O'Brien's Response Mgmt. v. BP Expl. & Prod. Inc.

O'BRIEN'S RESPONSE MANAGEMENT, L.L.C., et al. v. BP EXPLORATION & PRODUCTION INC., et al.

CIVIL ACTION No. 19-CV-01418 SECTION: J(2)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

May 4, 2020

JUDGE BARBIER

MAG. JUDGE WILKINSON

ORDER & REASONS

Before the Court are cross motions for judgment on the pleadings under Rule 12(c). (Rec. Docs. 58, 59, 60). These motions present two overarching questions: First, are O'Brien's Response Management, L.L.C. ("O'Brien") and National Response Corporation ("NRC," and together with O'Brien, "Responders") contractually required to indemnify BP Exploration & Production Inc. and BP America Production Company (together, "BP") against personal injury claims by the Responders' employees (and the Responders' subcontractors' employees)? Second, is BP an additional insured on two of O'Brien's insurance policies? For the reasons explained below, the Court answers both in the negative.

I. BACKGROUND

A. The DEEPWATER HORIZON/Macondo Well Oil Spill, the Responders' Contracts, and the Cleanup Workers' Chemical Exposure Claims

On April 20, 2010, a blowout, explosion, and fire occurred aboard the semi-submersible drilling rig DEEPWATER HORIZON as it was in the process of temporarily abandoning a well, known as Macondo, that it had drilled some 50 miles off the coast of Louisiana. These events resulted in a massive oil spill in the Gulf of Mexico. BP, the majority owner of the well and a designated "responsible party" under the Oil Pollution Act of 1990, 33 U.S.C. § 2701, et seq., engaged the Responders to clean up the affected area.

Each of the Responders had a contract with BP. BP's contract with O'Brien ("the O'Brien Contract," Rec. Docs. 59-3 & 59-5) contained reciprocal indemnity provisions that required O'Brien and BP to indemnify each other against personal injury claims by employees in the indemnitor's "group," regardless of who may be at fault. (O'Brien Contract §§ 11.02.01, 11.03.01). The O'Brien Contract also required O'Brien to maintain certain types of insurance and name BP as an additional insured. (Id. §§ 12.01, 12.02).

The contract between NRC and BP ("the NRC Contract," Rec. Doc. 59-4) also had an indemnity provision, but its terms were very different from the O'Brien Contract. Specifically, NRC was required to indemnify BP only to the extent a claim was caused by NRC's gross negligence or willful misconduct. (NRC Contract § 9(1)). Meanwhile, BP agreed to indemnify NRC against any claim to the extent it was caused by BP's failure to comply with applicable law, a term of the agreement, or BP's gross negligence or willful misconduct. (Id. § 9(2)(a)). Furthermore, the NRC Contract stated that

[NRC] shall be entitled to the protection of Responder Immunity Law and nothing herein shall be construed to allow [BP] to recover by way of contribution, indemnity or otherwise from [NRC] . . . any amounts for which [BP] is liable to or has paid to third parties and for which [NRC] would have no liability under the Responder Immunity law applicable in the jurisdiction where the Discharge and/or Response Activities haveoccurred.

(Id. § 7(4)). "Responder Immunity Law" is defined in the NRC Contract as "Federal Law or State Law which provides immunity from liability to those who respond to Discharges for the purpose of attempting to contain and remove Oil from the water, beaches or shoreline." (Id. § 1). Finally, the NRC Contract did not require NRC to name BP as an additional insured on any contracts, unlike the O'Brien Contract.

The Responders employed, directly or through subcontractors, thousands of workers to perform the cleanup. In the summer of 2010, cleanup workers began to file lawsuits claiming that they were exposed to oil and/or other chemicals during the response that caused them to develop various illnesses or injuries.¹ Thousands of cleanup workers eventually would make similar claims. Some of these claims would eventually give rise to the instant dispute over contractual indemnification and BP's status as an additional insured.

B. MDL 2179 and the B3 Claims

Multidistrict Litigation No. 2179 ("MDL 2179" or simply "MDL") was created and assigned to this Court in August of 2010. Nearly all federal cases relating to the DEEPWATER HORIZON/Macondo Well disaster have been consolidated with the MDL.² In October of 2010, the Court established eight separate "pleading bundles"for different categories of claims to facilitate the effective administration of the MDL. (No. 10-md-2179, Rec. Doc. 569). One of these was the "B3 bundle," defined to include "all claims for personal injury and/or medical monitoring for exposure or other injury occurring after the explosion and fire of April 20, 2010." (No. 10-md-2179, Rec. Doc. 983 at 2). "B3 plaintiff/claim/case" refers to a plaintiff, claim, or case in this bundle. In December of 2010, the Plaintiffs' Steering Committee ("PSC") filed the "B3 Master Complaint," which alleged, inter alia, chemical exposure personal injury claims on behalf of cleanup workers and other individuals, and named BP, the Responders, and others as defendants. (No. 10-md-2179, Rec. Docs. 881, 1812). Plaintiffs could join the B3 Master Complaint by filing a "short form joinder" with the Court. (10-md-2179, Rec. Docs. 982 & 983 at 4). Thousands did. (See generally No. 10-8888). Plaintiffs who filed their own complaints that alleged claims that met the B3 definition were also deemed to be within the B3 bundle.

