“The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP’s reckless decisions and actions,” said Anadarko CEO Jim Hackett in a statement last week. “BP’s behavior and actions likely represent gross negligence or willful misconduct and thus affect the obligations of the parties under the operating agreement.” (emphasis mine)

As TPMmuckraker’s Rachel Slajda notes, use of the phrase “gross negligence or willful misconduct” is very intentional. But, needless to say, BP doesn’t expect to shoulder all the responsibility for the spill. “Other parties other than BP may be responsible for costs and liabilities…We expect those parties to live up to their obligations,” a BP spokesman told TPM.

In a word, this is going to get messy. As we’ve written before on the GJEL blog, the BP oil spill has set off a bevy of tough class action lawsuits claiming injury and economic damage in the months following the spill. And even before Anadarko jumped into the mix, defendants and plaintiffs waged a turf war, each side attempting to get a “home court advantage.” BP, for example, wants the class action suits and multidistrict litigation (MDL) tried in Houston, which one Louisiana lawyer called “the epicenter of the oil and gas business worldwide” where “almost every one of those judges there would be related in some way to the oil industry.” Meanwhile, plaintiffs continue to push for New Orleans, which has suffered the vast majority of the spill’s damage and could be more sympathetic to victims.

Thanks to its 25 percent ownership of Deepwater Horizon, Anadarko would have surfaced as a potential defendant sooner or later. But unless the company can prove that BP is responsible for all of the “gross negligence or willful misconduct” that contributed to the spill, Anadarko will become another public punching bag in addition to jumping feet first into the legal firestorm about to engulf BP.

We’ll keep you posted.

Photo credit: ideum

UPDATE: Following a meeting with administration officials this morning, BP announced that it would accept the $20 billion escrow. According to the New York Times, the “preliminary terms would give BP several years to deposit the full amount into the fund so it could better manage cash flow, maintain its financial viability and not scare off investors.”

President Obama got tough on the British oil giant turned Gulf spill villain BP last night in a nationally televised primetime speech detailing the administration’s plan to contain the spill and prevent similar disasters in the future. Behind the scenes, the Obama administration has been making legal postures, which some say overstep its authority. But BP is already facing a set of tough legal challenges, federal and otherwise, and might not have the political strength to take the administration to court.

On Monday, the president backed a letter co-signed by 54 Senators asking BP to “establish a special account of $20 billion, administered by an independent trustee, to be used for payment of economic damages and clean-up costs.” In addition to helping victims of the spill, the letter said that it would be a first step for BP to show that it’s serious about taking responsibility for the spill.

The Obama administration has taken this request even further, saying it will legally demand that BP set up the $20 billion escrow account. “We want to make sure that money is escrowed for the legitimate claims that are going to be made and are being made by businesses down in the Gulf, people who have been damaged by this,” said Obama advisor David Axelrod on Meet the Press. “We believe that BP has the resources to meet the claims. And we’re going to make sure that they do.”

Legal experts, including University of Pennsylvania law professor David Zaring, who writes for The Conglomerate blog, have said that the Obama administration does not have the legal authority to force BP to establish the escrow account. After all, federal law has set a liability cap for the company at $75 million (not including non-government lawsuits). But White House Deputy Press Secretary Bill Burton has brushed these concerns aside. “We’re confident that we have the legal authority to compel BP to make sure that the folks that they have affected here are made whole,” he said. “The signs from BP aren’t that there is going to be a protracted legal battle over this or anything like that.”

He’s right. BP will mostly likely appease the administration and set aside the $20 billion. But that’s not necessarily because they are legally bound to do so. To this point, the Obama administration has been generally supportive of BP, at least on a policy level. So BP would be foolish to risk turning the US government into an enemy and appearing even more villainous to the public by refusing to help oil spill victims. Then again, anything can happen, and foolish hasn’t stopped BP before.

Photo credit: USCGD8

While BP isn’t likely to be economically devastated by cleanup or regulatory fees resulting from the spill, it’s a PR disaster that is already starting to take a toll. The New York Times reported yesterday that key BP’s investors have started to distance themselves from the company. In less than two months since the Deepwater Horizon rig exploded on April 20, BP has reportedly lost $75 billion, a third of its market value. That’s no small potatoes, even for multinational oil behemoths.

Since we last wrote about the tough class action suits mounting against BP a week ago, the strategic pre-game has revved up. Hoping to get a “home court advantage,” BP has asked the government body overseeing the Multidistrict Litigation (MDL) to consolidate many of the suits in Houston. “It’s the epicenter of the oil and gas business worldwide,” said Louisiana lawyer Daniel Becnel, who has already filed multiple suits against BP. “Almost every one of those judges there would be related in some way to the oil industry.”

Plaintiffs’ lawyers are hoping the cases will be combined in New Orleans, which has experienced the vast majority of environmental and economic damages caused by the spill, and could therefore be more sympathetic to claims of personal injury or loss of business against BP. Already, six of the twelve judges in the New Orleans based federal judicial district have removed themselves from BP oil spill cases due to conflicts of interest.

At least to the public, BP is playing the good Samaritan, saying it will pay whatever is necessary to fix the spill, and keeping mum on the government’s $75 million liability cap. “We are well prepared to spend more than that $75 million,” said BP spokesmen Jon Pack. “We already have.” Transocean, BP’s partner at Deepwater Horizon, emerged this week as another easy target when it announced that it would rely on an antiquated 1851 law to limit its liability at $27 million. The Obama administration has already said it will challenge the move.

So needless to say, challenges to BP have the potential to dwarf the state and national lawsuits against Toyota. We’ll keep you posted on developments as they relate to mass tort litigation, and BP’s liability dance.

Photo credit: USCGD8

Here in California, Los Angeles County Superior Court Judge Carl West consolidated about thirty state plaintiffs’ suits into a single case, merging eight personal injury complaints with those seeking economic recovery for property damages. The decision set off a dispute about where the catchall case would take place: Santa Ana or San Diego. While plaintiffs shoot for the former, Toyota is gunning for the latter. This has led Garo Mardirossian, a lawyer representing the family of a popular sushi restaurant owner who was killed in an acceleration-related Toyota accident, to accuse the company of manipulating the system to get a more sympathetic jury. “Orange County has a more conservative jury pool than L.A., and [Toyota] is trying to do a bit of forum shopping,” he said.

Lawyers on both sides have maintained that the 100 state cases and 230 federal cases will remain separate. This week, the federal case heated up in California when US District Judge James Selna ordered Toyota to provide the court with company records on acceleration problems. Toyota initially balked, saying it would be difficult to turn over the documents quickly, many of which are confidential and/or written in Japanese. Selna rejected this reasoning, and offered additional time for translation and filtering information that would be inadmissable in a federal court.

So Toyota lawsuits keep limping along here in California and across the country. We’ll keep you updated along the way.

Photo credit: David Villarreal Fernández

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