only twenty minutes of sight we will not interrupt you in the middle of one syllable words but we are very familiar with both the law and the facts of this particular case and want to concentrate on exactly argument this case and by far the most important new development is the supreme court's decision in state farm versus caramel in state farm in one q respect the supreme court turned that important element  the court said that's not right in fact if you focus on the necessity of punishment and deterrence the court recognize that large compensatory cost may already accomplish both of those reprehensible as to warrant the ever station of further sanctions necessary to achieve punishment and turrets that very new way of looking at it was actually four shared by this court's nov two thousand and punishment it turns out already did satisfy went over three thousand million dollars had been imposed in cost and voluntary cleanup on the defendant in this case the only thing that was missing was president and i think the supreme court's decision state farm suppliers that precedent now we're not asking this panel to revisit their decision not to strike the punitive damages claim but we certainly believe that the considerations that dollars is one of the greatest deterrents we've ever seen and the civil law and that lease of the question whether there is an amount necessary for punishment and here and usually in this case we don't have to speculate counsel yes just puzzled by something here in our previous opinion we spent the bad thirteen pages going over what the amount should be after first trudging through all the issues that led up to whether there could be punitive damages at all we rejected the arguments acknowledging that some were close on whether there should be punitive damages and said it was allowed well then of the thirteen or so pages of the third going over the amount we wanted every every which way and we kept coming up to a number around one point one one point two billion dollars your brief says the district court ignored the mandate of this court and he cited a lot of authority that a lower court is bound by the mandate at the higher court and it doesn't matter that the lower court thinks the higher court was wrong or didn't have good enough authority for  it sounds like you're doing the same thing you're saying we shouldn't do what we said before was the right thing to do instead we should basically erase the p i don't get it how could we do that without applying that rarely applied branch of law of the case doctrine that allows a court to erase its prior decision on account of its being plainly wrong answer and we do have the i think a powerful the last we said at the end of it that our mandate was that the district court should recalculate consistently with this opinion development since you wrote that opinion that is to say the party in the sense is the cause your analysis about is head of state farm change our opinion as opposed to showing that where there was no clear already before  have the supreme court saying we were right your previous argument is basically where there was no clear authority before on one of the issues we tackled the supreme court said we were right well and two respects first of all state farm says you all said there's logic in policy to the notion that this kind of cost my simply rule out punitive because there's no predicate for punishment returns the court stand for the first time that that only if the fetus culpability after having paid compensatory so references to warrant further sanctions really endorsing that secondly your opinion now that a number of number some words are that comparable penalty you know that there was an agreement of one hundred fifty million dollars which was reduced to twenty five million for reasons that are directly germane it seems to us to be the correct number you also said in the opinion that it's him it is generally not proper to count in what you call the numerator for ratio purposes amounts of the paid and settlement  and and that makes all the sense of the world because here what you had was often effort so the solution where you have a purely economic injury and there is probably payment three hundred million dollars paid out within two years i think the chart starts on the sort of the record pace for five six when those payments were made three hundred million dollars paid out the bulk of it that chart will show in the fall of nine hundred eighty nine in many cases before the economic losses and suffered it makes sense to look at the fact as you said in your opinion that the judgment was for we know precisely what the charge was for was nineteen million five hundred thousand dollars and that doesn't you know the ratio never ballenger but it also is the case in which the other thing the supreme court says the state farm i believe for the first time is that compensatory damages could reach the outermost limits of the due process guarantee if that's not this case i don't know what case it would be if it's three thousand million dollars is a substantial what do you understand basically suffered by the plaintiffs which is compensatory damag account in accounts for a lot of the three hundred three million dollars was paid out where you're paying people who anticipate an economic loss for the next season and you make a payment you sell the claims offices and make a payment in advance of a loss having with respect to that language when it cites opinions with which i'm quite familiar and i have a pretty good idea of what i thought we have by that but but but i'm just asking in terms of the of the state farm analysis which is what's