Litgiation Articles

Opposition grows to BP’s legal strategy

September 16, 2010, 8:49 am

Originally posted by Michael Peel - Financial Times - September 16, 2010

BP is facing mounting opposition to its strategy of stalling the lawsuits of some Gulf of Mexico oil spill claimants, by forcing them to apply to a $20bn compensation fund first.

Plaintiffs’ lawyers allege that the UK-based energy group is using pollution legislation to “confuse, delay and frustrate claimants”.

BP contends ahead of the first big court hearing on Thursday that some of the hundreds of lawsuits involving alleged economic losses by gulf fishermen, hotels, seafood processors, restaurants and others have been filed prematurely, in breach of the 1990 Oil Pollution Act.

The company says all claims should first be sent to the special BP-financed fund managed by Kenneth Feinberg, after which at least 90 days would have to elapse before a court claim could be lodged.

Plaintiffs who have failed to do this “have no right to be in court at all”, BP has said, nor to make “sweeping” demands for the company to disclose documents.

The strategy is one of a number of key tests of oil pollution law facing the judge in New Orleans tasked with managing what could be years of litigation involving claims totalling billions of dollars from people ranging from oil workers injured by the explosion on the Deepwater Horizon oil rig to local businesses hit by its aftermath.

Doug Kysar, professor at Yale Law School, said that BP was “perfectly sensible” and “within its rights” to use a debatable point of law to try to reroute some of the claimants, although it ran the risk of generating further bad publicity in the process.

“What this really reflects are the culture and instincts of the civil defence bar,” he said. “They tend to protract cases, as long as possible and by any means possible, even when it risks a PR flap for their client.”

Rhon Jones, head of the toxic torts section of Alabama-based Beasley, Allen, Crow, Methvin, Portis & Miles, is representing more than 1,000 claimants – not all of whom have yet filed a lawsuit.

Mr Jones said: “Any claimant should be allowed to go to court now. BP is using the statutory requirement to set up a fund as a way to confuse, delay and frustrate claimants.”

David Logan, professor of law at Roger Williams University, said: “It is a bit unseemly that BP . . . would use a compensation system set up to make things easier on the thousands of people and businesses they injured as a tool to actually delay the resolution of claims.”

BP declined to comment.

Legal experts said the dispute was an early sign of the cat-and-mouse game judge Carl Barbier would have to deal with, as plaintiffs aimed to bring on their cases quickly and BP and other corporate defendants tried to slow them down and limit the release of sensitive documents.

Judge Barbier – who has already survived an attempt by several defendants, including BP, to force him to recuse himself and withdraw from the case as he once owned some of the defendants’ bonds – already has control over hundreds of Deepwater Horizon-related cases and is likely to receive many more.

Aside from the main fight between claimants and defendants, lawyers are also involved in an internal struggle to win membership of a committee that will govern how the alleged victims pursue damages.

Such arrangements are standard in complex litigation against corporations, with claimant lawyers who are not selected frequently complaining of a loss of control over their clients’ individual cases.

The New Orleans court has in recent weeks received a welter of pitches from plaintiffs’ lawyers in what amounts to a legal beauty parade of their qualifications to sit on the committee.

The filings bring out some of the internal politics of the spill, with companies based in the oil industry’s headquarters of Texas slugging it out – in diplomatic language – with legal practices from Louisiana and other places nearer the heart of the spill.

Many of the lawyers play up their broader experience outside the law, with Texas-based Brent Coon citing his media profile and the “unique perspective” he gained from his involvement in owning and operating an oilfield equipment services company.

Mr Coon is one of several lawyers who clashed with BP over the 2005 Texas City oil refinery explosion that killed 15 people.


Information overload for lawyers

Lawyers for the defendants in the lawsuits over the Gulf of Mexico oil spill believe that the plaintiffs have access to more than 600,000 pages of information, an almost unprecedented amount at this early stage of complex multi-district litigation.

BP’s document depository for its legal action currently contains more than 54,000 documents encompassing well over 250,000 pages of material.

Other defendants have established similar facilities. Halliburton, which was responsible for cementing operations on the well, has at least 4,466 documents covering over 49,000 pages;

Transocean, which owned the Deepwater Horizon rig, has set up a depository with over 200,000 pages; Cameron International, which made the blow-out preventer that failed, has over 16,000 pages in its depository; Anadarako, which held a 25 per cent stake in the well, has a depository of 2,836 documents covering 14,835 pages; and MOEX’s, the third partner, with a 10 per cent stake, has a depository of 240 documents with 14,511 pages.


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