Aug. 10 (Bloomberg) -- BP Plc must face hundreds of lawsuits in federal court in New Orleans because the city is closest to the site of the largest offshore oil spill in U.S. history, a panel of judges ruled.
“Without discounting the spill’s effects on other states, if there is a geographic and psychological ‘center of gravity’ in this docket, then the Eastern District of Louisiana is closest to it,” the panel said in its decision today.
U.S. District Judge Carl Barbier will preside over more than 300 suits, including wrongful-death claims by families of workers killed in the April explosion of the Deepwater Horizon drilling rig. Claims also cover revenue lost by Gulf Coast businesses and environmental damage.
Barbier has “considerable” experience with multidistrict litigation and “has been already actively managing dozens of cases in this docket,” the judges said. BP investors’ suits over losses tied to the spill will go to federal court in Houston.
Barbier today set Sept. 17 for an initial conference for organizing the lawsuits in his court.
Government scientists estimated that the well spewed more than 4 million barrels of oil into the Gulf of Mexico, making it the largest accidental maritime oil spill. The leak was about 16 times larger than the estimated 257,000 barrels lost after the Exxon Valdez ran aground in Alaska in 1989.
BP has set aside $32.2 billion to pay spill costs and legal claims. The London-based company, which is selling $30 billion of assets, decided to replace Chief Executive Officer Tony Hayward after reporting a record quarterly loss of $17.2 billion.
$49 Billion Estimate
Fadel Gheit, an Oppenheimer & Co. oil analyst, estimated damage from the disaster may be as much as $49 billion. Homes in Gulf Coast states may lose as much as $56,000 apiece in value as buyers avoid areas marred by the spill, according to CoreLogic Inc., a real-estate data company.
BP is working to permanently plug the Macondo well, 40 miles (64 kilometers) off the Louisiana coast. Oil fouled beaches and marshes in that state along with Mississippi, Alabama, Texas and Florida, prompting lawsuits by commercial fishing interests, beachfront-property owners and environmentalists claiming harm from drifting oil.
“The decision is welcome news for Louisiana and our people, who have been at the epicenter of this tragic event,” Louisiana Governor Bobby Jindal said today in a statement. The state supported consolidation in New Orleans. “Our people have been severely impacted by the spill.”
The U.S. government and some lawyers representing the spill victims also wanted the cases consolidated in New Orleans, the largest city near the spill site.
“Louisiana is bearing the brunt of the blow so far,” plaintiffs’ lawyer Jere L. Beasley of Montgomery, Alabama, said today in a phone interview. “From the victims’ standpoint, you couldn’t have a better location.”
BP sought to have the Judicial Panel on Multi-District Litigation consolidate the cases in Houston, home to BP’s U.S. headquarters. Other suggested consolidation sites included Miami as well as Mobile, Alabama, and Gulfport, Mississippi.
“We are aware of and respect the decisions of the Judicial Panel on Multidistrict Litigation on consolidating various federal court cases,” Scott Dean, a BP spokesmen, said in an e-mailed statement. “We look forward to the cases proceeding as expeditiously and efficiently as possible.”
At least six of the 12 actives judges in the New Orleans district have recused themselves because of oil industry investments and ties to lawyers or companies involved in the litigation, according to Gene Smith, a deputy clerk.
“Judge Barbier is an exceptional jurist, who would be a wise selection for this assignment even had those other judges in the district been available,” John G. Heyburn II, chief judge for the panel wrote in today’s five-page decision.
BP and a Halliburton Co. unit sought to have Barbier step down from spill cases because he owned bonds issued by Transocean Ltd., the owner of the Deepwater Horizon rig, and Halliburton, which provided cementing services for BP’s well. The companies failed to persuade the U.S. Court of Appeals in New Orleans to order Barbier to recuse himself in the cases.
“Barbier is an old admiralty lawyer, and he knows the Oil Pollution Act,” said Louisiana attorney Daniel Becnel, who has attended several hearings in oil-spill cases already consolidated in Barbier’s court. “The panel wanted a judge that’s going to try cases, and Barbier was going faster than anybody else.”
Claims by BP investors who sued over billions in stock losses caused by the plunge in BP’s share price since the spill will be heard in a separate consolidation under U.S. District Judge Keith P. Ellison in Houston.
Because of the $20 billion fund BP has established to pay spill claims, “the securities cases may have more value in the long run than the economic loss cases,” said Houston attorney Mark Lanier, who represents plaintiffs in investor and economic loss lawsuits.
The cases before Ellison will include civil securities fraud claims, shareholder derivative actions, and claims by employees over losses in company retirement savings plans, according to the court order. Lawyers for claims brought on behalf of employees will be given the chance to argue why they shouldn’t be included in the BP securities multidistrict litigation, the panel said.
Ellison already is involved in the oil spill litigation, having presiding since May over a case in which Switzerland-based Transocean is trying to limit its liability for damage claims. The Transocean case is now slated to be transferred along with the other BP spill-damage claims to the New Orleans judge handling non-securities damage claims from the spill.
The seven-judge multidistrict litigation panel, created in 1968, meets periodically in sites around the U.S. to decide whether lawsuits in different federal districts have common factual questions that can be decided once and applied to all cases. The group heard the BP arguments in Boise, Idaho, on July 29.
The process is designed to streamline the exchange of evidence and avoid duplication. Once pretrial proceedings are completed, the individual cases are sent back for trial in the courts where they were first filed.
The main MDL case is In Re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 2010, MDL Docket No. 2179.
To contact the editor responsible for this story: David E. Rovella at email@example.com.