CARL BARBIER, United States District Judge.
Before the Court is BP Exploration & Production, Inc.'s ("BP") "Motion to Dismiss Moratoria/Permitoria Claims" (Rec. Doc. 15663), the OPA Test Case Plaintiffs' "Renewed Motion to Strike Affirmative Defenses and Motion in Limine Regarding Potential Third-Party Fault, Including Application of any Alleged `Superseding' Cause Defense Premised on Governmental Action or Inaction Following the Spill" (Rec. Doc. 15655), and related briefing. At issue is whether a "responsible party" is liable under the Oil Pollution Act of 1990 ("OPA"), 33 U.S.C. § 2702(a), (b)(2)(E), for a claimant's economic loss that resulted from the moratorium on offshore drilling imposed by the federal government in the aftermath of the DEEPWATER HORIZON/Macondo Well blowout and oil spill. Because the Court answers this question in the negative, it will grant BP's motion and deny the OPA Test Case Plaintiffs' motion(s).
On the evening of April 20, 2010, a blowout, explosions, and fire occurred aboard the mobile offshore drilling unit DEEPWATER HORIZON as it was in the process of temporarily abandoning an exploratory well, known as Macondo, it had drilled in the Gulf of Mexico, some 50 miles from the Louisiana coast and in 5,000 feet of water. Eleven men died in the incident and at least seventeen others were seriously injured. At the time of the blowout, a 5,000 foot-long pipe, called a marine riser, connected the HORIZON to the well. Hydrocarbons from the well travelled up the riser to the rig, fueling the massive fire until the HORIZON capsized and sank on April 22. As it descended, the marine riser collapsed and fractured. Oil and gas then poured into the Gulf via breaks in the riser near the seafloor. BP, the majority owner and operator of the Macondo Well, is a "responsible party" for this incident under OPA, 33 U.S.C. § 2702(a).
These events triggered a massive response — unprecedented in size and complexity — to combat the oil spill. On April 29, 2010, the incident was declared a "Spill of National Significance" under the National Contingency Plan.
The HORIZON/Macondo incident also provided the impetus for certain regulatory actions that would affect the offshore drilling industry. Ten days after the blowout, the President ordered the Secretary of the Interior to review the incident and report "what, if any, additional precautions and technologies should be required to improve the safety of oil and gas exploration and production operations on the outer continental shelf." Hornbeck Offshore Servs. v. Salazar, 713 F.3d 787, 789 (5th Cir.2013) (internal quotations omitted). On May 6, 2010, the Secretary announced that "as a result of the Deepwater Horizon explosion and spill ... no applications for drilling permits [would] go forward for any new offshore drilling activity" pending his report to the President. Id. (internal quotations omitted). On May 27, the Secretary issued his report, "Increased Safety Measures for Energy Development on the Outer Continental Shelf," which recommended immediate and long term reforms to improve drilling safety. Id. The report also recommended "(1) a six-month moratorium on permits for new wells being drilled using floating rigs and (2) an immediate halt to drilling operations on the 33 permitted wells that [were] currently being drilled using floating rigs in the Gulf of Mexico." Id. (internal quotations omitted). The report stated, "The moratorium would allow for implementation of the measures proposed ... and for consideration of the findings from ongoing investigations...." (Pls. Mot., Ex. 1 at 3, Rec. doc. 15655-2). The next day, May 28, the Secretary issued the so-called "May Directive," wherein he found that, under then-existing conditions, "offshore drilling of new deepwater wells poses an unacceptable threat of serious and irreparable harm to wildlife and the marine, coastal, and human environment" and directed
Hornbeck, 713 F.3d at 790. The May Directive was executed by way of a Notice to Lessees, which explained that "MMS would not consider any new drilling applications for six months in `deepwater,' defined as depths greater than 500 feet." Id. MMS also notified the operators of the 33 wells that were being drilled at the time that their activities were temporarily suspended. Id.
