Lawsuits Over Gulf Oil Disaster Begin With Clash Over Pace

Scores of attorneys will jam a federal courtroom today to argue for almost immediate access to emails and other documents from BP Plc and its business partners as the legal fight over the Gulf of Mexico oil spill heats up.

The hearing is the first major gathering of attorneys involved in the sprawling spill-related litigation since hundreds of civil lawsuits were combined before a judge in New Orleans federal court last month.

The lawsuits, brought by shrimpers, injured rig workers, property owners and others, will get an initial airing at the hearing with an expected fight over the pace of the case.

The stakes are huge. Some legal consultants have estimated the total cost to BP and its co-defendants from the biggest oil spill in U.S. history to BP could run to $100 billion if maximum fines and punitive damages are assessed.

BP has taken a one-time charge of about $32 billion to reflect the estimated costs of lawsuits, claims and fines from the spill.

The lawsuits against BP, as well as Transocean Ltd and Halliburton Co., are expected to drag on for years. The defendants are expected to argue at Thursday’s hearing that most individuals and businesses who are suing do not have a right to be in court, based on the briefs they filed.

The defendants will argue that they should not turn over large volumes of potential evidence until next year after the court determines who can sue.

If the judge, Carl Barbier, opts for an accelerated schedule, it would allow plaintiffs’ attorneys to quickly build their case before their clients feel pressed to settle.

For the defense, a slower pace will give time for claims to be paid from a $20 billion fund set up by BP, which is being overseen by the Obama administration’s former executive pay czar, Kenneth Feinberg.

Each individual or business who accepts a final payment on their claim gives up the right to sue BP, and presumably the strongest legal cases will fall away as the payments flow.

“Defendants want to delay substantive progress for six to eight months, see what has occurred in the BP Claims Facility, and then, perhaps, commence the litigation,” the plaintiffs’ attorneys wrote in a court filing.

If the judge accepts the plaintiffs proposed schedule, they expect by March to have a list of cases to try. The defendants preferred to take up the issue of the “appropriateness” of test trials next year, without offering a time frame.

The hearing will attract some of the Gulf region’s best-known plaintiff’s firms and lawyers who have racked up billions in settlements with drug companies and tobacco firms.

Lawsuits have been filed by heavyweights of the plaintiffs’ bar, including Texas attorney Mark Lanier and Elizabeth Cabraser, a California lawyer.

The cases have ranged from commercial fisherman who lost an entire season of catches to Post Corner Pizza in faraway Clearwater, Florida, which said sales were “eviscerated” by the spill. The local tourism board says the city was unaffected.

Many restaurants such as the famed Bayona in New Orleans argued they were indirectly harmed by the lack of fresh seafood from the Gulf. Feinberg will have determine who gets a payout.

“How far down the chain do you go? That’s the toughest of the tough issues here,” said Scott Giordano, the corporate technology counsel for Mitratech Inc, which provides legal consulting and technology.

Alleged victims have three years to submit a claim to Feinberg, and BP and its defendants said this week only those who have had a claim rejected by Feinberg’s fund have a right to sue.

The more claims Feinberg settles, the fewer lawsuits that are brought, and less likely that the defendants are hit with punitive damages, which are trickier and more time-consuming to prove but would open the door to massive payouts.

“I doubt (claimants) would hold out for punitive damages. That’s the ace in the hole that Feinberg has,” said Ed Sherman, a law professor with Tulane University Law School in New Orleans.

James Roy, a Louisiana attorney who is co-liaison counsel for the plaintiffs, said he doubts BP will be able to cover all the claims with its Feinberg fund, but doesn’t expect it to run as high as $100 billion.

“It will be expensive to litigate and time-consuming,” he said. “Will it take as long as the Exxon Valdez (spill case)? No. Will it last 10 years? No. Will it be in the three- to five-year time frame? I hope so.”

The case is In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-MDL-2179.

(Reporting by Tom Hals. Editing by Robert MacMillan)