new and we haven't seen it before and that's really as you started your argument it seems to me the focus of the state farm argument of that case is that the utah supreme court was way off base in looking at the at the the damages the focus being on overall damage caused to around the country to these two by this policy as opposed to we look to the penalties and if you look if you look to the criminal and civil penalties as a comparison very to bring you very much in line with this number mean usually courts are in the position of saying what might a criminal find realistically be expected to be here the senior law enforcement officials above the united states in the state of alaska agree that the appropriate amount of punishment under the the harm component you're looking at the harm to these players not to the environment itself and to be sure the twenty five million dollars that was that was one of the largest violence not the largest ever imposed that twenty five million dollars was for all of the har to have a useful ratio it's useful to have objective numbers the objective number here is the judgment that was paid that that number makes sense i don't know where else i could go with that answer except to say that it seems to me that the proper calculation of what compensatory judgment was is ninety five plus seven hundred thousand from the state court which is what comes to twenty point three and the amount of plaintiffs should be regarded as needing to compensate them for that their harm i would not see it as reduction i would see it as you start with the compensatory judgement which was nineteen point five millionaire yes that's eight billion dollars they started it but they realize it doesn't take account of the cleanup which reduces it to sixty four million of you know in our brief we set out starting in place forty four while we think that's twenty eight million bu the debate is really between twenty eight million and sixty four million and we've never had a better guide on criminal penalties in any punitive damage case i look at because the government actually went through and resolve that issue and decided that it should not be one hundred fifty million but twenty five million and kind of all the activity so those are both relevant da and when you look at it and the reason is of course when you look at represents ability when you ask whether there should be an exception to the statement and state farm that one to one is the appropriate ratio in cas in our previous decision in this case that the amount that a defendant voluntarily pays before judgment should generally not be used as part of the numerator that's holding within the context of analyzing the ratio yes however as i understand the thrust of judge schroeder's inquiries to you they go not only to ratio but represents a billet that we did not suggest in the reprehensive billet the analysis that that three hundred dollars to three hundred million dollars of harm should not be considered so what i'm thinking is that the proper analysis is in terms of considering how reprehensible the conduct is look at the money that was voluntarily paid after the harm was done in terms of the ratio don't  affects the ratio only i mean it's supposed to take a hypothetical case you had a company that engaged in a practice that was dangerous to its workers who knew perfectly well that from time to time they'd be accidents killed workers so whenever yes i fully understand and that's why i want to if i may address whether instability directly but it seems to me let me just give you where i'm coming from and then we will give the other side equal time but it seems to me that the what they pay out in cleanup and early claims does reduce their compensatory liability but i don't see why you should so that we get compensation that compensatory damages are reduced but i the when you look at the if the ratio is that if the numerator is anything other than twenty million where we think that already triggers a one to one ratio then i would think that the proper ratio could be substantially less than if you consider only the quantified harm the award is presumptively within the presumptively constitutional single digit guideline if you take into account uncompensated harm and potential harm zero teachers the real ratio falls to last than four to one council yes sir this reminds me this argument would appear to start from scratch and it seems to me you have to start from the previous decision because that was for the result of very considerable consideration and it's since been followed in other decisions of this court absorbtion this court precedents so i don't i don't quite see how you start from scratch let me address the proposition that i'm starting from scratch since this court's decision we've had a number of decisions in the circuit cooper being the best example in which  a very that was something where if you didn't have punitive she wouldn't have much of a deterrent at all and one of the things that state farm makes clear is if a lot of money is awarded against the defendant the reluctance of people generally to pay a lot of money x is that deterrent by itself so a lower ratio is appropriate ordinarily not greater than four to one and let me address that directly and i want to address it in two ways first of all in this particular situation you have thirty the impact of deterrence and punishment fall on the defendant that's punished in deterred let me know but you can have a class action where everybody in the class gets a dollar fifty in a coupon for a discount on their next  car something a lawyer sketch ad one hundred million dollars and that the defendant