As long as she demonstrated the skills required so that she could be certified, then I don't believe that the instructor should have any liability. Now if she couldn't demonstrate those skills and it was still signed off, that would be a different issue.
I don't know which agency the Watsons were certified with. I don't think that it was with any of the 3 largest agencies.
I can only speak to PADI standards: A student must show mastery of each skill. The Instructor must determine, in his/her opinion, that the student can perform the skill adequately in a repeatable manner.
It is not uncommon for Instructors to create an environment which will help to enable the success of students having difficulty in a confined water environment. A private session, low pressure atmosphere, slow pace, numerous attempts at skills, physical contact to provide comfort and confidence, etc. In the end, the student passes the class having achieved all minimum standards, but only because of the low stress atmosphere.
Assume that the OW cert dives happened with the same Instructor in a controlled environment.
The question is, can the student perform the skills in a repeatable manner in an Open Water environment, without the direct supervision of that caring and good intentioned Instructor? If this person were my student (and I have had a few who fit the description), I would not sign off on their paperwork. She would need to schedule additional pool time to practice, and to become more comfortable on her own, before my name would go on the bottom line.
Now take that student, give her a cert card, ship her half way across the world, throw into the vast ocean with new and unfamiliar equipment, and while she tries to stay calm and be cool, she involuntarily manifests her stress by clenching her teeth and raising her lips, which breaks the seal around the mouthpiece.
This theory is not unreasonable, and all the judge or jury has to do is determine reasonable doubt. I was teaching a class last year and I actually witnessed a rescue where the victim, a 65 year old man (Vietnam Vet) was in passive panic and in an uncontrolled descent. When interviewed after the incident we found that he was breathing around his mouthpiece and inhaling water. Another diver, not his buddy, finally made contact with him at 65 feet and stuck an octo in his mouth. The guy spit it out, so the rescuer stuck the guy's second stage back into his mouth, and he spit it out. The rescuer finally forcebly stuck the octo in the guy's mouth and hit the purge button as they ascended. Everyone survived, but only because the rescuer was very experienced and very persistent.
Witnesses said that Gabe had to have someone help him put his fins on before the fateful dive, and that he was visibly nervous. IMO, he was completely incapable of conducting a rescue like the one described above.
The Instructor might be liable if an investigation, not tied to the Watson case, were to take place. Agency standards are established for this exact reason, so it would likely be very difficult to prove negligence. Negligence as a result of good intentions is probably not worth the victim's family pursuing legally, but it is worth discussing here on a scuba discussion board.
