damage award) could easily send George's Shoes into bankruptcy.
This is clearly and demonstrably unfair. George's is being punished vastly more severely than Exxon for the identical actions. This breaches several Constitutional guarantees, including such things as equal protection and due process. It is basic hard-wired "even Supreme Courts can't change it" Constitutional law called "substantive due process" (which is much "tougher" than "procedural due process"). In this country ... people [and corporations are legally people] are to be treated generally equally by the court system. George's Shoes should receive approximately the same level of pain and punishment as should Exxon for the identical bad acts.
So instead, after struggling with it for years (which is an advantage that the common law has over statutory law ... the courts can more appropriately refine it) it was determined that for punitive damages, the only fair (and possibly the only constitutional) system was to tie them to the value of, and/or the earnings of, the tortfeasor. If, for instance, the jury thought that the act was bad enough that it should equal 2% of the company's net profit for that year ... George's might have to pay $5,000. Exxon, however, to feel the same amount of pain ... to receive a similar amount of punishment ... might have to pay, say, $800,000.000.
On February 1, 2008 Exxon nka Exxon Mobil, posted the largest annual profit by a U.S. company in the history of the universe. Exxon had a profit [not just gross income] of $40.6 billion dollars! They also had the highest quarterly net income of any U.S. company in history: $11.7 billion dollars of net profit for the last three months of 2007. They ruined the lives of tens of thousands of people, countless fish and wildlife, thousands of miles of pristine shoreline, with continuing and likely permanent damage and had been ordered by judge and jury to pay $5 billion dollars as punishment for their horrendously stupid and reckless actions. That is less than 6 weeks of their NET profit! It is frankly unconscionable that they should be able to be so reckless and do so much damage and receive such a tiny slap on the hand for doing so.
The spill covered 11,000 square miles! They oiled and blackened 1,300 miles of some of Alaska's most beautiful and bountiful shoreline. Pristine waters that teemed with fish and the mammals and birds that fed on them. By comparison, ANWR is a tiny bleak ugly piece of frozen tundra that is virtually incapable of supporting life. People demonstrate by the thousands to "keep ANWR" away from the Oil companies. Where is the public outrage at what Exxon already did which is thousands of times worse than it is even possible to do to ANWR.
Less than 6 weeks worth of their net profit was all the punishment they received for recklessly causing almost unimaginable damage! And the Supreme Court of the United States decided that was much too high and sliced it to approximately $500 million dollars. This is a company that makes $130 million dollars of net profit PER DAY!
The day when punitive damages actually punished the wrongdoer is clearly gone ... for the Big Boys. The giant corporations, the insurance companies, people who are well insured ... there will be no "punitive" remaining in "punitive damages". This is one of the most asinine decisions that the U.S. Supreme court has ever made and it will have horrendous consequences beyond the wreck of the Exxon Valdez! The big corporations are now free to behave as recklessly as they please. They risk less than four days of their net profit for the most egregious intentional or grossly negligent actions. And they managed to delay even that for just a few months shy of 20 years (and are claiming to the courts and will probably win, that they owe no interest on it).
If the idea is to spank the wrongdoer ... 10% if their net profits spanks them substantively but doesn't destroy them. Nor does it let them off with a limp wrist hand swat that they don't notice. That would be a reasonable criteria for punitive damages. But to comply with substantive due process and equal protection guarantees of the U.S. Constitution, punitive damages must be tied to the value and profitability of the company ... not (as the Supreme Court just did) to the amount of compensatory damages.
If the amount of punitives is tied to the amount of compensatories, as it now is following this Decision, then for exactly the same acts, either George's Shoes would be bankrupted, or Exxon wouldn't even notice the "punishment". This is flatly unconstitutional. Clearly a Court that understands the law and the Constitution and has enough I.Q. points to comprehend what today's Court did, will have to change this. This Decision and our Constitution cannot co-exist. But until the day that we have a Court that understands Constitutional Law 101, horrendous damage will be done; the corporations will gain vastly more power and control; the "people" will have lost so many of their rights and protections ... that I'm honestly afraid it might be too late.
By making the Supreme Court a lackey of the corpocracy we may well have just ensured that we will be passing on to our children and grandchildren a destroyed country which has totally reverted to corporate feudalism.
We should be ashamed.
This, then, is how the doctrine evolved such that the relevant standard focused on company size and income since the purpose is "punishment". It was on that basis that punitive damages have been calculated for most of our country's history and it is the instructions that Judge Holland gave the jury.
And it is this doctrine that the U.S. Supreme Court defenestrated [:-)] (threw out the window).
We are now back to that Never-Never land which I just finished describing and explaining why damages could not rationally or fairly be tied to the amount of the compensatory reward. But ... despite the fact that is impossible for it to be fair and that the only fair formulation was just destroyed ... that is exactly what the Supremes did and, because they are the Supremes, that is what is now the law of the land.
