Decision of Interest in DEEPWATER HORIZON Litigation

On August 26, 2011, Judge Barbier (i.e. – the District Court judge presiding over the multi-district ("MDL") litigation arising from the DEEPWATER HORIZON explosion and oil spill in the Eastern District of Louisiana) issued a thirty-nine (39) page Order in the DEEPWATER HORIZON litigation, granting in part and denying in part various motions to dismiss the "B1 Master Complaint" filed by claimants in the litigation. As per the Court's initial Case Management Order, the "B1 Master Complaint" at issue in the Judge's decision addressed all claims for private or "non-governmental economic loss and property damages" and consisted of more than one hundred thousand (100,000) individual claims.

A large portion of the Order addressed the interplay between jurisdiction under the Outer Continental Shelf Lands Act ("OCSLA"), general admiralty jurisdiction, and various state laws. The Judge recognized that he had previously held in the DEEPWATER HORIZON litigation that he had OCSLA jurisdiction over the action because, at the time of the spill, the DEEPWATER HORIZON was operating in the Gulf of Mexico, approximately fifty (50) miles offshore and above the Outer Continental Shelf of the United States. The Court similarly found that admiralty jurisdiction existed under Supreme Court precedents because the B1 Master Complaint alleged that the DEEPWATER HORIZON incident occurred on navigable waters and because the operations of the DEEPWATER HORIZON had a substantial relationship to traditional maritime activity. Citing the Fifth Circuit's decision in Tenn.Gas Pipeline v. Houston Cas. Ins. Co., 87 F.3d 150, 154 (5th Cir. 1996), the Court stated that when both OCSLA and general maritime law both could apply, general maritime law is to govern the case.

In opposing the motions to dismiss, the B1 Plaintiffs claimed that substantive maritime law did not preempt their various state law claims, arguing that state law could "supplement" general maritime law. The Judge rejected this argument and dismissed all state common-law claims for nuisance, trespass, fraudulent concealment, and claims asserted under the Florida Pollutant Discharge Prevention and Control Act. During his lengthy analysis, the Judge first looked to whether the OCSLA permitted adjacent-state law to be adopted as surrogate federal law. Applying the three (3) factor test set forth by the Fifth Circuit Court of Appeals in Union Tex. Petroleum Corp. v. PLT Eng'g, 895 F.2d 1043, 1047 (5th Cir. 1990), the Court concluded that state law could not be adopted as surrogate federal law under OCSLA because federal maritime law (i.e. – both the general maritime law and OPA) applied of its own force. Having ruled that state law could not be adopted as surrogate federal law under OCSLA, the Court then looked to the relationship between federal maritime law and state law and found that because the casualty occurred over the Outer Continental Shelf – and not on waters within any state's territorial borders – and impacted claimants in multiple states, state law was preempted. As such, the Judge granted the Defendants' motions to dismiss the B1 Plaintiffs' state law claims.

The Court also considered Defendants' arguments that general maritime claims should be dismissed as being displaced by the Oil Pollution Act of 1990 ("OPA") and that the B1 Plaintiffs could only pursue their claims for economic damages against the OPA designated "Responsible Party."  After considering the history of general maritime law pre-OPA, Congress's intent in enacting OPA, and Supreme Court precedents to determine if a statute preempts or displaces federal common law, the Court concluded that all claimants who would not have had a viable cause of action and would have been precluded from any recovery pre-OPA (i.e. – claimants who did not allege physical injury to their property or other proprietary interest) could not assert a plausible claim under general maritime law and, as such, dismissed all general maritime law claims asserted by such claimants. However, the Court sustained claims against non-Responsible Parties under general maritime law on behalf of claimants who alleged physical damage to a proprietary interest or were commercial fishermen, finding that such a cause of action existed under general maritime law prior to OPA's enactment; OPA did not address the liability of non-Responsible Parties to those who suffered such losses; and that there was no indication that allowing such a remedy would frustrate Congress's intent when it enacted OPA.

The Court also granted the motions to dismiss negligence claims asserted against Anardarko, Anadarko E&P (collectively "Anadarko"), MOEX Offshore and MOEX USA (collectively "MOEX"), the non-operating lessees for the Macondo well. These defendants, in addition to asserting the arguments made by other Defendants in their respective motions, also independently argued that under the Joint Operating Agreement ("JOA") between BP and themselves, BP was the solely responsible for the drilling operations; neither Anadarko nor MOEX had any personnel present aboard the DEEPWATER HORIZON; and neither Anadarko nor MOEX had the right to control BP's conduct. Citing the Fifth Circuit's decision in Ainsworth v. Shell Offshore, Inc., 829 F.2d 548 (5th Cir. 1987), the Court concluded that because BP retained and exercised operational control over the drilling of the Macondo well, the B1 Plaintiffs could not allege a plausible general maritime negligence claim against Anardarko or MOEX and dismissed all such claims. In a footnote, the Court acknowledged that it was plausible that Anadarko and MOEX could be found to be Responsible Parties under OPA, and thus declined to dismiss OPA claims against these parties.

Although the Court agreed with the moving Defendants that presentment of a claim to the Responsible Party was a mandatory condition precedent under OPA before commencing a lawsuit, the Judge recognized the practical problems of sorting through more than one hundred thousand (100,000) individual claims to determine those in which presentment had not occurred. For the purposes of the motions to dismiss, the Court concluded that the B1 Plaintiffs had sufficiently alleged presentment in their Master Complaint and that he did not intend to sort through the thousands of individual claims to determine which claims were (or were not) properly presented to the Responsible Party at this time. The Judge recognized that there is no presentment requirement for claims against non-Responsible Parties.

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