Bloomberg News

Cameron Asks Court to Derail February BP Gulf Spill Trial

December 13, 2011

(Updates with law professor’s comment in 11th paragraph.)

Dec. 13 (Bloomberg) -- Cameron International Corp. asked a federal appeals court to derail a trial set for February to determine which companies should be blamed for the 2010 BP Plc oil spill in the Gulf of Mexico.

Cameron, which made the blow-out prevention equipment used for the Macondo well, asked the U.S. Court of Appeals in New Orleans to throw out the existing trial plan and rule that claims against the company should be tried before a jury. U.S. District Court Judge Carl Barbier, who is overseeing much of the spill litigation, has scheduled a nonjury trial for Feb. 27 in New Orleans to determine liability and apportion fault.

Barbier plans two subsequent nonjury phases on the size of the spill and efforts to contain it. Test jury trials on damages to victims would follow, the judge has said. Cameron said that trial plan violates its constitutional rights.

“The proceeding envisioned by the district court’s plan is not a ‘trial’ as it is known in Anglo-American law,” Cameron, a defendant in hundreds of lawsuits over the explosion and subsequent oil spill, said in a court filing. “Its three phases are reminiscent of the procedures followed by European courts in which the judges are active prosecutors in search of justice while the litigants are virtually bystanders.”

The appeals court last week set oral arguments on Cameron’s challenge for Dec. 22 in Dallas.

Blowout and Explosion

The April 2010 Macondo well blowout and the explosion that followed killed 11 workers and set off the worst offshore oil spill in U.S. history. The accident and spill led to hundreds of lawsuits against BP and its partners and contractors, including Cameron, Transocean Ltd., the Switzerland-based owner and operator of the Deepwater Horizon drilling rig that exploded and Halliburton Co., which provided cementing services.

The lawsuits for injuries, economic and environmental loss are combined before Barbier in federal court in New Orleans.

Cameron, based in Houston, argues that the trial plan should include specific claims by injured parties in the multidistrict litigation, or MDL.

“The trial plan does not formally include the claim of any individual MDL plaintiff or limitation claimant, yet it seeks a global fault allocation for all of them,” the company said in court papers.

‘Free-for-All’

The trial plan “invites” the plaintiffs’ lawyers “to participate in a potentially riotous free-for-all over fault on behalf of an undifferentiated mass of unidentified plaintiffs,” wrote David Beck, Cameron’s lawyer.

“The appeals court may be reluctant to intervene,” said Carl Tobias, a law professor at the University of Richmond in Virginia. “MDLs are special and appeals courts are pretty deferential to MDL judges.”

The appellate court may decide that it needs more time to decide and delay the Feb. 27 trial, Tobias said. “If Cameron is right, and the trial goes forward, they would have to redo it all,” he said.

Cameron also contends that Barbier chose the wrong laws to govern the spill litigation and that claims against the company fall under the federal Outer Continental Shelf Lands Act, which allows for a jury trial.

‘Impermissibly’ Infringed

Maritime law disputes are typically tried by a judge alone. By choosing maritime law, Barbier “impermissibly” infringed on Cameron’s constitutional right to a jury trial, the company’s lawyer said.

BP, which owns the blown-out well, filed papers disagreeing with Cameron and urging the appellate court to allow Barbier the discretion to conduct the massive spill litigation in whatever manner he deems most efficient.

“BP does not agree with all of the rulings” Barbier has made in “perhaps the most complex admiralty proceeding in history,” the London-based oil company said last month. “But BP does believe that Judge Barbier is doing an admirable job of managing the enormous proceedings.”

Lawyers for spill victims also opposed Cameron’s appeal. Cameron “fundamentally misunderstands” the structure of Barbier’s trial plan, which doesn’t require the participation of individual injured parties, lawyers for the committee representing thousands of spill victims said in an appellate filing.

Facts and Conclusions

Barbier is entitled to utilize the structure to determine facts and conclusions he’ll need to apply in further phases of the spill litigation, Stephen Herman and James Roy, liaison counsel said in the filing.

Halliburton Co., which provided the cementing services to the well, said it supported the challenge to the trial plan.

“The current trial plan purports to address liability issues in isolation from actual claims and causation issues,” Donald Goodwin, Halliburton’s lawyer, said in a Nov. 7 filing at the appeals court.

Any attempt to use the judge’s liability findings in individual claims “violates the district court’s limited pre- trial jurisdiction over MDL cases,” Goodwin said. Houston-based Halliburton supports the use of maritime law to govern the lawsuits, he said.

Barbier said in September that the February trial would “address all allocation of fault issues that may properly be tried to the bench without a jury.” This includes “the negligence, gross negligence, or other bases of liability of, and the proportion of liability allocable to the various defendants, third parties, and non-parties,” he said.

Fault Denied

Cameron has denied any fault for the incident, contending its blowout preventer functioned as designed.

“The BOP was not activated in time to seal the well and prevent a blowout,” Cameron lawyer David Beck said in an Oct. 18 filing in the appeals court.

Transocean set the trial in motion last year by filing what’s known as a limitation action, seeking to restrict the company’s exposure to damage claims under a 160-year-old law that shields ship owners from unlimited injury claims.

Barbier allowed thousands of spill victims who suffered only economic losses to file claims in Transocean’s limitation action, rather than requiring them to file individual suits under the Oil Pollution Act, which compensates economic losses.

‘Limitation Action’

“Cameron was dragged into the limitation action and forced to confront the prospect of liability to a vast number of claimants in that proceeding, as well as potentially catastrophic liability to BP on its cross claims,” Beck told the appeals court.

The limitation action has high-jacked what should be a trial over liability and damages conducted under Oil Pollution Act rules, Cameron contends. Under OPA, injured parties must present damage claims to designated responsible parties first. Only after this stage can legitimate damage claims be filed in court or lodged against third parties, such as Cameron, which aren’t designated as responsible parties under OPA, the company said.

“The district court has inverted the congressional order by confusing Transocean’s limitation action with the OPA claims that this case is mainly about,” Beck said in the Oct. 18 filing. “This has become a case of the caboose driving the train, and it needs to be put back on the tracks.”

Even if subsequent juries determine the company isn’t liable for specific injuries, Barbier may have already unfairly assigned a percentage of fault to Cameron through the proceeding that’s to begin in February, Beck argued. “A futile trial would be very prejudicial, and the prejudice suffered cannot be put back in the bottle,” he said.

The appeals case is In re: Cameron International, U.S. Court of Appeals for the Fifth Circuit. The lawsuits are combined in In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

--Editors: Fred Strasser, Michael Hytha

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

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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