State of Mississippi v. Gulf Coast Claims Facility and Kenneth Feinberg: Case Is Remanded to State Court
State of Mississippi v. Gulf Coast Claims Facility and Kenneth Feinberg:
Case Is Remanded to State Court
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Hood’s Petition Did Not Initiate a Civil Action and GCCF’s Removal to Federal Court
Was Improper
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OCSLA Does Not Apply and Is Not a Proper Basis for Federal Jurisdiction
Tampa, FL (November 16, 2011) – On November 15, 2011, the United States District Court for the Southern District of Mississippi remanded the suit filed on July 12, 2011 by Attorney General Hood on behalf of the State of Mississippi against the Gulf Coast Claims Facility and Kenneth Feinberg (hereinafter collectively “GCCF”) in Hinds County Chancery Court. Hood had filed the suit in an effort to compel GCCF’s compliance with the subpoena duces tecum he had issued in February 2011 on the GCCF pursuant to the authority vested in him by the Mississippi Consumer Protection Act.
In his Motion to Remand, Hood argued that GCCF’s refusal to comply with his subpoena leaves him “unable to determine whether GCCF has been or is in violation of the Consumer Protection Act.” Hood also sought costs and attorneys’ fees associated with bringing the Petition.
Notably, in his Petition to the Hinds County Chancery Court, Hood claimed explicitly that he “brought this action solely under state law and not under federal law; and was not asserting therein any claims arising under federal law,” and he “specifically and expressly denied and disclaimed asserting any such federal claims in the Petition.”
On August 11, 2011, GCCF removed the case to federal court pursuant to Title 28, Sections 1441 and 1446 of the United States Code. Specifically, GCCF claimed that original jurisdiction lies with the federal court by virtue of the Outer Continental Shelf Lands Act (“OCSLA”). Hood moved to remand the case to state court on September 12, 2011, but not before GCCF moved on August 30, 2011, for a stay pending a decision by the Judicial Panel on Multidistrict Litigation regarding whether to transfer this case.
Motion to Stay
As an initial matter, the Southern District of Mississippi Court declined to grant GCCF’s motion for a stay despite the fact that this case was the subject of a MDL conditional transfer order. Until a transfer to multidistrict litigation has become final, a district court’s jurisdiction over pretrial matters is in no way impeded. And when a litigant improperly removes a case, the limited jurisdiction of federal courts is impermissibly invoked, resulting in an undue delay of a state court’s rightful duty to address a case’s merits.
Motion to Remand
Hood offers several arguments in favor of a remand to state court, but the most compelling is his first: that the Petition filed by Hood in Hinds County Chancery Court does not amount to a “civil action,” as that term is used in the federal removal statute, and therefore that GCCF is not entitled to bring the case to federal court.
Generally speaking, when a plaintiff is permitted to bring his case in either state or federal court but chooses the former, the defendant may opt to have a federal court hear the case instead. This principle is contained in Title 28, Section 1441 of the United States Code, which provides that except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.
Clearly, Section 1441 permits removal only of “any civil action,” and in Hood’s view, the matter at hand is not such a creature. Hood argued that the subpoena at the center of his Petition “is a pre-litigation investigative tool, and its enforcement in chancery court is not a ‘civil action’ ……”
In 1998, Chief Judge Butler of the Southern District of Alabama held that a petition filed pursuant to Rule 27 of the Alabama Rules of Civil Procedure, which “permits a party to . . . obtain discovery before an action is commenced,” was not itself a civil action. That Court observed that Alabama’s Rule 27 “provides a limited means by which potential plaintiffs (and their attorneys) . . . can examine evidence before actually deciding whether they have a reasonable basis for filing an action.” Such a petition, in that Court’s view, “is a request for discovery, nothing more.”
Hood’s Petition did not seek to prosecute a claim or other cause of action; it merely sought an order requiring production of evidence that may ultimately be used in the prosecution of a claim. As such, it does not amount to a civil action.
In 1994, the Fifth Circuit rejected a plaintiff’s argument that the 30-day removal period began running at the filing of a bill of discovery rather than at the filing of the complaint because the latter was “the first document stating a claim . . . .” The removal statute permits a defendant to invoke the federal courts’ jurisdiction only “after receipt by the defendant . . . of a copy of the initial pleading setting forth the claim for relief . . . .” Therefore, in the Fifth Circuit’s apparent view, removal cannot occur until a complaint has been filed.
According to Rule 3 of the Federal Rules, “[a] civil action is commenced by filing a complaint with the court.” Whatever can be said of the filing by which Hood instituted this matter, it cannot be properly characterized as a complaint; it raises no claim and seeks no damages.
