The U.S. Justice Department's decision to open a criminal investigation into the Gulf Coast oil spill is threatening to complicate scores of lawsuits brought by people seeking compensation for the disaster.
At issue are questions that often come up in so-called "parallel proceedings" -- in which multiple government agencies are investigating the same event for possible wrongdoing. Different divisions of the Justice and Interior Departments are looking into the oil spill, searching for civil and criminal liability. And in this situation, said lawyers with experience in environmental investigations, the existence of the private lawsuits adds another layer of difficulty.
For the companies responsible for the spill, there is now less incentive to cooperate in the civil suits, for fear that any statements could later be used against them in a criminal case. For the plaintiffs lawyers, the criminal inquiry is more of a mixed bag. They said they fear less cooperation from defendants, but they also held out hope for access to additional evidence if prosecutors make new information public in court. A guilty plea from a criminal defendant could bolster their cases, but an acquittal could hurt.
Daniel Becnel Jr., a Reserve, La., plaintiffs lawyer who has taken a leading role in the civil lawsuits, said he thinks the criminal investigation could hold back his clients.
"Criminal investigations -- no matter what it is -- always take years before they're over, and guess what it does to the civil cases?" said Becnel, name partner at the Becnel Law Firm. He worries that some potential witnesses will invoke their Fifth Amendment right against self-incrimination. "If I want to take a deposition, and someone says, 'I'm under investigation by the DOJ. I can take the Fifth,' there's nothing I can do about it. ... You've got to wait until that criminal case is over before you can force them to testify."
Jere Beasley of Beasley, Allen, Crow, Methvin, Portis & Miles in Montgomery, Ala., also said he worries that key executives could refuse to be deposed. His firm has filed three proposed class actions related to the oil spill.
Companies that have been named as defendants in the civil suits -- including BP PLC, Halliburton Co. and Transocean Ltd. -- do not appear to have filed any motions to stop the lawsuits or to limit civil discovery on the basis of the criminal investigation. They either declined to comment or did not respond to questions about whether they plan to do so. But others said it's likely they will. "It is predictable that the defense will ask for the civil cases to be held in abeyance," said Oliver Houck, a Tulane University Law School professor who specializes in environmental law.
"If I were defending any of the companies involved here, I might be concerned about some of the civil discovery," said Roger Marzulla, name partner at Marzulla Law in Washington and a former assistant attorney general in charge of the Justice Department's Environment and Natural Resources Division. "BP's lawyers have to be telling their people that this is a potential liability problem."
THE IMMUNITY QUESTION
A possible solution for prosecutors is to grant immunity to a select number of individuals or companies -- notifying them that they are likely to be witnesses but that they will not be targets of the criminal investigation. A former Justice Department lawyer, who declined to be named because of client confidentiality, said there is precedent for the government to do so in writing in parallel proceedings such as this. Those witnesses would then be free to cooperate in the criminal investigation, civil enforcement actions and private litigation.
Justice Department spokesman Andrew Ames declined to comment on how the criminal investigation would affect private civil claims. Ames noted that on June 1 the department filed a motion in U.S. District Court for the Southern District of Texas opposing an attempt by Transocean to limit its courtroom liability to $26.7 million -- a motion that was favorable to plaintiffs. It was the same day that Attorney General Eric Holder Jr. announced the department's criminal investigation.
The Oil Pollution Act of 1990 caps oil spill damages at $75 million unless the plaintiff can prove gross negligence, willful misconduct, or a violation of federal construction or operating requirements. White House officials and congressional Democrats are hoping to raise that cap to $10 billion or eliminate it altogether. The Oil Pollution Act also requires that claims alleging property damage, environmental damage or loss of livelihood -- although not personal injury claims -- be filed first with the responsible party. In this case, that is BP. The plaintiffs must then wait 90 days before filing suit.
In an extreme example of the potential twists in parallel proceedings, prosecutors from the Justice Department recently subpoenaed several U.S. law firms for documents from foreign manufacturers of LCD screens. Prosecutors want the documents for a price-fixing investigation into Toshiba Corp. and others, but the law firms have the documents only because of civil litigation on the issue. A federal judge quashed the subpoenas, but the Justice Department is appealing to the 9th U.S. Circuit Court of Appeals.
In the Justice Department's criminal investigation of the oil spill, the 40-lawyer environmental crimes section, led by chief Stacey Mitchell, is working with U.S. Attorneys along the Gulf Coast. Mitchell, a career department lawyer, has been in the section since 1998 and tried Clean Air Act cases in New Jersey and the Virgin Islands, according to her department biography. She was an assistant district attorney in New York City from 1994 to 1998, and she got her law degree at Tulane.
Lawyers from the department's Civil Division have also been on the Gulf Coast, and Marzulla, the former assistant attorney general, said the department will likely share information with investigators from the Environmental Protection Agency and the Interior Department. "The environmental crimes section works closely with all the investigatory agencies," Marzulla said.
Ronald Sarachan, who was chief of the environmental crimes section from 1994 to 1997, said investigations of environmental crimes aren't too different from those of white-collar crimes. "Generally, the investigators are using the same sort of tools to determine what occurred and what was people's mental state when actions were taken," he said. That could result, for example, in charges of making false statements -- a crime not at all unique to environmental law.
But having multiple investigations creates other problems for defense lawyers, said Sarachan, who is chair of the white-collar and investigations practice at Ballard Spahr in Philadelphia. For example, ensuring a company provides the same information to prosecutors, civil enforcement officials and plaintiffs. "The government is asking for information very quickly; it takes a lot of resources to put that together and you don't want to be in the position of having missed something," Sarachan said.
WATCHING AND PLANNING
Some plaintiffs lawyers said they hold out hope that the criminal investigation could end up helping their clients. "Anything that they uncover could be used in our cases ... and I think the government could use its subpoena power to find out things probably faster than we can," said Baron & Budd shareholder Scott Summy, whose Dallas firm has eight oil-spill lawsuits. He added that plaintiffs lawyers will get around the liability cap if the government can prove gross negligence by industry defendants. And, he said, a criminal case could have benefits that are more subtle. "That could also have a bearing on what judges think, what the public thinks -- that could help mold public opinion," Summy said.
New Orleans plaintiffs' lawyer Camilo Salas III said he will watch the criminal inquiry for details on industry employees interacting with regulators in order to obtain drilling permits. The Interior Department's inspector general has described "culture of accepting gifts from oil and gas companies" among employees of the Minerals Management Service.
But Salas, who has five spill cases, said there's already evidence BP misrepresented its plans in government filings, including whether it could handle a worst-case-scenario spill. "In one of the certifications, they said the fish could swim away -- that the fish could recognize oil and they would swim away," he said, adding, "A lot of facts are out there already."
SPREADING FAST: A TIMELINE OF THE LITIGATION OVER THE GULF OF MEXICO OIL SPILL
For more coverage, see The National Law Journal's Gulf Spill Scorecard.