The Donovan Law Group

BP Oil Spill: Plaintiffs Oppose Class Action Lawsuits in MDL 2179

Posted in BP, class action, Feinberg, Feinberg Rozen, GCCF, Gulf Coast Claims Facility, Mass Tort by renergie on December 5, 2011

BP Oil Spill: Plaintiffs Oppose Class Action Lawsuits in MDL 2179

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Plaintiffs Are Entitled to Receive the True Value of Their Claims

Tampa, FL (December 5, 2011) – Plaintiffs in Pinellas Marine Salvage, Inc., et al. v. Kenneth R. Feinberg, et al. and Salvesen v. Kenneth R. Feinberg, et al. have each filed a motion in opposition to class certification of any action in MDL 2179. The motions were filed in the United States District Court for the Eastern District of Louisiana for the following three reasons:

I. Defendants Feinberg, et al. Have No Incentive to Settle Claims  

Defendants Feinberg, et al. have established a claims process with the primary function of convincing claimants that the only compensation available is a minimal set amount that comes with a full release attached. The MDL 2179 Plaintiffs’ Steering Committee states, “The delay in responding to interim claims, the near-complete failure to pay interim claims, and the skewed final payment calculation delivers the message to over 112,000 putative class members: the only way to ever get any more compensation is to take the quick payment amount and sign a release.”

On August 26, 2011, in the Court’s Order and Reasons [As to Motions to Dismiss the B1 Master Complaint], Judge Barbier found,

“…. that nothing prohibits Defendants from settling claims for economic loss. While OPA does not specifically address the use of waivers and releases by Responsible Parties, the statute also does not clearly prohibit it. In fact, as the Court has recognized in this Order, one of the goals of OPA was to allow for speedy and efficient recovery by victims of an oil spill.”

In the same Order, the MDL 2179 Court also found,

“State law, both statutory and common, is preempted by maritime law, notwithstanding OPA’s savings provisions. All claims brought under state law are dismissed.”

II. Plaintiffs Are Entitled to Receive the True Value of Their Claims

The true value of a claim submitted to the Gulf Coast Claims Facility (“GCCF”) for lost earnings or profits is approximately the amount equal to the average monthly loss in earnings or profits for the period from May 1, 2010 through April 30, 2011 multiplied by fifty (50) months. In other words, if the average monthly loss in earnings or profits for the period from May 1, 2010 through April 30, 2011 is $5,000.00, the true value of the claim submitted to GCCF is calculated as follows:

True Value of Claim = ($5,000/month)(50 months) = $250,000.00

The Fifth Circuit has noted, “In addition to skewing trial outcomes, class certification creates insurmountable pressure on defendants to settle, whereas individual trials would not. The risk of facing an all-or-nothing verdict presents too high a risk, even when the probability of an adverse judgment is low. These settlements have been referred to as judicial blackmail.” Castano v. Am. Tobacco Co., 84 F.3d 734, 746 (5th Cir. 1996) (citations and footnote omitted). This generalization is not applicable to class certification in MDL 2179. Here, the class certification would be in a mass tort context within the context of a multidistrict litigation. Given that “all individual petitions or complaints that fall within Pleading Bundles B1, B3, D1, or D2, whether pre-existing or filed hereafter, are stayed until further order of the Court” (Pretrial Order No. 25, Para. 8), certification of pending class actions would most probably not be decided until the conclusion of the limitation and liability trial which does not commence until February, 2012. “It was reported that one attorney has approximately 23,000 claimants and inquiry was made as to whether the attorney may produce the information in the form in which it is maintained rather than complete individual PPFs.” (Rec. Doc. 642 at Page 2). As of November 16, 2011, there are 523 actions, which encompass approximately 130,000 total individual claims, pending in MDL 2179. In other words, tens of thousands of potential class members are in legal limbo. This hardly “creates insurmountable pressure on defendants to settle.”

In the context of one of the largest mass tort cases in United States history, the damages suffered by the vast majority of individual potential plaintiffs as a result of the BP oil spill of April, 2010, and the subsequent “Delay, Deny, Defend” strategy of Feinberg, et al., are potentially so great that class treatment would not be necessary to permit effective litigation of the claims. Here, when the amount of damages suffered by the individual is so great, the filing of an individual lawsuit should be economically feasible and would be in the best interests of the plaintiffs.

The associated cost, consumption of time, and ongoing negative publicity of numerous trials, rather than a few class action lawsuits, are required in order exert the proper amount of pressure on Feinberg, et al. to negotiate a settlement which reflects the true value of the claim and not one which focuses on minimizing the liability of Feinberg Rozen, LLP, Feinberg/GCCF, and the responsible parties.

