Full opinion text
ORDER No. 36Jp Second Renewed Motion for Reduction of Punitive Damages Award HOLLAND, District Judge. Preface On December 6, 2002, the court granted Exxon Mobil Corporation’s (D — 1) and Exxon Shipping Company’s (D-2), hereinafter referred to as “Exxon”, renewed motion for reduction or remittitur and reduced a jury verdict awarding plaintiffs $5 billion in punitive damages to $4 billion. The court concluded that application of the BMW guideposts supported the $5 billion award but, based on plaintiffs’ alternative suggestion, reduced the award to $4 billion because the Ninth Circuit in earlier proceedings hereinafter described in detail had mandated that the award be reduced on remand. After final judgment was entered on the $4 billion award, both Exxon and plaintiffs timely appealed. On April 7, 2003, before any briefing on the appeals in this case, the Supreme Court decided State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003). In State Farm, the United States Supreme Court revisited the due process issue as to punitive damages in the context of an insurance bad faith case. On August 18, 2003, the Ninth Circuit Court of Appeals vacated the $4 billion punitive damages judgment and remanded the case to this court to reconsider the punitive damages award in light of State Farm. Upon remand, this court called for supplemental briefing from the parties to aid in its reconsideration. Exxon submitted its supplemental briefing in the form of a second renewed motion for reduction or remittitur of punitive damages. This motion is opposed by plaintiffs. Oral argument on the second renewed motion for reduction or remittitur of punitive damages was heard on December 3, 2003. After considering the parties’ briefing and hearing oral argument, the court has determined it most practical, for purposes of reevaluating the punitive damages award, to vacate Order No. 358 in its entirety. State Farm, adds no new, freestanding factor to the constitutional analysis of punitive damages that the court might “tie onto” its previous order. It is the court’s view that State Farm, while bringing the BMW guideposts into sharper focus, does not change the analysis. In fact, there are aspects of the due process evaluation of punitive damages awards which have not changed at all as a result of State Farm. As a consequence, although the court is vacating Order No. 358, where the court perceives no need or necessity of further exposition of the facts or its view of the law, the court will simply replicate what it has previously said in Order No. 358. Facts Terrible things have happened in Alaska on Good Friday. On Good Friday, March 27, 1964, the strongest earthquake ever recorded in North America literally relocated the seabed of most of Prince William Sound and the Kenai Peninsula. On Good Friday, March 24, 1989, the oil tanker Exxon Valdez was run aground on Bligh Reef in Prince William Sound, Alaska. On March 24, 1989, Exxon’s co-defendant, Joseph Hazelwood, was in command of the Exxon Valdez. He was assisted by a third mate and a helmsman. Captain Hazelwood was a skilled mariner, but he was an alcoholic. Worse yet, he was a relapsed alcoholic; and, before departing Valdez, Alaska, on March 23, 1989, he had, more probably than not, consumed sufficient alcohol to incapacitate a non-alcoholic. As the Exxon Valdez exited Valdez Arm, Captain Hazelwood assumed command of the vessel from a harbor pilot and made arrangements to divert the vessel from the normal shipping lanes in order to avoid considerable ice which had calved off Columbia Glacier. That diversion from the standard shipping lanes took the vessel directly toward Bligh Reef. The captain gave the third mate explicit, accurate orders which, if carried out by the third mate, would have returned the vessel to the shipping lanes without danger of grounding on Bligh Reef. The third mate, who had completed the requirements for a captain’s license, was, more probably than not, overworked and excessively tired at the time in question. He neglected to commence a turn of the vessel at the point where, and the time when, he had been directed to do so. At that critical time, Captain Hazelwood had left the bridge to attend to paperwork. When the third mate realized that he had proceeded too far in the direction of Bligh Reef, he commenced a turn, but it was too late. Like so many great tragedies, this one occurred when three or more unfortunate acts and/or omissions took place in close proximity to one another, and but for any one of them, the grounding would likely not have occurred. Joe Hazelwood was under the influence of alcohol. Instead of staying on the bridge to verify that his orders were carried out, he tended to paperwork below. The third mate, being overworked and tired, neglected to carry out the orders which he had been given. The grounding might still have been avoided but for several other converging circumstances: the captain had put the vessel on an automated system for increasing its speed prior to completing the maneuver around the ice in the shipping lane; and the third mate, upon realizing his oversight, did not turn the vessel as sharply as he might have. It has never been established that there was any design, mechanical, or other fault in the Exxon Valdez. It responded to its human masters as intended and expected. Thus it is entirely clear why the Exxon Valdez grounded on Bligh Reef: the cause was pure and simple human frailty. Defendant Exxon Shipping owned the Exxon Valdez. Exxon employed Captain Hazelwood, and kept him employed knowing that he had an alcohol problem. The captain had supposedly been rehabilitated, but Exxon knew better before March 24, 1989. Hazelwood had sought treatment for alcohol abuse in 1985 but had “fallen off the wagon” by the spring of 1986. Exxon knew that Hazelwood had relapsed and that he was drinking while on board ship. Exxon officials heard multiple reports of Hazelwood’s relapse, and Hazel-wood was being watched by other Exxon officers. Yet, Exxon continued to allow Hazelwood to command a supertanker carrying a hazardous cargo. Because Exxon did nothing despite its knowledge that Ha-zelwood was once again drinking, Captain Hazelwood was the person in charge of a vessel as long as three football fields and carrying 53 million gallons of crude oil. Exxon officials knew that it was dangerous to have a captain with an alcohol problem commanding a supertanker. Exxon officials also knew that oil and fisheries could not mix with one another. Exxon officials knew that carrying huge volumes of crude oil through Prince William Sound was a dangerous business, yet they knowingly permitted a relapsed alcoholic to direct the operation of the Exxon Valdez through Prince William Sound. Captain Hazelwood came to the bridge immediately after the grounding. He timely reported to the United States Coast Guard: Exxon Valdez [calling Valdez Traffic Control], We should be on your radar there. We’ve fetched up hard aground north of Goose Island off Bligh Reef and evidently leaking some oil and we’re gonna be here for a while.... Despite the fact that he was aware of oil boiling up through the seawater on both sides of the vessel, Captain Hazelwood attempted to extract the vessel from the reef. Had he succeeded in backing the vessel off the reef or driving it across the reef, the Exxon Valdez would probably have