HOUSTON (Dow Jones)--A federal hearing resumed Friday on a petition for class action status from plaintiffs suing Murphy Oil Corp. (MUR) following a giant oil spill from a refinery in suburban New Orleans shortly after Hurricane Katrina.
The case relates to a spill of some 25,110 barrels of mixed crude into Chalmette, La., a working-class city of 68,000 that was devastated by flooding from Katrina. Plaintiffs have charged Murphy with negligence. Murphy maintains the spill was an act of God. A favorable ruling on class status would enable plaintiffs to pool litigation costs, rather than pursue individual cases.
On Thursday, attorneys representing Murphy argued that class action status was unnecessary because the Arkansas-based oil company was settling with many residents affected by the spill. Murphy said it spent more than $50 million in settlements, accounting for some 1,800 homes, the Associated Press reported. The company also spent some $17 million on cleanup.
More than 60 plaintiffs have filed suit against Murphy since September. Last month, the Environmental Protection Agency said 1,800 properties were "visually determined to have been oiled by the spill," 114 with heavy oiling, 286 properties with medium and the rest having a "light" level of oiling only.
In their petition, plaintiffs assert that the spill impacted more residents than those with visible damage. They say neighboring areas were affected by storm runoff, airborne contamination and the "stigma" of their proximity to the polluted area.
Plaintiffs argue that the hazardous conditions of the spill can't be alleviated by cleanups on an "individualized" basis. "To return this community to a safe place to visit, live, attend school, and work," they say, "requires the people of this community to go forward with one voice, one action: the present action."
Murphy has filed a mountain of pleadings, arguing for example that many of the named plaintiffs lived outside the affected area and that none have suffered actual physical injury due to the spill. The oil company is also trying to exclude many of the plaintiffs' expert witnesses.
The company argues that testimony from Paul Templet should be excluded because his understanding of the facts of the case are "deficient" and he "has never been involved" in"a comprehensive cleanup strategy for any event involving a crude spill in a residential community." Templet, the former head of the Louisiana Department of Environmental Quality, is now an environmental studies professor at LouisianaStateUniversity.
In a decision filed on Thursday, Fallon said testimony from Templet and most of the plaintiffs' witnesses was admissable. Templet "appears well-qualified to testify as an environmental scientist," and his testimony "appears to have some relevance" to the plaintiff's argument, Fallon said.
"The question is how much relevance Dr. Templet's opinion should have, not whether Dr. Templet's opinion is admissable," Fallon wrote.
The hearing comes amid a recovery in Murphy's stock price. The market punished Murphy in the weeks after Katrina because of lost production in the Gulf of Mexico and concerns about the Chalmette litigation. But the stock has recovered in recent months.
Investors regard the litigation as "manageable" because of the limited number of potential plaintiffs and Murphy statements that most of the loses will be insured, said Gene Gillespie, an analyst at Howard Weil, a New Orleans investment bank.
The ruling is expected to continue through Friday afternoon, with a possible Saturday session if necessary. A ruling is expected within 7-10 days following the conclusion of arguments.
Source: John M. Biers, Dow Jones Newswires; 713-547-9214; john.biers@dowjones.com