Reconceptualizing the BP Oil Spill as Parens Patriae Products Liability

Abstract

The April 20, 2010 explosion and sinking of the Deepwater Horizon oil drilling platform created an immense environmental catastrophe in the Gulf of Mexico. The ineffective blowout preventer (BOP), possibly the largest moveable object ever implicated in products liability litigation, is at the center of an epic legal struggle between oil industry defendants over the limits of tort law to supplement deficient federal regulation. 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 were filed pursuant to their states’ 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 BOP was defectively designed or contained a manufacturing defect that led to consequential damages, rather than a superseding cause such as operational errors by some other oil industry entity supplying equipment or expertise. BP and Cameron have agreed to mutual releases of potential claims against each other, and BP has agreed to indemnify Cameron for compensatory damages arising from the failure of the blowout preventer to close off the gushing well. Neither punitive damages nor civil penalties are under the indemnification agreement.

Further discovery is necessary to determine whether there are aggravating circumstances that justify the imposition of punitive damages against Cameron International or the other oil industry defendants. A company's inaction in the face of knowledge of a dangerous defect will generally support an inference that the firm has been recklessly indifferent to consumer safety. Deep sea drilling is an ultrahazardous activity and the operations must be conducted with the highest degree of care. 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). 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.