foundered, risking the loss of the entire cargo and the lives of those aboard. However, the vessel was really hard aground. It could wiggle but not be moved off Bligh Reef. The best available estimate of the crude oil lost from the Exxon Valdez into Prince William Sound is about 11 million gallons. In the days following the grounding, about 42 million gallons of crude oil were light-ered off the Exxon Valdez by other tankers. This process was very dangerous. The lightering process was necessarily taking place in a pool of crude oil. A spark from static electricity or other mechanical or electrical sources might have set fire to the crude oil. The crude oil lost from the Exxon Valdez spread far and wide around Prince William Sound, mostly in a westerly direction. Counter-currents which pass through the sound in a westerly direction (the primary North Pacific currents flow from west to east) took the crude oil past numerous islands, spreading to the coast of the Kenai Peninsula, Cook Inlet, and Kodiak Island. As the oil spread, it disrupted the lives and livelihoods of those in its path, including the 82,677 punitive damages class members. Commercial fisheries throughout this area were totally disrupted, with entire fisheries being closed for the 1989 season. As a result, commercial fishermen not only suffered economic losses but also the emotional distress that comes from having one’s means of making a living destroyed. A high percentage of commercial fishermen suffered from severe depression, post-traumatic stress disorder, generalized anxiety disorder, or a combination of all three. Subsistence fishing by residents of Prince William Sound and Lower Cook Inlet villages was also disrupted. The disruption to subsis-fence fishing deeply affected Native Alaskans, for whom subsistence fishing is not merely a way to feed their families but an important part of their culture. Research indicated that Native Alaskans also experienced great emotional distress following the spill. Shore-based businesses dependent upon the fishing industry were also disrupted as were the resources of cities such as Cordova. In keeping with its legal obligations, Exxon undertook a massive cleanup effort. Approximately $2.1 billion was ultimately spent in efforts to remove the spilled crude oil from the waters and beaches of Prince William Sound, Lower Cook Inlet, and Kodiak Island. Also in accordance with its legal obligations attendant to spilling crude oil, Exxon undertook a voluntary claims program, ultimately paying out $303 million, principally to fishermen whose livelihood was disrupted for the year 1989 and ensuing years up to 1994. Proceedings Litigation over the grounding was soon commenced. The civil suits came first, but developed slowly because of their number and complexity. Both the United States Government and the State of Alaska sued Exxon for environmental damage. That litigation was expeditiously settled by means of consent decrees under which Exxon agreed to pay to the governments, for environmental damage, $900 million over a period of ten years. The decrees contain an “opener” provision, allowing the governments to make additional claims of up to $100 million for environmental damage not known when the settlements were reached. Captain Hazelwood was prosecuted by the State of Alaska for operating a watercraft while intoxicated, reckless endangerment, negligent discharge of oil, and three felony counts of criminal mischief. That litigation became involved in legal complexities which led to multiple appeals. Some nine years after the grounding, a single misdemeanor conviction for negligent discharge of oil was affirmed on appeal. Exxon was prosecuted by the federal government for various environmental crimes: violating the Clean Water Act, 33 U.S.C. §§ 1311(a) and 1319(c)(1); violating the Refuse Act, 33 U.S.C. §§ 407 and 411; violating the Migratory Bird Treaty Act, 16 U.S.C. §§ 703 and 707(a); violating the Ports and Waterways Safety Act, 33 U.S.C. § 1232(b)(1); and violating the Dangerous Cargo Act, 46 U.S.C. § 3718(b). Exxon Corporation pled guilty to one count of violating the Migratory Bird Treaty Act. Exxon Shipping pled guilty to one count each of violating the Clean Water Act, the Refuse Act, and the Migratory Bird Treaty Act. They were jointly fined $25 million and were ordered to pay restitution in the amount of $100 million. The civil cases (involving thousands of plaintiffs) were ultimately (but with a few exceptions) consolidated into this case. Municipal claims and some Native corporation claims were tried in state court. In the consolidated cases, there was never any dispute as to Exxon’s liability for compensatory damages. Only the amount of the plaintiffs’ economic losses was controverted. As a consequence of procedural orders in this case and the excellent, cooperative approach taken by counsel for all parties, an effective and efficient trial protocol for the plaintiffs’ claims was developed. As the time for trial grew near, this court became convinced of the necessity of creating a single, punitive damages claims class. On April 14, 1994, the court granted conditional final approval of a mandatory punitive damages class, consisting of all persons or entities who possess or have asserted claims for punitive damages against Exxon and/or Exxon Shipping which arise from or relate in any way to the grounding of the EXXON VALDEZ or the resulting oil spill. By agreement with the parties, trial as regards Exxon’s and Captain Hazelwood’s liability for punitive damages was commenced on May 2,1994. In this Phase I of the trial, the jury found Exxon and Captain Hazelwood to be liable for punitive damages: Phase II of the trial dealt with compensatory damages for plaintiffs’ economic losses. In Phase IIA, the jury returned a verdict in favor of the fishermen in the amount of $287 million. Phase IIB, a separate aspect of the compensatory claims having to do with the Native economic claims, was settled without trial for $22.6 million. Phase III of the trial focused upon the amount of punitive damages which should be imposed upon the defendants. As a predicate or base for the punitive damages trial, the parties entered into a stipulation regarding impacts from the oil spill which was read to the jury at the beginning of Phase III. The stipulation outlined the actual damages that had been resolved in Phase IIB of the trial and the actual damages that were to be resolved in Phase IV of the trial and in Alaska state court proceedings. The damage estimates outlined in the stipulation exceeded $350 million. The jury was, of course, also aware that it had awarded $287 million in damages in Phase IIA of the trial. The evidence presented during Phase III focused on Exxon’s and Hazelwood’s conduct as it related to the oil spill. While evidence of extraterritorial conduct was admitted, it had a nexus to the grounding of the Exxon Valdez and the resulting oil spill. In consultation with counsel, unusually detailed punitive damages instructions were developed for purposes of this case. The jury was instructed that punitive damages are awarded for the purposes of punishment and deterrence, and that the fact that it had found the defendants’ conduct reckless did not require it to award punitive damages. The jury was specifically instructed to use reason in setting the amount of punitive damages and that any award of