The threshold question before the Southern District of Mississippi Court was whether the matter has yet developed into a full-fledged “civil action.” The Court held, “Precedent commands the conclusion that it has not.”
OCSLA
Judge Reeves also found GCCF’s argument that Hood has unwittingly stated a claim under OCSLA was 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.” 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.
The analysis of the scope of OCSLA by Judge Reeves is instructive. 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.
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.
Pinellas Marine Salvage, Inc., et al. v. Kenneth R. Feinberg, et al. and Selmer M. Salvesen v. Kenneth R. Feinberg, et al.
These are the only two cases of their kind filed in any court in the country. In each case, the complaint alleges, in part, that Defendants Kenneth R. Feinberg, Feinberg Rozen, LLP, and GCCF 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.”
The Pinellas and Salvesen plaintiffs do not assert any claims under OCSLA or OPA and rely solely on state law. Plaintiffs’ allegation that Defendants are in violation of OPA is merely evidence of, at the very least, Defendants’ negligence.
Plaintiffs in Pinellas and Salvesen allege:
(a) BP is responsible for the oil spill incident; and
(b) Feinberg, et al. (independent contractors), via employment of their “Delay, Deny, Defend” strategy, are responsible for not compensating and thereby financially ruining the Pinellas and Salvesen plaintiffs and over 100,000 other victims.
Neither the Pinellas nor the Salvesen case has been dismissed by the MDL 2179 Court. Plaintiffs in both cases look forward to eventually having their cases remanded to Florida state court where they will also be able to hold Defendants accountable.
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BP Oil Spill Litigation Quote of the Year:
“GCCF is correct that the Fifth Circuit views ‘the jurisdictional grant contained in 43 U.S.C. § 1349(b)(1) as very broad.’ But to view the Outer Continental Shelf Lands Act’s (“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.”
Hon. Carlton W. Reeves
United States District Court Judge
Southern District of Mississippi
Second Lawsuit Filed Against Kenneth R. Feinberg, Feinberg Rozen, LLP and Gulf Coast Claims Facility
Second Lawsuit Filed Against Kenneth R. Feinberg, Feinberg Rozen, LLP and
Gulf Coast Claims Facility
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Complaint Alleges Gross Negligence, Fraud, Fraudulent Inducement and Unjust Enrichment
Tampa, FL (June 21, 2011) – A second lawsuit has been filed in state court in Florida against Kenneth R. Feinberg, Feinberg Rozen, LLP and Gulf Coast Claims Facility (“GCCF”). The 38-page complaint was filed on June 15, 2011 in the Circuit Court of the Twentieth Judicial Circuit in and for Lee County, Florida by Tampa attorney Brian J. Donovan on behalf of Mr. Selmer M. Salvesen. The complaint alleges, in part, gross negligence, fraud, fraudulent inducement and unjust enrichment on the part of the defendants (Case No. 11-CA-002008).
Mr. Salvesen is the sole proprietor of a business engaged in aquaculture, specifically the growing of farm-raised hard-shell clams on sovereignty submerged land leased from the State of Florida. As a result of the actions of the defendants, Mr. Salvesen’s aquaculture business is struggling to survive.
Feinberg, acting through and as Managing Partner of Feinberg Rozen, established GCCF to independently administer and where appropriate settle and authorize the payment of certain claims asserted against BP as a result of the explosion at the Deepwater Horizon rig and consequent spillage of oil into the Gulf of Mexico.
The complaint alleges, in part, that Defendants misled Mr. Salvesen by employing a “Delay, Deny, Defend” strategy against him. 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.”
On April 22, 2011, 274 days after Mr. Salvesen presented a claim for damages to BP, GCCF finally denied his claim. This is in keeping with the “Delay, Deny, Defend” strategy alleged by Mr. Salvesen in his complaint – delay 274 days, deny compensation, then say to the claimant, “sue us.”
Mr. Salvesen is not able to sue Defendants under the Oil Pollution Act of 1990 (“OPA”) because his damages did not “result from” the oil spill and Defendants are not “responsible parties.” Defendants are independent contractors that administer, settle and authorize the payment of certain claims asserted against BP, the “responsible party.” Here, Defendants’ “Delay, Deny, Defend” strategy and associated tortious acts, not acts by BP, resulted in the financial ruin of Mr. Salvesen.
Donovan believes GCCF, without any legal authority for doing so, circumvents many of the rights provided to victims of the BP oil spill under the OPA. Under OPA, responsible parties for an oil spill are strictly liable for the payment of claims for specified damages. In order to recover damages, a claimant merely needs to show that his or her damages “resulted from” the oil spill. OPA states, “The responsible party for a vessel or a facility from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon the navigable waters or adjoining shorelines or the exclusive economic zone is liable for the removal costs and damages that result from such incident.” These damages include, but are not limited to: “Damages equal to the loss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, personal property, or natural resources, which shall be recoverable by any claimant.”
