Vessels monitor a oil burn in the area of the Deepwater Horizon disaster on the Gulf of Mexico, Tuesday, July 13, 2010. BP officials have placed a containment cap over the leak in hopes that the flow of oil will be diminished. (AP Photo/Dave Martin)
President Barack Obama makes a statement after being briefed on the BP oil spill relief efforts in the Gulf Coast region, Friday, June 4, 2010, at Louis Armstrong International New Orleans Airport in Kenner, La. (AP Photo/Charles Dharapak)
Protesters gather outside of the BP offices in San Francisco on Wednesday, May 12, 2010 to demonstrate against the Gulf oil rig disaster. (AP Photo/Marcio Jose Sanchez)
This image from video provided by BP PLC early Sunday morning, June 13, 2010 shows oil continuing to pour out at the site of the Deepwater Horizon oil well in the Gulf of Mexico. The Coast Guard has demanded that BP step up its efforts to contain the oil gushing into the Gulf of Mexico by the end of the weekend, telling the British oil giant that its slow pace in stopping the spill is becoming increasingly alarming as the disaster fouled the coastline in ugly new ways Saturday. (AP Photo/BP PLC) NO SALES
This image from video provided by BP PLC early Sunday morning, June 20, 2010 shows oil continuing to gush millions of gallons a day, from the broken wellhead, at the site of the Deepwater Horizon oil well in the Gulf of Mexico. (AP Photo/BP PLC) NO SALES
GULF SHORES, AL - JUNE 08: Workers pick up oil patches and tar that washed up on the beach at Bon Secour National Wildlife Refuge from the Deepwater Horizon oil spill in the Gulf of Mexico on June 8, 2010 in Gulf Shores, Alabama. Early reports indicate that BP's latest plan to stem the flow of oil from the site of the Deepwater Horizon incident may be having some success. (Photo by Joe Raedle/Getty Images)
Oil floats in the Gulf of Mexico near Orange Beach, Alabama, U.S., on Friday, June 18, 2010. The BP Plc oil spill, which began when the leased Transocean Deepwater Horizon oil rig exploded on April 20, is gushing as much as 60,000 barrels of oil a day into the Gulf of Mexico, the government said. Photographer: Kari Goodnough/Bloomberg
Oil cleanup workers hired by BP pick up oil on the beach in Gulf Shores, Ala., Friday, July 2, 2010. Oil from the Deepwater Horizon incident is expected to come ashore over the July 4th weekend. (AP Photo/Dave Martin)
In this image taken from video provided by BP PLC at 18:17 CDT, a new containment cap, top, is lowered over the broken wellhead at the site of the Deepwater Horizon oil spill in the Gulf of Mexico, Monday, July 12, 2010. Deep-sea robots swarmed around BP's ruptured oil well Monday in a delicately choreographed effort to attach the tighter-fitting cap that could finally stop crude from gushing into the Gulf of Mexico nearly three months into the crisis. (AP Photo/BP PLC) NO SALES
This combo made from images taken from video provided by BP PLC shows oil flowing from two of three valves on the new 75-ton cap atop the site of the Deepwater Horizon oil spill in the Gulf of Mexico at 17:04 CDT Wednesday, July 14, 2010, left, and the top of the cap at 17:56 CDT on Thursday, July 15, minutes after the flow of oil was choked off. BP vice president Kent Wells said the oil stopped flowing into the water at 14:25 CDT after engineers gradually dialed back the amount of crude escaping through the last of three vents in the cap, an 18-foot-high metal stack of pipes and valves.(AP Photo/BP PLC) NO SALES
The view from an approaching helicopter shows the armada of drillships and other vessels surrounding the site of the blown out BP well in the Gulf of Mexico about 40 miles off the coast of Louisiana. Credit Brett Clanton / Chronicle
Oil gushes from a valve atop the failed blowout preventer (BOP) at the BP Deepwater Horizon oil spill site in the Gulf of Mexico off the coast of Louisiana, U.S., in an image captured by the Skandi remotely operated underwater vehicle (ROV) camera at 7:35 a.m. Central Standard Time (CST) on Tuesday, July 13, 2010. BP Plc installed a new cap on its leaking Gulf of Mexico oil well and will start testing today whether this will stop the gusher while work continues on a permanent plug. Source: BP Plc via Bloomberg
EDITOR'S NOTE: EDITORIAL USE ONLY. NO SALES.