Certain offshore businesses challenged the moratorium as violative of the Administrative Procedure Act. On June 22, 2010, another judge of this Court agreed and issued a preliminary injunction blocking the moratorium. Hornbeck Offshore Servs. v. Salazar, 696 F.Supp.2d 627 (E.D.La.
This Order and Reasons will refer to the government-imposed suspensions and delays of offshore drilling and permitting as the "Moratorium."
Early on in this multidistrict litigation, the Court instructed the Plaintiffs' Steering Committee ("PSC") to file several master complaints, including the "B1 Master Complaint" on behalf of private individuals and business who claimed to suffer economic loss or property damage. (Pretrial Order No. 11, Rec. Doc. 569). The B1 Master Complaint asserted multiple claims on behalf of different types of individuals and businesses. Relevant here are the "Moratorium Plaintiffs," described as "deepwater drilling rig workers, rig support personnel, transport personnel, ..." and others who "suffered losses and damages as the result of the Six-Month Deepwater Drilling Moratorium issued by the United States Department of Interior on May 28, 2010, in response to the Spill." (Amend. B1 Master Compl. ¶ 521, Rec. Doc. 1128). The Master Complaint alleged that the Moratorium was imposed "as a direct, proximate and foreseeable result of the Deepwater Horizon/Macondo Well blow-out and spill." (Id. ¶ 522). Defendants subsequently moved to dismiss the B1 Master Complaint, raising numerous and complex legal arguments. The Court's Order and Reasons of August 26, 2011 ruled on many of these issues. (Rec. Doc. 3830) Relative to the Moratorium Plaintiffs' claims, however, the Court declined at that time (the pleading stage) to define the precise contours of OPA causation and simply held that the Moratorium Plaintiffs had alleged sufficient facts to state plausible claims under OPA. In re Oil Spill by the Oil Rig "Deepwater Horizon," 808 F.Supp.2d 943, 966 (E.D.La.2011).
In June 2014 — after two massive class settlements and two major trial proceedings — the Court issued an "Agreed Upon Scheduling Order for OPA Test Case Trials," which established a case management procedure for six
According to its complaint, Bisso "was engaged in the marine salvage and commercial diving business, which includes all pipeline and offshore construction activity, performing salvage, diving and other related services in the navigable waters in the Gulf of Mexico in water depths of typically 300 feet or less." (Bisso First Amend. Compl. ¶ 5, Rec. Doc. 12988). Bisso alleges that the blowout and "consequent explosion, fire, vessel sinking and massive oil spill prohibited [it] from engaging in its marine salvage and commercial diving operations." (Id. ¶ 7). Bisso is a class member in the Economic and Property Damages Settlement, one of the two class settlements mentioned above. Although the terms of the settlement required that Bisso release most of its claims relating to the oil spill, it specifically reserved to Bisso any claims for "Moratoria Losses," defined as
(Settlement §§ 3.3, 38.93 Rec. Doc. 6430-1). Consequently, Bisso's only remaining claims are for "Moratoria Losses."
Blake "was a privately-held offshore platform rig provider in the business of contracting and negotiating the use of their drilling rigs to oil and gas companies who operate and drill oil wells in the Gulf of Mexico." (Blake Compl. ¶ 2, No. 13-1185, Rec. Doc. 1). Blake alleges, "As a result of the April 20, 2010 blowout of the Macondo well and consequent explosion, fire, vessel sinking, massive oil spill, and resulting moratorium that ceased drilling activity in the Gulf of Mexico, Blake was forced to take their rigs out of commerce." (Id. ¶ 60). Consequently, Blake claims it "has suffered and will continue to suffer extensive economic and formidable monetary damages." (Id. ¶ 62).
