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Oil Spill Lawsuits Come Quickly

by Jared Newnam
June 29, 2010

The Deepwater Horizon oil rig explosion and the resulting oil spill in the Gulf of Mexico have ignited countless legal issues for oil company BP and its contractors. More than 100 lawsuits related to the spill were filed just in the first two months following the April 20 accident and many are class-action suits filed on behalf of groups of victims. 

The types of lawsuits stemming from the disaster range from personal injury and loss of business to noncompliance with environmental laws and jurisdictional issues, legal experts say. Even BP shareholders have filed a class-action suit in which they allege a history of safety lapses, cost cutting, and workplace disasters and claiming the company misled investors. The suit, filed in the U.S. District Court for the Eastern District of Louisiana, seeks to represent people from all around the world who bought shares in United Kingdom-based BP. 

Closer to home, the spill has affected local fishermen and fish sellers, businesses who depend on tourists, people who own property and those who eke out a living on the coast. The sooner plaintiffs address their legal concerns the better, says attorney Karen Hanson Riebel. That’s the lesson Riebel took away from her work as a member of a trial team that initially won a $5 billion jury verdict for punitive damages in the Exxon Valdez oil spill litigation. Riebel’s Minneapolis law firm, Lockridge Grindal Nauen P.L.L.P., spent two decades on a class action suit that began with 32,500 class members. By the time the case reached the Supreme Court in the fall of 2007 almost 20% of the class members had died. 

“Time is the enemy,” she says. Those affected by the BP oil spill have got to jump on any litigation now, Riebel believes. “People think it’s unseemly that there are lawyers there now, but there’s got to be a good process and people have got to be paid.” 

Riebel was in New Orleans in late May for the Louisiana State Bar Association’s Gulf Coast Oil Spill Symposium where she and her law partner Richard Lockridge gave a presentation called the Exxon Valdez Experience. 

There are many similarities between the kinds of litigation involved in the Exxon spill and what likely will come up with the BP spill, she said. Plaintiffs will include those in the fishing and tourist industries but also city, county, and state governments that may find their infrastructures taxed as much by the cleanup as the spill itself. The influx of people coming into the communities to clean up the spill and the reporters who are there to cover it could strain the sewage and water systems of some municipalities, Riebel said. Cities could make claims for the increased costs in public services such as police and emergency personnel.  

There could be recreational use claims because jurisdictions and the tourist industry will lose revenue from the loss of visitors. At the end of May, Florida hotels along the coast had reported that reservations were down 30% to 40%. Local governments could also claim losses for the lack of incoming sales tax due to the lag in the tourist industry. Plus, there likely will be lost revenue since people won’t be buying fishing licenses. 

Riebel predicted that the people who will be hurt the most are those who subsist on what they harvest from the ocean along that coast. Their losses may be difficult to prove. Many people rely on fishing in Gulf waters for the food they eat, and those victims aren’t likely to hang around for a claims program, she said. Smaller businesses will have a hard time recouping their losses through litigation. 

“It’s hard for individual fishermen,” Riebel says. “They don’t necessarily keep good records and save things they need to save to prove what they may have lost in a disaster like this. … A hotel in Florida will have occupancy data. A small shrimping rig may not have the records to prove their losses.” 

The Valdez oil spill happened in 1989. Monetary damages for the cases Riebel worked on were not finalized until 2009, after Exxon successfully appealed earlier verdicts all the way to the Supreme Court. The final settlement was $507.5 million in punitive damages, a fraction of the original $5 billion jury verdict. 

“We had a huge population of plaintiffs that never saw the end to the litigation,” Riebel says. “That’s the big lesson.”

by Jared Newnam
June 29, 2010
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