punitive damages should bear a reasonable relationship to the harm caused the members of the plaintiff class by the defendants’ misconduct. The jury was instructed that punitive damages are not intended to provide compensation for plaintiffs’ losses and that they should assume that the plaintiffs had been fully compensated for the damages that they had suffered as a result of the oil spill. Factors that the jury was told it could consider in setting an amount of punitive damages included the reprehensibility of the defendants’ conduct, the amount of actual and potential harm suffered by the members of the plaintiff class as a result of the defendants’ conduct, and the financial condition of the defendants. As to the reprehensibility factor, the jury was instructed that in determining the reprehensibility of the defendants’ conduct it could consider “the nature of the conduct, the duration of the conduct, and defendant’s awareness that the conduct was occurring.” As to the defendants’ wealth, the jury was instructed to consider the defendants’ financial condition only in terms of what level of award would be necessary to achieve punishment and deterrence. The jury was instructed that it should not count any damage to natural resources or the environment in general when assessing the harm suffered by members of the plaintiff class. The jury was also instructed that it could consider as mitigating factors the existence of criminal fines or civil awards against the defendants for the same conduct and the extent to which the defendants had taken steps to remedy the consequences of the oil spill and to prevent another oil spill. The Phase III trial was relatively short, lasting only five days, but the jury deliberated for approximately twenty-two days before returning a verdict. The jury awarded a breath-taking $5 billion in punitive damages against the Exxon defendants, and $5,000 against Captain Hazel-wood. There was to be a Phase IV of the civil litigation. The Phase TV claims embodied all of the compensatory damage claims remaining in federal court and not included in Phase II. As to these claims, a settlement was reached in the amount of $13.4 million. Exxon moved for a reduction or remitti-tur of punitive damages. That motion was denied. The court applied the Hammond factors to reach its conclusion that the $5 billion punitive damages award was not so grossly excessive as to violate Exxon’s due process rights. After lengthy other proceedings not relevant now, final judgment was entered including the award of $5 billion in punitive damages. Appeal and Remands Exxon appealed as to liability for and the amount of punitive damages. Exxon sought and obtained a stay of execution on the judgment for punitive damages by posting a supersedeas bond in the amount of $6,750,000,000. On appeal, Exxon contended first that punitive damages should have been barred as a matter of law. For reasons given, the court of appeals rejected this contention, concluding that: the Clean Water Act does not preempt a private right of action for punitive as well as compensatory damages for damage to private rights.... [W]hat saves plaintiffs case from preemption is that the $5 billion award vindicates only private economic and quasi-economic interests, not the public interest in punishing harm to the environment. In re Exxon Valdez, 270 F.3d at 1231. Exxon’s second contention was that the plaintiffs’ burden of proof should be to produce clear and convincing evidence of liability for punitive damages. The court of appeals held that this court did not abuse its discretion by employing the preponderance of evidence standard. Id. at 1232-33. Similarly, this court was affirmed as regards its instructions to the jury concerning Exxon’s vicarious liability for the conduct of its employees. Id. at 1235. Exxon did not challenge the substance of the court’s instructions as to the determination of punitive damages; for, with prescient skill, counsel for plaintiffs and Exxon had proposed instructions which appropriately informed the jury as to what have become the “guideposts” for fixing punitive damages: the reprehensibility of defendant’s conduct, the relationship of punitive damages to actual and potential harm, and comparison to other penalties. Captain Hazelwood and Exxon both challenged the sufficiency of the evidence to support an award of punitive damages against them. The Ninth Circuit Court concluded that there was substantial evidence to support a jury verdict of liability for punitive damages as to both Captain Hazelwood and Exxon. Id. at 1237-38. Finally, with liability concluded, the court of appeals turned to Exxon’s challenge to the amount of the punitive damages award against it. In addition to passing muster under the sufficiency of the evidence test, punitive damages awards must be subjected to a due process analysis which flows from the decision of the United States Supreme Court in BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996). In BMW, the Supreme Court held that a $2 million punitive damages award based upon $4,000 in compensatory damages for pure economic loss was unconstitutional because the defendant lacked fair notice of so severe a punitive award. Id. at 574-75, 116 S.Ct. 1589. The importance of the BMW guideposts in determining the outer constitutional limits of punitive damages was reinforced in Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 121 S.Ct. 1678, 149 L.Ed.2d 674 (2001). Based upon BMW, the Ninth Circuit Court of Appeals in this case reiterated the three guideposts established by the Supreme Court for use in determining whether punitive damages are so grossly excessive as to constitute a violation of due process. The guideposts are: (1) the reprehensibility of the defendant’s conduct; (2) the ratio of the award to the harm inflicted on the plaintiff; and (3) the difference between the award and the civil or criminal penalties in comparable cases. In re Exxon Valdez, 270 F.3d at 1240. The court of appeals recognized that this court did not have the benefit of BMW and Cooper Industries when it decided Exxon’s original motion to reduce the punitive damages award and remanded the case “for the district court to consider the constitutionality of the amount of the award in light of the guideposts established in BMW.” Id. at 1241. However, the court of appeals also provided its analysis of the BMW factors to aid the court in its consideration of the constitutional question. Id. In the end, the court of appeals unequivocally told this court that “[t]he $5 billion punitive damages award is too high to withstand the review we are required to give it under BMW and Cooper Industries ” and “[i]t must be reduced.” Id. at 1246 (citations omitted). On remand, Exxon filed a renewed motion for reduction or remittitur of the punitive damages award, which plaintiffs opposed. After consideration of the briefing and hearing oral argument on the renewed motion, the court, on December 6, 2002, issued Order No. 358, which granted Exxon’s renewed motion and reduced the punitive damages award to $4 billion. In applying the BMW guideposts, the court found Exxon’s conduct highly reprehensible, a ratio of 9.85-to-l based on actual and potential harm of over $507 million, and comparable civil and criminal penalties of which Exxon was on notice in excess of $5 billion. The court concluded that application of the