Certified Platform claims it "was engaged in the business of purchasing salvaged offshore jackets, piling, decks and related production equipment from companies who have ceased production from their shallow water Gulf of Mexico installations. Similarly, Certified [Platform], at all material times, was engaged in the business of refurbishing such equipment to meet the needs of oil and gas companies who operate in Gulf of Mexico." (Certified Platform Compl. ¶ 2, No. 13-1143, Rec. Doc. 1). Certified Platform asserts that the "blowout of the Macondo well and consequent explosion, fire, vessel sinking and massive oil spill prohibited Certified [Platform] from engaging in its business of purchasing, refurbishing, and reselling salvaged offshore jackets, piling, decks and related production equipment from oil and gas companies with exclusive production operations in the navigable waters of the Gulf of Mexico." Certified Platform does
Black Elk "is an oil and gas exploration and production company" with "many interests in the Gulf of Mexico." (Black Elk Second Amend. Compl. ¶ 33, Rec. Doc. 13722). Black Elk alleges that prior to the oil spill, it held a partial interest in three potential wells to be drilled in the Gulf of Mexico. (Id. ¶ 34). It further claims that "[d]ue to the BP Oil Spill and resultant moratorium on offshore oil and gas exploration and production..., [Black Elk] and the other interest-holders could not obtain the necessary permits to begin drilling the wells in question. However, all interest holders were still contractually obligated to pay their respective pro rata shares of the daily rate for the drilling rig." (Id.). Therefore, Black Elk claims it "suffered significant financial damages by paying for a drilling rig that did not drill a well." (Id.)
Seahawk's complaint states that it "provided contract drilling services to the oil and natural gas exploration and production industry exclusively in the Gulf of Mexico." (Seahawk Second Amend. Compl. ¶ 1, Rec. Doc. 13721). Seahawk alleges,
(Id. ¶ 45). Seahawk claims that the reduced demand for drilling services led to reductions in the number of Seahawk drilling rigs in operation and reduced day rates for those rigs that could find work. (Id. ¶ 31). Ultimately, Seahawk filed bankruptcy and liquidated its assets in February 2011. (Id. ¶ 33).
Wadleigh is "a heavy material handling equipment inspection, maintenance and service company primarily operating on drilling rigs in the Gulf of Mexico." (Wadleigh Compl. ¶ 15, No. 13-810, Rec. Doc. 1). Wadleigh claims that "[a]s a result of the oil spill, [its] market was significantly impacted due to greater competition for fewer available jobs and projects in the Gulf area. Of note, [Wadleigh's] largest customers were forced to leave the Gulf of Mexico, further negatively impacting [Wadleigh's] operations and severing relationships that [it] had built and fostered for many years." (Id. ¶ 15).
The OPA Test Case Plaintiffs only assert claims under OPA against BP. (Rec. Doc. 12972 ¶¶ 1-2). After BP answered the Test Case Plaintiffs' individual complaints, the Plaintiffs filed a combination motion to strike/motion in limine that essentially sought to preclude BP from arguing that economic losses caused by the Moratorium are not compensable under OPA or that the Moratorium is a defense to liability under OPA, etc. (Rec. Doc. 13108). The Court denied the motion as premature and directed the parties to re-urge their arguments at the summary judgment stage. (Rec. Doc. 13393). After further consideration, the Court instructed Plaintiffs to re-urge their motion and BP to file a motion to dismiss. (Rec. Doc. 15582). These motions have been fully briefed and are ripe for resolution.
BP argues in its motion to dismiss that the Moratorium was not an unavoidable mandatory response to the oil spill, but instead newly crafted measures designed to facilitate an industry-wide review of drilling practices and, therefore, discretionary acts aimed at avoiding future spills. BP describes the OPA Test Case Plaintiffs' claims as consequential economic losses caused by the government-imposed Moratorium. Citing OPA's liability provisions, 33 U.S.C. § 2702(a), (b)(2)(E), and In re Taira Lynn Marine Ltd. No. 5, 444 F.3d 371 (5th Cir.2006), BP urges that such claims are not compensable under OPA because they did not "result from" the discharge of oil, nor was the Moratorium an OPA "incident," nor were the losses "due to the injury, destruction, or loss of real property, personal property, or natural resources." Additionally, BP interprets OPA as only compensating losses that are proximately caused by the oil spill, and further asserts that Plaintiffs do not satisfy this standard because the proximate cause of their claims was the federal government's decision to impose the Moratorium, not the oil spill.
