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Mexican States Can't Sue for Damage Caused by Deepwater Horizon

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By Mark Wilson, Esq. on May 05, 2015 3:57 PM

Even though it happened a little over five years, the Deepwater Horizon explosion is the gift that keeps on giving -- to the environment, and to lawyers.

This week's saga involves three Mexican states -- Veracruz, Tamaulipas, and Quintana Roo -- that sued BP, Transocean, and the other usual suspects, over damages resulting from the subsequent oil spill. The Fifth Circuit affirmed denial of their claims for lack of a "proprietary interest."

Robins Dry Dock

All three states border the Gulf of Mexico, and as a result, sued for oil damage to waters, beaches, animals, and plants, as well as lost fees and taxes due to reduced fishing and diminished tourist revenue.

The question before the Fifth Circuit, as with the district court, is what "proprietary interest" has been damaged here, and whether it's something the plaintiffs actually have. This rule, known as the "Robins Dry Dock rule," is manifested in the Fifth Circuit through a 2013 opinion in In re Bertucci Contracting Co. Under facts quite similar to those in the current case, plaintiffs were barred from bringing claims based on loss of income or loss of use of property resulting from a ship colliding with a bridge that caused the bridge to be closed for several days.

The rule is grounded in the need to cut off tort liability at some point, and unless a plaintiff can show physical damage to a chattel or some concrete economic harm, the plaintiff can't recover.

Criminal? Civil? It's All Negligence

Rather than try to argue directly with the rule, the Mexican states argued that this case is different. The Robins Dry Dock rule generally applies only to unintentional conduct; i.e., negligence. The Mexican states claimed that because Transocean pleaded guilty to a crime, its actions were more than negligent. Unfortunately, the only intentional crime it pleaded to was obstructing an investigation; on the other counts, it pleaded guilty to criminal negligence. No help there.

But even so, the Fifth Circuit has never squarely addressed the application of Robins Dry Dock to criminal conduct. The First Circuit has, and found that even criminal negligence still allows Robins Dry Dock to be applied. The Fifth Circuit agreed, finding that "there is no principled reason to distinguish between civil and criminal negligence" because the basis for the rule is "the prospect of runaway recovery stemming from a negligent act."

No Proprietary Interest Here

With Robins Dry Dock in play, the question then becomes whether the Mexican states had a sufficient proprietary interest in the damaged stuff. This can be shown through ownership or even something "just shy of outright ownership" like the demise agreement in Robins Dry Dock.

But the property at issue -- water, land, and so on -- isn't owned by any of the Mexican states. Per the Mexican constitution, it's owned by the federal government, which wasn't a party to this case. And even statutes couldn't help the states, as all the Mexican wildlife statutes grant the federal attorney general -- not individual states -- the authority to prosecute claims based on wildlife.

Even though the states maintain some right to use some of the land damaged by the oil spill, Mexican law -- on which the states based their claim to ownership -- is quite clear that the states themselves don't own that land and can't recover.

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