Abbott v. Exploration

• Decision Date: 15 March 2011
• Docket Number: Civil Action No. H–09–1193.
• Citation: 781 F.Supp.2d 453
• Parties: Kenneth W. ABBOTT, et al, Plaintiffs,v.BP EXPLORATION AND PRODUCTION INC., et al, Defendants.
• Court: U.S. District Court — Southern District of Texas

781 F.Supp.2d 453

Kenneth W. ABBOTT, et al, Plaintiffs,

v.BP EXPLORATION AND PRODUCTION INC., et al, Defendants.

Civil Action No. H–09–1193.

United States District Court, S.D. Texas, Houston Division.

March 15, 2011.

David L. Perry, Rene M. Haas, Perry Haas PC, Corpus Christi, TX, Mikal C. Watts, Watts Guerra Craft LLP, San Antonio, TX, Christopher V. Goodpastor, Watts Guerra et al., Austin, TX, Edward A. Mallett, Mallett & Saper, L.L.P., Rachel Gail Candelet, Watts Guerra Craft LLP, Jill Ondrejko Venezia, Office of U.S. Attorney, Houston, TX, Joyce Branda, Dept. of Justice, Washington, DC, for Plaintiffs.Otway B. Denny, Jr., Anne M. Rodgers, Christopher Brian Watt, Daniel M. McClure, Katherine Dudas MacKillop, Fulbright Jaworski LLP, Lynne Liberato, Haynes Boone, LLP, Houston, TX, L. Poe Leggette, Fulbright & Jaworski LLP, Washington, DC, Peter Andrew Stokes, Fulbright & Jaworski, Austin, TX, Sarah Rae Teachout, Haynes & Boone LLP, Dallas, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

KENNETH M. HOYT, District Judge.I. Introduction

Pending before the Court is the defendants', BP Exploration and Production Inc., BP America Inc., BP p.l.c., and BP Products North America Inc. (collectively, “BP”), motion to dismiss the plaintiffs' amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(6), 9(b), and 12(b)(7) (Docket Entry No. 56). The plaintiffs, United States of America ex relatione Kenneth W. Abbott, Kenneth W. Abbott individually, and Food & Water Watch, Inc. (“FWW”), filed a response in opposition (Docket Entry No. 58), to which BP filed a reply (Docket Entry No. 59) and a notice of supplemental authority in support of its motion (Docket Entry No. 60).¹ After having carefully reviewed the motion, the responses and the applicable law, the Court denies BP's motion in its entirety.²II. Factual Background

The plaintiffs are seeking to enjoin BP's ability to drill for and produce oil and gas at its Atlantis facility until BP corrects its alleged lack of compliance with various federal environmental and safety regulations. The plaintiffs also seek to recover billions of dollars in oil and gas revenue from BP, alleging that BP unlawfully acquired that revenue by falsely certifying to the Department of the Interior (“DOI”) that BP was in compliance with various federal regulations. The Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331, 43 U.S.C. § 1349(a), and 31 U.S.C. § 3732(a).

Abbott was formerly employed through a third-party employment company at Atlantis' administrative offices in Houston, Texas, during which time he served as a project control supervisor. His responsibilities included supervising, auditing and managing BP databases to ensure the existence of critical Atlantis documentation. FWW is a national, non-profit, public interest consumer advocacy organization that supports environmental protection and the longterm well-being of coastal fishing communities.

Atlantis is located upon leases that BP obtained from the DOI, pursuant to the Outer Continental Shelf Lands Act, 43 U.S.C. § 1344, et seq. (“OCSLA”) on the Outer Continental Shelf (“OCS”), approximately 190 miles south of New Orleans, Louisiana. Atlantis is located in water depths ranging from approximately 4400 to 7200 feet, and it began production around October 2007. It is rated to produce 200,000 barrels of oil per day and 180,000,000 cubic feet of gas per day.