GULF OF MEXICO, LA - JULY 27: (EDITORS NOTE: Distortion caused by heat.) Ships assist in clean up and containment near the source of the BP Deepwater Horizon oil spill July 27, 2010 in the Gulf of Mexico off the coast of Louisiana. Work continues to put a permanent plug on the well which has leaked an estimated three to five million barrels of oil. (Photo by Chris Graythen/Getty Images)
Hairdresser Karen Jackson wears a t-shirt that reads "We've been BPeed on!" on the front of the shirt and "Gulf Oil Disaster 2010-??" on the back Saturday, July 3, 2010, in Orange Beach, Ala. Jackson says she is worried about the effect the spill is having on her community and what will happen if local business continues to falter. "I would hate to have to leave this place. We love it here." She said her business is way off what it should be for the season, "down here we make all of our money in the summer," she says. Her husband's work as an electrician has dried up she says, so he has signed on to work cleanup for BP. ( Smiley N. Pool / Houston Chronicle )
A driver rolls down the highway with messages such as "$ave the Gulf Coa$t" and "Tony Hayward C.E. O of B.P. Give us out Live Back" while driving Sunday, June 27, 2010, in Pensacola, Florida. ( Smiley N. Pool / Houston Chronicle )
This still image from a live BP video feed shows a view from a submersible while checking the integrity of the well head on August 3, 2010 in the Gulf of Mexico. BP prepared Tuesday to plug the worst oil leak in history, although the Gulf of Mexico region will be counting the environmental and economic costs for years, perhaps decades, to come. Already delayed by a week due to Tropical Storm Bonnie, the long-awaited "static kill" was put off again at the last-minute when a leak was discovered on Monday in the cap that has been sealing the runaway well since July 15. US spill chief Thad Allen said the leak had been stopped overnight and that the operation to ram in heavy drilling fluids, known as mud, would commence as soon as "injectivity tests" had given the procedure the all-clear. AFP PHOTO / BP == RESTRICTED TO EDITORIAL USE / NO SALES / NO MARKETING / NO ADVERTISING CAMPAIGN == (Photo credit should read HO/AFP/Getty Images)(Photo Credit should Read /AFP/Getty Images)
In this image taken from video provided by BP PLC at 12:23 a.m. EDT, Saturday Sept. 4, 2010 Aug. 3, 2010 shows the blowout preventer that failed to stop oil from spewing into the Gulf of Mexico being raised to the surface. The blowout preventer wasn't expected to reach the surface until Saturday, at which point government investigators will take possession of it. (AP Photo/BP PLC) NO SALES
DAUPHIN ISLAND, AL. | JULY 4, 2010 : A cleanup worker, wearing a protective coverall and carrying a small scoop, punctuates an otherwise typical holiday beach scene as patrols the beach looking for tar balls on Independence Day. While exact numbers are elusive, tourist business along the Gulf Coast all reported feeling the sting of lost income from a noticeable dip in tourism this summer following the Deepwater Horizon spill.
GULF OF MEXICO | JUNE 26, 2010 : Streaks of oil are seen on the surface of the water near the site of the Deepwater Horizon spill in the Gulf of Mexico. The amount of oil spilled, and what happened to the oil remains in debate, but in August, the Department of Energy and United States Geological Survey announced, that it estimated a total of 4.9 million barrels of oil had been released from the BP Deepwater Horizon well.
