Judge allows some punitive damages in BP oil spill lawsuits
In a major ruling about economic losses resulting from last year’s oil disaster in the Gulf of Mexico, U.S. District Court Judge Carl Barbier dismissed all state law claims, but adopted an expansive view of economic damage that could result from the oil spill and said that some plaintiffs may be able to collect punitive damages from the companies involved in the Macondo well blowout.
Barbier’s 39-page ruling dealt with a myriad of topics raised in oral arguments in late May, when defendants in the case sought to dismiss many of the economic damage claims resulting from the April 2010 explosion of the Deepwater Horizon drilling rig and subsequent 86-day oil gusher.
There are hundreds of lawsuits and about 100,000 claims dealing with non-governmental economic loss and property damages, making up the biggest sector of claims in the litigation consolidated in federal court in New Orleans.
In determining whether certain claims properly belonged in the litigation, Barbier, who was appointed to the federal bench by President Bill Clinton in 1998, had to weigh in on the confusing topic of which laws apply to the situation. The case properly falls into maritime law and the Outer Continental Shelf Lands Act, both federal laws.
Since state law is preempted by maritime law, all claims brought under state law are dismissed. Maritime law allows claims for negligence, gross negligence and strict liability for manufacturing or design defects. Steve Herman, co-lead plaintiffs attorney in the case, said Louisianans will see no ill-effects from state law claims getting knocked out, because maritime law and the Oil Pollution Act of 1990, another federal law, are more favorable to people’s grievances. Both laws will be used by the court to weigh claims.
The OPA was enacted after the Exxon Valdez oil spill in Alaska and greatly expands the universe of people who are eligible to claim damage from an oil spill. Before OPA, only commercial fishers and people who had oil land on their property could claim damages; OPA opened the possibility of indirect economic losses, such as hotels, restaurants or fish processing plants claiming damages.
But maritime law allows for the possibility of punitive damages, while OPA is silent on punitive damages.
The court considered whether OPA knocked out claims that previously might have existed under general maritime law, such as punitive damages, and determined it did not. Therefore, commercial fishers and people with direct physical damage on their property from the oil spill can pursue punitive damage claims against BP, the majority owner of the well, and other corporate defendants in the case.
In a win for the minor partners in the Macondo well, Moex and Anadarko, all maritime negligence claims against them are dismissed because they didn’t have operational control over the well.
Another significant point in the ruling is that Judge Barbier took an expansive view of the type of claims that could fall under OPA. “The Court notes that OPA does not expressly require ‘proximate cause,’ but rather only that the loss is ‘due to’ or ‘resulting from’ the oil spill,” Barbier wrote. “OPA causation may lie somewhere between traditional ‘proximate cause’ and simple ‘but for’ causation.”
As such, people with economic damage claims from the Vessels of Opportunity program, where private boats were enrolled to help clean up the oil, and people who suffered economic losses from the moratorium on new deepwater drilling, were allowed to remain in the case. The court merely stated that such claims were “plausible,” and not that the claims have merit.
BP declined to comment on Barbier’s ruling.
Herman, the co-lead plaintiffs attorney in the case, said he was very pleased with Barbier’s ruling. “The judge agreed with us on all major points, including the availability of punitive damages, and a liberal causation standard under OPA,” Herman said.
Meanwhile, Barbier’s allowance of punitive damages could be highly influential on whether commercial fishers, oyster harvesters and coastal property owners choose to stay in the litigation or take a settlement from the Gulf Coast Claims Facility.
The GCCF does not include a factor for punitive damages in its calculations.
Rebecca Mowbray can be reached at email@example.com or 504.826.3417