In 2010 and 2011, the Responders demanded that BP indemnify them against some of the B3 claims pursuant to their respective contracts. In May of 2011, BP and the Responders came to an agreement whereby BP reimbursed the Responders for legal fees and expenses for certain B3 claims. In contrast, BP did not demand indemnification from the Responders at this time. It would not begin to do so until 2017.

C. The Medical Settlement and the BELO Cases

In 2012, BP and the PSC (who later became Class Counsel) agreed to the Medical Benefits Class Action Settlement Agreement ("Medical Settlement" or simply"the Settlement"), which was intended to resolve many of the chemical exposure claims in the B3 bundle. (10-md-2179, Rec. Doc. 6427). Cleanup workers were included in settlement class unless they opted out. Under the Settlement, certain conditions or illnesses that were diagnosed before April 16, 2012—known as "Specified Physical Conditions" or "SPC"—were paid a particular amount pursuant to a compensation matrix. Conditions that are diagnosed after April 16, 2012 are not paid under the SPC matrix. Instead, the Medical Settlement permits the class member to file a new individual lawsuit against BP for such "later-manifested" illnesses through a process known as the Back-End Litigation Option ("BELO"). A BELO lawsuit is subject to a number of special rules and procedures, some which are discussed later in this opinion.

The Court approved the Medical Settlement in January of 2013. (Rec. Docs. 8217, 8218). It became effective in February of 2014, when the last appeal was voluntarily dismissed. The first BELO lawsuit was filed in December of 2014. (Wilson v. BP, No. 14-2730). BELO cases slowly trickled in for the next few years. Then, 2018 brought a surge of BELO cases that continued through much of 2019. To date, around 4,700 BELO cases have been filed. New BELO cases continue to be filed, though at a much lower rate than occurred in 2018-2019.

The Responders are not signatories to the Medical Settlement, nor did they participate in its negotiation. The Responders are, however, listed among the Settlement's "Released Parties," meaning class members may not sue the Responders for claims released by the Settlement, particularly chemical exposure personal injuryclaims. Class members are also barred from suing the Responders in a BELO lawsuit; only BP may be named as a defendant. Nevertheless, the Medical Settlement purports to preserve BP's ability to seek indemnification from another entity. (See Medical Settlement § XVI.K ("Except as provided in Section XXIX.L, this RELEASE is not intended to prevent BP from exercising its rights of contribution, subrogation, or indemnity under any law.")).

D. B3 Claims Remaining After the Medical Settlement

Not all B3 claims were resolved by the Medical Settlement. Notably, cleanup workers who opted out in favor of pursuing their claims through litigation remained part of the B3 bundle.

As mentioned, many B3 claims were asserted directly against the Responders. The Responders (along with other entities involved in the oil spill response) argued that they were entitled to derivative immunity under the Clean Water Act and the Federal Tort Claims Act. The Court first addressed these arguments in 2011, when it ruled on motions to dismiss the B3 Master Complaint. (No. 10-md-2179, Rec. Doc. 4209). The Court held that the Responders' defenses, although certainly plausible, were not established on the face of the complaint and therefore could not succeed on a motion to dismiss. The Responders renewed their arguments through motions for summary judgment, which the Court granted in 2016. (No. 10-md-2179, Rec. Docs. 21406, 15853). Consequently, the B3 plaintiffs' claims against the Responders were dismissed. B3 claims against BP, however, remained.

In 2017, the Court issued Pretrial Order No. 63, which focused on the remaining B3 cases. (No. 10-md-2179, Rec. Doc. 22295). Noting that the B3 Master Complaint had served its purpose, the Court dismissed it and required all remaining plaintiffs in the B3 bundle (i.e., plaintiffs with B3 claims that were not released by the Medical Settlement) to file a sworn statement regarding the status of their claim and, to the extent the plaintiff had not already done so, an individual lawsuit. Around 1,000 B3 plaintiffs remained after the PTO 63 process was complete. (No. 10-md-2179, Rec. Doc. 24268). In 2018, the Court issued Pretrial Order No. 66, which required the B3 plaintiffs to complete and serve a...