BP Fights U.S. Government, Oil-Spill Victims Over Venue for Gulf Lawsuit


BP Plc, the U.S. and plaintiffs who filed hundreds of lawsuits seeking billions of dollars for damages stemming from the largest oil spill in U.S. history are fighting over where the cases should be heard first.

A panel of federal judges in Boise, Idaho, will hear arguments today on which city will host spill suits, including wrongful-death claims by families of workers killed in the April explosion of the Deepwater Horizon rig. Claims include losses of revenue by Gulf Coast businesses and securities claims by holders of U.S. shares in the London-based energy company. The federal government wants the cases consolidated in federal court in New Orleans, while BP said it prefers Houston.

“It all comes down to which judge the panel thinks has the intellectual firepower, experience and the docket space to handle a huge case like this,” said Edward Sherman, a Tulane Law School professor in New Orleans and mass litigation expert.

The seven-judge panel, appointed by the chief justice of the U.S. Supreme Court, meets periodically in locations around the country. The judge they choose to preside over the BP cases will make crucial legal rulings on what evidence can be used and which laws applied. Oil analyst Fadel Gheit, at Oppenheimer & Co., estimated the damage from the disaster may top $60 billion.

BP faces at least 300 suits over the spill as it works to permanently plug the Macondo well 40 miles off the coast. Oil has fouled beaches and marshes in Louisiana, Mississippi, Alabama, Texas and Florida.

Lawsuits were filed by commercial fishing interests, beachfront-property owners and environmentalists claiming harm from drifting oil. The parties have suggested courts in all five states as a proper venue for the cases.

Types of Losses

Different types of spill-related cases may be consolidated. One group may involve economic loss and environmental damage claims filed in federal courts in a dozen states. Most of those cases also name as defendants Transocean Ltd., Halliburton Energy Services and Cameron International Corp.

The other concentration of cases may include securities lawsuits by BP investors who claim company executives hid the rig’s safety problems and committed missteps that led to the spill. Plaintiffs in those cases allege the failure to disclose problems with the well artificially inflated BP’s stock price.

BP’s shares have fallen more than 35 percent since the rig exploded in April.

Seven Judges

The seven-judge Judicial Panel on Multi-District Litigation, created in 1968, must decide whether lawsuits in different federal districts have common factual questions that can be decided once and apply to all cases.

The process is designed to streamline the exchange of evidence and avoid duplication. Once pretrial proceedings are completed, the individual cases are sent back for trial in the courts where they were first filed.

U.S. officials and many plaintiffs’ attorneys contend New Orleans is the best site for consolidation, noting Louisiana is the closest state to the spill site and has suffered the bulk of environmental damage.

Putting the cases in Houston, home to BP’s U.S. headquarters, would be a “cruel irony” for Louisiana victims, said Stephen Herman, a lawyer for Louisiana residents suing over the spill’s fallout, in a May court filing.

Eight federal judges in New Orleans and surrounding courts have already recused themselves from spill cases because of potential conflicts of interest, BP noted in court papers.

Houston Judge

BP officials want the cases sent to U.S. District Judge Lynn Hughes in Houston, according to court filings. The judge has lectured for an oilfield industry professional group that pays his travel expenses, according to filings obtained from the Judicial Watch website. The judge declined in an e-mail this year to discuss any potential conflicts in the oil-spill cases.

To address the conflict issue, some plaintiffs’ lawyers have suggested in court papers that U.S. District Judge Shira Scheindlin in New York, who has a background in environmental litigation, go to New Orleans to oversee the litigation. Others suggested a retired judge who could focus solely on the spill cases without the burden of a regular caseload.

The government’s decision to line up behind New Orleans doesn’t carry any more official weight than any other party’s recommendation, said Adam Steinman, a law professor at Seton Hall University who teaches complex litigation. He added that it’s rare for U.S. officials to express a preference for where to consolidate mass-tort cases.

The main MDL case is In Re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 2010, MDL Docket No. 2179.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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