Less than two years after the Deepwater Horizon rig exploded, killing 11 workers and pouring millions of gallons of oil into the Gulf of Mexico, more than 500 lawsuits have been filed against BP PLC and other defendants. Consolidated into one of the largest multidistrict litigation proceedings on record, the claims are moving toward trial at astonishing speed, considering their complexity.
During an Aug. 12 status hearing, U.S. District Judge Carl Barbier, who is overseeing the litigation against BP and other defendants, approved a rapid timetable for resolving the unwieldy assortment of claims for personal injuries, environmental violations and economic losses. “Again, lest anyone have any doubt about it, I fully intend that this trial will start as scheduled,” he said. The bench trial is set for Feb. 27, 2012.
Barbier has made some moves to manage the litigation. He ordered that certain claims and their related legal theories should be organized into pleading “bundles.” Since June, he has issued three orders on motions to dismiss all or a portion of some of those bundles.
So far, the swift pace has contrasted noticeably with the lengthy litigation that followed the 1989 Exxon Valdez spill, which finally concluded in June 2009. It represents an impressive speed for a multidistrict litigation, some of which don’t go to trial for several years.
“It’s fairly unprecedented in an MDL of this size — if there has ever been an MDL of this size — to have a trial date within less than two years of the event,” said Steve Herman of New Orleans-based Herman Herman Katz & Cotlar, co-lead counsel on the plaintiffs’ steering committee. “It’s the determination of the judge and the willingness of the parties to work together to try to resolve the case and not have it dither around like the Exxon Valdez case did.”
Barbier acknowledged as much during the August hearing. “I’m still pleasantly amazed at what you all have been able to do and accomplish,” he told the lawyers. “One year exactly since I was assigned to this case, I think we’ve all made good progress here.”
The BP MDL would certainly appear a beast. “This is 20 times bigger than the Exxon Valdez spill and it has impacted 10 times the number of plaintiffs or more,” said Gerry Nolting, a partner at Faegre & Benson in Minneapolis who was a lead member of the plaintiffs’ trial team in the Exxon Valdez case. “It is a much, much bigger case.”
In the Exxon Valdez case, which ultimately targeted a single defendant, the trial took place five years after the spill, he said. The BP case involves more than half a dozen defendants, all accused of bearing some responsibility for the catastrophe.
According to a survey of the docket by The National Law Journal, there were 511 cases in the MDL. The cases were brought originally in state courts and federal courts across the nation, mostly in Louisiana, Alabama, Texas and Florida. A few have settled or been dismissed. But the number has grown substantially since an original 77 were consolidated last year.
Outside the MDL, another 34 cases in various state courts across the county are pending against many of the same defendants. The first trial in the nation related to the Deepwater Horizon spill is scheduled for Oct. 17 in Galveston County, Texas, on allegations that a worker involved in cleaning up the spill became sick after inhaling natural gas following a docking accident.
Barbier said he would reach out to the judge in that case to “make sure that, hopefully, there’s nothing that will interfere with what we’re trying to accomplish in this case.”
Lawyers in the Texas case declined to comment.
There is a separate MDL in front of U.S. District Judge Keith Ellison in Houston involving lawsuits filed by BP shareholders who allege that company executives made false and misleading statements about safety procedures. BP has filed motions to dismiss those cases.
But most of the litigation, despite a wide scope of claims, is contained in the MDL before Barbier. In addition to the lawsuits, Barbier is overseeing more than 108,000 short-form joinders, BP lawyer Andrew Langan, a partner at Kirkland & Ellis. These are additional claims, one to two pages long, filed in an action in federal court in Houston that Transocean Ltd. brought under the U.S. Limitation of Liability Act of 1851. The limitation action is technically designed to limit the damages that Transocean ends up paying for the Deepwater Horizon explosion. But the move had the intended effect of bringing the other defendants, such as BP, into the case.
And Barbier’s decision to take over the limitation action, rather than allow it to be tried in Houston, expanded the number of claimants in the MDL from hundreds to thousands.
