The Very Difficult Task of Making Gulf Residents Whole Again

By Satyam Khanna

hayward2Long after the press attention on the BP oil leak fades, devastated Gulf residents and businesses will be embroiled in years of litigation against BP. The WSJ reports today that the court battles “are likely to mimic the legal cases stemming from the Exxon Valdez spill, litigation that took about twenty years to be resolved” [italics mine].

For the plaintiffs, a repeat of Exxon isn’t a good thing. Take a look at this piece from 1996, written by a lawyer involved in the litigation, about how very savvy Exxon lawyers narrowed cases, sought friendly judges, got the cases dismissed, tied up the litigation in the appeals process for years, and avoided paying full compensation to residents. It’s very long, but informative. Some highlights:

— “However…after it became clear that Judge Holland was more sympathetic to Exxon’s positions than Judge Shortell, Exxon concocted a number of legal theories designed to remove cases from state court to federal court.

— Maritime preemption of state law “became the law of the case, and led to a number of rulings just before trial dismissing the claims of the following groups of plaintiffs: processors, cannery workers, tenderers, area businesses, and municipalities. Judge Holland also dismissed the claims of “unoiled” property owners for devaluation of their property, and the Alaska Natives’ claims for injury to their subsistence culture.”

— For discovery, “the parties, at Exxon’s request, were ultimately ordered by the court to follow a ‘protocol’ [that] was enormously time-consuming. The end result was that plaintiffs were only able to challenge 3,000 of the 12,000 documents on Exxon’s privilege log.

–“Yet, Exxon had successfully shaped and limited the case before trial, and the trial was conducted according to rules favoring Exxon. Most evidence that Exxon found objectionable or “prejudicial” was excluded from the trial, and the jury instructions ultimately delivered were, at least in plaintiffs’ view, tilted in Exxon’s favor.”

The paper concludes, “Exxon has the time and resources to fight every battle, and its grand strategy may yet turn defeat into victory. But even now, only one thing is certain: more than seven years after the spill, and more than two years after the trial began, there is still no end in sight.”

Given Exxon’s successful lawyering, I don’t doubt that BP will mimic some of those strategies. In fact, the WSJ reports that BP is seeking to have the cases tried in “oil-friendly Texas.” Regardless, BP’s strategy, as we see in politics, will likely be “delay and obstruct.” The oil leak itself may be the first sad story of many.