It is terrible. It is inexcuseable. It is horribly unfair. And it creates terrible law that will need to be applied to thousands of other situations in the next few years. The punitive damages doctrine was a valuable ... indeed critical ... part of the arsenal of justice. But it was an egg sitting on a wall and the Supreme Court came by and blithley knocked it off.
And all the King's insurance companies and all the King's multinational corporations are dancing hand-in-hand because they know that Humpty Dumpty cannot be put back together again.
In a display of corporate arrogance unmatched in modern times (well, perhaps, other than Enron giving top management huge bonuses just before closing their doors), Exxon vowed that as a matter of principle, and because it thought that people should be grateful to it (for all the work it did cleaning up the spill) instead of suing it, it would make sure the fishermen and other plaintiffs never received anything anywhere close to an award of that magnitude. Tragically, they successfully carried through on their arrogant pronouncement.
And so: your right to trial by jury in civil matters just got tossed because the jury verdict is now irrelevant if it isn't "politically correct". Indeed, it is part of an ongoing trend by the "Conservative Court" to take power away from the juries and trial judges (who are the only ones truly familiar with the case)! You right to trial by jury is eroding much faster than you probably realize.
Even a source as conservatively mainstream as Answers.com says this about it:
"The Court has continued to grant review of state punitive damage awards. In a major onslaught on the jury trial right, in Cooper Industries, Inc. v. Leatherman Tool Group (2001), the Court established that appellate tribunals may review punitive damage awards using a de novo standard because these damages express moral outrage, not the finding of facts; hence traditional deference to the jury does not apply."We now have law of politics instead of law of justice. Given various historical precedents (which is all a topic I will expand on in a later post), this does not bode well for the future of our country or the people in it.
In a brief break from all the ranting I've been doing here, I'd like to single out three ... "entitles" if you will that performed admirably and deserve out deepest appreciations despite the ultimate outcome. First, believe it or not (! :-), the plaintiff lawyers. They did magnificently without a dime coming into their coffers for the whole 20 years.
Secondly, Judge Holland. Despite the fact that "chain of command" is probably more rigidly enforced in the court system [I will no long be referring to it as the justice system!], Judge Holland "was there" at the trial. Unlike every other judge he heard and saw the evidence. Unlike every other judge ... he watched as the jury stuggled through the difficulties presented in trying to reach a fair accomodation. Unlike every other judge he had the ability to question witnesses (judges can do that if they wish) and rule on the evidence ... including ruling evidence inadmissible so the jury (and appelate courts) didn't get to see it ... but he did. He knew right from wrong. He knew that the 9th Circuit was doing wrong. And he rebuffed them. Masterfully. Twice. It is amazing that they let him retire instead of tossing him from the bench. Because he did what he knew was right despite the orders form the higher muckety-mucks.
The third "heros"; who would get appropriate recognition as such if the case hadn't been trashed. (No one builds statues for the losers!) was ... the jury. At great personal sacrifice (and potential personal danger ... someone, presumably hired by the Oil Boys, threw a dead salmon in an elderly lady's front yard as a "warning"). She was one of those "on the fence" and the Oilees apparently thought they could scare her away from crossing them. They obviously don't know Alaskan women! :-) [It is also a spooky realization that they knew who was on the fence. Jury deliberations are supposed to be private. It appears they had infiltrated the jury ... or possibly the jury room.] In any event ... they are true heros. They did what they knew to be right after agonizing over their decision. They did so knowing that Big Oil knew who they were and bad things sometimes happened to people who "crossed" Big Oil.
Judge Holland and the jurors are people we should be proud to claim as "true Alaskans" in heart and spirit.
It wasn't the judge or jury that shafted the victims. It was one of the the giant multi-national corporations that will soon be (truth be told, already are) running out lives and economies more than we allow ourselves to believe ... and it was the judicial system that has been filled, fairly quietly, with the "approved selections" of the Big Boys and the conservatives such that now they have taken over from inside "without a shot being fired". Although the giant corporations had a huge hand in making it come to pass, they couldn't have done it alone. I blame the "strict constructionist" conservatives who have been in ascendence for the past few decades. They are the brain-washed backers of "tort reform" which is one of the greatest scams ever pulled on the American people. I blame them for their utter ignorance (which is simple to cure - it is ignorance, not stupidity that is our problem and that is morally blameworthy) in not understanding that "strict construction" requires that they believe in judge-made law since that is what the common law is; and the common law is guaranteed to us as surely; truthfully more surely, than the right to bear arms and is right up there with freedom of speech and religion.
I think it is good for citizens to get involved in their government. Civic affairs are important and public service can be exactly what it is called. Thomas Jefferson did what was necessary to serve his country, then went home. He didn't make a profession out of it. I think it is much more difficult to justify being a professional politician. That isn't just civic involvement. Once it becomes your career, your priorities change. You are no longer doing your civic duty to make government better. You are doing it to further your professional career.
