June 15, 2012
Koenig & Rustad on the BP Oil Spill
Tom Koenig & Mike Rustad have posted to SSRN Reconceptualizing the BP Oil Spill as Parens Patriae Products Liability. The abstract provides:
The April 20, 2010 explosion and sinking of the Deepwater Horizon created an immense environmental catastrophe in the Gulf of Mexico. This Article examines the products liability litigation by Gulf States attorneys general (AGs) against British Petroleum (BP) and BP’s products-related cross claims. Alabama’s and Louisiana’s multidistrict litigation claims for products liability, negligence, and punitive damages will be pursuant to their parens patriae sovereign powers.
This complex products defect case involves all the big issues in products liability: risk utility design tests, cause in fact, proximate cause, defenses such as state of the art, the economic loss rule, caps on damages, and punitive damages under federal maritime law. The state AGs bear the burden of demonstrating that Cameron International’s blowout preventer (BOP) was defectively designed or contained a manufacturing defect that led to their consequential damages, rather than a superseding cause such as operational errors by BP, Transocean, Halliburton, or some other oil industry defendant supplying equipment or expertise.
This will be the first test of the U.S. Supreme Court’s de facto cap that it placed on punitive damages in maritime cases in Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008). The BOP, possibly the largest moveable object ever implicated in products liability litigation, will be at the center of an epic legal struggle between oil industry defendants over the limits of tort law to supplement deficient federal regulation. Our argument is that the states’ parens patriae products liability action against BP and other oil industry defendants is necessary so that BP and the other codefendants pay the true costs of deploying allegedly defective products in the perilous subsea drilling and oil exploration industry. Even if the state attorney generals’ litigation ultimately settles, Judge Barbier should be praised for creating a legal pathway for future governmental lawsuits to recover public welfare damages based upon products liability rather than the amorphous and ill-fitting nuisance paradigm.
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