BP FIGHTS COURT BID TO LIFT OIL-SPILL DAMAGES LIMITHoward Erichson in Reuters/Westlaw Press , November 21, 2010
NEW YORK (Reuters Legal) - BP had said for months it would pay all legitimate damages for the largest oil spill in U.S. history, but now it's fighting a bid to legally force it to waive a $75 million statutory cap.
Lawyers for local businesses and individuals filed a motion this month asking U.S. District Judge Carl Barbier, who is overseeing the oil-spill litigation in New Orleans, to rule that a cap is inapplicable in this case.
Noting that BP itself had told the court it would waive the cap, the plaintiffs' lawyers asked Barbier to rule on the matter to preclude BP from "re-urging this defence" in the future.
In a response filed on Wednesday, BP called the plaintiffs' motion "unnecessary" and "premature." BP also said it had voluntarily waived the liability cap -- only it did so to justify the opposite position.
"There is no issue in dispute that the Court needs to address," the company argued.
On Nov. 2, BP raised its estimated cost of cleaning up the Macondo disaster by $7.7 billion to $40 billion. BP will likely try to recoup some of these costs from its Macondo partners, Anadarko Petroleum Corp and MOEX Offshore 2007 LLC, as well as such contractors as Halliburton but the resolution could take years of court battles.
BP has already paid out hundreds of millions of dollars to fishermen, retailers, charter boat captains and property owners who suffered from the spill.
Under heavy pressure from the Obama administration, in June the company also established a $20 billion compensation fund for those damaged by the spill.
ALL LEGITIMATE CLAIMS
The cap issue was expected to come up at a hearing before Barbier scheduled on Friday.
Soon after BP's Deepwater Horizon well began spewing oil into the Gulf of Mexico in April, the company said that it would pay all legitimate claims, even though the Oil Pollution Act (OPA) could have limited BP's liability for the disaster to $75 million, plus clean-up costs.
But it was never clear whether BP's pledge was legally binding, and signals from the company were mixed. During a court hearing last month, BP's lawyers did not commit to waiving the OPA cap, which they called "not relevant." After Barbier asked the company to clarify, it filed a statement with the court saying it was committed to waiving the cap.
A BP spokeswoman said on Friday that the company's opposition to the plaintiffs' motion "was not an indication that BP was wavering at all on its previous promises and commitments," but rather, was "simply based on the legal deficiencies" in the motion.
Howard M. Erichson, a professor at Fordham University School of Law and an expert in mass torts, said plaintiffs' lawyers now appear to be engaging in "a bit of litigation gamesmanship." From the company's perspective, he said, "there is no upside having the waiver locked in," but opposing such a move could present a publicity problem. "The extraordinary thing," he said, "is the backdrop to this motion -- the fact that BP faced such an enormous public-relations crisis that it was willing to abandon some of its potential legal defences early in the litigation."
The case is In re Oil Spill, U.S. District Court, Eastern District of Louisiana, No. 10-MDL-2179. The plaintiffs' motion was filed on behalf of the plaintiffs' steering committee by Stephen J. Herman of Herman Herman Katz & Cotlar and James Parkerson Roy of Domengeaux Wright Roy & Edwards. BP's submission was filed by Don Haycraft and R. Keith Jarrett of Liskow & Lewis in New Orleans and Richard Godfrey and J. Andrew Langan of Kirkland & Ellis in Chicago.