BMW guideposts supported the $5 billion punitive damages award but reduced the award to $4 billion because the Ninth Circuit had mandated that the award be reduced. Judgment on the $4 billion punitive damages award was entered on December 10, 2002. Plaintiffs moved for an order directing entry of a final judgment on Order No. 358 or, in the alternative, an order authorizing an interlocutory appeal. On January 27, 2003, the court granted the plaintiffs’ motion. Both Exxon and plaintiffs timely noticed appeals to the Ninth Circuit Court of Appeals. Exxon sought and obtained a stay of execution on the judgment by posting a supersedeas bond in the amount of $4,806,000,000. On April 7, 2003, the Supreme Court decided State Farm, 538 U.S. 408, 123 S.Ct. 1513, which addressed the question of whether a $145 million punitive damages award, compared to compensatory damages of $1 million, in an insurance bad faith case was grossly excessive and violated due process. The Court held that the $145 million punitive damages award did not comport with due process and remanded the case to the Utah Supreme Court with the suggestion that, under the circumstances of the case, a punitive damages award at or near the amount of compensatory damages would comport with due process. Id. at 1526. On August 18, 2003, prior to briefing on either appeal, the Ninth Circuit Court of Appeals vacated the $4 billion punitive damages judgment and again remanded the case to this court, this time to reconsider the punitive damages award in light of State Farm. In remanding, the court of appeals simply vacated the court’s amended judgment which found plaintiffs entitled to $4 billion in punitive damages against Exxon. The court of appeals did not comment on the merits of Order No. 358, neither suggesting nor implying that the court should revise Order No. 358, although the court of appeals plainly intended that this court reconsider Order No. 358 in light of State Farm. In remanding, the court of appeals also did not disturb its earlier holding that the $5 billion punitive damages award was too high to pass constitutional muster. On remand, this court called for supplemental briefing from the parties to aid in its reconsideration of the punitive damages award in light of State Farm. Exxon submitted its supplemental briefing in the form of a second renewed motion for reduction or remittitur of punitive damages. This motion is opposed by plaintiffs. Oral argument on the second renewed motion for reduction or remittitur of punitive damages was heard on December 3, 2003. Having considered the parties’ arguments, both written and oral, the court turns, for a third time, to the question of whether the $5 billion punitive damages.award against Exxon offends the Due Process Clause of the Fourteenth Amendment of the United States Constitution. Discussion Legal Background It has long been understood “that the Due Process Clause of the Fourteenth Amendment imposes substantive limits ‘beyond which penalties may not go.’ ” TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 453-54, 113 S.Ct. 2711, 125 L.Ed.2d 366 (1993) (quoting Seaboard Air Line Ry v. Seegers, 207 U.S. 73, 78, 28 S.Ct. 28, 52 L.Ed. 108 (1907)). It was not, however, until recent years that the Supreme Court considered applying this general principle of constitutional law to punitive damages awards. In Browning-Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 276-77, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989), the Supreme Court suggested that the Due Process Clause could place substantive limits on punitive damages awards but left the question of whether it did to another day because the parties had not raised the issue below. Id. That day came two terms later in Has-lip, 499 U.S. 1, 111 S.Ct. 1032. Haslip involved the misappropriation of insurance premiums by Pacific Mutual’s agent. After their insurance lapsed because of nonpayment of premiums, Haslip and others brought a fraud claim against the agent and also sought to hold Pacific Mutual liable on a respondeat superior theory. A jury awarded Haslip $200,000 in compensatory damages and $840,000 in punitive damages. Id. at 6-7 and n. 2, 111 S.Ct. 1032. Pacific Mutual challenged Haslip’s punitive damages award arguing that it violated both substantive and procedural due process. The Supreme Court rejected Pacific Mutual’s argument that its substantive due process rights were violated by the imposition of liability based upon the respondeat superior doctrine. The Court also determined that the common-law method of determining punitive damages is not “so inherently unfair as to deny due process and be per se unconstitutional.” Id. at 17, 111 S.Ct. 1032. However, the Court emphasized that a punitive damages award that was the result of unlimited jury or judicial discretion could violate the Due Process Clause. Id. at 18, 111 S.Ct. 1032. The Court in Haslip refused to “draw a mathematical bright line between the constitutionally acceptable and the constitutionally unacceptable....” Id. Rather, the Court stated that punitive damages awards should be evaluated based upon “general concerns of reasonableness and adequate guidance from the court when the case is tried to a jury....” Id. The Court then concluded that the punitive damages award against Pacific Mutual did not violate the Due Process Clause because: (1) the jury had been adequately instructed and was not given unlimited discretion in setting the amount of punitive damages; (2) the trial court was required to do a post-trial review of the punitive damage award for excessiveness; and (3) the Alabama Supreme Court also conducted a post-verdict review of punitive damages awards, using the Hammond factors. Id. at 191-22, 111 S.Ct. 1032. The Court observed that Haslip’s punitive damages award was more than four times her compensatory damages and much greater than any fine that could have been imposed for insurance fraud under Alabama law but found that the award, although perhaps “close to the line”, id. at 23, 111 S.Ct. 1032, did “not cross the line into the area of constitutional impropriety.” Id. at 24, 111 S.Ct. 1032. Two terms later, in TXO, 509 U.S. 443, 113 S.Ct. 2711, the Court again took up the issue of the constitutionality of a punitive damages award, this time a $10 million punitive damages award in a slander of title case that was 526 times the compensatory damages award. The parties urged the Supreme Court to formulate a “test” for evaluating whether a punitive damages award violated due process. The Court refused to do so, instead returning to what it had said in Haslip: “We need not, and indeed we cannot, draw a mathematical bright line between the constitutionally acceptable and the constitutionally unacceptable that would fit every case. We can say, however, that [a] general concer[n] of reasonableness ... properly enter[s] into the constitutional calculus.” Id. at 458, 113 S.Ct. 2711 (quoting Haslip, 499 U.S. at 18, 111 S.Ct. 1032). In evaluating the reasonableness of the $10 million punitive damages award against TXO, the Court concluded that it was appropriate not only to consider the actual harm that a defendant’s conduct caused a plaintiff but also the potential harm that may have resulted from the defendant’s conduct. Id. at 460, 113 S.Ct. 2711. TXO’s pattern of behavior could have resulted in damages ranging from $5 million to $8.3 