is put out of business that will sure deter it does let me address that well first of all from the proposition from a legal standpoint i didn't planets with it was in the context of knocking it down building it up we knocked the award way down a plant that's correct but but but but the proposition is clearly made in planned parenthood and it relies on state farm which says that you're supposed to take a look at the harm to the individual plaintiff now let me address it from a different perspective the amp cam case which we cited in our briefs stands for the proposition that the imposition of the class structure of different plaintiffs is should not affect the substance of the claims of those individual plaintiffs the class structure is to facilitate getting all of the cases through the courts so that's the proposition that's the supreme court case but that's a problem that's an important proposition that supports that you should look at these on an individual kind of your argument i mean that in a class action punitive damages should be higher because the involved in a commercial transaction of the reprehensible it is low and there is a large financial award against one that's one situation but here in the fact that exxon talk chances like the livelihoods of thirty two thousand people alcoholic and you know is drinking again and you know is drinking and driving and you know it's drinking and driving and leaving the bridge and over a period of three years despite warning after warning and despite knowledge from the top of the chain of command to the bottom of the chain of command not doing anything about it that's the reprehensible conduct everybody knew the good captain hazelwood had gone through rehab everybody knew he was drinking happen in the situation of which you know you're going to hurt thirty two thousand people is a very bad thing how do you respond to the defendant's argument that under the  it's it's clear that that wasn't wasn't the reason and there are facts supporting an inference that that wasn't the reason and if you take those facts most favorable of the jury verdict that isn't the reason it appears from the trial proof that it was day after day if you read the transcript the transcript weeks of alcohol it was clear from the trial pros that exxon corporation at least on the shipping company had an alcoholic culture that they were enablers and that they were neighbors from the top of the it concluded what that the conduct was reprehensible i thought the jury there was the evidence was such that the jury could have rejected it just a total fabrication and we cite it in our  if that was the regime then the system what you stand the system on it's not for a variety of reasons the first is any time you do something wrong you can get out of it by paying compensatory damages there would never be any punishment you make that judgment you go out and settle the second aspect of that is it takes the punishment decision away from society and away from the courts and places that are in the hands of the wrong door because the wrong to work and i was by itself out quite five billion dollars in advance of any lawsuit being filed by anyone going around and said we feel terrible about what we did we don't want you to feel you have to sue us in order to get a  sting and handed out five billion dollars and the total amount that the jury found was due would you say that they should nevertheless be liable for another five million probably not if they paid out what i made a decision here as to how i wanted to do it when i tried the case and it resulted in two things the first was exxon argued to the jury that its payments made at last reprehensible and they got a jury instruction i think the jury instruction number is thirty seven which allowed them to argue the voluntary payments in the context of everything that went on before and went on after so it was part of the of the  understand that you are arguing that this was tried this was found this was taken from i understand it are standard with respect to due process review which is what we're supposed to be talking about understanding you right your intention with this sentence in the supreme court's decision in state farm they said we reiterated the importance of these three guideposts in cooper industries and mandated appellate courts to guideposts at the top level but in order to do that review you need facts and the facts that go into that review are are taking most favorably to the winner and you say that in the first  decision when he was analyzing application of the three factors that's correct and on the factual issues that's correct and i think the supreme court makes that clear and say fine he didn't say he was making f holland the first opinion was then we all context of reviewing the jury award if you go back to the last opinion the one that you were doing here he talks in terms of finding facts he thought that was your charge to him to violates the constitution and in this particular case because of the number of people that were hurt because of the the amount of damage that was done and because of the exceptional notice that exxon corporation had with regard to the ball park that it was playing on the punishment is fair it's large but it's  is the deterrence with regards to what happened here and the sufficiency of the deterrence with regard to what happened here and i have a couple of observations on that the first as we know that think because of the fact that they were not rational decision makers as the district court found and that they were operating in the context of this alcoholic culture but we know that the scope of this damage which