Legal Drama Over Gulf Oil Spill Could Last Years

By Carrie Johnson

Published April 18, 2011 at 2:37 PM EDT

Teens walk past a closed oyster business last week in Golden Meadow, La. A number of Louisiana fishermen have had to close because of economic conditions blamed on the Deepwater Horizon oil spill. Nearly a year after the spill, hundreds of lawsuits are slowly moving through the courts.

This story is part of a series.

Last year's huge oil spill left an enduring mark on communities along the Gulf Coast. But courts are just starting to turn to the question of who's to blame for the disaster — and who should pay for it.

Hundreds of lawsuits are moving through a federal court in New Orleans; judges combined the cases to make it easier to handle them. Among those suing: restaurant owners, wildlife supporters and families of some of the 11 workers who died on the oil rig.

The Plaintiffs

Brian Barr is a plaintiffs' lawyer who sits on a special committee overseeing all those cases. "The court has put us on a very aggressive schedule," he says.

Tracy Kuhms, a fishing boat owner from Louisiana who was affected by last year's oil spill, talks to members of the media last week outside the London conference center where BP held its annual general meeting of shareholders.

Since the start of the year, he and other lawyers suing over the spill have been holed up in conference rooms. They're taking depositions of executives and engineers at companies involved in the spill: BP, Transocean, Halliburton and Cameron. Sometimes, they question two or three people a day.

"It's one of those situations where the people of the Gulf Coast really need help now," Barr says. "We couldn't wait."

Lawyers for those plaintiffs are in a special position: Unlike some of the other people who investigated the disaster, they have subpoena power, so they got access to more emails. And they're interviewing more insiders from BP and the other companies.

Barr describes some of the materials: "They don't come out and say, 'You're going to kill a bunch of people,' " he says. "But they do say, 'This is a very dangerous well, and we know we are dealing with a very narrow drilling margin, and if we keep going like we're going, we're facing severe consequences.' "

It's still not clear how high up the corporate ladder those documents may lead. Former BP CEO Tony Hayward will sit for a deposition in June. A few corporate managers and engineers declined to take part in the depositions, citing their right against self-incrimination.

The Blame Game

If you know anything about high-stakes lawsuits, it won't surprise you to hear there's a lot of finger-pointing.

Transocean, which owns the sunken rig, said it's responsible for paying death settlements and some personal injury claims. But most of the liability, Transocean said, should fall on BP.

"BP, the owner and operator of the Macondo well itself, is responsible for environmental damages associated with the release of oil from the Macondo well," said Brian Kennedy, a Transocean spokesman. "So given those facts, those facts that are clear and unambiguous in the official contract, we believe that BP will do the right thing and fully honor its legal obligations."

In a written statement, BP pointed out that a presidential commission investigating the spill found that the tragedy happened because of many failings by many different companies. In the end, BP said, the courts will decide how much Transocean and the other companies involved will have to pay.

'Pure Economic Loss'

Law professors say the cases against BP, Transocean and Halliburton are no sure thing — especially claims by hotels and restaurants that didn't actually get smothered in oil.

"It's not like the oil touched everybody," says Anthony Sebok, who teaches at Cardozo Law School in New York City. "The oil stopped the flow of commerce, and that had effects upstream — but that's what we call pure economic loss. Pure economic loss cases can be very hard."

There's another legal headache for BP that involves economic losses: Big pension funds from New York and Ohio are suing the company in a Houston court because they lost a lot of money when the stock price dropped by half last April.

The retirement fund for New York state workers owned about 19 million shares of BP at the time of the spill.

"[BP] represented that safety, and risk mitigation was a priority," says New York state Comptroller Thomas DiNapoli, who oversees the fund. "With the Gulf spill, it indicates that from our point of view, that was a misrepresentation."

Lawyers for stockholders like DiNapoli don't have access to internal corporate information just yet. Their cases are moving more slowly than the ones filed by Gulf Coast businesses and workers — the start of a legal odyssey that could last for years.

Legal Drama Over Gulf Oil Spill Could Last Years

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