Oil Rig Explosion Unleashes a Gusher of Lawsuits

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The Deepwater Horizon oil platform burning as it sinks into the Gulf of Mexico.

For the past month BP engineers have fought to stanch the flow of oil spewing into the Gulf of Mexico since the April 20 explosion of the Deepwater Horizon rig. While that effort is hugely complex and expensive, perhaps an even more daunting battle awaits on dry land, where oil companies will face a slew of lawsuits. The financial stakes are extremely high and millions of people affected, says Robert Kennedy Jr., co-counsel to a lawsuit brought by fishermen along the Gulf Coast. "I think this will be one of the biggest losses in U.S. history," he told TIME on Tuesday.

So far about 130 lawsuits related to the explosion and its aftermath have been filed, but lawyers say that number will rise significantly in coming months as the full extent of the environmental and economic damage becomes clear. Plaintiffs need to decide by July whether to opt for government compensation — available from the Federal Oil Spill Liability Trust Fund — instead of pursuing damages in court. Even before that deadline, attorneys are wasting no time filing claims against BP, as well as oil-services giant Halliburton and the rig's Swiss-based owner, Transocean Ltd. The first suit, filed on behalf of an oil rig worker who was killed in the explosion, came just a day after the accident. Since then, law firms mostly working on contingency have gathered hundreds of clients, many though online advertisements; some major law firms along the Gulf Coast have even begun holding public meetings to drum up support, and more clients, for the suits. The plaintiffs include injured rig workers, survivors of the 11 men killed, local businesses and shareholders who claim that the companies covered up or downplayed the potentially calamitous risks of the ultra-deep drilling operations. "I expect a monumental legal battle," says Brian Beckom, a Houston lawyer who is representing rig workers against Transocean. Transocean has already filed to limit its legal liability.

Lawyers say there could be further lawsuits down the line against the U.S. Government's Minerals Management Service, which oversees offshore drilling, for having failed to prevent the accident. Interior Secretary Ken Salazar told the Energy and Natural Resources Committee on Tuesday that the disaster has underlined how much the government needs to overhaul its oversight of the oil industry, including gaining more independence and authority, and devoting more resources to the effort.

Expect infighting, too. The targeted companies are not only facing a barrage of lawsuits from individuals and businesses, they are also likely to take legal action against each other, says Kennedy, as each tries to prove that the other is to blame. A ruling in favor of one company could significantly reduce the sums it would have to pay victims. That awareness seems to have played out during last week's Congressional hearings in Washington, where BP, the rig's operator, and Transocean, the owner, blamed each other. "You'll see a lot of finger pointing during this process," Kennedy says.

In all these lawsuits, attorneys are bracing for a vicious fight. The signs of what's to come are already visible, says Mike Papantonio, a partner in the Pensacola, Fla. firm of Levin, Papantonio, Thomas, Mitchell, Echsner & Proctor, who has spent decades suing corporations, including Big Tobacco and asbestos companies; he is Kennedy's long-time legal partner and co-counsel on the Gulf lawsuit. Papantonio sees here the repeat of a typical pattern in how corporations react when facing mammoth legal claims. The first round is denial, he says, referring to BPs initial assessment after April 20 that the leak was not disastrous. Next, he says, comes "racheting back the denial," and then — the current clean-up phase — "you get the kumbaya atmosphere, when they say, 'We're sorry we have completely devastated your ecosystem and your marine life, but let's all get along and solve this.'"

In an effort to cut off that "Kumbaya" phase, Papantonio has called a town hall meeting in Pensacola on Thursday night, with a star guest: Erin Brokovich, subject of the 2000 hit movie with Julia Roberts, portraying her David and Goliath battle against Pacific Gas & Electric for toxic chemical leaks. The aim of the public meeting is to counter what Papantonio describes as "BP's aggressive P.R. campaign, which involves getting low-level bureaucrats talking about what a wonderful company it is." That, he says. is "very disarming to the community, which doesn't have a a full sense of the history of this company."

Even if the plaintiffs win in court against the oil companies, that doesn't mean victims will see quick and substantial compensation. First, Papantonio believes oil companies will stall for time, waiting for the furor over the Gulf spill to die down. Hoping to expedite matters, one attorney in Louisiana requested on Wednesday that all lawsuits related to the oil spill be quickly combined in a single federal court. Secondly there's the question of whether there will be enough money to compensate the victims. Even BP, whose 2009 profits amount to about $30 billion, could be permanently hobbled by decades of litigation, appeals and billions in claims, says Papantonio. The company that emerges from litigation will be very different from the pre-explosion BP, he says.

Aside from the money involved, there are also what Kennedy calls "intangible losses" for which there are few legal solutions. "You cannot re-create the ecosystem of the Gulf coastline," says Kennedy. "I don't think people will ever be made whole again."