NEW ORLEANS/SAN FRANCISCO (Reuters) - BP’s attempt to get a U.S. federal court to pin at least a sizeable amount of the blame for the Deepwater Horizon disaster on other companies may have saved it billions of dollars.
After failing to settle claims from the 2010 Gulf of Mexico spill through negotiations, the British oil company opted in February to go to trial with plaintiffs ranging from small businesses to the U.S. government over the damages it will face.
The decision rests with U.S. District Court Judge Carl Barbier, who could issue findings on blame and the level of negligence as early as July.
Legal experts say BP appeared to succeed in shifting some of the blame for the disaster to rig owner Transocean Ltd (RIG.N) and cement provider Halliburton Co (HAL.N). In doing so, it may have shaved a slice off a liability that could stretch into the tens of billions of dollars.
BP (BP.L) “put their faith in the hands of the court,” said Blaine LeCesne, a tort law professor at Loyola University in New Orleans who has followed the trial closely. “It looks like that might have paid off.”
Of course, if Barbier determines that BP was grossly negligent then it could more than offset anything it has saved by getting the rap for the disaster shared more broadly.
LeCesne, and two other legal experts who followed the trial but spoke privately on the matter, believed BP had some success in offloading blame for the worst U.S. offshore spill, which was caused by a blowout on the Deepwater Horizon rig that killed 11 people exactly three years ago on Saturday.
During the trial last Wednesday, Transocean may have taken a hit from BP’s final witness, Andrew Mitchell, a 40-year veteran of the offshore oil industry and now an International Safety Management Code consultant.
Mitchell described the rig captain’s response to the crisis as “completely inadequate.” That came on top of Transocean’s previous admission that its employees misinterpreted a crucial pressure test on the well and evidence that a dead battery in the blow-out preventer kept the device from closing the well hole.
Transocean declined to comment on specifics of the trial, but said it remained confident in the case it presented.
Halliburton also took some blows. Last month the company belatedly introduced cement samples into evidence. Then this month, Halliburton produced documents, including test results BP lawyer Mike Brock said he would have liked to have had while Halliburton witnesses were still on the stand.
Another document included an email in which a Halliburton executive said their company was one of the “contributing parties” responsible for ensuring a sound cement job.
“It’s very troubling the way Halliburton has handled this entire matter,” Judge Barbier said of the documents, adding that he was considering whether to impose sanctions in response.
Halliburton did not respond to a request for comment.
Testimony in the first phase of the trial ended April 17. With an estimated 70 million pages of evidence to weigh, the parties have 80 days to file legal briefs as Barbier considers blame and negligence in the non-jury trial.
Phase two would determine exactly how much oil spilled so damages can be assessed, a process due to start in September. Legal sources say it is possible Barbier could delay announcing his phase-one trial conclusions until after the next phase, so total fines and penalties may not be known until 2014.
LeCesne expects BP could shoulder about 70 percent of the blame and that Halliburton might bear a heavier share of the rest due to testimony regarding the failure of its cement mixture in attempts to plug the well.
“I’d say Halliburton is likely to have an equal or higher percentage attributed to it than Transocean,” LeCesne said.
BP spokesman Geoff Morrell said the evidence presented at the trial showed BP was not grossly negligent and the accident was the result of “multiple causes, involving multiple parties.”
BP has been determined from the start of the oil spill to avoid the decades of litigation that Exxon Mobil Corp (XOM.N) endured after the 1989 Valdez accident in Alaska. But the complexity of BP’s case meant a last-minute deal in February was elusive, so it landed in court.
BP has already allocated $42 billion to cover clean-up, fines and other costs. A gross negligence finding by Barbier could add billions to the civil penalties and expose BP to punitive damages claims. BP’s liability under the U.S. Clean Water Act alone could reach $17.5 billion if BP is found grossly negligent. Billions more could be piled on in economic damage claims from Gulf Coast states, while a third set of claims, for natural resource damage, have not yet been filed.
Just in the past few days, the states of Mississippi and Florida have filed suit against BP over the spill. Louisiana and Alabama have been parties to the civil litigation for two years.
While some observers think the results of the trial’s first phase will prompt a settlement of many remaining claims, LeCesne believes the parties will continue to duke it out in court. He also thinks even if BP did reduce its share of the blame during the trial, a very costly ruling against BP is in the cards.
“It’s by no means a certainty, but I think it’s more likely than not there will be a finding of gross negligence,” he said.
John Levy, a maritime and complex litigation expert at Montgomery, McCracken, Walker & Rhoads, said all the money at stake is what made the Deepwater Horizon case special among maritime cases.
“On smaller cases, people will just work it out,” he said. “Here, you’re talking about numbers that end with the word billion. It’s worth fighting over.”
The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.
Reporting by Kathy Finn in New Orleans and Braden Reddall in San Francisco; Editing by Patricia Kranz and Matt Driskill