million. Id. at 461, 113 S.Ct. 2711. Considering the “potential” harm, the Court found that “the dramatic disparity between the actual damages and the punitive award [was not] controlling. ...” Id. at 462,113 S.Ct. 2711. TXO also challenged the punitive damages award on the grounds that the jury had not been adequately instructed. The Court noted that the jury had been instructed that it could consider the wealth of TXO “in recognition of the fact that effective deterrence of wrongful conduct ‘may require a larger fine upon one of large means than it would upon one of ordinary means under the same or similar circumstances.’” Id. at 463, 113 S.Ct. 2711 (quoting the punitive damages jury instruction). The jury was also instructed that one of the purposes of punitive damages was to provide additional compensation to the injured parties. The Court agreed with TXO that reference to TXO’s wealth may have increased the risk of the jury being influenced by prejudice against a large non-resident defendant but noted that it had found in Haslip that the wealth of the defendant could be considered when assessing punitive damages. The Court also stated that it did not understand the reference in the instructions about “additional compensation”. However, because the issue of inadequate instructions had not been raised below, the Court did not consider what effect these jury instructions might have had on the punitive damages award. The Supreme Court next considered the constitutionality of a punitive damages award in Honda Motor Co. v. Oberg, 512 U.S. 415, 114 S.Ct. 2331, 129 L.Ed.2d 336 (1994). Oberg was severely injured in an accident involving a three-wheeled all-terrain vehicle that was manufactured and sold by Honda. The jury awarded Oberg $735,512.31 in compensatory damages and $5 million in punitive damages. Honda appealed, arguing that the punitive damages award violated due process, in large part, because Oregon courts had no power to reduce a punitive damages award if they found that the amount of the award was grossly excessive. The Court held “that Oregon's denial of judicial review of the size of punitive damages awards violates the Due Process Clause of the Fourteenth Amendment.” Id. at 432, 114 S.Ct. 2331. Then came BMW, 517 U.S. 559, 116 S.Ct. 1589, in which the Court provided lower courts with a more definite means for analyzing the reasonableness of a punitive damages award. In BMW, Dr. Gore purchased a new BMW from a Birmingham, Alabama, dealer. Pursuant to a national BMW policy, the dealer did not disclose to Dr. Gore that the car had been repainted because the cost of this “repair” was less than three percent of the car’s suggested retail value. At trial, BMW admitted that its national policy since 1983 was to not disclose repairs to new cars if the repairs cost less than three percent of the car’s suggested retail price. Dr. Gore presented evidence that since 1983 BMW had sold 983 “repaired” cars as new, including fourteen in Alabama. Dr. Gore also presented evidence that the value of a repainted ear was ten percent less than a car that had not been repainted. The jury awarded Dr. Gore $4,000 in compensatory damages and $4 million in punitive damages (apparently based on 1000 cars x $4000 in actual damages per car). BMW moved to set aside the punitive damages award, but the trial court denied the motion. On appeal to the Alabama Supreme Court, the punitive damages award was reduced to $2 million. In reviewing the $2 million punitive damages award, the United States Supreme Court stated that “the federal ex-cessiveness inquiry appropriately begins with an identification of the state interests that a punitive award is designed to serve.” BMW, 517 U.S. at 568, 116 S.Ct. 1589. The Court observed that there could be no doubt that Alabama had a legitimate interest in protecting its citizens from deceptive trade practices. Id. at 568-69, 116 S.Ct. 1589. However, it was conceded that Dr. Gore was endeavoring to achieve national punishment and deterrence. For reasons explained, the Supreme Court held that Alabama’s interests, not those of the entire nation, were the proper scope of deterrence and punishment. .Id. at 573-74, 116 S.Ct. 1589. The Court then announced the three guideposts that lower courts are to use to determine whether a punitive damages award is grossly excessive and applied them to the punitive damages award against BMW. The Court held that the $2 million punitive damages award against BMW violated due process and remanded the case to the Alabama Supreme Court. Id. at 585-86,116 S.Ct. 1589. After BMW, the Supreme Court did not consider a punitive damages/due process case until its 2001 decision in Cooper Industries, 532 U.S. 424, 121 S.Ct. 1678, in which the issue was “whether the Court of Appeals applied the wrong standard of review in considering the constitutionality of the punitive damages award.” Id. at 426, 121 S.Ct. 1678. The Ninth Circuit Court of Appeals had applied an abuse of discretion standard; the Supreme Court reversed, holding that the constitutionality of punitive damages required de novo review and remanded the case to the appellate court to apply the appropriate standard. Id. at 431, 121 S.Ct. 1678. Although the constitutional issue was not before the Court, it nonetheless applied the BMW guideposts and found several potential problems with a punitive damages award of $4.5 million versus a compensatory damages award of $50,000 for violations of the Lanham Act based on Cooper Industries passing off its product as Leatherman’s. For the next several years, lower courts grappled with applying the BMW guideposts to punitive damages awards with no additional guidance from the Supreme Court. Then, last term, the Court handed down its decision in State Farm, 538 U.S. 408, 123 S.Ct. 1513. State Farm arose out of a serious traffic accident in 1981, in which, one person (Ospital) was killed and one (Slusher) was permanently disabled. The accident occurred when Curtis Campbell was attempting to pass six vans. Early investigation into the accident indicated that Campbell’s unsafe pass was the cause of the accident. A wrongful death and tort action was brought against Campbell. Campbell insisted that he was not at fault and his insurer, State Farm, decided to contest liability and declined offers to set-tie the claims against Campbell for policy limits ($25,000 per person, $50,000 total). The case went to trial and ended with a judgment against Campbell for $185,849, which was in excess of the amount offered in settlement. State Farm refused to cover the excess or to assist Campbell in an appeal. Campbell hired his own counsel to appeal and during the appeal reached a settlement with the plaintiffs in the tort case by which they agreed not to seek satisfaction of the judgment against Campbell if Campbell would pursue a bad faith action against State Farm. In 1989, the Utah Supreme Court denied Campbell’s appeal. State Farm then paid the entire judgment, including the excess. Nonetheless, Campbell and his wife filed suit against State Farm alleging bad faith, fraud, and intentional infliction of emotional distress. The trial court granted summary judgment to State Farm but was reversed on appeal. On remand, the case was bifurcated for trial. In the first phase of the trial the jury determined that State Farm’s decision to not settle was unreasonable. Phase two of the trial addressed, among other issues, compensatory and punitive damages. During phase two, the Camp-bells were allowed to introduce evidence of “ ‘a national scheme [by State Farm] to meet corporate fiscal goals by capping payouts on claims company wide.’ ” Id. at 1518 (quoting Campbell v. State Farm Mutual Auto. Ins. Co., 65 P.3d 1134, 1143 (Utah 2001)). This evidence concerned State Farm’s business practices for over 20 years in numerous states. Many of the practices had no connection to third-party automobile claims, which was the type of claim underlying the complaint against the Campbells. In addition, some of the out-of-state conduct was legal where it occurred. The jury awarded the Campbells $2.6 million in compensatory damages and $145 million in punitive damages. The trial court reduced the compensatory damages to $1 million and the punitive damages to $25 million. On appeal, the Supreme Court of Utah applied the BMW guideposts and reinstated the $145 million punitive damages award (but left compensatory damages at $1 million). State Farm successfully petitioned for certiorari. The United States Supreme Court began its analysis, as it had in BMW, with a discussion of how the two aims of punitive damages, deterrence and retribution, fit into the concept that grossly excessive or arbitrary punitive damages awards offend due process. The Court observed that “it is well established that there are procedural and substantive constitutional limitations” on punitive damages awards. State Farm, 123 S.Ct. at 1519. The Court further observed that although punitive damages serve the same purpose as criminal penalties, defendants in civil cases are not afforded the same protections as criminal defendants. The Court stated that “[t]his increases our concerns over the imprecise manner in which punitive damages systems are administered.” Id. at 1520. The Court discussed the need to properly instruct juries concerning punitive damages. Id. The Court continued by remarking that “[o]ur concerns are heightened when the decisionmaker is presented ... with evidence that has little bearing as to the amount of punitive damages that should be awarded.” Id. The Court then turned its attention to the application of the BMW guideposts, observing that “this case is neither close nor difficult.” Id. at 1521. The Court held that the $145 million punitive damages award violated due process and remanded the case to the Utah Supreme Court, stating: An application of the [BMW] guideposts to the facts of this case, especially in light of the substantial compensatory damages awarded (a portion of which contained a punitive element), likely would justify a punitive damages award at or near the amount of compensatory damages. Id. at 1526. The Question Presented The question presented by the instant motion is the same question that was presented in Haslip, TXO, BMW, and State Farm: does the punitive damages award constitute “grossly excessive or arbitrary punishment[ ] on [Exxon]” in violation of the Due Process Clause of the Fourteenth Amendment? State Farm, 123 S.Ct. at 1520 (citing Cooper Industries, 532 U.S. at 433, 121 S.Ct. 1678, and BMW, 517 U.S. at 562, 116 S.Ct. 1589). The question is not whether the jury “got it right” as to the necessary and/or appropriate level of punishment and/or deterrence per se. Discussions of whether the award sufficiently “got” Exxon’s attention or whether the costs of the cleanup of the oil spill were a sufficient deterrence have little place in the constitutional analysis. We engage in a judicial (as opposed to lay judgment) review of the fundamental fairness of the punitive damages award. We consider whether Exxon was fairly on “notice not only of the conduct that will subject [it] to punishment, but also of the severity of the penalty....” BMW, 517 U.S. at 574, 116 S.Ct. 1589. That analysis is a forward-looking inquiry from Exxon’s point of view prior to the grounding of the Exxon Valdez. The Supreme Court has not said this expressly, but the forward-looking nature of the inquiry is necessarily implicit in the concept of fair notice to Exxon, i.e., what Exxon should reasonably have perceived as the likely consequences of its conduct. It is because of this aspect of the inquiry that we are to look at not only actual harm but also potential harm which a defendant’s reckless conduct could foreseeably have caused. TXO, 509 U.S. at 460,113 S.Ct. 2711. The fair notice inquiry requires that the court first look at the quality of Exxon’s conduct. Any reasonable person will understand that the more heinous his conduct, the more severe the punishment will be. Next, we look at the harm which a reasonable person would anticipate likely to flow from his conduct. This includes potential harm because a reasonable person analyzing the consequences of his conduct would naturally look to not only what is sure to happen but also to what could possibly happen. Finally, we look at other sanctions that can be imposed because the maxima in these regards are the very kind of thing that a reasonable person would think about if he were evaluating the possible consequences of his conduct. In sum, the question before us is whether, under the circumstances of this case, an award of $5 billion in punitive damages is grossly excessive and therefore violates due process. To answer that question, the court’s inquiry is two-fold: (1) the court must identify the state interests that the $5 billion punitive damages award was designed to serve, and (2) the court must apply the BMW guideposts in light of State Farm. Punishable Interests In BMW, the Court instructed that “the federal excessiveness inquiry appropriately begins with an identification of the state interests that a punitive award is designed to serve.” BMW, 517 U.S. at 568, 116 S.Ct. 1589. Without saying so expressly, State Farm suggests that this is still the first step in the due process evaluation of a punitive damages award. State Farm, 123 S.Ct. at 1519-20. In both BMW and State Farm, the plaintiffs were endeavoring to achieve national punishment and deterrence. In BMW, for reasons explained, the Supreme Court held that Alabama’s interests, not those of the entire nation, were the proper scope of deterrence and punishment. BMW, 517 U.S. at 573-74, 116 S.Ct. 1589. In State Farm, the Court reiterated that punitive damages are not to be used to punish and deter a defendant for conduct that happened in another jurisdiction, particularly if the conduct is legal in the jurisdiction in which it occurred. State Farm, 123 S.Ct. at 1522-23. Most of the courts considering the constitutionality of punitive damages awards have ignored this first step in the analysis. In In re Exxon Valdez, the Ninth Circuit Court did not expressly discuss the scope of interests which plaintiffs seek to vindicate. That it would not have done so probably flows directly from the circumstances of this case. The plaintiffs’ claims for punitive damages expressly excluded consideration of harm to the environment. These claims were pursued and vindicated by consent decrees in favor of the State of Alaska and the United States Government in other proceedings. Here, the plaintiffs’ focus has always been upon what happened in Prince William Sound, Lower Cook Inlet, and the environs of Kodiak Island. While brought under both state and federal law, the focus of plaintiffs’ complaints have always had to do with