BP Settlement Claims

Gulf Coast Disaster News

BP Suits Top 300 on Claims by Workers, Mall, Sheriff

July 16, 2010, 11:29 am

Originally posted by Laurel Calkins - Bloomberg - July 15, 2010

July 15 (Bloomberg) -- BP Plc faces more than 300 lawsuits seeking billions of dollars in potential claims as damage from the worst oil spill in U.S. history ripples through the nation’s Gulf Coast economy.

A regional shopping mall in southern Louisiana sued July 12 in New Orleans federal court over the loss of customers, a parish sheriff filed suit there July 9 to recover lost business tax revenue, and growing numbers of BP employees and investors lodged claims over alleged corporate mismanagement that caused BP’s share price to fall by half. The complaints surpassed 300 yesterday, according to court records compiled by Bloomberg.

These lawsuits join scores of proposed class actions filed by commercial fishing companies, beach-front property owners, restaurant owners and environmentalists claiming harm from the drifting oil. Legal experts said the number of suits will continue to rise after the damaged well has stopped gushing oil.

“There are more than 100,000 individual damage claims filed in the BP claims process, so we’ll probably see a multiple of that number of court cases before it’s all said and done,” Houston attorney Brent Coon said today in a telephone interview.

Coon said he’s filed “very few” lawsuits so far on behalf of the 100 spill-related clients he represents, because he’s waiting to see whether London-based BP pays claims from the $20 billion fund the company created for that purpose.

Michael Salt, a spokesman for BP, declined to comment.

New Lawsuit Phase

The lawsuit for lost tax revenue filed July 12 by the Tensas Parish, Louisiana, sheriff may be the first of a new phase of lawsuits. Such claims by state and local governments seek money to cover budget shortfalls caused by the spill’s impact on local businesses, said New Orleans lawyer Stephen Herman.

Herman told the New Orleans City Council in late June that claims for lost municipal tax revenues are specifically covered by the federal law governing BP’s oil spill claims-payment process.

“It seems to all be spelled out in the Oil Pollution Act of 1990, but so far BP is not committed to paying lost tax revenues,” Herman said in a phone interview.

The 1990 law states that “damages equal to the net loss of taxes, royalties, rents, fees or net profit shares” can be recovered by the U.S., states or a “political subdivision.”

Injured Worker

Injured Deepwater Horizon worker Oleander Benton and the children of deceased rig crew member Keith Manuel also filed separate lawsuits in the last week in state court in Houston and New Orleans federal court, respectively. Their suits, against BP and Transocean Ltd., which owned the rig, are among those filed by 40 survivors or relatives of the 126-member crew that was onboard the Deepwater Horizon when it exploded off the Louisiana coast on April 20, killing 11.

Estimates of BP’s ultimate payout over the spill are rising along with the number of lawsuits. Analysts in May estimated costs of judgments and claims wouldn’t exceed $20 billion. A June 2 Credit Suisse report assessed BP’s liabilities at $37 billion in cleanup and potential litigation expenses. Three weeks later, oil analyst Fadel Gheit, at Oppenheimer & Co., put the financial hit from the Deepwater Horizon rig disaster as high as $60 billion.

“We don’t know what the ultimate cost to BP will be,” Coon said. “The oil is still spilling, and we don’t know how far it will go, or what dispersants will do to the underwater plumes, or whether a hurricane will cause deviations in the projected path. We just don’t know.”


Lawyers will ask a panel of federal judges in Boise, Idaho, on July 29 to consolidate the cases into two multidistrict litigations, or MDLs, to streamline pretrial rulings, evidence- gathering and organization.

One MDL would cover economic loss and environmental damage claims in a dozen states. Most of these cases also name as defendants Transocean Ltd., Halliburton Energy Services, Cameron International Corp. and Anadarko Petroleum, all of whom allegedly played a role in the spill. BP has asked the Boise panel to consolidate the cases in federal court in Houston, while attorneys for multiple plaintiffs are seeking assignment to New Orleans.

The other MDL will cover lawsuits by investors in BP U.S. shares who claim the company’s officers failed to disclose safety problems, artificially inflating stock value, or that management failures led to the spill.

“BP’s procedures for minimizing its financial losses from drilling rig problems were no more than fantasies,” according to a complaint in a shareholder class action filed in Lafayette, Louisiana. “BP was simply not the enterprise that its public communications pictured.”

BP Workers

This MDL might not cover the growing number of lawsuits by BP’s U.S. workers claiming the company breached its duty to them in managing the employee savings plan, said attorney Thomas Ajamie in Houston. These lawsuits claim BP and retirement savings plan managers knew or should have know that investing in the oil company was imprudent.

“We don’t think an MDL would be proper for our case,” said Ajamie, who filed a class action in federal court in Chicago July 7 for U.S. BP employees. So far, at least six of these cases have been filed, five of them in Chicago, two this week. The lawsuits are in Chicago because the BP plan is administered there, Ajamie said. Plaintiffs lawyers involved should be able to develop the cases without an MDL, Ajamie said.

Lawyers in these cases claim the company’s value has been hurt not only by the spill but also by funds BP must pay to clean up the spill and compensate victims.

“As BP’s $20 billion fund reduces the damages for everyone else in this courtroom, it increases the damage to the shareholders,” Michael Swick, a lawyer representing BP investors said last month in a New Orleans court hearing over spill claims.

Private Parties

Compensation sought by private parties may be dwarfed by claims by governments, including the U.S. and the Gulf states, over damage to natural resources. The Oil Pollution Act of 1990 requires those responsible for oil spills to restore a resource to its pre-incident condition, or provide an equivalent to offset the loss, such as to wildlife habitat, breeding stocks and clean water.

The U.S. and state governments began assessing possible damage by early May to determine the type and amount of restoration needed, according to the National Oceanic and Atmospheric Administration.

“If the standard Louisiana sets for cleaning up the spill is to go wipe the oil off of every blade of grass in every marsh and recreate every estuary, that’s going to take more than the value of BP to do that,” Coon said. “It will take umpteen billions of dollars to recreate the estuaries, maybe trillions of dollars.”

--With assistance from Allen Johnson Jr. and Leslie Snadowsky in New Orleans. Editors: David E. Rovella, John Pickering

Brent Coon discussing Oil Spill Settlement

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