Defendants, who cannot cite to a single authority, statutory provision, or fragment of legislative history supporting their position, argue that (a) “OPA imposes no duty on responsible parties other than to establish and advertise a process for receiving claims, not that they actually settle claims;” and (b) “OPA says nothing about how a claims process should work. It simply requires that the claimant and the responsible party have a chance to consider a settlement before the claimant may sue.”
“The overarching purpose of OPA’s mandatory alternative dispute resolution process is ‘to encourage settlement and avoid litigation.’” Boca Ciega Hotel, Inc. v. Bouchard Trans. Co., 51 F. 3d 235, 240 (11th Cir. 1995).
Defendants’ “Delay, Deny, Defend” strategy avoids settlement and encourages litigation. In addition to Mr. Salvesen’s lawsuit, this strategy by GCCF has resulted in more than 130,000 BP oil spill victims being forced to become Plaintiffs in MDL 2179.
Mr. Salvesen seeks economic and compensatory damages, in amounts to be determined at trial, and punitive damages.
Lawsuit Filed in State Court Against Kenneth R. Feinberg, Feinberg Rozen, LLP and Gulf Coast Claims Facility
Lawsuit Filed Against Kenneth R. Feinberg, Feinberg Rozen, LLP and
Gulf Coast Claims Facility
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Complaint Alleges Gross Negligence, Fraud, Fraudulent Inducement and Unjust Enrichment
Tampa, FL (March 2, 2011) – A first-of-its-kind lawsuit has been filed in state court in Florida against Kenneth R. Feinberg, Feinberg Rozen, LLP and Gulf Coast Claims Facility (“GCCF”). The 42-page complaint, filed by Attorney Brian J. Donovan on behalf of Pinellas Marine Salvage, Inc. and Mr. John Mavrogiannis alleges, in part, gross negligence, fraud, fraudulent inducement and unjust enrichment on the part of the defendants.
Pinellas Marine Salvage, Inc., a corporation organized under the laws of the State of Florida, is a full-service marine salvage facility on the west coast of Florida serving the Gulf Coast states of Louisiana, Mississippi, Alabama and Florida. The company was founded in January, 1997 by Mavrogiannis for the purpose of addressing a strong market need for used and refurbished marine parts, supplies and vessels. As a result of the actions of the defendants, the company is struggling to survive.
Feinberg, acting through and as Managing Partner of Feinberg Rozen, established GCCF to independently administer and where appropriate settle and authorize the payment of certain claims asserted against BP as a result of the explosion at the Deepwater Horizon rig and consequent spillage of oil into the Gulf of Mexico.
In their lawsuit, the plaintiffs allege, in part: (a) the defendants, without any legal authority for doing so, circumvent many of the rights provided to victims of the BP oil spill under the Oil Pollution Act of 1990; (b) the defendants employ a “Delay, Deny, Defend” strategy against claimants. 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; (c) the defendants delay payment by telling claimants, “claims will be paid within 90 days after substantiation.” Unbeknownst to the claimants, substantiation means “the claim has been received and reviewed by GCCF.” This definition of substantiation allows a claim to be received and held “under review” indefinitely by GCCF. When GCCF finally “substantiates” the claim, the claimant is told he or she will be paid within 90 days; (d) Feinberg uses the fear of costly and protracted litigation to coerce claimants to accept grossly inadequate settlements from GCCF. During widely-reported town hall meetings organized to promote GCCF, Feinberg repeatedly tells victims of the BP oil spill: “The litigation route in court will mean uncertainty, years of delay and a big cut for the lawyers.” and “I take the position, if I don’t find you eligible, no court will find you eligible;” and (e) Feinberg misleads claimants by advising during well-reported town hall meetings, on a number of occasions, potential claimants that the fund which he administers is fully funded in the amount of $20 billion. At the end of 2010, the most the fund would have had in its escrow account would have been $5 billion.
Pinellas Marine Salvage, Inc. and Mavrogiannis seek economic and compensatory damages, in amounts to be determined at trial, and punitive damages.
Brian J. Donovan can be reached at BrianJDonovan@verizon.net.
UPDATE
A very different perspective is provided in the following excerpt from an article titled “Pinellas Marine Salvage sues Feinberg over oil spill claim” which appeared in the Tampa Bay Business Journal on March 11, 2011:
Carl Nelson, a shareholder at Fowler White in Tampa, represents 450 businesses – including national companies with nearly 2000 locations – bringing claims related to the spill. His experiences are counter to those outlined in the Mavrogiannis complaint.
“We’ve been treated quite nicely,” Nelson said. “We know how to do it. We’re using economists and forensic accountants.”
