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Tuesday, May 24, 2022

Appeals Court Revives BP’s Fight Over Deepwater Cleanup Workers’ Claims

Maritime Activity Reports, Inc.

January 20, 2022

Crewmembers on board Coast Guard Cutter Walnut deploy an oil skimmer into oil the ship collects in its inflatable boom, July 2, 2010. The Walnut, homeported in Honolulu, Hawaii has been temporarily redeployed to the Gulf of Mexico to aid in the BP Deepwater Horizon response. - Credit:  Deepwater Horizon Response/(CC BY-ND 2.0)

Crewmembers on board Coast Guard Cutter Walnut deploy an oil skimmer into oil the ship collects in its inflatable boom, July 2, 2010. The Walnut, homeported in Honolulu, Hawaii has been temporarily redeployed to the Gulf of Mexico to aid in the BP Deepwater Horizon response. - Credit: Deepwater Horizon Response/(CC BY-ND 2.0)

A federal appeals court on Wednesday revived a fight between BP, two contractors, and an insurance company over who should pay for thousands of personal injury claims brought by cleanup workers after the Deepwater Horizon explosion and fire in 2010.

The 5th U.S. Circuit Court of Appeals reversed most of a lower court’s rulings for contractors National Response Corp and O’Brien’s Resource Management, and for O’Brien’s excess-liability insurer, Navigators Insurance Co.

The decision was not a complete win for BP, however. Circuit Judges Edith Jones, Edith Brown Clement and James Graves Jr ruled that the energy giant was an additional insured on Navigators’ policy, but for $2 million at most – not the $100 million BP had argued. The panel also affirmed the dismissal of a large subset of BP’s claims against O’Brien’s, and remanded the rest to U.S. District Judge Carl Barbier in New Orleans for further consideration.

BP’s attorneys at Kirkland & Ellis and Arnold & Porter Kaye Scholer did not immediately respond to requests for comment.

O’Brien’s and National Response were jointly represented by lawyers at Quinn Emanuel Urquhart & Sullivan and Phelps Dunbar. Navigators’ had its own counsel at Larzelere Picou Wells Simpson Lonero. Those attorneys also had no immediate response.

According to the 5th Circuit, this “latest installment of litigation spilling out of the Deepwater Horizon offshore explosion and fire” involved two types of claims that survived BP’s $7.8 million multidistrict litigation settlement of cleanup workers’ claims in April 2012.

Some workers opted out of the settlement, and sued BP individually. Others participated in the settlement but later took advantage of its “Back End Litigation Option,” or BELO, which allowed them to sue BP for medical conditions that were diagnosed after the settlement was signed. As part of the settlement, BP agreed to waive or modify several defenses to the BELO claims.

By 2019, BP had been hit with 1,800 BELO claims by O’Brien’s employees and about 200 from National Response’s, and a “smaller number” of opt-out claims by workers from both companies.

BP argued that the contractors were required to indemnify it for all of these claims, under the terms of their contracts. Barbier, however, rejected all of its arguments.

The 5th Circuit agreed that BP had breached its contract with O’Brien’s by creating the BELO claims without its consent as part of the 2012 settlement. It affirmed the dismissal of those claims, and sent the rest back to Barbier for “claim by claim” reconsideration.

BP has “provisioned more than $69 billion relating to the spill, including response, cleanup, economic claims, government payments, settlements and restoration,” according to a statement on its website.

The case is O'Brien's Response Management LLC et al v. BP Exploration and Production Inc et al, 5th U.S. Circuit Court of Appeals, No. 20-30364.

For O’Brien’s Response Management and National Response Corp.: Derek Shaffer of Quinn Emanuel Urquhart & Sullivan, Ivan Rodriguez of Phelps Dunbar

For BP: George Hicks Jr of Kirkland & Ellis, R. Stanton Jones of Arnold & Porter Kaye Scholer

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