harm to Alaska fisheries, Alaska businesses, Alaska property (both real and personal), and, to the extent that potential claims have been involved, they too have Alaskan roots. No one has contended that Exxon should be deterred or that it should be punished for conduct not having a direct nexus with the grounding of the Exxon Valdez on Bligh Reef in Prince William Sound. Before moving on, and as a part of the first phase of the constitutional analysis, further comment about the court’s instructions on punitive damages may be in order. The Supreme Court’s punitive damages jurisprudence has consistently emphasized the role of adequate jury instructions in ensuring punitive damage awards that comport with due process. As discussed above, in State Farm, the Supreme Court reiterated its concern about quasi-criminal awards being made without the protections applicable to criminal cases and without adequate instructions that properly limit the jury’s discretion. State Farm, 123 S.Ct. at 1520. Here, given the jurisprudential changes which took place between the time this court first evaluated the $5 billion punitive damages award and the Ninth Circuit Court’s review of the same, there could have been an absence of appropriate instructions to the jury or inadequate instructions as to how punitive damages should be determined by the jury. As discussed above, Exxon had its opportunity for input to those instructions, its opportunity to challenge those instructions, and we all have the results of that inquiry before us at the present time. The court’s substantive jury instructions as to the determination of punitive damages were unchallenged. Nevertheless, given the nature of the present inquiry, it strikes the court as important to know and be mindful in understanding the second phase of the constitutional analysis (the guideposts) that the trial jury in this case was working with the very same concepts embodied within the BMW guideposts as set out above. The jury was instructed on the purpose of punitive damages: punishment and deterrence. The jury was admonished not to be arbitrary: punitive damages must have a rational basis in the record and bear a reasonable relationship to harm done or likely to result from the defendant’s conduct. The jury was also instructed on the subjects of reprehensible conduct and consideration of mitigation (as by voluntary payments) and some comparison to other available sanctions. Without proper instructions, jury verdicts are patently suspect. Here, we know that the trial jury, in making an award of $5 billion for punitive damages, was seeking to vindicate — through punishment and deterrence — the appropriate, Alaska-oriented plaintiff interests, and not other interests such as environmental concerns which had been separately dealt with and which the jury was expressly told not to consider. In short, this is not a situation where the jury awarded $5 billion in punitive damages based upon one script, with this court second-guessing the jury’s work using a different script. Finally, this court was concerned before trial about the risk of multiple punitive damages awards based upon the same incident. Even when punitive damages awards are limited to matters in which there is a proper Alaska interest, they could be arbitrarily cumulative and in sum grossly excessive. Here, Exxon was exposed to a multiplicity of claims, most but not all of which were pending in this court. But for the creation of a mandatory punitive damages class, Exxon was exposed to the risk of multiple punitive damages awards flowing from the same incident. Where multiple suits for punitive damages have been brought in a single jurisdiction, it strikes this court that there is a very real risk that two punitive damages awards in different courts, but based upon the same incident, could result in a doubling up on deterrence and punishment. How this concern should be managed under BMW and State Farm is not clear. What is clear is that the risk does not exist in this case. Because of the mandatory punitive damages class, the court can say with confidence that Exxon has not been exposed to grossly excessive deterrence or punishment because of multiple suits for punitive damages based upon the same harm or course of conduct. It follows that the whole of what is constitutionally foreseeable for purposes of due process is fairly put to the BMW test of whether $5 billion in punitive damages was or was not grossly excessive. In consideration of the foregoing, this court concludes that the plaintiffs in making their claims, this court in instructing the jury, and the jury in awarding punitive damages, were all focused upon the appropriate, relevant Alaska interests for which deterrence and punishment through punitive damages is permissible. Application of BMW Guideposts Reprehensibility. In BMW, the Court stated that “[pjerhaps the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct.” BMW, 517 U.S. at 575, 116 S.Ct. 1589 (emphasis added). In State Farm, the Court unequivocally stated that the reprehensibility of the defendant’s conduct is “ ‘[t]he most important indicium of the reasonableness of a punitive damages awardState Farm, 123 S.Ct. at 1521 (quoting BMW, 517 U.S. at 575, 116 S.Ct. 1589). In determining whether a defendant’s conduct is reprehensible, the court considers whether: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. Id. “The existence of any one of these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and the absence of all of them renders any award suspect.” Id. In BMW, BMW’s conduct was found to be not very reprehensible. Dr. Gore suffered only economic harm; BMW did not show indifference to the health and safety of others; BMW’s conduct was not criminal; and although BMW suppressed a material fact, there were no deliberate false statements made. Dr. Gore argued that BMW’s conduct was highly reprehensible because it was part of a nationwide pattern of conduct, thereby making BMW a recidivist. BMW, 517 U.S. at 577-79, 116 S.Ct. 1589. The Court recognized that a recidivist is usually punished more severely than a first offender, but noted that in some states, BMW’s conduct would not have violated state disclosure laws and that BMW had a good faith belief that its conduct would not be considered fraudulent. In State Farm, the Court again found the defendant’s conduct not very reprehensible, once extra-territorial (non-Utah) factors were set aside. State Farm had altered company records to make Campbell look less culpable, disregarded the overwhelming evidence of liability and almost certainty of an excess judgment at trial, and first assured the Campbells that their personal assets were safe but after judgment told them to put a for-sale sign on their house. The Campbells, like Dr. Gore, argued that State Farm’s conduct was reprehensible based on its nationwide business practices. The Supreme Court reiterated that “[a] State cannot punish a defendant for conduct that may have been lawful where it occurred.” State Farm, 123 S.Ct. at 1522. The Court also emphasized that a defendant should not be punished for out-of-state conduct that is unrelated to the harm suffered by the plaintiffs. Id. at 1523. In short, the Court concluded that “[t]he reprehensibility guidepost does not permit courts to expand the scope of the case so that a defendant may be punished for any malfeasance, which in