NEW ORLEANS (CN) – BP won two rounds in its massive oil spill litigation when the federal judge overseeing the cases ruled that lead plaintiffs in property damage lawsuits cannot include racketeering claims, and that a lawsuit from BP business partner Anadarko Petroleum must be arbitrated.
U.S. District Judge Carl Barbier granted BP’s motion to dismiss a consolidated oil spill complaint brought under the RICO Act, calling plaintiffs’ inability to show a direct link between BP business practices and the economic damages sought the “fatal flaw in their RICO claims.”
The plaintiffs claimed that damages to property and business losses caused by the oil spill would not have happened if BP had not “defrauded government regulators in connection with the safety of its drilling operations, its ability to respond to any oil spill, and its response to the spill at the Macondo well.”
Judge Barbier ruled that a direct relationship between the alleged fraud and the plaintiffs’ injuries was required for a RICO complaint to stand.
That ruling does not affect the hundreds of other lawsuits seeking property damages, personal injury and other economic losses still pending in Barbier’s court.
Barbier agreed with BP’s argument that a proximate connection must exist between the alleged fraud and the plaintiffs’ claims.
“Plaintiffs allege that the oil spill, and their resulting injuries, occurred because BP defrauded government regulators in connection with the safety of its drilling operations, its ability to respond to any oil spill, and its response to the spill at the Macondo well. BP challenges plaintiffs’ RICO claim on the grounds that plaintiffs have not sufficiently alleged proximate causation. After reviewing the parties’ memoranda and applicable case law, the court agrees with BP that plaintiffs have alleged a casual connection between BP’s alleged fraud and plaintiffs’ injuries that is too attenuated to state a RICO violation,” Barbier wrote.
After the Deepwater Horizon drilling rig exploded on April 20, 2010 killing 11 and setting off the worst oil spill in history, BP was accused of being dishonest with the federal agency in charge of overseeing drilling regulations, the Minerals Management Service (MMS).
“BP points out that plaintiffs’ theory of causation ‘depends on a series of speculative assumptions to link the alleged fraud with the spill.’ … Specifically, BP explains that plaintiffs’ theory depends on the following assumptions: If MMS had known the truth about BP’s safety practices and capacity to respond to a spill, then MMS would have concluded that these were insufficient to meet regulatory standards; if MMS had concluded that BP’s safety practices and capacity to respond to a spill were insufficient to meet regulatory standards, then MMS would have required BP to adopt alternative practices; if MMS had required BP to adopt alternative practices, those practices would have prevented the blowout or lessened the impact of the spill. … The court agrees with BP. In order for plaintiffs to prevail on their theory of causation, they must rely on this particular domino effect stemming from BP’s alleged fraud. …
“Here, plaintiffs’ harm is ‘purely contingent’ on MMS potentially requiring BP to conduct different practices and those practices preventing or lessening the effects of the spill. … The cause of plaintiffs’ harm rests on inactions (MMS’s failure to demand that BP comply with regulations and BP’s subsequent alleged failure to maintain better safety practices) that are ‘entirely distinct from the alleged RICO violation’ (defrauding government regulators).” (Parentheses in ruling.)
Barbier added: “As BP correctly points out, the United States has already filed suit against BP in this MDL and is capable of redressing any alleged fraud committed upon its regulators.”
The RICO claims are included in pleading bundle B2 of the litigation.
In a separate ruling, Barbier stayed proceedings between BP and Anadarko.
Anadarko owns 25 percent of the failed Macondo well. BP asked Anadarko to help pay cleanup costs, but Anadarko refused.
Anadarko sued BP in April, disclaiming fault for the explosion and spill.
During a hearing on the matter in May, Anadarko attorneys told the court that no one from Anadarko was on the rig when it exploded, and no officials from Anadarko were involved with any of the decision-making that led up to the explosion and catastrophic spill.
There are an estimated 130,000 plaintiffs in the several hundred oil spill lawsuits pending before Judge Barbier.
The first trial is slated for February 2012.