Oil spill a magnet for lawyers

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Scientists, U.S. Coast Guard sailors and thousands of volunteers have come to the coast of the Gulf of Mexico in a massive effort to clean up the oil gushing from an offshore BP oil well that officials now fear could hit the Louisiana shoreline later this week.

Lawyers, too, have rushed to the coast.

As many as 70 lawsuits have been filed against BP PLC , as well as Swiss-based Transocean Ltd., which owned the Deepwater Horizon oil rig, and Halliburton Energy Services Inc., which also worked on the well. Before a Congressional hearing Monday, executives from all three companies pointed blame at each other.

In addition to lawsuits from families of workers killed or injured in the April 20 explosion that sunk the oil rig, class-action lawsuits have been filed on behalf of fishermen, oystermen, shrimpers, crabbers, seafood wholesalers and processors, beachfront condo owners and sport-fishing boat operators. Some BP shareholders have launched a lawsuit alleging BP directors failed to improve safety procedures after previous accidents.

BP, which like the other companies involved has said it would not comment on litigation, has pledged to pay for the cleanup and says it has already spent $350-million (U.S.) on the effort as it tries to cap the gushing well thousands of metres below the surface.

"We will absolutely take responsibility for cleaning this up," BP CEO Tony Hayward told CNN, adding that the company would offer compensation to those affected. "We will honour all legitimate claims."

Analysts estimate the final bill for the cleanup and legal fallout could be in the tens of billions of dollars. It's a legal mess to rival the actual mess on the waters of the Gulf. And many have pointed out that it echoes the 20-year legal fight that erupted after the Exxon Valdez oil-tanker spill sloshed millions of litres of crude onto Alaska's coast in 1989.

Brad Marten, a leading U.S. environmental lawyer in Seattle who represented the state of Alaska in the Exxon Valdez case, said the class actions are just one piece of what promises to be an extremely complicated legal battle, possibly more complex than the Exxon Valdez case.

For example, the U.S. federal government could file a number of civil claims - as well as criminal prosecutions - on behalf of different government agencies, including the Coast Guard, the National Oceanic and Air Administration and the Department of the Interior.

In the Exxon Valdez case, the oil company agreed to pay close to $1-billion for what are known as natural resource damages, to compensate for the destruction of wildlife or other resources. He said this could end up a major factor in the BP case.

"Natural resource damages are basically injury to the critters," said Mr. Marten, who rushed to Alaska as soon as he got word of the spill. " … In Alaska, they were kind of cute. They were otters and whales and birds and eagles. So they were very charismatic. I'm not sure we quite have that in the Gulf, but I am sure people are fond of their shore birds and such there as well."

State and city governments may also make claims. Meanwhile, competing class action lawyers will jostle over how their cases are grouped together, where they are heard and which lawyers take the lead. Insurance companies may also be dragged into court.

Plus, there might be litigation between the companies involved over who pays out what, Mr. Marten said: "It gets really, really complicated, really fast."

Steven Fineman, the New York-based managing partner of Lieff Cabraser Heimann & Bernstein LLP - which is part of a legal team launching class actions on behalf of fishermen, seafood plants and chartered boat operators in four gulf states - said he doesn't think the case will drag on the way Exxon did.

He said some of the thorny legal issues that may arise - such as the proper size of punitive damages - are clearer now than in the Exxon case, in which his firm was also involved. And he said the Oil Pollution Act, passed in 1990 after the Exxon Valdez disaster, allows for a faster claims process: "I don't think it will be anything like what happened in Exxon."

But before any real action starts on the claims, the U.S. Judicial Panel on Multidistrict Litigation must decide where all of the class-action pretrial matters will be heard. According to Associated Press, BP wants all of the cases referred to a judge in the oil industry capital of Houston.

Don Barrett, a lawyer in Lexington, Miss., working on lawsuits against BP, said the pretrial motions should be heard elsewhere, perhaps in Florida, closer to the victims.

Residents and businesses along the Gulf Coast are angry and fearful, he said, waiting for the oil to come ashore or for word that somehow, the oil company has stopped the flow. Mr. Barrett said people are worried that they aren't getting the full story from either the company or the government. "Nobody believes that the government … has a handle on what to do about it."

Counting the cost of Exxon Valdez

330

Number of civil lawsuits filed after Exxon Valdez oil tanker ran aground off the coast of Alaska in March 1989.

$125-million (U.S.)

Amount Exxon paid in fines and restitution for crimes under U.S. environmental laws.

$900-million

Amount Exxon agreed to pay to the U.S. and Alaskan governments to be used to repair damage to natural resources, such as animal habitats.

$287-million

Amount originally demanded from Exxon by jury for compensatory damages in civil lawsuits in 1994.

$5-billion

Amount awarded in punitive damages, which Exxon appealed.

$507-million

Amount awarded in punitive damages by U.S. Supreme Court; including interest, it came to about $1-billion.

$15,000

Average award to 33,000 class action claimants against Exxon.

Source: Brad Marten, Marten Law.