The government issued five leases to BP for the land underlying Atlantis, granting BP the “exclusive right and privilege to drill for, develop, and produce oil and gas resources, except helium gas, in the submerged lands of the [OCS] ... subject to the [OCSLA]; [and] all regulations issued pursuant to the Act.” Before BP could “produce the oil and gas contained within the lease area,” it had to construct the structures necessary to safely withdraw that oil and gas from the OCS. Pursuant to regulations incorporated into the leases, BP's construction efforts had to comply with health, safety and environmental requirements and to provide certifications of compliance to obtain certain approvals from the DOI, through the agency formerly known as the Minerals Management Service (“MMS”).³ The MMS promulgated these regulations pursuant to its authority granted by the DOI.⁴

III. Contentions of the PartiesA. BP's Contentions

BP contends that the plaintiffs' False Claims Act (“FCA”) claim should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6), because they have not pled a false claim for money or property under the FCA. Alternatively, BP contends that post-lease regulatory non-compliance is not a material claim for property under the FCA. BP also maintains that the plaintiffs' FCA claims should be dismissed under Rule 9(b), because those claims have not been pled with specificity and because they have failed to plead a fraudulent certification on which a government payment was expressly conditioned.

BP avers that the plaintiffs fail to state a claim for injunctive relief for OCSLA violations because the plaintiffs: (1) cannot ask the Court to enforce OCSLA regulations; (2) have failed to join an indispensible party in violation of Federal Rule of Civil Procedure 12(b)(7); (3) lack standing to seek an injunction; and (4) cannot meet the requirements for an injunction. BP requests that this Court dismiss the case in its entirety and with prejudice.

B. The Plaintiffs' Contentions

The United States ex rel. Abbott asserts that BP violated the FCA by knowingly submitting—and then attempting to fraudulently conceal—false documents to obtain oil and gas that was government property. See 31 U.S.C. § 3729(a)(1)-(2). He claims that his allegations, taken as true, state violations of the FCA because only through BP's material, false certifications could it obtain oil and gas from the OCS.⁵ On behalf of the government, he seeks damages in the amount of the value of property taken, which he believes to be at least ten billion dollars minus any royalties previously paid, treble damages, civil penalties estimated to be at least thirty billion dollars pursuant to 43 U.S.C. § 1350, and attorneys' fees and expenses.

Abbott individually and FWW claim that BP violated the OCSLA by failing to adhere to MMS safety and environmental regulations, including the platform approval and verification programs, the production safety systems and the oil response plan.⁶ Abbott individually and FWW seek injunctive relief under the OCSLA until BP complies with all applicable regulations and agreements. They allege that: (1) they meet the requirements for standing; (2) OCSLA's citizen suit provision authorizes any legally interested entity to raise a claim to compel compliance with OCSLA and MMS regulations; (3) the DOI is not a necessary party; ⁷ and (4) the plaintiffs have stated a claim upon which injunctive relief may be granted. The plaintiffs assert that they have legally cognizable interests in the protection, preservation and enhancement of the Gulf of Mexico environment, and that BP's alleged violations create an imminent risk of harm to their legal interests. The plaintiffs also request that—if the Court finds their current complaint insufficient—that they be given the opportunity to re-plead.⁸

IV. Standards of ReviewA. Rule 12(b)(6) Standard

A defendant may to move to dismiss a plaintiff's complaint for “failure to state a claim upon which relief may be granted.” Fed. R. Civ. P. 12(b)(6). Under the requirements of a Rule 12(b)(6) motion, “[t]he plaintiff's complaint is to be construed in a light most favorable to the plaintiff, and the allegations contained therein are to be taken as true.” Oppenheimer v. Prudential Sec., Inc., 94 F.3d 189, 194 (5th Cir.1996) (citing Mitchell v. McBryde, 944 F.2d 229, 230 (5th Cir.1991)). Dismissal is appropriate only if, the “[f]actual allegations [are not] enough to raise a right to relief above the speculative level ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations omitted). Moreover, in light of Federal Rule of Civil Procedure 8(a)(2), “[s]pecific facts are not necessary; the [allegations] need only ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ ” Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) ( per curiam ) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). Even so, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly at 555, 127 S.Ct. 1955 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)).

More recently, in Ashcroft v. Iqbal, the Supreme Court expounded upon the Twombly standard, reasoning that “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly at 570, 127 S.Ct. 1955). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft, 129 S.Ct. at 1949 (citing Twombly at 556, 127 S.Ct. 1955). “But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’ ” Ashcroft at 1950 (quoting Fed. R. Civ. P. 8(a)(2)). Nevertheless, when considering a 12(b)(6) motion to dismiss, the Court's task is limited to deciding whether the plaintiff is entitled to offer evidence in support of his claims, not whether the plaintiff...