Explosion at Sea: Deepwater Horizon

      Photo Credit: http://www.wired.co.uk/news/archive/2010-07/14/deepwater-oil-spill-future

Welcome Law Students:

This website contains links that might be helpful for students who are looking at the BP case for examples of various legal rules in action.  You might want to read the Summary essays below, browse through the Case Chart to find interesting plaintiffs, and use the Parties page to get a general feel for all the interested individuals, small businesses, corporations, non-profits, governmental and defending parties, or use the links on the left to get information from a variety of sources.

Although this website is no longer being updated, the links on the left to the Official MDL website will lead you to current developments in the litigation.


On April 20, 2010, an explosion occurred aboard the oil rig Deepwater Horizon which led to one of the most devastating environmental disasters ever faced by the United States.  The consequences of the explosion and resulting oil spill have been similarly grave, affecting the lives of individual workers, the economy of the gulf states, and, potentially, the welfare of other nations.
The explosion itself impacted the lives of 126 workers aboard the rig; leaving 11 missing and 17 injured.  Survivors of the explosion have made accounts of the events surrounding the incident.  The statements describe the operation of the rig up to the explosion as a "nightmare", decry the owner and operator's negligence, and allege poor treatment after workers fled the wreckage.  Those aboard the rig further allege that after the evacuation, Transocean confined workers against their will until they "decided" to sign contracts releasing Transocean from liability for any personal injuries they may have sustained.
The oil spill resulting from the explosion has had even more widespread and profoundly complex ramifications.  The economies of the southern states has been acutely compromised.  Sundry individuals have suffered economic harm to their businesses, property, and health due to exposure to the oil as it makes its way to shore.  In particular, fishermen in the Gulf have been put out of business due to fishing bans, and tourism has waned due to popular opinion that the Gulf is an unsafe location to visit.
Furthermore, on May 27th, President Obama issued a moratorium on deep sea drilling.  The moratorium has had the dual effect of allowing researchers and legislators time to ponder new measures to ensure safety in drilling, but also sending oil rig workers home without paychecks.  Because of the latter effect, the moratorium has been hotly contested, in particular by the wives and families of those who were on the Deepwater, while President Obama has sought to further extend the suspension.
Wildlife and protected marshlands, too, have sustained damage, and attempts to protect and clean them have led to power struggles and harm to cleanup workersCleanup efforts, led by BP and the U.S. Coast Guard, continue in the attempt to mitigate the oil slick.  However, actions taken by BP, especially the pouring of chemical oil dispersants in the ocean, refusal to provide protective clothing, and the impact of controlled burns, may have implications for the health of cleanup workers and the rest of the environment.  The EPA has attempted to curb the use of chemical oil dispersants, with mixed results.
Both BP's conduct and the regulation of the oil industry's safety standards have been harshly criticized.  A criminal and civil investigation commenced against BP on June 1, and legislative hearings have publicly shamed BP executives.  Safety concerns from the failure of the blow out preventer aboard the rig to the failure in the "cementing" process (for which Halliburton was seemingly responsible) cast further shadows on many players in the industry.  These investigations and safety failures, in turn, have had an impact on shareholders in the responsible companies, who have watched their stocks' value deplete as much as 50%.
Finally, the potential international implications are as yet unknown.  However, as oil reaches the Gulf's loop current, it may begin to wash up on foreign shores, and cause the same disturbances abroad which have been felt in the United States.  Prior oil spills have had similar international effects, and it is still unknown whether any other countries will decide to enter the fray of litigation commencing against BP and the other defendants.
Legal Implications

Several categories of claims are at issue in the litigation arising from the oil spill in the Gulf, most important amongst them are: ordinary tort and admiralty (class actions), personal injury/wrongful death, derivative shareholder suits, the Hornbeck decision, and RICO and environmental claims.


Defendants in these actions include (but are not limited to) BP, who leased the rig and was responsible for the majority of the decisions made aboard the rig, Transocean, who owned the rig, Cameron, who made the blowout preventer, Anadarko and Mitsui, companies that also had stakes in the well, and Halliburton, who was responsible for the cementing.  Potential plaintiffs range from shareholders in the various defendant corporations, to restaurateurs, fishermen, hotel owners along the Gulf, victims of the explosion, workers aboard rigs in the Gulf, cleanup workers, governmental agencies and non-profits.


Many legal issues may lead to diminution in the recovery of plaintiffs for individual claims.  One of these issues is the foreseeability prong of the proximate cause element in all of the negligence claims.   In order for plaintiffs to prove negligence, they must prove not only that the defendants' actions actually caused their injuries, but also that the connection between those negligent acts and the harm sustained was not too remote and attenuated; the harm has to be reasonably foreseeable.


The more central limitation on negligence, however, is a limit on the duty of defendants called the pure economic loss rule.  Under this rule, when the claim is for negligence, a defendant has no liability for a purely economic claim, such as for loss of business.  The economic claim has to "piggy-back" onto another claim, such as a physical injury which caused the loss of income, a harm to property, etc.  In this case, the rule could ironically be used to limit recovery of deserving fishermen.


A further statutory limitation is the Oil Pollution Act of 1990.  The OPA was created after the Exxon-Valdez oil spill, and does allow claims for economic harm.  While it creates causes of action for property owners, for loss of subsistence use, and for claims by public entities, it also imposes a cap of $75 million per responsible party.  However, if the accused can be shown to have been grossly negligent or engaged in willful misconduct, or if the act was proximately caused by breaking a federal regulation, the cap may be lifted.


The creation of the claims fund (Gulf Coast Claims Facility or GCCF) administered by Kenneth Feinberg has also caused a great deal of confusion and discord amongst the parties.  Plaintiffs are uncertain of the finality of their recoveries from the fund, i.e. whether or not any monies received from the fund represent a conclusive settlement as against BP (or other defendants). 


At the bleeding edge of the litigation battle is the current consideration of the Transocean's petition for limitation of liability in Judge Barbier's court in the MDL consolidation.  The court is considering liability of all parties, and, particularly, the petition of defendant Transocean to limit their liability to about $27 million using a federal statute enacted in 1851.  Due to the application of the collateral source rule (which bars mention of insurance in consideration of damages in negligence proceedings), Transocean could actually stand to gain a windfall, Producers-style, from the explosion aboard Deepwater Horizon.  Transocean will be receiving insurance money for the explosion, while limiting their liability to injured parties to only the value of the damaged rig, a potential outcome which legislators and the DOJ have been openly decrying.   

Also, in order for these decisions to be binding on potential plaintiffs (through preclusive effect), the plaintiffs must actually be parties to the action, and so the Plaintiff's Steering Committee (PSC) has created a website to provide further notice to affected persons (link is located on the left navigation bar under "Useful Links" or here).


Finally, the defendants have been engaging in a great deal of dissension based on contractual stipulations and in-fighting as they all rushed to point the finger at each other.  Most notably those co-owners engaged in the business endeavor with BP have been trying at all costs to ensure that BP shoulders all the blame for the explosion.