Deepwater Horizon Litigation

By Paula Cotter, Energy & Environment Counsel

Paula Cotter, Environment Project Director and Chief Counsel

On April 20, 2010, the Deepwater Horizon oil rig began to leak crude oil into the Gulf of Mexico. By the time the leak was stopped, hundreds of thousands of barrels of oil had been released into the Gulf and oil had washed up onto the shores in at least four Gulf States. Not surprisingly, thousands of lawsuits have been filed as a result of the Deepwater Horizon incident. Several Gulf States, represented by their Attorneys General, are parties to some of the legal actions.

Even before the gushing oil was capped in late summer of 2010, it was clear that litigation over billions of dollars of damages would probably result from the blowout. In June 2010, BP created a $20 billion spill response fund. Claims made to the fund are separate matters from the multitude of claims that have been filed in courts throughout the Gulf area. Kenneth Feinberg, who administered the fund created to benefit the victims of Sept. 11, is also the administrator of the $20 billion fund that BP has set up. BP has paid out approximately $4 billion in compensatory claims through the Gulf Coast Claims Facility.

The state of Mississippi has initiated an investigation of the Gulf Coast Claims Facility. Mississippi Attorney General Jim Hood issued a subpoena pursuant to state statute, requesting production of documentation for the Gulf Coast Claims Facility operations, in order to determine whether the facility is complying with the Mississippi Consumer Protection Act. Because there has been only partial compliance with the subpoena, the state filed a petition in state court to compel full compliance with the subpoena in July 2011.

The collection of lawsuits known as the Multi-District Litigation (“MDL”) was filed by a mix of plaintiffs. Numerous private parties filed claims against BP and its business partners and associates, alleging injury to their health, livelihood, and property. The states of Louisiana and Alabama have also filed suit against Transocean (the rig owner), BP and its partners (who owned the well), and several other defendants who performed work on the well or rig before the blowout. The United States also brought suit against against a mix of BP affiliates and the insurer, Lloyd’s Syndicate 1036.

The MDL encompasses a great many suits based on a variety of theories. The United States bases its case on liability imposed by the Oil Pollution Act (OPA) and the Clean Water Act. The private plaintiffs’ cases reflect a mix of legal theories. The states’ claims have several sources, including OPA, general maritime law, state common law, and state civil penalty statutes.

Over a hundred separate federal actions were filed in the federal district courts for the Eastern District of Louisiana, the Southern District of Alabama, the Northern District of Florida, the Southern District of Mississippi, the Western District of Louisiana, the Southern District of Texas, and the Northern District of Louisiana. Various parties moved to centralize the cases. Under 28 U.S.C. § 1407, the United States Judicial Panel on Multidistrict Litigation is authorized to transfer cases with common issues to one federal district court. Acknowledging the common factual and legal questions that underlie the multitude of individual actions, the panel transferred the cases to Judge Carl Barbier’s court in the Eastern District of Louisiana.

The Court has set an aggressive schedule for the first phase of the MDL; it will go to trial on Feb. 27, 2012. Among the issues that are expected to be resolved are: the liability of each defendant, the allocation of fault among the defendants, the number of barrels of oil (which may affect the calculation of damages), the culpability (which may also affect the amount of damages awarded), the relationship between state and federal law, and the question of whether punitive damages may be awarded. After the February trial and the court’s ruling, it is expected that the individual cases making up the Multi-District Litigation will be transferred back to the courts where they originated. Presumably the outstanding issues will be sharply narrowed by the general rulings, and the later cases may well be restricted to questions of damage calculation.

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Deepwater Horizon offshore drilling unit on fire.