Plaintiffs counter that OPA does not impose a "proximate cause" or similar requirement. They point out that OPA only uses "proximate cause" in § 2704, concerning the removal of liability caps, but employs broader language in § 2702, concerning liability. Plaintiffs also urge that Taira Lynn, relied upon by BP, is distinguishable because it involved a gaseous release that did not cause any property damage. Plaintiffs contend that BP's interpretation is contrary to OPA's purpose of expanding the scope of liability beyond traditional maritime standards and would exclude entire categories of claims that were clearly intended to be compensated under OPA. Plaintiffs also note that a responsible party may avoid liability under OPA only in the narrow instances listed in § 2703, which BP admits are not applicable here. Arguing in the alternative, Plaintiffs state that even if OPA does require proximate cause (or that damages be "foreseeable" or "direct"), their claims would still meet the test. Plaintiffs note that the government has imposed some type of drilling moratorium every year from 1982 to 2008. In light of that fact and given the severity of this oil spill, Plaintiffs contend that the 2010 Moratorium was not only foreseeable, but practically certain. Plaintiffs also propose that one of the reasons for the Moratorium was that assets and resources necessary for containment were tied up responding to the HORIZON/Macondo spill. In terms of OPA's language, then, Plaintiffs argue that "the discharge of oil from the Macondo Well was an OPA `incident' which caused massive damage and substantial threats of further damage to natural resources and other property; which was, among other considerations, a substantial factor in the existence, nature and scope of the moratoria and associated permitting changes; which were, perhaps among other factors, a substantial cause of the economic losses suffered by the Plaintiffs." (Pls.' Opp'n p.15, Rec. Doc. 15704).
On a motion to dismiss, "[t]he central issue is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief." Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir.2010) (citations and quotations omitted). More specifically:
Id. (citations and quotations omitted). Furthermore, "[d]etermining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
A motion to strike a defense is generally disfavored. Kaiser Aluminum & Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1057 (5th Cir. 1982). "Striking an affirmative defense is warranted if it cannot, as a matter of law, succeed under any circumstance." United States v. Renda, 709 F.3d 472, 479 (5th Cir.2013); see also Augustus v. Bd. of Pub. Instruction of Escambia Cty., 306 F.2d 862, 868 (5th Cir.1962) ("[T]he action of striking a pleading should be sparingly used by the courts.... It is a drastic remedy to be resorted to only when required for the purposes of justice.... The motion to strike should be granted only when the pleading to be stricken has no possible relation to the controversy." (citation and quotations omitted)).
The parties disagree over the nature of each other's arguments and the associated burdens. Plaintiffs describe BP's arguments as an affirmative defense — superseding cause — for which BP bears the burden of establishing and, moreover, is not a defense to OPA liability. BP urges that, although some of its arguments are affirmative defenses, the issue it raises here concerns a key element to Plaintiffs' prima facie case — causation — which is Plaintiffs' burden to establish. BP contends that Plaintiffs' motion is an attempt to excuse themselves from establishing this element.
A plaintiff bears the burden of proving each element of its claim. A defendant, in turn, bears the burden of establishing any affirmative defenses, but this does not include the simple argument that a plaintiff has failed to plausibly allege a prima facie case in its complaint. While some of BP's arguments could be viewed as affirmative defenses, its motion to dismiss largely asks whether Plaintiffs have plausibly alleged claims that satisfy OPA's causation standard. Because causation is an indispensable element of Plaintiffs' claims, it is Plaintiffs' burden to establish its existence.