happened pretty well as envision known to the company and every aspect of this risk was known to the company almost to a certainty they had perfect knowledge with regard to joe they have perfect knowledge with regard to the sound they have perfect knowledge with regard to the fisherman and they did it anyway and they worked  second observation just a question of the turns and then i'll get the punishment yes the district court at some point in time i don't really get the deterrence it seems to me like  even if they were totally and unmindful of the harm to the environment and the liability they could be hammered with for harm to the environment and even if they were totally on mindful of the economic harm to others and how they could be hammered for doing still they wouldn't want to loose their one million gallons of oil but  unmindful no i'm saying everything i'm saying if you put a drunk in charge of the supertanker in prince william sound alaska knowing what exactly the consequences of that are going to be that that is reprehensible conduct has to be a jury question i'm still struggling with this  we're reviewing de novo that has to be a jury question as to whether or not they did this yelling and what they did has to be for the jury that's a correct statement now the question and what the punishment did we said that was more reprehensible torturing killing large numbers of people we said was more reprehensible than putting a drunk in charge of a supertanker i think it is more reprehensible but i think with regard to the management of a supertanker business putting a drunk in charge of the supertanker know that he's drinking is highly reprehensible marco's case is worse but to compare this sort of a nine to one in cooper i judge holland by the top guys in the company there over i went back and i read it and i timed that were over twelve hours by the former chairman the next chairman the president of the shipping company and judge holland on the jury got an opportunity to take a look at these guys and judge holland came to a couple of conclusions in order to sixty seven he came to the conclusion that the evidence was sufficient for the jury to conclude that there was a lack of if you used as the numerator actual compensatory damages minus amounts paid before trial not before judgment but before trial by this particular defendant when exxon tried to cut the numerator down low balling it as i characterized it it took credit for money that was paid by other parties not just itself and money that was paid after  trial commenced i think we run the number of three hundred sixty million dollars three hundred sixty million would be the numerator if you don't count prepays prepaid and a couple of other categories and we do that calculation in the brief there's a calculator on it forty six something like that is that's towards the end but we do the calculation at the break i once say though and this is probably the most important thing that i do want to say and that  that there is an awful lot of emotional damage that was just plain result of hurting thirty two thousand people's jobs or nature of things tells you that that's that that's the case i understood that argument you're trying to use the emotional damage that always flows from great economic harm to turn this into a personal injury case for purposes of the supreme court i caught a me between physical injury cases and economic harm cases is that right know the first five steps of the statement about what i'm doing are correct what i'm doing is i'm i am relying on the proposition and footnote eleven of the cooper decision and foot eleven of the cooper decision and this court's planned parenthood decision and other decisions that the proposition is recognize that there are other intangibles that go with economic harm and  together it isn't a nine to one case this is only a nine to one case if you take a look at the hard economic damages which the supreme court precedent tells you that that's what you're supposed to look at ok i won't even repa added to it the amounts were paid prior to the judgment but after or during the trial that would be another seventy million dollars plus suddenly in dollars before the trial fifteen million dollars were settlements post prejudgment twenty plus seventy plus fifteen get you to fifty five million you start the other way from five thirteen we take off the three hundred million was paid before oh hold on i lost you there ok i got paid prejudgment but post trial fifteen million dollars and someone paid during trial that is fifty five million dollars but there was rain that gap and the five hundred  thirteen million dollars this the three hundred million that was paid and i just before your argument before trial plus the ninety eight million dollars hypothetically eighteen u s c thirty five seventy one the twice the last as i say we don't think the losses anywhere near five hundred thirteen but state farm came along and warns against suspected abuse of cr penalties because they're speculative and you don't meet the standard of proof secondly thirty five fifty three of the sentencing guidelines cuts off that it whatever's necessary for punishment and deterrence thirdly we know the answer because there my and you don't give exxon credit for amounts that other defendants paid comes to around one hundred fifty million is there i don't think that's i'm not sure what terms of giving them a growing what you were saying well the judge was was nineteen point five million dollars and you add to that twenty plus twenty you add to that twenty another twenty and fifty which are the amounts that were paid before judgment but right but