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BP Settles Claims, Ends Texas Refinery Blast Trial (Update2)

By Laurel Brubaker Calkins and Margaret Cronin Fisk

July 22 (Bloomberg) -- BP Plc, Europe's second-biggest oil company, again avoided a jury verdict over a deadly 2005 explosion at its Texas refinery by settling claims of four injured workers before all evidence could be presented in their cases.

Four previous blast-related state court trials ended before jurors could be seated or all evidence heard. The latest settlement comes as testimony was to end this week in a Galveston, Texas, trial that began with jury selection May 22. Terms of the agreement weren't disclosed.

``We are pleased to have resolved substantially all of the claims arising from the March 23 explosion,'' BP spokesman Scott Dean said in an e-mailed message. ``Our goal from the outset has been to fairly compensate people harmed by this tragedy. We deeply regret what occurred and are working hard to become an industry leader in the areas of personal and process safety.''

BP has now settled almost all of the more than 4,000 injury and property-damage claims generated by the March 23, 2005, explosion at its largest refinery, which killed 15, injured hundreds and shattered windows up to five miles away. The company set aside $2.1 billion to resolve all blast-related claims. Terms of all settlements are confidential.

``BP received warning after warning after warning that something like this was going to happen, for years and years,'' plaintiffs' lawyer Brent Coon said in opening statements May 27. ``Not only did BP not operate that plant safely that day, but they'd not operated that whole plant safely for decades.''

Potential Punitive Damages

The settlements effectively end more than three years of litigation and BP's exposure to potential punitive damages awards in the billions of dollars. Fewer than 10 claims remain and these could be tried in September, if settlement talks fail.

BP admitted responsibility for the blast, while saying it never intentionally jeopardized workers. The incident occurred when an octane-boosting unit overflowed as it was being restarted. Gasoline spewed into an inadequate vent system, called a blowdown drum, creating a vapor cloud that exploded.

Lawyers for the injured workers said company documents, internal e-mails and testimony from executives proved BP recklessly endangered workers by slashing operations and maintenance budgets in spite of rising safety concerns.

``We've been talking settlement for months and slowly getting closer and closer,'' Coon said in a telephone interview today. ``In the last days of trial, BP circled back and made a settlement with us. I can only think they thought our case went very well.''

Current Trial

The complaints by the four workers in the current trial ranged from back and limb injuries to hearing loss and post- traumatic stress, similar to injuries claimed by plaintiffs in earlier trial groups. BP denied the injuries were related to the explosion.

``Within 24 hours, BP took responsibility for what we caused, and we've never deviated from that,'' BP lawyer Jim Galbraith told prospective jurors in May. ``We're here because we have a dispute with these 10 people about the nature and the extent of their injuries.''

Six of the 10 plaintiffs who originally presented claims in this trial settled with BP on July 8. Almost 200 outstanding claims have been resolved since the trial began, as lawyers negotiated while testimony proceeded.

Coon told jurors he wanted $950 million in punitive damages to punish BP for consciously choosing to scrimp on maintenance and safety to save money. ``You can punish them into bankruptcy,'' he told jurors in his opening statement.

$50 Million Fine

BP agreed to pay a $50 million fine and complete three- years' probation to end a federal criminal investigation of the explosion. Victims' lawyers are urging U.S. District Judge Lee Rosenthal in Houston to reject the deal as ``shockingly lenient'' and to require court supervision of BP's safety improvements.

Rosenthal postponed acting on BP's plea until at least October, so she can review information on victims' medical bills and lost wages. She also requested reports on BP's compliance with a post-blast settlement reached with the U.S. Occupational Safety and Health Administration, which fined BP $21 million for more than 300 safety violations linked to the explosion.

The U.S. Court of Appeals in New Orleans ruled May 7 that federal prosecutors ignored victims' rights by not consulting them before cutting the BP plea deal. The three-judge appellate panel didn't block the plea, and victims' lawyers indicated they may still challenge the deal with Rosenthal and at the U.S. Supreme Court.

The civil lawsuits are consolidated in Arenazas v. BP Products North America, 05CV0337, 212 District Court, Galveston County, Texas (Galveston).

The criminal case is U.S. v. BP Products North America Inc., 07-cr-434, U.S. District Court, Southern District of Texas (Houston).

To contact the reporters on this story: Laurel Brubaker Calkins in Galveston, Texas, at laurel@calkins.us.com; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

Last Updated: July 22, 2008 12:44 EDT

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