Fifth Circuit Adopts "Substantial Nexus" Causation Standard For OPA 90 Economic Damages
In re: Deepwater Horizon: Loggerhead Holdings, Inc. v. BP, P.L.C. ----- F.4th -----, 2022 U.S. App. LEXIS 24863 *, 2022 WL 4006944 (5th Cir. Sep. 2, 2022; Southwick, J.)
Loggerhead Holdings, Inc., which operated a scuba diving business, brought claims for economic and physical damages under OPA 90 (along with claims for compensatory and punitive damages under general maritime law) against various BP entities as a result of the Transocean Horizon and Macondo well blowout. Loggerhead sought $41 million in compensatory damages. Judge Carl Barbier granted BP's Motion for Summary Judgment to dismiss the economic damage claim (33 U.S.C. § 2702(b)(2)(E)) and the physical damage claim (33 U.S.C. § 2702(b)(2)(B)). Loggerhead timely appealed. Judge Southwick, writing for the unanimous panel (Judges King and Elrod were the other panel members), first addressed the claim for economic damages under 33 U.S.C. § 2702(b)(2)(E) which permits a party to recover economic damages without proof of physical damage to the claimant's property. The damages must "result from" or be due to the "injury, destruction, or loss of real property, personal property, or natural resources." (Citing In re: Settoon Towing, L.L.C. 859 F.3d 340, 345 (5th Cir. 2017)) The causation standard (proximate cause or but/for) under this provision of the act has been the subject of dispute throughout the Transocean Horizon litigation.
The court adopted the "substantial nexus" test the Supreme Court applied in interpreting OCSLA in Pacific Operators Offshore, LLP v. Valladolid, 565 U.S. 207 (2012). Notably, Judge Barbier adopted this standard in Classy Cycles. (In re: Oil Spill, 558 F.Supp.3d 331 (E.D. La. 2017)). However, the panel expressed some reservations about how "the sliding scale concept works in different circumstances." With this standard applied, the Summary Judgment for economic damages was reversed.
Addressing the claim for physical damage to a vessel under (33 § 2702(b)(2)(B), the panel affirmed the judgment in favor of BP dismissing that claim. A more detailed synopsis will follow soon.
A copy of the opinion may be obtained following this link:
https://www.ca5.uscourts.gov/opinions/pub/21/21-30573-CV0.pdf