I do not believe that it is possible for professional politicians to have the public's interest as "foremost" as a non-professional who is doing his or her civic duty to try to help out the country (or their little part of it ... serving on a county advisory board is morally just as admirable as serving in the state or even U.S. Senate).
But back to "tort reform". If the Legislature passes a constitutional law (questionable if it is even possible), limiting tort punitive damage awards ... that is one thing and the courts should examine that law when/if it properly comes before them with their constitutional maginifying glass. But to have the courts do it on their own as they did in this case ... to abrogate the common law and to "make law" they like better by pulling a concept and a number out of ... this is a G rated blog ... thin air ... these "strict constructionists" made [and made up] more law than the "liberal justices" the conservatives railed about for years.
Ultimately, if this is not soon changed (and I see no possibility of that for very many years), we will have lost the judicial system as a substantive part of our government. Oddly, they are castrating themselves at the behest of those who gave them their power. As far as our country goes, this is a recipe for disaster.
Very briefly, countries appear to have a choice when they evolve out of the "monarchial" or "totalitarian" phases of government and attempt to become what has, by really poor semantical choice, come to be called "democracies". They either make the courts a real functioning third branch of Government with substantial power over the other two (which have substantive, but different, powers over the Supremes in exchange); or ... that power vacuum gets filled by the military which is often forced to step in when the rest of the government gets out of control.
It turns out that governments, unlike storks, cannot long stand on one leg nor, like people, on two. To achieve any sort of long term balance by anything other than the barrel of a gun, a govenment must have three solid legs. If there is not a powerful working court system making up that third leg ... historically (and currently) around the world, the military (often of necessity, sometimes simply out of opportunity) steps in to become that third leg. So we have a simple but stark choice. Do we want the third leg of our government to be the courts or the military. It truly is that simple.
We have already surrendered, due to the insurance companies and Big Boy multinational corporations, the ability for a jury of real people to punish it with punitive damages (which was the only realistic way ordinary people could punish a giant corporation). That's one more of our extraordinarily valuable and rapidly diminishing supply of "protections for the people" that our Founders attempted to claim for us disappearing. Again, without knowing what they do ... the conservative "strict constructionists" who claim to believe in limited government and strong protections for the people, have emasculated the court system which was our only chance to maintain limitations on government and maintain strong protections for the people. They (these self-described "patriots") have already turned us into a corpocracy with many fewer rights and protections. Let's just hope that they have also not taken us too far down the path to a military dictatorship to stop on that slipperiest of slopes.
Many things caused this horrendous and incongrous result. Two stand out:
Exxon was evil. But, not to put too fine a point on it ... court systems are designed to deal with evil and to deal with it appropriately! So, although I think Exxon should have been a better corporate citizen if only for their long-term bottom line, it isn't their job to slap their own hand and tell it to get out of the cookie jar.
The courts were (are) packed with conservative judges and justices who do not believe that punishing giant corporations is a good idea. (How can the money "trickle down" if it is used to pay victims of the cheap greed that acquired it?) Let's face it. As much as I have disagreed with every Supreme Court (! :-) on occasion, at least the U.S. Supreme Court used to be made up of people who were smarter than the MENSA average. That clearly is no longer true.
The Exxon Valdez was a huge event in many ways. It is a much more critical decision than anyone seems to yet realize. For those whose lives it destroyed, that destruction is, of course, the primary effect of the ruling. And this happened because the insurance companies and multinational business interests have slickly (and sucessfully) worked at brainwashing the populace with fear techniques.
They cleverly convinced the constitutional "strict constructionists" that tort reform was required to keep us on track with the Constitution. It is not. Tort reform is just an honorable sounding name for taking away the jury's right to punish a corporation ... or well insured individual ... for actions unacceptable in a civilized society; and the corresponding right of the victims to be awarded the benefit of such punishments because they were unacceptably mistreated [well beyond the "treated negligently" standard which is used for compensatory damages] and because, frankly, the standards for compensation for negligence often don't come close to truly making the victims whole.
They certainly didn't in the Exxon case. Justice was not done. Injustice was purchased by those who have a lot more money than anyone opposing them, and the determination was, in the end, a political decision, instead of one that resulted from the intelligent, trained ponderings of our greatest legal minds.
Lawyers and judges like to say "hard cases make bad law". This refers to a situation where the apparent equities in a case make one want to rule in a way favorable to a sympathetic person or position ... but doing so would create law that if followed in subsequent cases would bring negative results. And we do follow the law as set forth by the Supreme Court. To do otherwise would result in sheer chaos as each court and jurisdiction took off following their own predispositions and "court shopping" would be the name of the game. This doctrine of stare decisis is (a critical) part of the common law guaranteed to us by the Constitution.
But the Supreme Court decision that ended the case of the Exxon-Valdez, and its eventual ramifications, was the most major (although so far generally unrecognized as such) event of all of the events involved in the history of this sad twenty year saga and the court's pathetic final ruling.
We all bear responsibility in allowing the system to get so far out of whack.
And we should all be ashamed of ourselves.
To Be Continued: