LitigationOn September 4, 2014, the Court handed down its Phase One Findings of Fact and Conclusions of Law 


The Court held that BP was guilty of “gross negligence”, “recklessness” and “willful misconduct”.   Among other things, the Court found that BP lied in its corporate Investigation Report regarding a critical phone call that was placed by the BP Macondo Well Site Leader to BP’s on-shore Senior Engineer shortly before the explosion.  The Court’s holding renders BP liable for enhanced civil penalties under the Clean Water Act, and the Court suggested that BP is liable for punitive damages under the standards developed by some courts in some jurisdictions.  Here in the U.S. Fifth Circuit, the Court felt constrained by a somewhat unique decision that had been handed down by the court of appeals in 1989.  The Court suggested, at the same time, that the egregious conduct at issue was attributable to the corporation, and that plaintiffs subject to the Fifth Circuit rule would be entitled to punitive damages if the 1989 decision were limited, distinguished or reversed by the Fifth Circuit or the U.S. Supreme Court on appeal.


The Court also found that Transocean employees were negligent in contributing to the blowout, and that the company was not entitled to protection under the Shipowner’s Limitation of Liability Act.  The Court found Transocean 30% at fault in causing the disaster.  As a practical matter, however, Transocean’s liability is assumed by BP under a contractual indemnity agreement between the two companies.


Finally, the Court discussed the liability of Halliburton, which had entered into a complex settlement with private plaintiffs and local government entities shortly before the decision was handed down.  While the Court described Halliburton’s conduct as “egregious” with respect to the cementing job, the Court found that, because of other failures by BP, the cement would have failed even had Halliburton done its job properly.  (The Court also found in a separate order that Halliburton deleted evidence after the Spill “intentionally and in bad faith”.)  In all, Halliburton was found to be 3% at fault in contributing to the incident, (as a result of the failures of its mudlogger to properly monitor the well along with Transocean employees).  As with Transocean, Halliburton’s liability for compensatory damages is assumed by BP under a contractual indemnity agreement between the two companies.


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