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Business Litigation

LA Supreme Court Overrules 3rd Circuit’s Use of Texas Punitive Damages

In Arabie v. Citgo Petroleum Corp., 10-2605 (La. 3/13/12), 89 So. 3d 307, the Louisiana Supreme Court overruled the Third Circuit Court of Appeal’s application of Texas law to award Texas punitive damages.  The case involved an oil spill that occurred at a Citgo refinery in Louisiana caused by a tank overflow during severe weather.  

Under Louisiana’s law of conflicts, the only way Texas or Oklahoma law could apply to allow for punitive damages would be if both Citgo’s domicile and the place of injury were in one of those states.  Because the court determined that Citgo was domiciled in Louisiana, the accident occurred in Louisiana, and neither Texas nor Oklahoma’s public policy would be violated by applying Louisiana law, Louisiana law should apply.  

Under Louisiana law, punitive damages are only available when expressly allowed by the legislature, and there is no provision allowing for punitive damages for exposure to hazardous chemicals.  Thus, the court overruled the Third Circuit and decreased the plaintiffs’ awards to take away the punitive damages awarded.  This decision has primarily been seen as positive for the business community, reigning in the judicial activism of the courts and protecting businesses from expansive punitive damage awards not allowed by Louisiana law.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.