Everything about the impending trial over the Deepwater Horizon oil spill is big — the potential damages, the range of legal issues, the thousands of exhibits, the cast of lawyers. U.S. District Judge Carl Barbier in New Orleans has made it clear that he intends to prevent the case from getting too big.
As the Feb. 27 trial date neared, Barbier issued a series of orders tightening the scope of the first of what was expected to be three trial phases to a single question: Who is liable for the April 20, 2010, explosion that killed 11 workers and blew a well that spewed 4.4 million barrels of oil and 200,000 tons of methane gas into the Gulf of Mexico? (Scroll down for a litigation timeline.)
“He wants a compact trial,” said Edward Sherman, a professor at Tulane University Law School who is following the litigation. “This trial — if he covers all the issues that are potential for limitation proceedings — could be half a year. He’s decided he’s not going to do that.”
The first phase is expected to last through May, with potentially thousands of exhibits and dozens of high-profile witnesses. BP PLC and six co-defendants are pointing the finger at each other, while thousands of fishermen, hoteliers and other business owners, two states and the U.S. government pursue negligence claims. Two subsequent phases will address issues related to controlling and quantifying the spread of oil, and all other liability issues, including failure to contain the oil.
Barbier has specified the exact number of minutes each party will be allowed for opening statements — nearly seven hours in total, and all on the first day of trial. He’s ordered two additional trial tables to accommodate all the lawyers and has dedicated a number of seats and two overflow rooms for the press. “My guess is, the first day there’ll be overflow audiences,” Sherman said. Trial days will last from 8 a.m. to 6 p.m., Monday through Thursday.
Other than BP, the defendants are Transocean Ltd., which owned the rig but had leased it to BP; Halliburton Energy Services Inc., which cemented the rig; Cameron International Corp., which manufactured the blowout-prevention device; M-I LLC, which provided drilling fluids; and Anadarko Petroleum Co. and Moex Corp., co-owners of the well. (The case narrowed somewhat on Feb. 17, when Moex settled with the federal government and five states for $90 million, although the company still faces claims by other plaintiffs.)
Other than BP, the defendants are Transocean Ltd., which owned the rig but had leased it to BP; Halliburton Energy Services Inc., which cemented the rig; Cameron International Corp., which manufactured the blowout-prevention device; M-I LLC, which provided drilling fluids; and Anadarko Petroleum Co. and Moex Corp., co-owners of the well. Their attorneys declined to comment.
Absent will be Weatherford International Ltd., which supplied the float collar used on the well. Barbier dismissed the company on Feb. 10, ruling that the device was not defective or a cause of the blowout.
LIMITING THE SCOPE
The Weatherford ruling, and earlier decisions limiting the scope of the evidence, signaled Barbier’s reluctance to consider outside information about the disaster, said Blaine LeCesne, associate professor at Loyola University New Orleans School of Law, who is following the case.
“In other words, he’s not going to be influenced by any out-of-court investigative findings that have been published prior to the start of the trial, but will rule solely on the facts of the record before him,” LeCesne said. Some inquiries concluded that Weatherford’s flow collar was indeed defective and contributed to the explosion, he said.
In a similar vein, Barbier on Feb. 9 granted BP’s motion to exclude evidence of prior accidents, including the 2005 explosion at its refinery in Texas City, Texas, that killed 15 people; the 2006 rupture of a pipeline in Prudhoe Bay, Alaska; and a series of accidents at a BP facility in Scotland in 2000. “The plaintiffs’ attorneys had a whole mountain of evidence to indicate bad behavior in the past, and so the judge ruled it out,” Sherman said. “He didn’t want it to become the showpiece of the trial.”
Additionally, Barbier excluded congressional testimony by former BP Chief Executive Officer Tony Hayward; U.S. government findings about the cause of the Texas City explosion; and the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling’s report.
