BP Oil Spill Lawsuits Spread to States Beyond Gulf Coast


BP Plc faces more than 225 lawsuits in 11 states as litigation from businesses, individuals and investors continues to increase almost two months after the Deepwater Horizon oil rig exploded.

In addition to scores of claims brought in five states along the Gulf shore, coastal businesses and property owners in Georgia and South Carolina have sued for damages from the drifting oil, which has yet to round the southern tip of Florida and enter the Atlantic Ocean.

Investors in three states, including Louisiana and Alaska, have sued BP’s board of directors for allegedly causing more than $50 billion in shareholder losses by failing to implement safety policies that would have prevented the spill. In a separate class-action lawsuit in Florida, the company is accused of “a pattern” of criminal acts including fraud. That suit seeks triple damages under federal civil racketeering law.

“The damage is not just suffered at ground zero along the Gulf Coast,” said Mark Lanier, a Houston lawyer representing dozens of fishermen and property owners against BP. “The shock waves reverberate across state lines and across occupational lines.”

A judge may decide there isn’t a strong enough connection between some damage claims and the spill itself and those claims will be thrown out, Lanier said yesterday in a phone interview. “But we’re not at that point yet,” he said.

Primary Liability

BP, as owner of the underwater lease, has primary liability for damages caused by the tens of millions of gallons of crude oil that have spewed from the damaged well since the April explosion and sinking of the Deepwater Horizon. Almost all the lawsuits also name Transocean Ltd., which owned the rig, along with Cameron International Corp. and Halliburton Energy Services Inc., which provided the rig’s blowout prevention equipment and cementing services, respectively.

David Nicholas, a BP spokesman, didn’t immediately return a call seeking comment yesterday.

BP America Inc. Chairman Lamar McKay told Congress in May that the company will pay all “legitimate” claims related to the spill. On June 2, Credit Suisse estimated the combined cleanup, restoration and litigation costs of the spill could top $37 billion.

President Barack Obama said yesterday in a televised speech that he will tell BP Chairman Carl-Henric Svanberg in a White House meeting today that the London-based company must set aside “whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company’s recklessness.”

Securities Lawsuits

Three lawsuits claiming securities fraud were filed by BP investors in federal courts in Louisiana. The lawsuits, each seeking to represent buyers of BP American depositary receipts in a class action, claim the company and its officials inflated share values by issuing “materially false and misleading statements” about BP’s safety record and protocols.

“BP’s procedures for minimizing its financial losses from drilling rig problems were no more than fantasies,” said lawyers for the Johnson Investment Counsel in a June 7 filing in Lafayette, Louisiana. “BP was simply not the enterprise that its public communications pictured.”

The lawsuit claims BP’s actions cost investors more than $56 billion in share value by May 25. The plaintiff is an investment holding company, said its attorney Stanley M. Chesley at Waite, Schneider, Bayless & Chesley in Cincinnati.

Directors Targeted

At least five so-called derivative lawsuits brought by shareholders on behalf of BP were filed against current and former officers and directors of the company. These lawsuits, filed in state and federal courts in Alaska, Delaware and Louisiana, contend that company mismanagement led to the April 20 explosion.

The spill “is a catastrophe of epic proportions brought by the greed and fraudulent conduct of BP,” according to a civil racketeering lawsuit filed June 12 in Florida that names as defendants the company, various corporate entities, and Chief Executive Officer Tony Hayward.

The lawsuit alleges that BP “successfully infiltrated” the Minerals Management Service, the federal regulatory agency overseeing off-shore drilling, and “systematically submitted unsubstantiated and erroneous exploration and oil spill response plans and lease agreements.”

Although oil has yet to leave the Gulf of Mexico, three proposed class-action lawsuits were filed last week in federal court in Charleston, South Carolina, on behalf of property owners, tourism-related businesses, real estate companies and other businesses in six coastal counties. Lawyers involved in those cases say fears the slick will foul beaches later this summer already have caused tourists to cancel trips and vacation rentals.

‘Already Hurting Us’

“The actual spill may not have reached our shores but the effects have,” attorney Aaron Jophlin of the Bell Legal Group LLC in Georgetown, South Carolina, said in an interview. “We hear the effects from our friends and neighbors that, man, it’s already hurting us.”

Owners of condominiums and hotels in Alabama and the Florida Panhandle, where oil is now washing ashore on beaches regularly listed among those with the world’s whitest sand, have filed dozens of lawsuits over lost business. Charter boat operators, fishing guides, marinas, souvenir vendors and watercraft-rental shops as far south as the Florida Keys are suing.

Some of New Orleans’s largest convention hotels, including the Marriott Convention Center and Wyndham Riverfront, have sued over bookings they claim they will lose now and into the future. Meeting planners, who work years in advance, may avoid booking conventions in coastal resorts just as they did after Hurricane Katrina devastated much of the central Gulf Coast in 2005, lawyers for the hotels say.

Katrina Effect

While most New Orleans hotels and restaurants reopened fairly quickly after Katrina, “We still had a tail of lost business for a couple of years” as meeting planners avoided the region, said Steve Herman, a lawyer for the hotels.

Restaurant owners throughout the Gulf Coast are suing over higher seafood prices and the reduced supply of fresh shrimp, oysters and fish, as the National Oceanic and Atmospheric Administration has closed 32 percent of the Gulf to commercial fishing. About 75 percent of shrimp and 20 percent of all seafood consumed in the U.S. comes from the Gulf, according to papers filed in multiple lawsuits.

Restaurateurs also are suing over lost income, claiming customers are avoiding seafood altogether over fears of contamination.

Fishing Fleet

Whole fleets of fishing industry workers have arrived at Gulf courthouses, including 11,700 individually named Vietnamese-American commercial fishermen who filed six lawsuits against BP and Transocean in federal court in Houston.

Thirty-three Mexican citizens who own or work on fishing boats or in seafood processing plants along the U.S. Gulf coast have sued BP and Transocean over lost income from the closure of Gulf waters.

Residents in Kentucky and Tennessee, who own Gulf beachfront properties, have sued over lost income from rental cancellations as well as the lost enjoyment of their own vacation homes.

“BP has grievously injured the entire country, not simply a city, parish, county or state,” Houston attorney Michael Holley, who represents multiple spill victims, said yesterday in an interview. “Hundreds of thousands — soon to be millions — of Americans are seeking redress anywhere it can be obtained, and the litigation will continue to spread as the oil and the harm continues to flow.”

BP shares have dropped 48 percent since the spill. They fell 3.8 percent to 342 pence in London trading yesterday, the lowest price since April 1997.

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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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