OPA's general liability provision is § 2702(a). It states,
33 U.S.C. § 2702(a) (emphasis added). BP is a "responsible party" under § 2702(a). Therefore, BP is liable for the damages listed in § 2702(b) "if, inter alia, the claimant's damages `result from such incident,' i.e., the discharge or threatened discharge
33 U.S.C. § 2702(b)(2)(E) (emphasis added). This provision requires that a plaintiff's lost profits or diminished earning capacity be "due to" the injury, destruction, or loss of property or natural resources, though the plaintiff need not own or lease the property or resources. Taira Lynn, 444 F.3d at 382.
Reading § 2702(a) and § 2702(b)(2)(E) together, Plaintiffs must establish that their economic losses were "due to" the injury, destruction, or loss of property or natural resources that "result[ed] from" the discharge or threatened discharge of oil from the HORIZON/Macondo well (i.e., the "incident"). See id. at 383.
There can be no doubt that the Government would not have imposed the Moratorium had the HORIZON/Macondo blowout and oil spill not occurred. However, the Moratorium addressed the risk of possible
Thus, this matter is distinguishable from the "shutdown" cases cited by Plaintiffs. For example, in Dunham-Price Group v. Citgo Petroleum Corp., the district court denied the defendant's motion for summary judgment against a concrete facility's claim for business interruption losses allegedly caused by the Coast Guard's decision to close a portion of a river following an oil spill. No. 2:07-CV-1019, 2010 WL 1285446 (W.D.La. Mar. 31, 2010). Significantly, and unlike the Moratorium, the river closure was part of the effort to contain and clean up the spill from the defendant's facility. Id. at *1.
Id. at 383 (citations omitted; emphasis in original).
Additional reasons support denying the OPA Test Case Plaintiffs' claims. Plaintiffs assert that the Government has imposed drilling moratoria every year from 1982 through 2008, yet Plaintiffs cite no cases in which a private party has been held liable (under OPA or other law) for losses caused by a moratorium. The absence of such cases suggests that Plaintiffs' claims are not recoverable. See also Steven Shavell, Should BP Be Liable for Economic Losses Due to the Moratorium on Oil Drilling Imposed after the Deepwater Horizon Accident, 64 Vand. L. Rev. 1995, 2006 (2011) ("It may also be useful to observe that in contexts other than the BP oil spill, firms engage in activities that occasionally produce information leading to government actions that impose losses on other parties, yet no one contemplates imposing liability on the firms for this reason."). On a similar note, while OPA's legislative history makes clear that Congress intended the Act to
For these reasons, the OPA Test Case Plaintiffs have failed to plausibly allege valid claims for relief under OPA. Accordingly, the Court will grant BP's motion to dismiss and deny Plaintiffs' motion to strike/motion in limine. The Court makes clear that it need not and does not decide whether or not § 2702(a) and/or § 2702(b)(2)(E) incorporates a proximate causation standard, etc.
IT IS ORDERED that BP's Motion to Dismiss Moratoria/Permitoria Claims (Rec. Doc. 15663) is GRANTED;
IT IS FURTHER ORDERED that the OPA Test Case Plaintiffs' Renewed Motion to Strike Affirmative Defenses and Motion in Limine Regarding Potential Third-Party Fault, Including Application of any Alleged "Superseding" Cause Defense Premised on Governmental Action or Inaction Following the Spill (Rec. Doc. 15655) is DENIED;
IT IS FURTHER ORDERED that the claims asserted in the OPA Test Cases (Nos. 13-706, 13-810, 13-1143, 13-1185, 13-1386, 13-2006) are DISMISSED with prejudice.
The parties dispute whether the Coast Guard's interpretation of OPA is entitled to deference. The Court need not decide this issue, because it has independently reached the same conclusion without giving any deference to the Coast Guard's decision.
