BP Will Face ‘Thousands’ of Spill Cases, Judge Says

Thursday, 16 Sep 2010 08:03 PM

 

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(Updates with judge’s comment on possible first trial in ninth paragraph.)

Sept. 16 (Bloomberg) -- BP Plc and other companies will face “thousands” of lawsuits over the oil spill set off by the explosion of the Deepwater Horizon drilling rig in April, a judge with about 400 such cases in his court said.

U.S. District Judge Carl Barbier in New Orleans is overseeing oil-spill lawsuits already filed seeking damages for everything from loss of business revenue to environmental cleanup costs. Barbier began a hearing today to organize the cases over the largest offshore oil spill in U.S. history, saying he wasn’t sure how many have been moved to his court.

“There will be thousands of cases consolidated in this court,” he told about 150 lawyers crowded into his courtroom. “One of the tasks we have is to find a way to organize and structure this litigation.”

Another 50 attorneys were listening in a spillover room.

Lawyers for victims seeking billions of dollars asked Barbier in court filings to set test-case trials over the spill within a year. Defense lawyers asked the judge to delay the litigation while administrators of a claims fund sort out demands for compensation.

BP and other companies being sued over the April explosion ought to begin pretrial information exchanges next month, victims’ lawyers told Barbier in court filings.

“There is no reason to delay” getting cases prepared for 2011 trials, Stephen Herman, a lawyer for some of the victims, said yesterday in an e-mailed statement. “Justice delayed is justice denied.”

‘Premature’ Schedule

In its own filing, BP dismissed the victims’ push for early trials as “premature and overly ambitious.”

Barbier said he may set a trial for as early as October 2011 on a claim by Transocean Ltd., which owned the Deepwater Horizon rig, seeking to limit its liability. The company argues its financial liability for the spill should be capped at $26.7 million, citing a 159-year-old maritime law that limits a vessel-owner’s exposure to the value of its ship and cargo.

“It’s going to take a lot of hard work to get there,” Barbier said today of a Transocean trial. “But I think it’s doable.”

A group of lawyers representing rig workers who were injured or the families of those killed in the explosion sought a trial within six months on these claims. Barbier said this wasn’t realistic.

Barbier urged lawyers for victims and the defendants to try mediation to settle the cases. “I’m not naïve enough to think this case will be settled easily or quickly,” he said. “It’s never too early to consider settling.”

Largest Spill

Government scientists estimated the well has spewed more than 4 million barrels of oil into the Gulf of Mexico, making it the largest accidental maritime oil spill. The leak was about 16 times the estimated 257,000 barrels lost by the tanker Exxon Valdez in a 1989 accident in Alaska.

BP has set aside $32.2 billion to pay spill costs and legal claims. The London-based company, which is selling assets, is replacing Chief Executive Officer Tony Hayward with an American executive Oct. 1. The company reported a second-quarter record loss of $17.2 billion.

In a report this month, BP officials faulted their own engineers for the fatal blast at the company’s Macondo well and said contractors including Transocean and Halliburton Co. share the blame.

All three companies were sued by spill victims over the explosion. Cameron International Corp., which made the blowout preventer used on the rig, also has been named as a defendant.

Feinberg First

The companies are asking Barbier to require virtually all spill victims to have their economic-damage claims examined by administrator Kenneth Feinberg before they’re allowed to sue. BP is paying Feinberg to oversee the evaluation of claims outside court.

Requiring victims to first present their claims to the so- called Feinberg Fund, through which BP agreed to pay as much as $20 billion in damages, might delay litigation against BP for months while administrators sort out which claims qualify for payment, plaintiffs’ lawyers said in a Sept. 14 filing.

The companies “want to delay substantive progress for six to eight months to see what has occurred in the BP Claims Facility, and then, perhaps, commence the litigation,” Herman said in the filing. Plaintiffs “believe the parties should be moving toward trial.” Herman is co-liaison counsel for the plaintiffs in the MDL along with James P. Roy, a maritime lawyer from Lafayette, Louisiana.

Case Categories

To speed the handling of the cases, Herman and other victims’ lawyers want Barbier to divide the cases into four categories depending on the type of claim involved.

Families of workers killed or injured on the rig should have their cases heard separately, as should business owners damaged by the spill’s fallout, according to the filing.

Cases brought by state and local governments over natural resource restoration or lost tax revenue should be heard separately from claims of businesses and individuals, the filing said.

U.S. Justice Department lawyers also are asking Barbier to set up “a special track for governmental claims” as part of the consolidated litigation, according to a court filing.

“Although the U.S. has not yet filed a civil action related to the Deepwater Horizon oil spill, it has potential civil claims arising from the spill,” government lawyers said.

Suits spawned by the deaths and injuries of workers on the Deepwater Horizon rig, moored off the coast of Louisiana, deserve quick attention, said Kurt Arnold, a Houston lawyer representing some of the families.

Trial Setting Needed

“On the personal-injury and death claims, there’s not a lot of dispute because everybody knows who is liable,” Arnold said in a phone interview. “We need a trial-setting so there’s some incentive for the defendants to come to the table.”

If Barbier agrees to put cases into different categories, he must decide whether to have separate judges preside over them, Edward Sherman, a Tulane University law professor, said in an interview.

“It would be unusual to have a judge assigned to each litigation track, but it has been done before,” said Sherman, who teaches class-action and complex litigation at the New Orleans-based school.

It also might be difficult to find federal judges in Louisiana free of potential conflicts of interest, Sherman added.

Six Judges Out

Six of 12 active judges assigned to the federal judicial district based in New Orleans removed themselves from spill- damage lawsuits before Barbier was named to oversee them. The judges concluded they had conflicts tied to oil investments or personal relationships with lawyers or companies involved.

In June, Barbier said he sold his investment in companies linked to the disaster to avoid any appearance he might be biased. The U.S. Judicial Panel on Multidistrict Litigation, a committee of judges, selected him to oversee the consolidated BP cases last month.

The process is designed to streamline the exchange of evidence and avoid duplication. Once pretrial proceedings are completed, the individual cases are sent back for trial in the courts where they were first filed.

Spill victims’ lawyers asked the judge to schedule a trial in September 2011 for Transocean’s attempt to limit its liability.

Eight other suits should be test cases for initial trials, including four under the Oil Pollution Act, two under maritime law, one wrongful death claim and one personal-injury suit. Plaintiffs’ lawyers would determine which cases should serve as tests, they proposed.

The parties “should be moving toward trial of the limitation issue and a few test cases within a year,” Herman and Roy said in a Sept. 14 filing.

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 2:10-md-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

--With assistance from Laurel Brubaker Calkins in Houston, Joe Carroll in Chicago, Jim Polson in New York and Allen Johnson Jr. in New Orleans. Editors: Charles Carter, Glenn Holdcraft.

To contact the reporters on this story: Jef Feeley in New Orleans at jfeeley@bloomberg.net; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.

© Copyright 2014 Bloomberg News. All rights reserved.

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