III. MDL 2179 Plaintiffs Are Not Able to Prove That Class Certification is Appropriate Under Federal Rule of Civil Procedure 23

MDL 2179 Plaintiffs in proposed class actions are not able to meet their heavy burden of proving that class certification is appropriate under Federal Rule of Civil Procedure 23 for the reasons which are thoroughly discussed in the memorandum of law which is filed with the motion.

BACKGROUND

Pinellas Marine Salvage, Inc., et al. v. Kenneth R. Feinberg, et al. and Salvesen v. Feinberg, et al. are the only two cases of their kind filed in any court in the country. Each complaint alleges, in part, that Defendants Kenneth R. Feinberg, Feinberg Rozen, LLP, GCCF, and (in Salvesen) William G. Green, Jr. misled Plaintiffs by employing a “Delay, Deny, Defend” strategy against them. This strategy, commonly used by unscrupulous insurance companies, is as follows: “Delay payment, starve claimant, and then offer the economically and emotionally-stressed claimant a miniscule percent of all damages to which the claimant is entitled. If the financially ruined claimant rejects the settlement offer, he or she may sue.” Each action, originally filed in Florida state court, is brought by Plaintiff under the following seven causes of action: (a) Gross Negligence; (b) Negligence; (c) Negligence Per Se; (d) Fraud; (e) Fraudulent Inducement; (f) Promissory Estoppel; and (g) Unjust Enrichment.

The MDL Panel ordered each action transferred to MDL No. 2179 on the erroneous grounds that “[These] action[s], similar to other actions already in the MDL, arise from alleged injury to plaintiffs’ business resulting from the oil spill.”

The clarity of the analysis of the scope of OCSLA by Judge Carlton W. Reeves in State of Mississippi v. Gulf Coast Claims Facility, et al., C.A. No. 3:11-00509 (S.D. Miss. 2011) is both refreshing and instructive. On July 12, 2011, Attorney General Jim Hood (“Hood”) filed suit on behalf of the State of Mississippi against the GCCF and Kenneth Feinberg in Hinds County Chancery Court. On August 11, 2011, the GCCF removed the case to the United States District Court for the Southern District of Mississippi (“MSSD”) claiming that original jurisdiction lies with the MSSD by virtue of the OCSLA. Hood moved to remand the case to state court on September 12, 2011. On November 15, 2011, Judge Reeves granted Hood’s motion to remand.

Judge Reeves found, “GCCF’s argument that Hood has unwittingly stated a claim under OCSLA is likewise not compelling. According to OCSLA, federal courts enjoy subject-matter jurisdiction ‘of cases and controversies arising out of, or in connection with (A) any operation conducted on the outer Continental Shelf which involves exploration, development, or production of the minerals, of the subsoil and seabed of the outer Continental Shelf . . . .’ The Fifth Circuit has written that it “applies a broad ‘but-for’ test to determine whether a cause of action arises under OCSLA.” Hufnagel v. Omega Serv. Indust., Inc., 182 F.3d 340, 350 (5th Cir. 1999). “And in GCCF’s view, because it would not exist but for the Deepwater Horizon’s explosion, this case (and, presumably, any other case to which it could ever be a party) necessarily implicates OCSLA.” State of Mississippi v. Gulf Coast Claims Facility, et al., C.A. No. 3:11-00509 (S.D. Miss. 2011), Order of Remand at Page 10.

“GCCF is correct that the Fifth Circuit views ‘the jurisdictional grant contained in U.S.C. § 1349(b)(1) as very broad.’ But to view OCSLA’s scope so far-reaching as does GCCF would render GCCF’s every potentially actionable decision a federal case, be it related to the claims process at hand or a GCCF employee’s car wreck en route to the office.” (Emphasis added)

Neither OCSLA’s plain language nor the Fifth Circuit’s decisions interpreting it contain any indication that matters so far removed as these – occurring not on the outer Continental Shelf but doing business in Dublin, Ohio, and aimed not at the “exploration, development, or product of . . . minerals” but rather at “developing and publishing standards for recoverable claims” related to the Deepwater Horizon spill – fall within the purview of Section 1349(b)(1), which addresses “any operation conducted on the outer Continental Shelf . . . .” Plainly, although GCCF’s activities amount [to] an operation, that operation is not conducted “on the outer Continental Shelf.” Therefore, OCSLA does not apply and is not a proper basis for federal jurisdiction. (Emphasis added)

CONCLUSION

Plaintiffs continue to suffer damages from three separate sources:

(a) once from the oil spill, the environmental and economic damages of which have devastated their way of life;

(b) again by being left in financial ruin as a direct result of Feinberg’s “Delay, Deny, Defend” strategy; and

(c) a third time for daring to demand justice, which will consume their time, energy and hopes for years to come if they are held hostage by protracted litigation.

If motions for class certification pursuant to Federal Rule of Civil Procedure 23 are granted in MDL 2179, Defendants Feinberg, et al. will continue to have no incentive to settle claims and Plaintiffs will never receive the true value of their claims.

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