In 1994, it was the biggest punitive damages judgment in history: $5.3 billion that an Alaskan federal jury awarded to fishermen and others whose livelihoods had been devastated by the Exxon Valdez oil tanker spill.
Three years later, as Exxon waged its appeal, a new line of research began to appear in several respected academic journals and Ivy League law reviews. Some articles challenged the competence of juries to fairly set punitive damages. Others suggested that such awards are ultimately bad for society.
Exxon cited several of the articles in the appeal. What it did not say in court filings is that it had funded the research.
Companies frequently contract with professors to testify as expert witnesses in court, but Exxon went a step further. It hired at least nine esteemed psychologists, economists and law and business school faculty members, giving them research funding that most social scientists can only dream about.
Now, the 13 papers they published -- several of them rewritten and reissued in a book that came out last year -- are popping up in legal arguments in other punitive damages cases cited both by companies defending themselves and by judges issuing opinions. And they are ruffling the feathers of competing professors who dispute their conclusions and complain about the difficulty of raising money for independent research.
The social sciences have long been seen as low-stakes disciplines, free from the funding controversies that have roiled the harder sciences. But with public money for social science research waning, universities have not stood between professors and the corporations willing to fund their work. Such arrangements have raised ethical debates over whether academic researchers are becoming hired guns for industry.
"It is very troublesome that work published as scholarship ... is being vetted by lawyers" for Exxon, said Richard Lempert, a law professor at the University of Michigan and a leading critic of the Exxon-sponsored studies.
"It was designed to serve Exxon. It was not done because they wanted to know how juries behaved."
Tom Cirigliano, a spokesman for Exxon Mobil Corp. (formed in a 1999 merger), said a better understanding of punitive damages not only helps his employer -- which he described as "the target of a number of suits that are just a matter of a trial attorney going after a company with deep pockets" -- but also benefits "everyone else in this country."
He said the company had not exerted any control over the conclusions of the studies.
But the research that was ultimately published served Exxon's interests.
Punitive damages have been big news since the early 1990s. Some cases that attracted attention seemed to spoof the U.S. legal system -- among them the $2.7 million that a court ordered McDonald's to pay a customer who had spilled hot coffee on herself (the award was ultimately reduced).
Others, such as massive damage awards against tobacco companies, affect many more people.
Earlier this month, an Alabama jury ruled that Exxon Mobil had cheated the state out of natural gas royalties and handed down a verdict that included $11.8 billion in punitive damages -- a judgment the company has vowed to appeal.
Although most punitive damage cases are mundane -- typically companies suing companies -- industry leaders live in fear of large awards and often campaign against them.
The Exxon research has provided them with ammunition.
The first use of the research in court came in the Exxon Valdez case itself. The accident dumped 11 million gallons of crude oil into Prince William Sound on March 24, 1989, and devastated the local fishing industry.
In its appeal of the $5.3-billion verdict to the U.S. 9th Circuit Court of Appeals in San Francisco, Exxon -- as well as industry groups -- cited several of the Exxon-sponsored papers. With no mention that it had funded the work, the company argued that "these articles present recent social science research demonstrating that jurors are generally incapable of performing the tasks the law assigns to them in punitive damage cases."
Plaintiffs' attorneys submitted a counter brief dismissing the studies as "junk social science."
Arguments ensued, stretching the appeal on and on.
In 2001, the 9th Circuit ruled in Exxon's favor. The justices returned the case to the judge in Alaska federal court with an order for reduction of the penalty. The judge complied, lowering the award to $4 billion, a figure that the company has continued to challenge in court.
The case remains unresolved, though the Exxon-funded research apparently is having an effect, at least indirectly.
In a separate U.S. Supreme Court case involving State Farm Insurance, leading corporations filed a brief that repeatedly cited Exxon-funded research. The plaintiffs, backed by 21 academics, countered with a lengthy attack on the studies.
In April, the high court, which has generally opposed large punitive damage awards, overturned a $145-million judgment against State Farm.
In light of that ruling, the 9th Circuit justices in February again returned the Exxon case to the lower court to consider whether the $4-billion award still held up legally.
Thus, Exxon-funded studies had been used in a separate case that now was coming back to help Exxon.
Judges have also used the research in their opinions. A search of legal databases turned up 10 cases since 1999 in which judges have invoked studies funded by Exxon.
"Random and freakish punitive awards have no place in federal court, and intellectual discipline should be maintained," a judge in Illinois wrote, citing one of the articles in 2002.
In New York in 2003, a judge cited two of the articles in ordering a new trial in a case in which Island Def Jam Music Group had been ordered to pay $132 million in punitive damages to TVT Records.
The Exxon-funded research became the backbone of "Punitive Damages: How Juries Decide," published last year by the University of Chicago Press. The authors conclude that juries are erratic and unpredictable in awarding punitive damages.
Calling the Exxon-funded book a "path-breaking multidisciplinary study," another judge invoked it in a discussion of a class-action suit against cigarette makers, but ultimately decided to let the case proceed.