this case extended for a 20-year period.” Id. at 1524. The reprehensibility of a party’s conduct, like truth and beauty, is subjective. One’s view of the quality of an actor’s conduct is the result of complex value judgments. The evaluation of a victim will vary considerably from that of a person not affected by an incident. Courts employ disinterested, unaffected lay jurors in the first instance to appraise the reprehensibility of a defendant’s conduct. Here, the jury heard about what Exxon knew, and what its officers did and what they failed to do. Knowing what Exxon knew and did through its officers, the jury concluded that Exxon’s conduct was highly reprehensible. As part of the constitutional analysis, the court must also determine the reprehensibility of Exxon’s conduct, and it does so by applying the factors set forth in State Farm. These factors are objective criteria which the court employs to evaluate the jury’s subjective appraisal of the quality of a defendant’s conduct. With due deference to the jury process, verdicts should not be upset unless the jury result is “grossly excessive” in light of the objective evaluation of a defendant’s conduct and therefore, constitutionally impermissible. BMW, 517 U.S. at 574, 116 S.Ct. 1589; State Farm, 123 S.Ct. at 1519-20. In evaluating the reprehensibility of a defendant’s conduct, the court may not consider extra-territorial conduct that has no nexus to the harm suffered by plaintiffs. State Farm, 123 S.Ct. at 1523. However, the Supreme Court stated in State Farm that even “[l]awful out-of-state conduct may be probative when it demonstrates the deliberateness and culpability of the defendant’s action in the State where it is tortious, but that conduct must have a nexus to the specific harm suffered by the plaintiff.” Id. at 1522. Here, the court views not only the actual grounding of the Exxon Valdez as relevant conduct but also Exxon’s conduct in the years prior to the grounding that resulted in Exxon giving the keys to a supertanker to a relapsed alcoholic on the evening of March 23, 1989. Exxon’s pre-grounding conduct by and large took place outside Alaska. Exxon could have removed Captain Hazel-wood from his command on the Exxon Valdez based upon knowledge of his relapse into alcoholism. It chose not to do so with tragic consequences. The nexus between the out-of-state conduct of Exxon and the grounding and harm to plaintiffs is clear and convincing. The court turns now to the State Farm reprehensibility factors. Type of Harm. In determining reprehensibility, the court considers whether the defendant’s conduct caused physical harm or only economic harm to the plaintiffs. In both BMW and State Farm, the defendants’ conduct caused only economic harm. Conduct that results in physical harm is considered more reprehensible than conduct that results in only economic harm. Swinton v. Potomac Corp., 270 F.3d 794, 818 (9th Cir.2001). Exxon’s conduct did not cause only economic harm. The court of appeals has aptly observed on Exxon’s earlier appeal that “The huge oil spill obviously caused harm beyond the ‘purely economic’ ”. In re Exxon Valdez, 270 F.3d at 1242. The social fabric of Prince William Sound and Lower Cook Inlet was torn apart. “[R]e-search on the community impacts of the Exxon Valdez Oil Spill clearly delineate a chronic pattern of economic loss, social conflict, cultural disruption and psychological stress.” Communities affected by the spill “reported increased incidences of alcohol and drug abuse, domestic violence, mental health problems, and occupation related problems.” Also, several studies found that a high percentage of affected fishermen suffered from severe depression, post-traumatic stress disorder, generalized anxiety disorder, or a combination of all three. The spilling of 11 million gallons of crude oil into Prince William Sound and Lower Cook Inlet disrupted the lives (and livelihood) of thousands of claimants and them families for years. The foregoing shows that the harm that the plaintiffs suffered as a result of Exxon’s conduct was much more egregious than the pure economic harm suffered by Dr. Gore whose only harm was that his new car was worth slightly less, or the economic risk and attendant emotional distress to which the Campbells were subject for eighteen months. Moreover, Dr. Gore and the Campbells each chose to deal with their defendant. Here, Exxon unilaterally intruded into the lives of the plaintiffs with no transactional foundation. Reckless disregard to the health and safety of others. Exxon’s and Captain Ha-zelwood’s conduct was determined by the jury to have been reckless and its verdict as to liability for punitive damages has already been affirmed. In evaluating the reprehensibility guidepost, the court of appeals observes that the spill “did not kill anyone.” In re Exxon Valdez, 270 F.3d at 1242-43. That statement is true based upon the record of this case; but we are engaged in a due process inquiry evaluating what Exxon was fairly on notice of prior to the plaintiffs’ losses. It is a well-known fact that drunk drivers kill people with alarming frequency. Exxon’s decision to leave Captain Hazelwood in command of the Exxon Valdez not only showed, a reckless disregard for the health and safety of those who lived and worked on the Sound, but also recklessly put the captain himself, his crew, and all of his rescuers in harm’s way. After its grounding, the Exxon Valdez was sitting in a pool of oil. Rescuers had to enter that pool of oil. Careless cigarette smoking, or an electrical failure on the grounded vessel, or so simple and predictable an occurrence as an electro-static discharge when hoses are being connected or disconnected to a vessel might have ignited the crude oil and incinerated everyone in the vicinity. Finally, Captain Hazelwood, for whom Exxon is responsible, did not just ground the Exxon Valdez. Perhaps because of judgment impaired by alcohol, but in the face of knowledge that the vessel had been holed and was rapidly losing crude oil into Prince William Sound, he endeavored to maneuver the vessel. The record reflects that this was a dangerous undertaking, one which might have taken a vessel from a point of more or less stability into a posture where a great deal more oil might have been spilled. Indeed, the vessel might have foundered., Exxon’s conduct showed great disregard for the health and safety of others (including Exxon employees) and appreciably aggravates Exxon’s conduct. Financially vulnerable targets. The plaintiffs, plus anyone else who lived and worked on Prince William Sound, were the foreseeable “victims” of Exxon’s decision to leave a relapsed alcoholic at the helm of a supertanker carrying a toxic cargo. While the commercial fishermen may not have been financially vulnerable targets, the subsistence fishermen certainly were. Although Exxon’s claims program mitigated the impact that its conduct had on financially vulnerable targets, Exxon cannot escape the fact that it knew that it was allowing a relapsed alcoholic to operate a fully-loaded, crude oil tanker in and out of Prince William Sound, a body of water which Exxon knew to be highly valuable for its fishery resources, resources which Exxon knew, or should have known, were relied on by subsistence fishermen. Repeated actions or an isolated incident. BMW and State Farm recognized that a recidivist may be punished more