Deepwater Horizon spill mega-lawsuit opens Monday in New Orleans

Publish date: February 24, 2012

Spill 4.9 million barrels of oil into the waters in the Gulf of Mexico and here’s what you get – what is heralded as the mother of all ecological lawsuits, the most complex environmental litigation in history, complete with hot-potato buck passing among the companies responsible for it who are facing tens of billions of dollars in liabilities, penalties and damages.

The long awaited case opens in a New Orleans Federal courtroom before Judge Carl Barbier Monday, February 27.

In short, it is the moment that BP, Transocean, Halliburton and others have feared most since the jointly operated Deepwater Horizon drilling rig suffered an explosion killing 11 and caused the worst accidental offshore oil blowout in US history on April 20, 2010.

What all the companies seek the most is to avoid a finding of “gross negligence,” which would make them liable for billions in damages on top of what BP has already paid in individual instances of compensation over the last two years.

And absent any eleventh-hour broad settlements for the some 130,000 plaintiffs – including the federal government –  the determination of how much BP Plc and others must cough up is scheduled to begin as planned.

“Do not let a lump sum settlement cover up the lies of the oil industry – let the blame game go one,” said Bellona President Frederic Hauge, who was present on the Gulf coast for the 2010 disaster. “We can all learn a lot from the blame game that the oil industry will play.”

Judge Barbier is overseeing 536 spill-related lawsuits, according to the US Judicial Panel on Multidistrict Litigation. President Bill Clinton appointed him to the bench in 1998.

BP seeks out-of-court settlement on ‘reasonable terms’

BP Chief Executive Robert Dudley, who succeeded the beleaguered Tony Hayward as the company’s helmsman on February 7th, said early in his tenure that the company was preparing for the court date, but ready to settle “if we can do so on fair and reasonable terms,” US press reports indicated.

Experts will also be watching whether the Justice Department will include a non-prosecution agreement with the companies as part of any potential civil settlement, closing a door on future criminal charges. BP could face penalties of about $17 billion under the US Clean Water Act if it is found guilty of gross negligence.

The Justice Department would not comment on Friday.

So far no offers are on the table, but legal observers have said that even if any do emerge, they will unlikely scuttle the beginning of the trial.  

“It’s hard to believe any kind of settlement will keep Judge Barbier for having to at least start this trial,” said Martin Davies, a law professor at New Orleans’ Tulane University and the director of its Maritime Law Center.

72 million pages of documents

So, after thousands of hours of legal deliberations, the non-jury lawsuit over the Deepwater Horizon oil blowout will encompass 72 million pages of documents, 20,000 exhibits and 303 depositions — the collective effort of 340 lawyers from 90 different firms working on the plaintiffs’ side alone, court officials said.

The plaintiffs span the gamut from angry fishermen, restaurateurs, condo owners who say their beach-side property is not worth what it once was, and gulf state governments. The trial phase alone could go on for nine months, court officials told Bellona late Friday evening.

Clean up workers complain of health difficulties

Clean-up crews have reported mysterious coughs and rashes. These symptoms are, according to Riki Ott, a marine toxicologist and author of “Sound Truth and Corporate Myth$: The Legacy of the Exxon Valdez Oil Spill,” consistent with the use of the oil dispersant Corexit, which was dumped by the ton on the oil spewing from the Macondo well in the Gulf.

Corexit, which is manufacture by the Illinois-based firm Nalco staffed largely by former BP and Exxon executives, is among those oil dispersants that are banned by the US Environmental Protection Agency (EPA). Official orders from the EPA to BP to cease its use during the spill, however, went unheeded.

Reports by Bellona from the site of the Deepwater Horizon accident indicated that BP’s use of the banned substance to contain the spill was staggering, and as little as four days after the well blowout, fishermen and rescue workers interviewed reported coughs, difficulty breathing, headaches, nausea and rashes after planes flying overhead had dumped the chemical on oiled waters.

The health impact on rescue workers made by Corexit may not be known for years. According to Ott’s book, dozens of rescue workers on the Exxon Valdez spill, where Corexit was also extensively used, died and continue to die of respiratory illnesses whose link to Corexit oil companies deny. Workers in the Gulf, predicted Ott, will face the same long degeneration of their health.

The full extent of damage to the Gulf ecosystem, to the tuna, dolphins and oysters that encountered hydrocarbons, and to the fragile wetlands where some of the oil washed up remains unclear.

The case plaintiffs are mounting

The amount currently being sought by plaintiffs’ lawyers is $40 billion in penalties and damages. BP has already paid out some $8 billion to thousands of spill victims, according to BP spokesman Daren Beaudo. It has also settled with families of most of the 11 men who were killed on the exploded rig.