It’s Transocean’s limitation action that goes to trial next year. The outcome will determine to what extent each of the defendants is liable for the Deepwater Horizon explosion. “It is the limitation trial, but it has much broader implications,” Herman said.
Under Barbier’s plan, the trial would be split into three phases. The first would address issues arising from the explosion and the drilling rig’s sinking. The cases most affected during this phase will be those filed on behalf of workers who were injured or died when the rig exploded. This phase is expected to last several weeks.
“It’s going to involve a lot of process-safety issues about what happened, what broke down and what was never put into place in the BP management that allowed all these things go wrong,” Herman said.
After a break for an unspecified time, the second phase would address issues related to controlling and quantifying the spread of oil. This phase could have greater ramifications for BP and other plaintiffs because it will deal with liability for economic and environmental damage caused by the spread of the oil.
The third phase would address all other liability issues, including failure to contain the oil.
Discovery for the first phase is nearing completion. As of a Sept. 13 status report, 188 depositions had been taken, with more than 20 million pages of documents produced — an “incredibly intensive discovery period,” said BP lawyer Don Haycraft, a shareholder at New Orleans-based Liskow & Lewis.
Barbier has dismissed some of the claims. On June 16, he tossed a bundle of injunctive relief claims, concluding that the cleanup of the Gulf of Mexico rendered them moot. On July 15, he dismissed claims in another bundle brought under the U.S. Racketeer Influenced and Corrupt Organizations Act.
His most recent ruling, on Aug. 26, addressed arguably the largest of the bundles: the economic damages claims. Among the most contested issues was whether those plaintiffs could recover punitive damages. Barbier concluded that no punitive damages were allowed under the Oil Pollution Act of 1990, the federal law under which most plaintiffs have asserted claims. The law was passed in response to the Exxon Valdez disaster and provides economic damages of up to $75 million per defendant to all individuals and businesses harmed by an oil spill.
Barbier left open the possibility that plaintiffs could bring punitive damages under general maritime law.
The defendants had argued that the act had displaced punitive damages available under general maritime law. But they also cited established case law that limits who qualifies for punitive damages under general maritime law. Only plaintiffs with “physical touching from oil, or commercial fishermen, are entitled punitive damages under maritime law,” said one lawyer involved in the case, who agreed to speak anonymously. “That cuts out the vast majority of the economic-loss plaintiffs,” such as hotel owners and restaurants, the lawyer said.
Plaintiffs’ lawyers will challenge that argument. The entire purpose of the act, Herman said, was to expand the potential recoveries for plaintiffs in the Exxon Valdez case. “It would be perverse if you gave one end and took away with the other. That’s obviously a point of contention between the parties.”
Barbier ordered lawyers on both sides to submit briefing by Sept. 12 on the extent to which his ruling should apply to the other remaining bundles, such as claims associated with cleaning up the spill or cases brought by government entities.
The argument over punitive damages may be premature, since compensatory relief isn’t expected to be tried until 2013, at the earliest. That’s why Jeffrey Berniard, who serves on a subset of the plaintiffs’ steering committee in the MDL, wants to keep his clients out of court if possible. Berniard represents 50 services companies asserting claims for business lost after the Obama administration issued a six-month moratorium on deepwater oil drilling operations in the Gulf following the Deepwater Horizon spill. Most of them are negotiating for payments from the Gulf Coast Claims Facility, the $40 billion compensation fund that the Obama administration and BP set up, he said. According to the fund’s Aug. 23 annual report, it has doled out more than $5 billion to more than 200,000 claimants.
“I would think by the time we get into next year, we’ll come to an impasse,” said Berniard, of the Berniard Law Firm in New Orleans. “I know that once I file into the MDL, it’ll be a couple of years before they get some resolution. So I’m not in a rush to file them in there while I think there still might be, even if the slimmest of possibilities, a possibility to resolve them. I want to keep them alive.”
Amanda Bronstad can be contacted at firstname.lastname@example.org.
CHART: CLAIMS FILED IN BP LITIGATION
A list of 511 individual actions contained in the MDL arising from the Deepwater Horizon oil spill, presented in rough order of their filing dates.
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