Gulf spill victims fight companies’ effort to gut punitive damage claims

Individuals, businesses and states suing over the 2010 Gulf of Mexico oil spill are trying to prevent cement contractor Halliburton and rig owner Transocean from pulling the rug out from under their case before a federal judge rules on whether the companies were grossly negligent.

The two companies have filed court papers asserting that because BP agreed in a class-action settlement reached last year to pay for some victims’ compensatory damages but didn’t agree to punitive damages, Halliburton and Transocean cannot be subject to punitive damages to those victims under the law.

The private plaintiffs, the state of Alabama and BP, which has assigned its claims against Halliburton and Transocean to the plaintiffs, filed responses late Monday. Among other things, they argue that the requests by Halliburton and Transocean are premature and should be denied.

“No policy interest favors a rule that allows a grossly negligent actor to escape punitive liability because someone else settles the victim’s compensatory losses,” Alabama said in its response.

Long haul: Gulf spill judge says ruling could take months

The bulk of the remaining liability that the two companies face is punitive damages, so if U.S. District Judge Carl Barbier were to grant their motions, any decision he were to make later about the gross negligence issue would have much less of an impact on them.

Lawyers for the private plaintiffs said in their response that the settlement “does not in any way affect the punitive damage claims of personal injury plaintiffs or of economic plaintiffs who are not members of the settlement class.”

The settlement was reached with thousands of individuals and businesses affected by the spill, but thousands of others opted out. And while the motion by Halliburton and Transocean addresses only the punitive damage claims of those people who have already settled with BP, a ruling in the two companies’ favor could be applied later to anyone else BP settles with in the future, including the opt-outs and the states.

Environmental damage: Texas joins other Gulf states in suing BP over 2010 oil spill

Barbier is presiding over a civil trial in federal court in New Orleans over the oil spill. The first phase, which involved allocating fault for the disaster and determining whether any of the defendants were grossly negligent, ended last month. The second phase, which will deal with the amount of oil that’s spilled, is set to start in September.

Barbier has yet to issue any substantive rulings stemming from the trial as to BP, Halliburton or Transocean.

The debate comes even as Halliburton has said it’s been in talks with private plaintiffs about a settlement.

BP owned the undersea well the blew out in the Gulf off the coast of Louisiana, triggering an explosion on the Transocean-owned Deepwater Horizon rig that killed 11 workers. Halliburton supplied the cement for the well.

Read ongoing FuelFix coverage of the legal trials surrounding the Gulf of Mexico oil spill: