I had intended to write a detailed update this month on the BP oil spill, but I didn’t have to do it. That was because Parker Miller, a lawyer in our firm, gave a presentation to a group of Georgia lawyers in Atlanta last month, and it was exactly what was needed for this issue. Parker has been working virtually full time on oil spill-related claims for the past year. With Parker’s permission, I am including his paper in this issue for the edification of our readers. Parker did a very good job of giving both a historical perspective, as well as laying out projections for the future.
Seminar Paper Presented by J. Parker Miller
I. Introduction – Technology vs. Human Error
By all accounts, the Deepwater Horizon oil drilling rig was a magnificent creation. It was enormous. Costing about $365 million to build, it was designed to drill some of the deepest wells ever drilled. It rose 378 feet from top to bottom, and if you can believe it, was able to automatically position itself directly over the Macondo well drilling site using satellite positioning and advanced computer technology. It was a technological marvel, and the pride of Transocean’s fleet.
II. What Happened – The Spill was Devastating
But no matter how advanced the technology was on that drilling rig – it could not make up for the decisions humans made aboard the rig. You see, for weeks, the Deepwater Horizon oil rig was running weeks behind on its work. It was costing BP, who was leasing the vessel, millions every day it was late. It was nearing completion of its responsibility on April 20, 2010, and only had to go through a couple more steps to safely insure completion.
Instead of doing the right thing and undertaking fundamental industry-accepted principles in completing the well – such as accounting for methane gas in the well, taking the time to ensure the cementing job was completed, accounting for intense pressure variations in the well, and so on – BP cut corners at almost every critical part of the safety process. Around 9:50 PM on April 20, 2010, after ignoring obvious pressure and gas readings, dangerous gas shot up the riser that connects the drilling rig to the well, and the rig exploded. Witness reports say that you could see the explosion from almost 35 miles away. Eleven people were burned alive and countless others were hurt. The rig burned out of control for two days, sunk into the ocean, and set off what is most assuredly the largest environmental disaster in United States history. In total, 200 million gallons of oil spilled into the Gulf over an 87 day stretch, BP dumped 1.8 million gallons of toxic chemical dispersant to cover up the oil, 85,000 square miles of fishing territory was closed at the peak of the spill, and over 600 miles of coastline was oiled. Businesses and families were devastated from the disaster – all because profits were more important than people.
III. Beasley Allen’s Involvement
A significant amount of litigation has ensued since the Deepwater Horizon oil spill occurred. Beasley Allen environmental Section Head Rhon Jones, along with 16 other lawyers selected by the court in Louisiana, was selected by the Court in Louisiana to be on the steering committee. I am second chair to Beasley Allen’s steering committee position. In addition, we have two other lawyers that are working full time in New Orleans — Chris Boutwell is working hard with the MDL’s environmental impacts team. John Tomlinson, another attorney in our environmental section, is involved with the MDL’s economic damages committee, which is tasked with assessing the total economic damage to folks along the Gulf Coast. In Montgomery, our firm has about 20 lawyers working around the clock to assist clients along the Gulf Coast who are suffering as a result of this disaster.
IV. Litigation Status
The MDL formed in the fall of 2010, and since that time, a total of 20 million pages of documents have been produced. Since January, lawyers for the Plaintiffs have taken 188 depositions, and that number will grow by another 44 over the next couple of months. There are roughly 5,600 exhibits to depositions. And imagine guys – this is just for the first phase of the litigation. There are two other phases of the litigation that have really not even started yet. One thing is for sure though – we believe the facts are going to show systematic cost cutting by BP and others that led directly to the explosion that killed so many people and ruined so many businesses.
Given how massive this case is and the complexity that is involved, you, and the Defendants as well, would probably think that I was crazy if I told you when all of this started that the Plaintiffs would be trying a case a year and a half after the disaster occurred. I am pleased to report that is exactly what is going to happen. On February 27, 2012, trial begins and the Plaintiffs will be ready. From what I hear, this case could be the quickest “incident to trial” case of this magnitude in history. And in these cases, nothing is more effective than a Steering Committee that is unified and is constantly pushing the Defendants. I am pleased to report that is exactly what is happening, and that will continue to happen through trial.
V. The Trial
I talked a little bit about Phase One of the oil spill trial that is set to begin on February 27, 2012. Phase One will cover the actual blowout liability. In other words, not only will it determine who is at fault, but it will also apportion fault amongst all of the Defendants. Transocean actually did us a favor when it filed an action to limit its liability as a vessel owner last summer. In doing so, it has tendered in all of the other Defendants to determine who is actually at fault, by how much, and whether Transocean can limit its liability under maritime law as a vessel owner.
In the end, we believe BP is going to bear a significant amount of the responsibility, but we also believe that Transocean is not going to be able to limit its liability because it knew about the problems and risks aboard that rig. There will be other companies that will bear responsibility as well, and all of that will be worked out in a couple of months when trial begins.
The Phase Two trial will take place after the Phase One portion is completed. Phase Two is going to cover how much oil actually spilled into the Gulf. In addition, Phase Two will focus on the conduct of the parties in trying to stop the oil from gushing. Discovery is just getting kicked off for the Phase Two portion of the trial. When it comes to quantifying how much oil was actually spilled, Phase Two will be very important to the federal government and state claims because of civil penalties.
