Lawsuits Over Gulf of Mexico Oil Spill Expected to Increase Dramatically

May 13, 2010

Companies linked to the massive Gulf of Mexico oil spill are facing a flood of lawsuits, as legal actions from the disaster spread faster than the crude gushing from BP Plc’s blown-out undersea well.

Nearly 100 lawsuits have already been filed across the Gulf region, and the disaster, which lawyers envision becoming one of the biggest class actions in U.S. history, involves billions of dollars in potential liabilities.

“This is not just an environmental disaster, this is a legal disaster, Alabama Attorney General Troy King told reporters Wednesday.

“It seems clear that this one will eclipse the Exxon Valdez payout,” said Zygmunt J.B. Plater, who chaired a legal task force for a special commission in Alaska following the Exxon Valdez oil tanker spill there in 1989.

“The hit in terms of economics is going to be measurable and it’s going to be greater,” said Plater, a law professor at Boston College, who noted that the population and levels of investment along the Gulf coast dwarfed those at stake in remote Alaska more than 20 years ago.

BP is the most exposed to potential damages in the case. The London-based oil giant is the owner of the ruptured undersea well spewing out oil at an unchecked rate of about 5,000 barrels (210,000 gallons/795,000 litres) per day.

The resulting oil slick threatens fisheries, beaches and wildlife refuges — and livelihoods — along the Gulf Coast.

Other companies involved in the spill include Transocean Ltd., owner of the Deepwater Horizon drilling rig licensed to BP, and Halliburton Co., which provided a variety of services on the rig and was involved in cementing the well to stabilize its walls.

Families of some of the 11 workers who died in the April 20 Deepwater Horizon rig blast have filed wrongful-death claims, and people who were injured have also taken legal action.

The companies also face lawsuits brought by fishermen, restaurants, charter boat companies, hotels and rental property owners. Gulf Coast states could also sue, as could municipalities, for lost tax revenues, and shipping companies if traffic into major ports or the Mississippi River is disrupted.

“You’re talking about the entire economic structure of five states and all their ancillary businesses,” said Tim Howard, a Tallahassee lawyer who last week filed one of Florida’s first class-action suits over the oil spill.

“You’re talking maybe about close to a half a trillion dollar economy here,” Howard added. “This is why you do not mess around and play around with something toxic.”

BP’s shares have been pummeled since the accident, wiping about $30 billion from its market value.

The company has said repeatedly that it takes responsibility for the oil spill and will pay any legitimate damage claims. BP Chief Executive Officer Tony Hayward has said that includes interrupted business activity.


BP declined to comment Wednesday on the number of lawsuits it now faces in connection with the spill.

But it moved last week to have what it then described as “at least 70 suits” consolidated in a court in Houston, the U.S. oil hub which also serves as the command center for teams directing the oil spill clean-up efforts.

In its appeal to a judicial panel that will decide which court is best equipped to hear the cases, BP also took the unusual step of asking that Houston Judge Lynn Hughes, appointed to the federal bench by former President Ronald Reagan, handle the multi-district litigation.

“It’s a little unusual for the defendants in massive litigation to request a judicial panel to send them to a particular court with a particular judge,” said Brent Coon, a lawyer who spearheaded civil action against BP after the 2005 explosion at its Texas City refinery, which killed 15 workers.

“It certainly raises some red flags for some people,” added Coon, whose firm is representing a survivor of the rig explosion suing BP, Transocean and Halliburton, among others.

“BP’s blueprint (is) saying that they’re transparent when in fact they’re not; saying that they accept responsibility when in fact they’re already pointing their finger at the other guys,” Coon said.

A lawsuit brought against BP by one of its own shareholders, who alleged the company helped cause the Gulf spill by putting profit before safety, was dropped by the plaintiff Tuesday without any explanation from lawyers.

But the move may offer little solace to BP.

“The number of cases is going to increase dramatically,” said Robert Gordon, an attorney with New York law firm Weitz & Luxenberg, which is representing 500 Gulf area commercial fisherman in the oil spill litigation.

(Additional reporting by Kelli Dugan in Mobile, Alabama; Editing by Pascal Fletcher and Paul Simao)

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