Deepwater Horizon Litigation:
Understanding the Claims and Settlements

REFLECTS CHANGES THROUGH APRIL 25, 2012

The Deepwater Horizon incident at the Macondo well in 2010 led to the death of eleven oil rig workers and damaged air, water, sediment, wildlife, and habitats across the Gulf. Hundreds of lawsuits related to the disaster have been and continue to be filed in courts across the nation. Together, these lawsuits raise a wide variety of legal claims under state and federal law, from tort law (e.g., personal injury) to environmental law (e.g., water pollution). The result is a complex array of claims, filed by different parties, for different damages, on different timelines.

To help people understand the legal response to this disaster, this resource provides a big-picture overview of the various types of legal claims and their status as of April 25 , 2012. As the litigation continues and more settlements occur, the Environmental Law Institute (ELI) will continue to update this resource to account for recent developments.

• Glossary of Key Legal Terms
• Responsible Parties and Other Defendants
• MDL No. 2179, In re: Oil Spill
• MDL No. 2185, In re: BP p.l.c. Securities Litigation
• The Federal Government Complaint
• Gulf Coast Claims Facility (GCCF)
• Legal Claims & Status

Glossary of Key Legal Terms

*Please note that these are intended to be informal definitions that capture the primary ideas, not formal legal definitions that would be used in court.

Claim--The set of facts or the legal theory that justifies a lawsuit.

Defendant--The individual or entity who must defend herself against a lawsuit, or who is formally accused of violating a law.

Indemnity--An obligation for one party to reimburse a second party for the second party's liability, damages, or costs. Typically, an obligation to indemnify comes from a contract, like an insurance policy or a settlement agreement.

Lawsuit--A civil action filed in a court, in which a plaintiff claims to have suffered an injury or loss that was caused by a defendant's actions.

Liability--A legal responsibility for something, e.g., to pay a sum of money.

Multidistrict Litigation (MDL)--A centralized process to consolidate numerous related cases in a single court so multiple courts do not have to answer overlapping factual questions, thus saving time and money for both the court system and the parties. MDLs are initiated by the U.S. Judicial Panel on Multidistrict Litigation.

Natural Resource Trustees--Under the Oil Pollution Act, a group of government representatives who act on behalf of the public where natural resources have been injured.

Parent Company--A firm that owns enough stock in a "subsidiary" company to control that company.

Plaintiff--The individual or entity who initiates a lawsuit.

Punitive Damages--Fines assessed by a court against a defendant that are specifically meant to punish the defendant for her conduct and deter future wrongdoing. Typically, punitive damages are awarded in addition to the damages necessary to fully compensate the plaintiff for her injury.

Responsible Party--The party responsible for an oil spill; a responsible party is liable for the oil spill's removal costs and damages under the Oil Pollution Act.

Subsidiary--A company that is controlled by a "parent" company because the parent company owns a majority of the subsidiary's stock.

Responsible Parties and Other Defendants

The federal Oil Pollution Act of 1990 (OPA) states that each "responsible party" is liable for oil spill removal costs and damages. OPA outlines a process by which the Natural Resource Trustees officially designate responsible parties. Thus far, the following entities have been identified as responsible parties for the Deepwater Horizon incident:

1) BP Exploration and Production, Inc.;
2) Triton Asset Leasing GmbH;
3) Transocean Holdings Inc.;
4) Transocean Offshore Deepwater Drilling Inc.;
5) Transocean Deepwater Inc.;
6) Anadarko Petroleum;
7) Anadarko E&P Company LP; and
8) MOEX Offshore 2007 LLC.

BP was the operator of the Macondo oil well, and leased the Deepwater Horizon drilling unit from the unit's owner, Triton Asset Leasing. Triton Asset Leasing is a subsidiary of Transocean. In addition to BP, which was the majority owner of the well exploration rights, minority owners and co-lessees of the well included Anadarko and MOEX.

Parties not designated as "responsible parties" under OPA can still be sued under other federal and state laws. Other notable defendants in the Deepwater Horizon litigation that are not "responsible parties" include:

• QBE Underwriting LTD., Lloyd's Syndicate 1036, which insured the Deepwater Horizon;
• Halliburton Co., which formulated the cement intended to seal the well against leaks;
• Cameron International Corp., which designed the blowout preventer used on the well;
• Weatherford U.S., L.P., which produced the float collar used at the well;
• BP America Inc., BP Products North America, Inc., and BP America Production Company, which, together with BP Exploration and Production, Inc., are subsidiaries of BP, p.l.c.; and
• Mitsui Oil Exploration Co., Ltd., which is the parent company of MOEX.

