Veracruz v. BP, P.L.C.
784 F.3d 1019
| 5th Cir. | 2015Background
- In April 2010 the Deepwater Horizon exploded and leaked millions of gallons of oil into the Gulf; three Mexican states (Veracruz, Tamaulipas, Quintana Roo) sued U.S. oil-related companies for negligence and related claims for damages they incurred.
- District court dismissed many claims and limited remaining negligence/gross‑negligence claims to those where plaintiffs had a proprietary interest in physically damaged property; discovery focused on that proprietary‑interest question.
- District court granted summary judgment for defendants, applying the Robins Dry Dock economic‑loss rule and concluding under Mexican constitutional and statutory law that the federal Mexican government (not the states) owns the affected waters, seabed, wildlife, and related resources.
- Plaintiffs relied on state constitutions, Mexican statutes, and affidavits from state ministers and a developer to assert sufficient proprietary interests; defendants relied on Article 27 of the Mexican Constitution and federal statutes vesting control in the Nation (represented by the federal government).
- Fifth Circuit reviewed de novo, considered foreign law under FRCP 44.1, addressed whether Robins Dry Dock applies given some criminal pleas, and concluded the states lacked the requisite proprietary interest; affirmed summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Robins Dry Dock (economic‑loss rule) | Robins Dry Dock should not bar recovery here because defendants pled guilty to criminal offenses (including an intentional obstruction plea) — criminal/intentional conduct exception. | Robins Dry Dock applies; criminally negligent convictions do not create an exception, and BP’s obstruction plea is not causally related to the spill harms to Mexican states. | Robins Dry Dock applies; criminal negligence does not defeat the rule and BP’s obstruction plea does not create an exception. |
| Whether Mexican States have a proprietary interest in damaged property sufficient to overcome Robins Dry Dock | States point to state constitutions, statutes, and affidavits showing they manage, repair, and spend funds protecting beaches, waters, wildlife, and some islands. | Federal (Nation) ownership of lands, waters, continental shelf, seabed, and territorial waters under Mexican Constitution Article 27 and federal statutes; states’ powers are subordinate and do not amount to ownership/control equivalent to demise‑charter/ownership. | States lack the requisite proprietary interest; federal law vests ownership/control in the Nation/federal government, so Robins Dry Dock bars their economic loss claims. |
| Effect of Mexican state constitutions and minister affidavits | State constitutions and minister affidavits show state autonomy and state ownership/control of beaches and natural resources. | State constitutions are subordinate to federal Constitution; minister affidavits conflict with Article 27 and cannot overcome federal supremacy and statutory regime. | State constitutions and affidavits insufficient; Article 27 and federal statutes control and show federal ownership or exclusive authority. |
| Concern about duplicate recovery / parallel federal suit by Mexico | States argue they have concurrent authority and seek their own damages. | Federal government’s parallel suit and federal statutory allocation of enforcement/claims show primary federal interest and risk of duplicative recovery; supports bar to states’ economic claims. | Federal suit and statutes underscore federal primacy and risk of double recovery; counsels in favor of barring states’ claims. |
Key Cases Cited
- Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927) (establishes rule barring recovery for economic loss resulting from physical damage to property in which plaintiff lacks a proprietary interest)
- State of La. ex rel. Guste v. M/V Testbank, 752 F.2d 1019 (5th Cir.) (en banc) (applies Robins Dry Dock broadly to bar indirect economic claims by non‑owners)
- Catalyst Old River Hydroelectric Ltd. v. Ingram Barge Co., 639 F.3d 207 (5th Cir. 2011) (explains Robins Dry Dock aims to limit runaway recovery for economic repercussions)
- Ballard Shipping Co. v. Beach Shellfish, 32 F.3d 623 (1st Cir. 1994) (criminal negligence convictions do not create an exception to Robins Dry Dock)
- Vicksburg Towing Co. v. Miss. Marine Transp. Co., 609 F.2d 176 (5th Cir. 1980) (owner of damaged property may recover economic losses despite leasing to another)
- Bayou Lacombe v. Louisville & N.R. Co., 597 F.2d 469 (5th Cir. 1979) (distinguishes time charter from demise charter; incidents of ownership test)
- Kaiser Aluminum & Chemical Corp. v. Marshland Dredging Co., 455 F.2d 957 (5th Cir. 1972) (no recovery where plaintiff lacked ownership/control of damaged property)
- Texas Eastern Transmission Corp. v. McMoRan Offshore Exploration Co., 877 F.2d 1214 (5th Cir. 1989) (identifies factors—possession/control, repair responsibility, maintenance responsibility—as incidents of ownership but not substitutes for ownership)