The lawsuit goes by the formal title “In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010,” according to a spokesman for Judge Barbier reached Friday. 

And much like the disaster itself, the litigation is startling in its impact and scope: Beyond the billions of dollars at stake in fines and damages, it covers arcane matters of maritime law and Space Age details of deep-sea engineering, according to a Gulf based drilling engineer who spoke on the condition of anonymity with Bellona Friday evening.

There are a host of corporate defendants – chief among them oil giant BP, which was in charge of the drilling project, and Swiss company Transocean Ltd., the owner of the doomed rig — which have been fighting in court over who should shoulder how much of the blame for the disaster.

The legal haggling over witnesses and the order of their appearance has been a prominent feature in recent days.

First witness predicted to establish BP’s fault

According to reports in the Guardian, a very special role will be played by witness number one: Professor Robert Bea of the University of California, Berkeley. Bea has for the last 50 years investigated industrial accidents, and it will be incumbent on him to establish the case against BP.

Bea’s testimony, according to the Guardian, will immediately follow opening statements. Documents filed previously with the court had said BP executives would take the stand first – and BP fought hard to stave off Bea’s appearance and restrict his testimony, filing several motions last month.

Bea’s appearance as first witness represents a preliminary victory for the plaintiffs on the still battered Gulf coast: His testimony will establish the causes – and fault – for the Deepwater Horizon accident. This, said US legal observers, will focus the court’s attention immediately on the case lawyers for the plaintiffs seek to make: That BP and its partners were grossly negligent in the explosion on the Deepwater Horizon.

Bea’s testimony is expected to include evidence that the accident was preventable – information that he included in four reports he produced while a consultant to the White House commission investigating the spill. Bea’s reports also fault BP and its partners working on the doomed well for having a cavalier attitude toward safety.

Companies squabble to deflect blame

“You’ll see finger-pointing fairly early – parties saying: ‘It wasn’t us,’ or: ‘It was more them than us,'” said Edward Sherman, a professor at Tulane University Law School in New Orleans and a complex litigation specialist.

The main defendants are London-based BP, which owned 65 percent of the well; Vernier, Switzerland-based Transocean Ltd, which owned the Deepwater Horizon rig; Houston-based Halliburton Co, which provided cementing services for the well, and Cameron International Corp., designer of the failed blowout preventer. They are also suing each other.

Transocean spokesman Lou Colasuonno said in a statemet that the company is prepared for a trial and believes “the facts of this case are on our side.”

Halliburton spokeswoman Beverly Stafford said that her company intends to vigorously defend itself in court.

Central issue: determining degrees of fault

A key issue at trial will be the degree to which fault should be allocated among the corporate defendants.

Once the degree of fault is established, the court determines the amount the companies must pay in compensatory damages for what was lost to the spill. The court will also establish whether the defendants must pay punitive damages, meant to punish and deter bad conduct.

The issue of gross negligence is also significant here because only companies whose actions are deemed grossly negligent must pay punitive damages.

Settling avoids a parade of ‘stupidity’ – but avoids important lessons

“There is a big incentive for everyone to settle,” said Robert Percival, a professor at the University of Maryland’s law school and director of its environmental law program. “Companies can avoid damaging public relations from months of evidence of all the stupid things they did.”

But Bellona’s Hauge urged that the show go on as planned.

“This lawsuit – if it is not settled in a cheaper lump sum by big oil – has the potential to expose all of the lies that the public was told during the Deepwater Horizon disaster, which would cause a radical rethinking of offshore oil drilling all over the world and renewed public anger at the industry itself. The risks of offshort drilling, as have been well demonstrated by this disaster, are simply too high, and alternative energy must be given priority,” said Bellona’s Hauge

“The trial itself also gives further impetus to President Barack Obama’s 2013 budget proposal, which will cut government subsidies to big oil by $40 billion over the next 10 years if approved by US congress. In this sensitive election year, the lawsuit against BP and its co-conspirators in skimping on safety measures for higher profit, will again focus public attention on a green renewable energy agenda for the United States. And the economy in the Gulf of Mexico has not nearly begun to recover – is an oil slimed world what we want to leave to our children?” he said.

In addition to the case opening Monday, a separate class-action suit is unfolding in Houston on behalf of thousands of investors accusing BP of securities fraud, The Los Angeles Times reported.

That suit alleges that BP made false or misleading statements about its safety programs in the gulf and about its ability to respond to a big spill. A trial date in that case has not been set, Richard Mithoff, a co-lead attorney for the plaintiffs in that case told the paper.

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