MDL No. 2179, In re: Oil Spill

MDL No. 2179, In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010 is a consolidation of hundreds of civil lawsuits regarding the effects of the Deepwater Horizon incident. While the lawsuits within this MDL raise different types of legal claims, all claims will require a court to answer related factual questions. For this reason, the U.S. Judicial Panel on Multidistrict Litigation determined that it would be efficient to centralize the cases in an MDL. The Panel assigned Judge Carl J. Barbier of the U.S. District Court for the Eastern District of Louisiana to oversee the MDL. Cases filed in any federal court that are related to the oil spill ordinarily will be transferred into the MDL.

Judge Barbier has taken multiple steps to organize the MDL. Early in the litigation, Judge Barbier appointed a set of lawyers and law firms to form a "Plaintiffs' Steering Committee" to coordinate the many individual and business plaintiffs. To efficiently manage the numerous cases, Judge Barbier organized claims by type into groups called "pleading bundles." Additionally, Judge Barbier has organized the trial into three phases. Phase I will look at the well explosion and oil spill.

The Phase I trial was originally set to begin on February 27, 2012, but has been postponed pending finalization of settlements between BP and the Plaintiffs' Steering Committee of some economic losses and medical claims. This settlement would not affect other claims in the MDL, including federal, state and local government claims; consequently, it is expected that the trial will resume after the settlement is approved. On April 18, 2012, BP and the Plaintiffs' Steering Committee submitted joint motions seeking the court's preliminary approval of an Economic and Property Damages Settlement Agreement and a Medical Benefits Settlement Agreement. The court is expected to determine whether to grant preliminary approval of these agreements shortly. If the court preliminarily approves the settlements, affected claimants will receive notice and have an opportunity to submit objections to the settlement or opt out of the settlement. The court will then hold a final hearing to determine whether to grant final approval of the settlements. The parties have requested that this hearing be scheduled for November 8, 2012.

MDL No. 2185, In re: BP p.l.c. Securities Litigation

MDL No. 2185, In re: BP p.l.c. Securities Litigation, is a consolidation of various securities lawsuits alleging that BP misled its investors about its safety measures and the likelihood of a spill, resulting in dramatic investment losses for BP shareholders following the Deepwater Horizon incident. The securities litigation cases seek compensatory and punitive damages. The cases involve common questions of fact about BP's safety record and duties to its shareholders, and have a different focus from the cases in MDL No. 2179. Also, the securities cases mainly involve BP and its executives—not other defendants associated with the oil spill. For these reasons, the U.S. Judicial Panel on Multidistrict Litigation determined that it would be efficient to create a separate MDL for the securities cases. The Panel assigned Judge Keith P. Ellison of the U.S. District Court for the Southern District of Texas to oversee this litigation. MDL No. 2185 is ongoing.

The Federal Government Complaint

On December 15, 2010, the U.S. Department of Justice filed a lawsuit against the responsible parties in MDL No. 2179. The lawsuit is United States v. BP Exploration and Production, Inc. et al. (No. 2:10-cv-04536). The United States' complaint seeks civil penalties under the Clean Water Act and oil spill removal costs under the Oil Pollution Act (OPA). Additionally, the lawsuit seeks a declaratory judgment from the Court that all defendants are liable under OPA for damages resulting from the Deepwater Horizon spill. Notably, the United States has not yet filed claims for natural resource damages under OPA.

The United States reserved the right to amend its complaint at a later date to add supplementary claims under the Clean Water Act, OPA, Outer Continental Shelf Lands Act, Declaratory Judgment Act, Endangered Species Act, Marine Mammal Protection Act, National Marine Sanctuaries Act, and Park System Resource Protection Act.

Gulf Coast Claims Facility (GCCF)

BP established the Gulf Coast Claims Facility (GCCF), run by Kenneth Feinberg, to handle claims for damages from individuals and businesses outside of court. The GCCF used part of the $20 billion that BP initially set aside in trust to pay for damages caused by Deepwater Horizon. With a settlement pending, the GCCF was officially terminated on March 8, 2012, and a transitional court-run claims process was established. If approved, the settlement between BP and the Plaintiffs' Steering Committee will establish a new process for handling claims.

Legal Claims & Status

Many legal claims arose out of the Deepwater Horizon incident. This resource focuses on the following nine major categories of claims:

1) Economic Loss;
2) Medical;
3) Federal Civil Penalties;
4) Federal Criminal Penalties;
5) Oil Removal Costs;
6) Natural Resource Damages;
7) State and Local Government;
8) Securities; and
9) Claims by Defendants.