Barbier’s ruling made sense, LeCesne said — particularly given that no jury would be hearing the case. “That would be a protracted, prolonged debate that would obviously distract the court from the merits of the case,” he said. “Rather than get bogged down at this early juncture, he’s putting it on the side.”
The excluded evidence could weigh heavily during the trial’s subsequent phases, however, when damages — particularly punitive damages — become the focus. Barbier specifically ruled that such evidence could be relevant then.
One big setback for BP was Barbier’s rulings on the indemnity provisions of Halliburton’s and Transocean’s drilling contracts. He found on Jan. 26 that Transocean was immune from compensatory damages arising out of negligence but still might face punitive damages. He issued a similar ruling for Halliburton on Jan. 31.
“That’s a huge win for Transocean and Halliburton,” LeCesne said. If Halliburton and Transocean are each found, say, 10 percent at fault for the oil rig explosion, BP would have to cover any compensatory damages assessed against them, he said.
Some defendants have already settled their indemnity disputes. Anadarko, for instance, agreed to pay $4 billion to resolve spill-related claims. The company remains a defendant, but the deal ensures against the potential for a damages verdict large enough to put it out of business, LeCesne said. Cameron, Moex and Weatherford reached similar deals. “For companies, especially Anadarko, much smaller than BP, that could have been huge, and maybe a financially fatal judgment,” he said.
Barbier stopped short of prohibiting evidence of the settlements, saying that he would rule when and if a party attempts to introduce that information.
The first individuals to take the witness stand are expected to be H. Lamar McKay, chairman and president of BP America Inc., and Mark Bly, BP PLC’s executive vice president for safety and operational risk, according to a Jan. 24 court document filed by the plaintiffs’ steering committee.
“It’s very unusual to start your case with a leading representative of the other side,” LeCesne said. The idea might be to establish a “top-down policy” of decisions that contributed to the explosion, he said.
In a flurry of motions, BP has attempted to exclude certain testimony. Regarding Hayward’s testimony, for example, the company cited unfair questioning during his videotaped deposition. Another key potential witness is Donald Vidrine, BP’s Deepwater Horizon site leader; he has refused to testify for medical reasons. Transocean served a subpoena at his Lafayette, La., home on Feb. 6, seeking his testimony or, at the very least, that of his doctor.
“He possesses critical information regarding the negative pressure test and the BP operations and decisions made in the final hours before the incident,” wrote Steven Roberts of Sutherland Asbill & Brennan, Transocean’s attorney.
On Feb. 15, Barbier ordered a court-appointed physician to examine Vidrine.
In another battle, Jesse Gagliano, Halliburton’s cement tester on the rig, invoked the Fifth Amendment in May but waived it in January and agreed to testify. In a Feb. 10 order, Barbier rejected BP’s effort to exclude Gagliano’s testimony; BP had argued that his last-minute switch gave Halliburton a “strategic advantage.”
“Jesse Gagliano is a key witness in the case because he will testify about what BP knew about the instability of the cement slurry used in the well,” LeCesne said. “There were certain test data run prior to using it that suggested it was unstable and unsuitable for use. The question is, did BP have that information prior to using the cement mixture?”
BP has moved to require Steven Newman, Transocean’s president and chief executive officer, to testify. Transocean has fought that move. On Feb. 14, Barbier sided with Transocean.
Sources familiar with the case have indicated that the parties intend to go to trial but are open to a reasonable settlement. LeCesne doubted that BP would settle with the fishermen, hoteliers and other business owners who suffered economic losses. “I’ve always said, unless BP is ready to write a $40 billion check…this isn’t going to settle,” he said.
More likely, in his view, is that the U.S. Justice Department will want to settle its claims — a point underscored by the Moex settlement. Such a deal could run as high as $20 billion, based on estimated civil penalties.
“These cases take a lot of resources,” LeCesne said. “They may rather be done with it and move on to other things, and not allocate this huge segment of the Justice Department to prosecute these claims.”
Amanda Bronstad can be contacted at email@example.com.