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How might the Seacor Power tragedy play out in court? Look to Deepwater Horizon’s legal battle

Posted by Dennis Danos | Apr 22, 2021 | 0 Comments

A Seacor Power lift boat is capsized in the Gulf of Mexico about 7 miles from the coast near Port Fourchon, La., Sunday, April 18, 2021. The Seacor Power lift boat capsized in the Gulf of Mexico on Tuesday after a storm, leaving 5 confirmed dead, 8 missing and 6 rescued. (Photo by Sophia Germer,, The Times-Picayune | The New Orleans Advocate)


Seacor Marine Holdings Inc., the corporate owner of the Seacor Power lift boat, faces potential legal risks on several fronts following the vessel's deadly capsizing in the Gulf of Mexico, according to attorneys.

The U.S. Coast Guard called off its search and rescue mission on Monday. Six of the 19 crew members from the Seacor Power were rescued April 13, the day that a surprisingly strong storm churned up 7-to-9 foot waves and hurricane-force winds capsized the vessel eight miles south of Port Fourchon. Six bodies subsequently have been recovered, bringing the total dead or presumed so to 13.

The tragedy occurred roughly 11 years after the Deepwater Horizon disaster in the gulf killed 11 workers and set off a wave of litigation and regulatory investigations for BP Plc and its contractors, which resulted in billions of dollars of compensation and fines.

Though the Seacor Power sinking doesn't involve a massive environmental disaster, as was the case after the Deepwater Horizon explosion, lawyers that were involved in the Deepwater Horizon litigation said there are similarities in terms of how such cases are likely to play out in the courts.

Scott Bickford, a lawyer with Martzell & Bickford in New Orleans, which filed the first lawsuit in the Deepwater Horizon case on behalf of the widow of Shane Rostho, who died in the rig explosion, said the key consideration is whether there is the potential for jury trials in wrongful death lawsuits for the crew members.

"The worst case scenario for the companies involved is if they get hit with punitive damages," Bickford said. In such cases, juries are not limited in the amounts they can award to families of the crew members who died.

In the Deepwater Horizon, all of the wrongful death lawsuits were settled out of court before they could go to trial. The settlements weren't officially disclosed, but lawyers involved said Transocean, the rig owner, paid at least $8 million to each family, while BP paid significantly more.

The total, which likely was well above $100 million, was only a tiny fraction of the billions of dollars paid out by the companies. But it was far more than if the settlements had been restricted by the Death of the High Seas Act or the Jones Act, laws that are designed to protect vessel owners and limit compensation.

A big difference between the Deepwater Horizon case and Seacor Power is, of course, the relative size and wealth of the companies involved. BP alone had a market value before Deepwater Horizon of about $180 billion and was making billions in annual profits.

Seacor Marine, on the other hand, is worth just over $100 million based on its share price. It lost more than $170 million in the two years through the end of 2020 and was struggling with low oil prices even before the pandemic.

The company's stock had dropped to $4.44 a share by Tuesday, down 13.8% since the boat capsized, and recovered 20 cents to close Wednesday at $4.64. The company had $33 million in cash at the end of last year and assets of just over $1 billion. Vessels make up around $750 million of its total assets. Its long-term liabilities are just over $600 million.

Ian Taylor, a lawyer at Lewis, Kullman Sterbcow & Abramson in New Orleans, which was part of the plaintiffs' steering committee in the Deepwater Horizon litigation, noted that Transocean, though it ultimately settled with the victims, had quickly tried to limit its potential liability.

Within days of the disaster, the company filed a "limitation of liability" action under a law dating back to 1851, which has been used by vessel owners for more than a century — including the owners of the Titanic — to limit potential financial damages. The law offers the company the prospect of limiting its total liability to the value of the vessel itself.

Taylor, Bickman and other lawyers said that Seacor Marine will likely try to limit its liability in the same way, though the strategy didn't work for Transocean and hasn't worked for other vessel owners following recent tragedies.

Seacor Marine officials declined to comment on whether the company intended to file such an action, or on the potential ramifications of the tragedy on the company's legal or financial position.

In denying Transocean's attempt to limit its liability, federal judge Carl Barbier ruled that the company had a responsibility to know what led to the explosion.

"Knowledge, when the shipowner is a corporation, is judged not only by what the corporation's managing officers actually knew, but also by what they should have known with respect to conditions or actions likely to cause the loss," Barbier wrote.

The National Transportation Safety Board took control of the investigation of the Seacor Power this week, and statements from Seacor Marine and Talos Energy appeared designed to distance the companies from the decision to venture out of port.

Talos Energy, the rig operator that contracted Seacor Power, said Sunday that the decision about when to leave port was entirely in the hands of Seacor Marine and the captain of the boat.

John Gellert, Seacor Marine's CEO, said at a press conference on Monday that the "go/no-go decision" to depart Port Fourchon in bad weather was "entirely the captain's."

Gellert declined to discuss what communications between the captain and company officials led up to the decision to depart.

Questions about the responsibility of the captain and other factors that led up to the decision to leave port, such as pressures to meet deadlines, the state of repair of the vessel, and so on, "will be highly contested issues in any litigation," Taylor said.

Seacor Marine also faces the risk of potential lawsuits from shareholders, similar to those that followed the companies involved in Deepwater Horizon, said Donald Langevoort, a law professor at Georgetown University who is an expert on companies' legal obligations to communicate after disasters.

"A lot of companies get into a lot of trouble when they try to put a brave face on this kind of disaster," said Langevoort, noting that they have to walk a fine line between meeting their obligations under securities law while trying to limit their risk to lawsuits.

The Securities and Exchange Commission rules require that public companies like Seacor Marine communicate any liability that could potentially materially affect its earnings or value in a timely fashion.

Seacor Marine has made no official statement about the potential liability of the Seacor Power. On Tuesday, it filed an update with the SEC stating that the lift boat had capsized. The update included a letter the company provided to employees "emphasizing the company's commitment to recovering all missing in this incident and continuing to support their families during this difficult time."

Langevoort said executives have some leeway to make a statement before the company's next quarterly report, which is due on May 10th.

Still, he noted that even addressing the issue publicly brings its own set of risks. In the Deepwater Horizon case, Langevoort said, BP was successfully sued for making statements it believed to be technically true but were later deemed to be misleading.

"Whether there's an obligation or you voluntarily speak up, if anything you say is false or misleading you could be facing billions of dollars in liability," he said.

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