The worst environmental catastrophe in U.S. history, the Gulf oil spill, will almost certainly result in the biggest legal action in American history, according to a veteran litigator who has made a 23-year career out of successfully suing the petroleum industry over pollution issues.
The New Orleans based lawyer, Stuart Smith of Smith Stag LLC, who represents Louisiana’s commercial fishermen and environmental groups, said in an interview with Main Justice that he expects the scope of litigation, and the financial stakes, to be unprecedented.
With more than 300 lawsuits filed so far in Alabama, Florida, Louisiana, Mississippi and Texas, Smith has proposed that government prosecutors and private litigators coordinate their efforts, abandoning their traditional arms-length independence, rivalries and occasional distrust.
Smith said in a video interview, “I believe that yes, it is for the most part, pretty unprecedented in scope and size and the issues that are going to be presented with respect to the multi-jurisdictional issues, various state laws, the various different types of damages both economic and personal injury. It’s a very complicated, unprecedented case, yes.’’
President Barack Obama said earlier this week that the effort to stop the flow of oil into the Gulf is nearly over, but the work of lawyers is just beginning, with lawsuits piling up on the dockets of courts throughout the Gulf Coast.
BP announced earlier this week that it had made an initial deposit of $3 billion into a planned $20 billion oil spill recovery fund. Another $2 billion will be added in the fourth quarter of this year, BP officials said.
But that is not likely to stop the claims or investigations by state authorities in the region and, what may be the most significant potential legal action, the federal criminal inquiry which was announced in June by Attorney General Eric Holder.
The federal investigation is focusing on the actions of a number of companies involved in the spill, which resulted from an April explosion at the Deepwater Horizon drilling rig that killed 11 workers. As a result, several companies and their employees may be facing prosecution, and the total financial liability BP and other firms face is likely to be in the tens of billions of dollars.
It is not uncommon for criminal prosecutors and civil litigators to carry out inquiries on a parallel track in man-made disaster cases, and the Justice Department, if it chooses, can slow or halt civil litigation until criminal charges are adjudicated.
But that process could take years. Instead, Smith is proposing an alternative in the form of a loose alliance between government and private lawyers, a sharing arrangement as each proceeds with their inquiries.
In his view, the government would work cooperatively with private litigators, combining government resources with private litigators’ knowledge of the region and the day-to-day practices of the oil and gas industry. The cooperative approach would speed up evidence-gathering, forensic analysis and witness interviews.
A Justice Department spokeswoman declined to comment on the matter, but Smith, who has already served BP with civil subpoenas, wants to share the evidence he obtains with the government and wants the government to share its evidence with him and other plaintiffs’ lawyers.
The arrangement would, among other things, expedite discovery, the crucial process in which attorneys assemble documentary and testimonial evidence on which to base their cases.
“I’m not sure the government has the resources to do everything that needs to be done by itself,’’ Smith said, referring specifically to evidence that is currently being collected by the National Oceanic and Atmospheric Administration, Environmental Protection Agency and the U.S. Navy.
Smith says these agencies are currently collecting samples that will eventually become important evidence for civil lawyers and for criminal prosecutors. The outlines of the charges are increasingly clear, he said, centering around accusations that oil companies cut corners, failed to use proper equipment and overlooked safety hazards in an accumulation of problems that led to the explosion.
Smith, however, is not confident that government agencies, which lack experience in the culture and practices of the industry, are adequately coordinating efforts among themselves or that their personnel involved are sufficiently trained to know what evidence to collect, where to go to collect it and how to preserve the data in a form that would survive expected court challenges.
Smith said some evidence obtained by federal investigators could not be shared — for example, if it was obtained by criminal prosecutors using grand jury subpoenas. However, he said it is also likely that the same witnesses summoned to testify to a grand jury would also be deposed by civil lawyers seeking to establish that companies involved acted improperly.
A preliminary skirmish has been won by plaintiffs’ lawyers. A special judicial panel on multi-jurisdictional litigation ruled this week that most of the lawsuits, including wrongful-death claims by families of the 11 workers killed in the April 20 explosion of the Deepwater Horizon, will be heard in New Orleans by U.S. District Judge Carl Barbier.
That decision was reached after a hearing last month in Boise, Idaho, in which lawyers for BP and Transocean, which owned the Deepwater Horizon, had sought to have the cases moved to Houston. (The United States Panel for Multidistrict Litigation, which issued the ruling, is made up of seven district and appeals court judges, each of them selected by the Chief Justice of the United States).
“Without discounting the spill’s effects on other states, if there is a geographic and psychological ‘center of gravity’ in this docket, then the Eastern District of Louisiana is closest to it,” according to the panel’s decision.
The criminal investigation into the spill is largely based in New Orleans, though it is being closely supervised in Washington. A team led by a DOJ environmental crimes litigator, Howard Stewart, has moved into offices just a few blocks from the New Orleans federal courthouse.
There are still other legal claims. Separate civil suits have been filed by BP investors who say the spill caused the company’s share price to plummet, and those will be consolidated under U.S. District Judge Keith Ellison in Houston.
For its part, BP has formed its own all-star legal team, hiring Jamie Gorelick of Wilmer Cutler Pickering Hale and Dorr LLP and a former Deputy Attorney General to help the company navigate the multiple congressional inquiries now underway. BP has also brought in Mark Filip, a former Deputy Attorney General and partner at Kirkland & Ellis LLP, to help the company respond to the criminal investigation.
Other companies with potential exposure have hired their own firms. Transocean ltd., which leased the Deepwater Horizon to BP, has hired Skadden, Arps, Slate, Meagher & Flom, and Halliburton Co., which also worked on the drilling rig, has hired Patton Boggs LLP.