Phase Three is going to cover efforts to contain the oil, like the spraying of dispersant, controlled burns, and the use of boom. I like to think of this as the “everything else” trial.
VI. Important Rulings and Federal Investigation Status
I also want to update you on some of the rulings from the Court. This case is mainly governed by two sets of laws: the Oil Pollution Act of 1990 (which was a federal statute that was concocted back in 1990 after the Exxon Valdez disaster), and general maritime law (which is federal common law that governs cases at sea). The Defendants moved to dismiss the Plaintiffs’ maritime law claims because they said that the Oil Pollution Act displaced maritime law claims. And, because the Oil Pollution Act does not provide for punitive damages and because it displaces maritime law (which provides for punitive damages), the Defendants argued in their motion to dismiss that the Plaintiffs were not entitled to punitive damages.
The Court disagreed with the Defendants. First, Judge Barbier said that the Plaintiffs get to keep their maritime law claims. Second, he ruled that the Plaintiffs would have their punitive damage claims as well. I think Judge Barbier got it right here – plaintiffs have had these remedies for decades, and it’s hard to fathom that a statute that constantly tries to save maritime law claims would bar them. Third, Judge Barbier said that a strict proximate cause standard for proving damages would not apply. Instead, he said it would be a “due to” or “resulting from” the oil spill standard. These were significant victories for us, and are going to increase the pressure on BP and the other Defendants as we move further.
The Defendants also argued that Judge Barbier would have to analyze whether each Plaintiff met presentment under the Oil Pollution Act. The presentment requirement is a legal technicality similar to what you would see under the Federal Tort Claims Act where the Plaintiff has to present his claim first to a designated party before he could sue. If the Defendants had their way – they would have Judge Barbier look at over 125,000 claims that are filed in the MDL to figure out whether all of them have satisfied presentment. The effect of this would be to bog down the litigation for years. Thankfully, Judge Barbier said no to the Defendants – ensuring that the cases would progress forward quickly and efficiently.
There have also been some significant developments in the many federal and state studies. Just yesterday, a federal report was released that said the Defendants ignored serious problems aboard the rig that led to the explosion. In fact, the federal report – which was not the first of its kind since the explosion occurred – pointed the finger directly at the people that were calling the shots aboard the rig. Studies continue to roll in that say the same thing. We just heard another report where BP withheld critical information from the Federal Government about dangerous methane deposits around the well. You couple this with a scathing complaint filed by Halliburton in Texas Court accusing their business partner BP of intentionally withholding important information about the well, and what you find is a very unstable situation for BP and others making the decisions on that rig.
VII. Victims Of The Spill
You can only imagine what folks along the Gulf Coast have been through. As you probably know, BP set up the Gulf Coast Claims Facility and selected Kenneth Feinberg as the claims czar to man the facility. From my experience, the GCCF is operating to help BP with its liability at the grave expense of folks on the Gulf Coast. They are delaying and stalling legitimate claims filed by folks that need those funds to pay their bills and keep their businesses open. Predictably, what we are starting to see are desperate claimants willing to take any final settlement – no matter how much it under-compensates them – to pay their bills. We are trying to help our clients not only cope with the disaster, but to deal with the problems the GCCF creates. I can tell you that we are doing everything we can to protect their rights, and the PSC has filed a motion in Eastern District of Louisiana requesting Judge Barbier appoint a special master to supervise the GCCF. The GCCF should be paying claims quickly and efficiently, as the Oil Pollution Act requires. Instead, it is delaying payment until folks become desperate and are forced to accept a cheap settlement. I am confident that the Court will grant our motion, and that folks will get their money in a prompt fashion.
BP keeps spending millions of dollars in advertising to convince everyone that things are fine on the Gulf Coast and that the oil is gone. But as Tropical Storm Lee revealed when it came ashore – the oil is not gone. Tar balls continue to wash up on shore. You may have read reports about the hundreds of dolphins that have washed ashore, many of which were coated in oil. You may have also read about the large plumes of oil that have collected around the wellhead and just off the coast. A report also came out a couple of weeks ago about new oil that may be collecting around the wellhead – which is very disturbing if true. My clients tell me that there are disturbing trends happening right now in the shrimp, fish and crab populations that they have never seen before. There are hundreds, if not thousands, of cleanup workers that are now very sick because they were not given the appropriate protective gear. As you can probably tell, it is baffling how much heartache and damage this disaster has caused.
VIII. Closing Remarks
In closing, I am young, and I haven’t been at Beasley Allen a long time. But one thing I have learned very early on – and it is something that I think makes Beasley Allen stand out in these massive cases – is that we think it is so important that your clients have direct communications with lawyers, not secretaries and paralegals. Ultimately, you are never going to have a successful attorney-client relationship unless you have lawyers talking to clients.
As we progress towards trial, there are a lot of unresolved claims still out there. Keep in mind that folks and businesses don’t have to be on the Gulf Coast in order to have a claim. For example, a Georgia seafood processor that relies entirely on Gulf seafood could have a valid claim under the law. Our firm is still talking to new claimants almost every day. These claimants include restaurants, fishermen, hotels, people that were injured cleaning up the oil, and others across the Gulf.
If you have any questions about any of the matters discussed by Parker, or about anything else related to the oil spill litigation, you can contact him at 800-898-2034 or by email at Parker.Miller@beasleyallen.com.
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