Originally posted by Sheila McNulty - Financial Times - June 7, 2010
It took two decades and more than $1bn (€836m, £690m) in damages for ExxonMobil to resolve the last of the lawsuits from the 1989 Exxon Valdez oil spill in Alaska.
BP’s ongoing spill in the Gulf of Mexico is already bigger, and not only Louisiana’s fragile marshlands but also the tourist-filled beaches stretching to Florida are under threat from an estimated 12,000-19,000 barrels of oil per day gushing into the sea.
“BP is saying they will pay legitimate claims, just like Exxon said after the Valdez oil spill,” said Scott Summy, lead attorney at Baron & Budd, representing 18 fishermen in lawsuits against the UK company. “Yet once publicity died down, Exxon litigated for over 20 years.”
Despite BP’s mantra that it will pay “all legitimate claims’’, Mr Summy questions how hard it will be to get the company to do that.
BP said on Monday it did not comment on legal matters.
Tracy Hester, director for the University of Houston’s Center for Environment, Energy and Natural Resources Law, said the federal offshore damages cap for spills of $75m would not apply to most of the claims for BP to cover clean-up costs, tort lawsuits, shareholder lawsuits, civil or criminal penalties and any state claims.
“The scope of the lawsuits that could be brought to bear here will not be limited by the cap,’’ Mr Hester said. “Until the well is capped and the losses are filed, it’s very difficult to predict what any total liability might be.’’
BP could follow Exxon’s example, which was to voluntarily pay $300m to more than 11,000 Alaskans and businesses immediately after the accident. In the end, the courts only ordered an additional $25m payment to some groups that had been overlooked.
BP already says about 37,000 claims have been submitted and 18,000 payments have been made, totalling approximately $48m.
But Robert Gordon, lawyer at Weitz & Luxenberg, representing more than 500 commercial fisherman in lawsuits against BP, said the company’s initial payments of $5,000 to boat owners and $2,500 to fishermen were inadequate considering the spill had not yet been stopped.
The Exxon Valdez litigation went on for so long because the company argued the original punitive damages ordered, $5bn, was excessive – an assessment the US supreme court agreed with, leading to a final payment of $507m and $470m in interest in 2009.
The public and legal pressure on BP might well be more severe than against Exxon, however, given that many Americans have visited the states affected in this case: Louisiana, Mississippi, Alabama and Florida.
For now, the lawsuits against BP have centred on those whose livelihoods have been threatened, as well as the victims and families of those on board the BP-contracted rig when it exploded on April 20, killing 11 and injuring 17.
Brent Coon & Associates, the key firm handling the lawsuits against BP from its Texas City refinery explosion in 2005, is representing Stephen Stone, who was injured in the rig blast.
In the refinery case, the firm refused to settle until BP agreed to make $32m in worker training and healthcare donations, and that plaintiffs could release all 7m of the documents uncovered to federal agencies.