100,000 individual claims against BP and Transocean Ltd
The legal impacts of the Deepwater Horizon disaster continue to reverberate throughout the maritime community, most recently in the form of a lengthy court order issued in the multi-district litigation involving persons affected by the explosion, fire, and sinking of the rig in the Gulf of Mexico off the Louisiana coast in April 2010.
The order resolved a variety of preliminary and procedural issues raised in the over 100,000 individual claims. The claims are against BP, as well as Transocean Ltd., the Switzerland-based owner and operator of the Deepwater Horizon drilling rig, the Houston-based Halliburton Co., which was responsible for cementing services, and Cameron International Corp, which provided blowout prevention equipment. These companies sought to dismiss all claims brought pursuant to either general maritime law or state law and leave only claims arising under the U.S. Oil Pollution Act of 1990 (“OPA”) in the litigation.
First, the court ruled that admiralty jurisdiction is present because the alleged tortious conduct of the defendants occurred upon navigable waters of the Gulf of Mexico, disrupted maritime commerce, and the operations of the vessel bore a substantial relationship to traditional maritime activity. The term “vessel” is broadly construed under maritime law, including vessels that do not move under their own power, are not used for the primary purpose of transportation, or are not moving at the time of the relevant event. The court put to rest any argument that the Deepwater Horizon was not a vessel, finding that the Deepwater Horizon and the blowout preventer extending to the ocean floor constituted at all times a vessel in navigation, practically capable of maritime transportation. Thus, the court ruled federal maritime law will be applied to the case, not state law.
With respect to the non-OPA claims, the court applied a well-known rule from the 1927 Supreme Court case of Robbins Dry Dock v. Flint. The rule does not permit claims for damages of purely economic loss unless the claimant alleges a physical injury either to property or proprietary interest. There is also an exception to the rule in regards to commercial fishermen, especially applicable in the Deepwater Horizon litigation. The court dismissed all general maritime law claims except for those for physical injury to property or proprietary interest and those brought under the commercial fisherman exception.
As BP was officially designated the “responsible party” by the U.S. Coast Guard under OPA, all general maritime law claims against them were dismissed. However, this is not an escape from liability for BP. Although BP’s OPA liability is capped at $75 million, there are three exceptions to the liability cap. Liability limits would not apply if the disaster was proximately caused by gross negligence or willful misconduct, or if parties violated a federal safety or operation regulation, or if the party did not inform the President of the United States of the discharge. If one of these circumstances is determined to have occurred in the Deepwater Horizon disaster, the liability would be unlimited. The court did not address these issues at this time.
For those companies that were not named “responsible parties” by the U.S. Coast Guard, such as Halliburton and Cameron, they may still be liable for potential claims. The court held that those claimants who suffered physical injury to property or proprietary interest and commercial fisherman can pursue claims under general maritime law against these ‘non-responsible parties.’
Significantly, the court recognized that punitive damages under general maritime law can be made against responsible parties under OPA, such as BP, and non-responsible parties, such as Halliburton and Cameron. The court reasoned that “OPA does not displace general maritime law claims for those Plaintiffs who would have been able to bring such claims prior to OPA’s enactment.” This is particularly significant as there is no upper limit on the punitive damages a company can be made to pay if its fault is found to have caused the pollution.
The court also addressed the mandatory requirement under OPA that all claims for recovery must first be presented to the responsible party, in this case BP’s extra-judicial claims processor, before a claimant can evoke the judicial process. This OPA requirement is commonly called “presentment.” Only after a direct claim is denied or left unsettled by the responsible party, can a claim be made against the Oil Spill Liability Fund, a fund designed to ensure adequate compensation for those unable to recover the costs of cleanup or other damage from the responsible party. However, the court decided to conserve its energy at this point and postponed sorting through the thousands of individual claims to determine what constitutes proper presentment and who has or has not fulfilled this requirement.
Compensation for damage caused by the Deepwater Horizon disaster was also being pursued through state tort liability. Torts included negligence, trespass, and private nuisance. The court dismissed state law claims for these types of torts finding that state law claims were preempted by maritime law. However, such claims may still be pursued under federal maritime and environmental laws.
The court also allowed shipowners, with vessels designated as “vessels of opportunity” under OPA, to proceed with lawsuits if they contend that their vessel was damaged while working to clean up the oil.
More developments are expected as trial is currently scheduled for February 2012.
Source: The Standard P&I Club
