A legal expert’s take on BP’s settlement talks

As settlement talks continue between the Plaintiff Steering Committee and BP over the Deepwater Horizon disaster, outside legal experts are speculating on the potential value of the plaintiffs’ cases.

The steering committee represents individuals and businesses that have sued.

Calculations may center around whether the sides believe BP would be found, in a court setting, to have acted negligently or grossly negligent.

The first would trigger compensatory damages for economic losses, while grossly negligent would add possible punitive damages for plaintiffs.

Blaine LeCesne, a torts law professor at Loyola University, who has closely followed the case, believes that the accident has strong potential for a finding of gross negligence. In his view, if plaintiffs were awarded punitive damages, the final amount doled out by the judge overseeing the case could be much higher than $14 billion, which Bloomberg News reported Monday as a possible settlement figure.

“I still think the plaintiffs have sold themselves a little short, because they could have doubled that with punitive damages,” said LeCesne.

Under federal maritime law, in the case of gross negligence, plaintiffs are eligible for both compensatory and punitive damages.

While compensatory damages are limited to the amount of the loss, punitive damages could double or even triple the amount of the compensatory losses, particularly if the court finds that the defendants’ actions were fiscally motivated. In the Valdez settlements, punitive damages were awarded at a one-to-one ratio with compensatory damages, but LeCesne believes that ratio could go higher in this case.

“They probably did some preliminary calculations with attorneys who have filed suits and didn’t want to take the chance of waiting years for punitive damages to be paid out,” LeCesne said. “Some of the plaintiffs are in pretty desperate straits and probably preferred to get on with their lives. They may have needed the funds sooner rather than later.”

LeCesne believes that if BP is able to broker a deal with the plaintiffs, it will make a huge push to resolve its case with the federal and state governments as well.

“I don’t think BP has the stomach for the trial, with good reason – the facts and law are clearly against them and they can’t win this one,” LeCesne said. “You have strict liability, multiple deep pocket defendants who can afford to pay the judgment, good prospects for punitive damages and billions of damages involved.”

Both the Clean Water Act and the Oil Pollution Act impose strict liability, meaning that a responsible party (in this case, for the well) has to pay damages in case of an accident, regardless of whether their actions were negligent or not.

LeCesne also speculates that a settlement with individual plaintiffs would strengthen the hands of two state governments, Louisiana and Alabama, suing BP.

“I think that if Louisiana were to name its price – say, five billion – BP would gladly write that check,” said LeCesne. “If they are successful, they will have gotten out cheap for 14 billion on the plaintiffs’ side. If the PSC settles with BP, it gives the remaining governmental plaintiffs a lot of increased leverage to name their own price to settle the remainder of the case.”