BP says it won’t fight cap waiver on spill damages

By Moira Herbst

NEW YORK, Nov 19 (Reuters Legal) – BP Plc won’t object to a court order legally binding the company to waive a $75 million statutory cap on damages for the largest oil spill in U.S. history, the company said on Friday.

Earlier on Friday, the company was prepared to oppose a plaintiffs’ motion before U.S. District Judge Carl Barbier, who is overseeing the oil-spill litigation in New Orleans, seeking a ruling that the liability cap is inapplicable in this case.

Noting that BP itself had told the court it would waive the cap, the plaintiffs’ lawyers asked Barbier to rule on the matter to preclude BP from “re-urging this defense” in the future.

In a response filed on Wednesday, BP called the plaintiffs’ motion “unnecessary” and “premature.”

But on Friday, the company said in a statement to Reuters Legal that if Barbier issues a court order making the cap waiver legally binding, “BP will not object.”

On November 2, BP raised its estimated cost of cleaning up the Macondo disaster by $7.7 billion to $40 billion. BP will likely try to recoup some of these costs from its Macondo partners, Anadarko Petroleum Corp and MOEX Offshore 2007 LLC, as well as such contractors as Halliburton but the resolution could take years of court battles.

BP has already paid out hundreds of millions of dollars to fishermen, retailers, charter boat captains and property owners who suffered from the spill.

Under heavy pressure from the Obama administration, in June the company also established a $20 billion compensation fund for those damaged by the spill.

ALL LEGITIMATE CLAIMS

Soon after BP’s Deepwater Horizon well began spewing oil into the Gulf of Mexico in April, the company said that it would pay all legitimate claims, even though the Oil Pollution Act (OPA) could have limited BP’s liability for the disaster to $75 million, plus clean-up costs.

But it was never clear whether BP’s pledge was legally binding, and signals from the company were mixed. During a court hearing last month, BP’s lawyers did not commit to waiving the OPA cap, which they called “not relevant.” After Barbier asked the company to clarify, it filed a statement with the court saying it was committed to waiving the cap.

The BP statement said that the company’s opposition to the plaintiffs’ motion “was not an indication that BP was wavering at all on its previous promises and commitments,” but rather, was “simply based on the legal deficiencies” in the motion.

Howard M. Erichson, a professor at Fordham University School of Law and an expert in mass torts, said plaintiffs’ lawyers were engaging in “a bit of litigation gamesmanship.” From the company’s perspective, he said, “there is no upside having the waiver locked in,” but opposing such a move could present a publicity problem.

“The extraordinary thing,” he said, “is the backdrop to this motion — the fact that BP faced such an enormous public-relations crisis that it was willing to abandon some of its potential legal defenses early in the litigation.”

The case is In re Oil Spill, U.S. District Court, Eastern District of Louisiana, No. 10-MDL-2179. The plaintiffs’ motion was filed on behalf of the plaintiffs’ steering committee by Stephen J. Herman of Herman Herman Katz & Cotlar and James Parkerson Roy of Domengeaux Wright Roy & Edwards. BP’s submission was filed by Don Haycraft and R. Keith Jarrett of Liskow & Lewis in New Orleans and Richard Godfrey and J. Andrew Langan of Kirkland & Ellis in Chicago.

(Editing by Eric Effron and Howard Goller)

BP says it won’t fight cap waiver on spill damages