Epic Oil Spill Trial Delayed: Talks “Progressing” Toward Huge Settlement Between BP and Plaintiffs


The “trial of the century” was supposed to begin today.

New Orleans District Court Judge Carl Barbier was scheduled to hear nearly seven hours of opening arguments as the kickoff to a trial that is, by all measures, epic – unrivaled in scope, legal intricacy and potential damages. The three-phase, non-jury trial was designed to allocate blame in the worst environmental disaster in U.S. history, determine pollution fines and potentially resolve tens of thousands of lawsuits filed by individuals and businesses seeking economic damages tied to the spill. As the chief defendant, BP could face upwards of $50 billion in fines and victim compensation, which would be by far the largest payout in the history of environmental litigation.

Anticipation down here on the Gulf Coast has sizzled for weeks, but the legal fireworks will have to wait as Judge Barbier made an eleventh-hour decision to postpone the trial until March 5 to allow increasingly tense settlement talks to run their course. Here’s how the London-based Financial Times set it up in a front-page report this morning:

The trial over the 2010 Deepwater Horizon disaster has been postponed by a week, it was announced last night, to give BP more time to reach a settlement with lawyers representing an estimated 116,000 plaintiffs seeking damages over the spill.

The trial, intended to resolve claims for damages and civil penalties from both private plaintiffs and the U.S. authorities, had been scheduled to start today. It is now due to start next Monday.

According to the order issued by Judge Barbier, the delay was permitted “for reasons of judicial efficiency and to allow the parties to make further progress in their settlement discussions.” And a joint statement from BP and the plaintiff attorneys representing the victims said they are “working to reach agreement to fairly compensate people and businesses affected by the Deepwater Horizon accident and oil spill.”

I’m not surprised by the postponement, and as I’ve mentioned before, I believe a partial settlement with the private parties will ultimately be reached (most likely before the new March 5 start date). This is a highly complex case with a dizzying number of moving parts so negotiations are slow-moving and deliberate. I don’t believe this week-long delay signals a settlement impasse but rather a need for more time to iron out specific details. Consider this from a Feb. 26 Associated Press report:

Roughly 340 plaintiffs’ lawyers have worked on the case. BP has spent millions of dollars on experts and law firms. More than 300 depositions have been taken. Millions of pages of legal briefs have been filed. One Justice Department lawyer said it would take him 210 years to read all the pages submitted into the record if he read 1,000 pages a day.

Although rumors are swirling that BP is trying to “shortchange” or “stonewall” plaintiffs, I’m hopeful a fair and reasonable settlement will be reached. More from the AP on the delay announcement, which was made on a conference call Sunday:

…the judge told those on the call that BP and the Plaintiffs’ Steering Committee were “making some progress” in their settlement talks. The steering committee is overseeing lawsuits filed by individuals and businesses following the explosion on the Deepwater Horizon rig on April 20, 2010, in the Gulf. The blast killed 11 workers and injured 17, and led to 206 million gallons (780 million liters) of oil spewing from the blown-out well, soiling miles (kilometers) of coastline.

However, the judge did not mention the status of settlement talks between other parties, nor did he mention any figures being discussed, according to the people close to the case.

Tens of billions in damages hang in the balance, and predictions as to the amount of a BP settlement have varied wildly. As I’ve said in the past, I believe a BP settlement of $30 billion would be “fair and reasonable” to cover violations of the Clean Water Act (i.e., pollution fines), and it seems consensus estimates are posting in that neighborhood. More from the AP report:

Financial analysts estimate BP could wind up paying anywhere from $15 billion to $30 billion over the lawsuits, and BP has estimated in regulatory filings that its total liability for the disaster is $40 billion.

An AP analysis found that the company could conceivably face up to $52 billion in environmental fines and compensation if the judge determines the company was grossly negligent.

The trial may not yield major revelations about the causes of the disaster, but the outcome could bring much-needed relief for tens of thousands of people and businesses whose livelihoods were disrupted by the spill.

The main drawback to the continuance is that it may have a cooling effect on the global media contingency that has gathered here in New Orleans. Let’s hope these throngs of international press hounds can stay a week or more in the Crescent City and bring badly needed attention to the human and ecological toll of this historic disaster. My hope is that reporters may now have time to visit the Louisiana coast – where fresh oil continues to wash ashore and where the sick are still not receiving aid or medical attention.

One of the brightest young international stars to cover the BP oil spill is Al Jazeera’s Dahr Jamail, who has doggedly pursued the truth from the very early days of this ongoing disaster. His reporting is as relentless as it is accurate. Read his latest piece here: http://www.aljazeera.com/indepth/features/2012/02/201222672657745221.html

We will continue to stay all over this late-breaking announcement and how settlement talks proceed in the coming days. So stay tuned.

Read the Financial Times report here: http://www.ft.com/intl/cms/s/0/ac0811fa-609c-11e1-84dd-00144feabdc0.html?ftcamp=published_links/rss/companies_energy/feed//product#axzz1nauRAeRl

Read the AP report here: http://www.usatoday.com/news/nation/story/2012-02-26/bp-oil-spill-trial/53258036/1

Read my previous post on a “fair and reasonable” BP settlement here: https://www.stuarthsmith.com/will-feds-offer-bp-a-sweetheart-settlement

© Smith Stag, LLC 2012 – All Rights Reserved

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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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