GRAND ISLE, LA. | JULY 15, 2010 : Oil containment boom floats just off the pier as fishermen cast lines near the bridge leading to the island after sun sets on the first full day of fishing after a ban on sport fishing was lifted. Commercial fishing remained closed, but happy recreational fishermen flocked to the water on a beautiful evening. Most were BP contractors working on the cleanup. One was Bobby Walker of Houma, La., who said he had been coming to the island to fish for over 30 years and praised the great fishing and natural beauty of the island. "But who would have ever thought I would be here all summer working on the oil spill."
As it prepares to go to court over the Deepwater Horizon accident, BP finds itself on the edge of a legal landscape into which few other companies have strayed.
In the past, the oil company has been quick to write big checks to solve its legal problems, but this time it finds itself ensnared in a complex web of legal issues that may be impossible to untangle without going before a judge.
BP and lawyers representing Gulf Coast business owners and individuals were discussing a $14 billion settlement. The talks, which appeared promising enough for the judge on Sunday to delay the trial a week, had stalled as of Wednesday.
It’s a reminder that the complex court proceeding BP faces as early as Monday is unlike anything it – or most other companies – has faced before.
The case is bigger than the litigation that followed the Exxon Valdez spill, and it’s more unwieldy in many ways than even the multistate litigation with tobacco companies more than a decade ago.
BP, of course, is no stranger to massive legal cases, as we are painfully aware in the Houston area. It paid billions to settle lawsuits related to its Texas City refinery explosion in 2005. Most of those claims came from the families of the 15 people who died and workers who were injured.
BP’s tactic in that case was to offer big settlements early, and while some lawsuits lingered, none went so far as to be decided by a judge or jury. It wound up settling about 4,000 claims, of which only a few even made it to trial.
No businesses claimed economic damage from the blast. In the Gulf oil spill case, thousands, perhaps tens of thousands, do. The full number may not be known for months because some attorneys are still filing them.
Houston lawyer Tony Buzbee, for example, says he has 12,000 spill-related clients, many of whom haven’t even presented claims to the $20 billion fund that BP set up to streamline the legal process after the spill. That is the first step required before the cases can go to court, and that fund isn’t required to have all claims paid until August 2013.
That makes it difficult for lawyers on the steering committee of plaintiffs in the court case to cut a deal that would include lawyers like Buzbee with clients who aren’t in the case yet.
“Other people will have to be folded into the process,” Buzbee told me earlier this week. “The bulk of the cases are not in the litigation.”
Even the Exxon Valdez disaster didn’t have the sort of open-ended business claims that BP and its co-defendants now face. That spill, in Alaska’s Prince William Sound, occurred in a more remote area. Both disasters hurt local fishermen, but the Valdez accident didn’t affect hotels and other beach-front businesses.
The BP case has been compared with the settlement between the states and Big Tobacco in 1998. The dollar amounts were larger in that case – the companies wound up settling for $206 billion – but the claims didn’t have to be reviewed individually. Each state entered into its own settlement with the tobacco companies.
In BP’s case, its spill fund has cleared off many of the smaller, more straightforward claims. What’s left are mostly business owners trying to prove how much commerce they lost.
Determining which businesses were affected and to what extent is the legal equivalent of nailing Jell-O to the wall – messy and ineffective.
In other words, it’s unlikely a settlement would encompass all the potential claims against BP and its co-defendants and would do little to relieve the financial uncertainty that continues to hang over the oil giant.
It’s not going to write a check for $14 billion without any idea of what it gets in return.
Even if it did, that wouldn’t resolve other facets of the case, such as settling government claims of violating pollution laws, which could result in fines of more than $17 billion.
BP would undoubtedly prefer to settle rather than allow a judge to decide its fate. While there’s still a chance for an 11th-hour settlement, the sheer complexity of the case appears to be pushing BP and its co-defendants close to uncharted legal territory.
Loren Steffy, firstname.lastname@example.org, is the Chronicle’s business columnist. Follow him online at blog.chron.com/lorensteffy, www.facebook.com/LorenSteffypage and twitter.com/lsteffy.