Case Analysis General Instructions

Case Analysis

Research the Exxon Valdez and Prince William Sound Case in Box 3.2 on page 67 of your Trusted Criminals text. Answer the following questions:

1.What has happened to the key players since the events in this case?

2.Were the consequences they experienced as a result of their role appropriate under the circumstances and why?

3.What preventive and detective controls can be put in place to prevent this from happening again?

Box 3.2: The Exxon Valdez and Prince William Sound

One of the worst cases of aquatic pollution occurred on March 24, 1989, when the oil tanker Exxon Valdez ran into a reef in Prince William Sound, Alaska, spilling 11 million gallons of oil into the sea, with devastating consequences for wildlife, the environment, and the region’s economy (Davidson 1990; Labaton 1989a; Schneider 1991b). Complex questions of responsibility arose from this incident, but evidence emerged that the Exxon Corporation was aware that the ship’s captain had a drinking problem and had reduced the size of the tanker’s crew, leaving them fatigued. In 1991, Exxon agreed to plead guilty to a criminal charge and pay a $100 million fine, part of a civil and criminal settlement totaling more than $1 billion (Schneider 1991b). In September 1994, a federal grand jury in Anchorage ordered Exxon to pay $5 billion in punitive damages to Alaskans harmed by the Valdez oil spill; additional trials were anticipated (Schneider 1994). Remarkably, these outcomes had no significant negative effect on the corporation’s earning prospects or stock price (Schneider 1991b; Schneider 1994). It was later divulged that Exxon had misled the jury in the case; it had secret agreements with seafood processor plaintiffs that they would return part of the punitive damages award (Salpurkas 1996). In November 2001, a federal appeals court overturned as excessive the $5.3 billion punitive damage award against Exxon (Nieves 2001). In June 2008, the U.S. Supreme Court cut this award to approximately $500,000, to the outrage of many victims of the oil spill (Liptak 2008e). Other major oil companies in the recent era have been charged with causing ecological disasters. For example, Texaco went on trial in Ecuador for dumping billions of gallons of waste into open pits (Forero 2003). Such companies represent an ongoing threat to an increasingly fragile environment.