"Individual articles don't make a difference," said Theodore Eisenberg, a Cornell law professor who has written extensively about the Exxon-funded work. "But when the same story is repeated over and over -- judges are part of society. Whatever shapes your beliefs will shape theirs."
The biggest public grants for mock jury studies -- in which juries composed of paid research subjects are presented with cases and observed while they make decisions -- come from the National Science Foundation and top out at $250,000, enough for a 3,000-person experiment.
The jury studies that Exxon funded used more than 8,000 subjects.
Exxon Mobil said in a written statement that the cost of its studies was a "confidential matter," but academics estimate the total bill at more than $1 million.
Such investments have some scholars worried that industry will set the research agenda.
Edith Greene, a psychology professor at the University of Colorado and coauthor of the book "Determining Damages: The Psychology of Jury Awards," published this year, suggested that some of the money Exxon had paid would have been better spent on other questions: What sorts of technology could help jurors in determining punitive damage awards? How do judges influence decision making?
"No corporate bottom line is hanging out there waiting for the answers to those questions," she said.
The Exxon-funded professors insisted that they had retained intellectual control, although they acknowledged that company officials had commented on drafts, charted progress and coordinated meetings. All the papers acknowledge Exxon funding.
"I want to be very clear here," said John Payne, a business school professor at Duke University. "We were the ones who decided what the design would be, what the questions would be, how it would be written up for the journals."
He and others noted that some of the published work had fallen short of Exxon's hopes. For example, he said, the company probably would have liked to demonstrate bias against out-of-town defendants, but the data did not support that.
Cass Sunstein at first refused to join the project when a group of Exxon officials visited the University of Chicago, where he is a law professor.
But he changed his mind after a fellow researcher, Daniel Kahneman, a Princeton psychology professor who went on to win a Nobel Prize in economics in 2002, persuaded him that they could remain independent.
Still, Sunstein refused to accept money other than travel expenses.
"I felt it was very important just for me personally to feel that the research was not affected by money, even though Exxon imposed no restrictions or strings, direct or indirect," he said.
The others refused to say how much they had earned.
"That is personal," said David Schkade, a business professor at the University of Texas at Austin.
"I don't keep tabs on that," said Kip Viscusi, a Harvard law professor, suggesting that some of the criticism stemmed from professional jealousy. "We can say we had complete freedom, and nobody believes us."
His work also used funding from Harvard Olin Center for Law, Economics and Business.
Another researcher, Reid Hastie, a University of Chicago psychology professor, combined Exxon funding with a $113,100 grant from the National Science Foundation.
About half of the work originally appeared in peer-reviewed journals, meaning that articles were sent with the authors' names blacked out to anonymous reviewers who advised editors on whether the work should be published.
Rich Wiener, editor of Law and Human Behavior, where three Exxon-funded articles were published, said those papers had undergone "exactly the same" review process as all others. Reviewers, who were informed of Exxon's involvement, approved the papers, "based on the quality of the research and the methodology, independent of any funding source," he said.
The articles are the only ones in his seven years as editor that were funded by a corporation, he said.
In at least one case, Exxon cut off funding for research that didn't match its interests.
In the summer of 1996, William Freudenburg, then a professor of sociology at the University of Wisconsin, received an offer from Exxon.
In return for $240 an hour, Freudenburg agreed to write an article about whether punitive awards actually deterred bad behavior and thus reduced risks to society. He signed a contract giving the company the rights to his work for one year.
According to Freudenburg, a company official told him that Exxon was specifically looking for articles that could be used in court to argue that "punitive awards don't make much sense."
Freudenburg presented a paper in August at the annual meeting of the American Sociological Assn. about his experience. Although he did not name Exxon or its representative in the article, he confirmed their identities in an interview with The Times.
Last month, the Exxon contact he identified, Terry Gardner, told The Times: "I am not authorized to speak about this project."
Gardner proved a valuable and friendly resource, suggesting articles to read and sending books he deemed useful, said Freudenburg, who kept Gardner abreast of his progress.
In late 1996, he sent Exxon a 19-page draft of a paper that he planned to submit to the journal Risk Analysis. It was not welcomed enthusiastically, Freudenburg said.
The draft argued, in part, that fears of punitive damage awards do not improve public safety, an argument that suited Exxon's appeal. But the thrust of the paper was that more openness in corporations is an important way to reduce the likelihood of environmental disasters.
That was a position Exxon did not want to support, Freudenburg said. The contract, which had netted Freudenburg "maybe $10,000," was terminated.
In its written statement, Exxon Mobil did not dispute Freudenburg's version of events.
But the statement said: "While Exxon Mobil had no interest in his paper, we at no time discouraged him from publishing it himself."
Now a professor at UC Santa Barbara, Freudenburg has yet to do so.
As for his experience with Exxon, he is philosophical. "They treated me very well. But that doesn't make it any better for society."Copyright © 2015, Los Angeles Times