Bloomberg News

Cameron Won’t Face Punitive Claims in BP Spill Lawsuit

March 21, 2013

Cameron International Corp. (CAM:US) won’t have to face punitive damage claims and a Schlumberger Ltd. (SLB:US) unit will be dismissed from lawsuits over fault for the 2010 BP Plc (BP/) Gulf of Mexico oil spill, a federal judge ruled.

U.S. District Judge Carl Barbier in New Orleans refused yesterday to dismiss gross negligence and willful misconduct claims against BP, Halliburton Co. (HAL:US) and Transocean Ltd. (RIG:US), based on testimony in a non-jury trial over liability for the fatal 2010 explosion on the Deepwater Horizon rig.

“There was at least negligence on the part of some people” on the rig when it exploded, Barbier said. The judge agreed to throw out all claims against Schlumberger unit M-I Swaco, which provided the rig’s drilling fluids, after finding the government and oil-spill victims presented no evidence it helped cause the disaster.

The blowout of the deep-water Macondo well off the coast of Louisiana sent more than 4 million barrels of oil spewing into the Gulf of Mexico and killed 11 people. The accident sparked hundreds of lawsuits against London-based BP, Transocean and Halliburton, which provided cement services.

A trial over liability for the disaster began Feb. 25 in federal court in New Orleans. Barbier will determine responsibility for the disaster and whether any of the companies acted with willful or wanton misconduct or reckless indifference -- the legal requirement for establishing gross negligence.

Spill Victims

If BP is found grossly negligent, it may be liable for more than $17 billion in pollution fines, as well as punitive damages to claimants who weren’t part of an $8.5 billion settlement of lawsuits. For Transocean and Halliburton, a similar finding would mean they could face punitive-damages awards.

The government and spill victims contend BP was over budget and behind schedule on the Macondo well, prompting the company to cut corners and ignore safety tests showing the well was unstable.

They also allege Halliburton’s cement job was defective and Transocean employees made a series of missteps on the rig, including disabling safety systems, failing to properly maintain the installation and not providing adequate training for its crew.

Barbier’s ruling came after lawyers for the government and spill victims rested their case. The plaintiffs spent about four weeks presenting evidence about the companies’ liability for the explosion and spill.

‘Home Free’

Halliburton attorney Donald Godwin told Barbier yesterday he will file a request to dismiss the gross negligence and willful misconduct claims against the well’s cement contractor. “I’m not going to grant your motion,” the judge replied.

Barbier agreed to remove M-I Swaco from the case after finding “no basis” to rule that any act or omission by the drilling fluid company caused or contributed to the deadly explosion. “You’re home free,” Barbier told Hugh Tanner, an attorney for the company.

Joao Felix, a spokesman for Houston-based Schlumberger, said the company was “thankful” to be able to put legal questions about its role in the disaster behind it.

“We are pleased with the court’s complete dismissal of M-I Swaco from the Deepwater Horizon lawsuit and its finding that M- I had no fault whatsoever in connection with the events that led to the blowout and explosion,” Felix said in an e-mailed statement today.

Blowout Preventer

The judge also concluded lawyers for the government and spill victims hadn’t produced evidence to back up claims that officials of Cameron, which made the rig’s so-called blowout preventer, were grossly negligent in connection with the safety system.

Witnesses have testified the blowout preventer, designed to stop explosions and spills, wasn’t properly maintained by the Transocean crew manning the rig. An examination of the system’s remains found it suffered from faulty wiring and a dead battery.

“I have not heard any evidence” showing Cameron executives’ actions met the level of gross negligence, Barbier said yesterday.

Jeff Altamari, a spokesman for Houston-based Cameron, didn’t return a call for comment yesterday on Barbier’s punitive-damage ruling.

Safety System

The judge heard testimony today from Gregg Childs, an engineer who testified about the operation of the Deepwater Horizon’s blowout preventer. The more than 350-ton system is designed to prevent explosions and spills.

Childs testified yesterday the alleged maintenance issues with the blowout preventer didn’t stop the safety system from sealing the well.

Childs, called as an expert by Transocean, told the judge the flow of oil and gas into the drilling pipe prior to the blast knocked it off center and stopped the blowout preventer from functioning properly.

Under cross-examination today, the engineer conceded BP and Transocean officials were warned a decade before the explosion the safety system’s design would make it “extremely difficult” to maintain control of well during an emergency. The companies opted to have a blowout preventer that operated with a single sheer to cut the drilling pipe and close the well, he added.

BP and Transocean officials could have required a double- bladed “blind-shear ram” for the rig’s blowout preventer which would have improved the system’s chances of avoiding disasters, Childs added.

“With only one shear ram, it is extremely difficult to remove all the failure points from the control system,” Childs told the judge.

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 10-md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Allen Johnson Jr. in New Orleans at allenmct@gmail.com; Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net; Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net

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


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Companies Mentioned

  • CAM
    (Cameron International Corp)
    • $70.55 USD
    • -0.65
    • -0.92%
  • SLB
    (Schlumberger Ltd)
    • $104.47 USD
    • 1.16
    • 1.11%
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