BP Oil Spill Brings Tough Class Action Lawsuits
Posted on Thursday, May 27th, 2010
While national TV televised British Petroleum’s newest attempt to “Top Kill” their massive leak in the Gulf of Mexico this week, class action lawsuits continued to pop up against the embattled oil company. The Economist reports that in the two weeks following the April 20 spill alone, more than 70 legal challenges sprouted up, many of which were class action suits on behalf of clumps of victims.
Setting aside the fact that The Economist makes the cliched assumption that lawyers are out to make a profit, rather than the most likely force to successfully hold BP accountable for the spill, the article has some solid points about the forthcoming litigation firestorm about to engulf BP.
Attorneys are mixed on whether such lawsuits will hamstring BP. If you take the Exxon Valdez 1989 spill in Alaska as any indication, BP isn’t likely to be financially devastated. Although early reports estimated that Exxon would have to pay $4 billion in clean-up and legal fees, a 2008 Supreme Court decision reduced the punitive damages from $2.5 billion to $507.5 million, a big coup for the company. Although Democrats are trying to lift the liability cap from $75 million to $10 billion, it remains unclear whether their efforts to apply the new limit retroactively to BP are constitutional.
Cash penalties aside, plaintiffs’ lawyers don’t think it will be difficult to pin liability on BP. “Under the Oil Pollution Act, the fact that it was BP’s oil is enough,” said New Orleans lawyer Keith Hall. In essence, plaintiffs “don’t have to show they were negligent or grossly negligent,” he said. And Houston attorney Tommy Fibich said “The litigation is spreading faster than the slick…This legislation will dwarf other corporate catastrophes.”
The Economist was right about another thing: it has been a huge year for plaintiffs’ lawyers and class action lawsuits. Earlier this month, a federal judge approved a request to increase the size of the plaintiffs’ team in a multi-district litigation suit probing Toyota’s unintended acceleration problems. I hope BP succeeds in ending the stream so that oil will stop spewing into the Gulf and lapping up against Louisiana beaches. If it doesn’t, the British oil giant is sure to face more lawsuits and higher fines.
Photo credit: USCGD8
2 Responses to “BP Oil Spill Brings Tough Class Action Lawsuits”
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I’ve been thinking a lot about the liability of BP, Transocean, and everyone else involved…and the $75 million cap is frustrating.
I haven’t read the statute or regulation limiting their liability to $75 million, so I’m unsure about this, but it seems to me, that since BP is a large multinational corporation, with headquarters in the UK, that it would be possible to sue them outside the United States, and thus maybe get around the $75 million cap. That’s assuming the cap only applies to damages for suits in the US (which it seems like it would–other nation states shouldn’t be forced to abide by that cap). I imagine BP has a US subsidiary that would be the target for most US suits, but surely that liability flows up to the parent in the UK, and surely since they’re incorporated in the UK it would be easy to get jurisdiction.
Have you seen any good articles/other sources about the possibility of getting damages awarded in suits outside the US?
Great question, Kaitlin.
I’m not totally sure what the liability laws in England are like, and I have not seen articles on the subject. But I asked around a little bit (as I am not an expert on the subject), and it sounds like this comes back to issues of jurisdiction derived from forum non conveniens, a doctrine stating that a legal complaint cannot be introduced in a venue that would pose an undue hardship to the parties involved. So since the accident occurred here in the states, and all the witnesses and plaintiffs are here, suing in England would seem like little more than a strategic move and would probably be rejected.
But I imagine that as we move forward, the suits against BP will split similar to the Toyota case: personal injury/wrongful death vs. economic damages. Some BP investors here in the United States have started to sue the company for losses related to the company’s negligence. It would be more likely for such suits to take place in the UK, but I’ll have to check in to that more.
–Ben