Under OPA, the party responsible for a spill is obligated to set up a claims process and to pay claimants that satisfy the conditions set up in the process, Nelson said. The remedy allowed in the law for claimants that satisfy the requirements but are not paid is to sue the responsible party.
“If my clients are not satisfied, then we’ll sue BP,” he said. “Feinberg has no duty to pay anybody.“
BP Oil Spill Victims: Kenneth Feinberg Should Not be the Sole Focus of Anger
BP Oil Spill Victims: Kenneth Feinberg Should Not be the Sole Focus of Anger
By Brian J. Donovan
December 30, 2010
The Gulf Coast Claims Facility (GCCF) was meant to replace the inefficient claims process which BP had established to fulfill its obligations as a responsible party pursuant to the Oil Pollution Act of 1990 (OPA). BP and the Obama administration agreed to appoint Kenneth Feinberg, a Washington lawyer and Democratic Party supporter who administered the claims process for victims of 9/11, to run the allegedly independent GCCF. Unfortunately, in lieu of ensuring that BP oil spill victims are made whole, the primary goal of GCCF and Feinberg is the limitation of BP’s liability via the systematic postponement, reduction and denial of claims against BP.
Feinberg has been both admired and vilified as the administrator of GCCF. An article in the January issue of the ABA Journal refers to Feinberg as a “Master of Disasters.” Conversely, on December 21, 2010, members of the plaintiffs’ bar filed a Motion in federal court asking Judge Carl J. Barbier to intervene and ensure Feinberg’s comments to GCCF claimants who may be able to sue “are neither confusing nor misleading.” The Motion also questions Feinberg’s independence from BP.
Feinberg is neither a “Master of Disasters” nor the personification of evil. “Administrator” Feinberg is merely a defense attorney zealously advocating on behalf of his client BP.
Anger can be wasted energy which overwhelms and debilitates victims. However, anger, properly channeled, can also serve to motivate victims to take action. In the case of the BP oil spill, victims should not focus their anger on Feinberg but should properly channel their anger by focusing on: (a) an administration that ignores the Oil Pollution Act of 1990 and refuses to hold BP accountable; (b) a Congress that introduces unnecessary, and potentially unconstitutional, retroactive legislation in response to the BP oil spill; and (c) a plaintiffs’ bar that values profit over justice.
THE OBAMA ADMINISTRATION
Failure of President Obama to Partially Federalize the BP Oil Spill Incident
“Under OPA, BP, the responsible party, has the primary responsibility to clean up its oil spill” had been repeated, in one form or another, so many times by President Obama that it became the truth. The truth is that President Obama, under OPA, had the primary responsibility to “ensure effective and immediate removal of a discharge, and mitigation or prevention of a substantial threat of a discharge, of oil.”
Simply stated, Section 4201 of OPA provided President Obama with three options:
(1) perform cleanup immediately (“federalize” the spill);
(2) monitor the response efforts of the spiller; or
(3) direct the spiller’s cleanup activities.
Pursuant to OPA Section 4201, and given that the BP oil spill was a “discharge posing substantial threat to public health or welfare,” President Obama should have federalized the collection of the oil that was released into the sea and the restoration of the coastal areas impacted by the oil. Both of these activities could have been done without having to federalize the operational priority of stopping the flow of oil from the well.
The failure of President Obama to partially federalize the BP oil spill incident, allowed BP to:
(a) use an excessive and unprecedented amount of dispersant both on the surface and underwater. This toxic “out-of-sight, out-of-mind” strategy resulted in tiny dispersed droplets of oil sinking or remaining suspended in deep water rather than floating to the surface and collecting in a continuous slick. Rather than being collected, the dispersed oil is now on the seabed, where it is toxic food for microscopic organisms at the bottom of the food chain and will eventually wind up in shellfish and other organisms; and
(b) prohibit independent measurement of the amount of oil being released into the Gulf of Mexico by unbiased third party scientists and engineers. BP, with the full support of the federal government, knowingly and systematically underestimated the size of the gusher to limit the financial impact on the company. Under the Clean Water Act (CWA), BP faces fines of up to $4,300 for each barrel spilled. Furthermore, pursuant to Section 2702 of OPA 90, BP should be required to pay royalties (18.75%) owed to the federal government for the oil gushing from the well.
Negotiation of the Deepwater Horizon Oil Spill Trust
On June 16, 2010, President Obama announced that BP agreed to set aside $20 billion to pay economic damage claims to individuals and businesses affected by the Deepwater Horizon incident. The White House press release stated, “BP will provide assurance for these commitments by setting aside $20 billion in U.S. assets.”
BP created the Deepwater Horizon Oil Spill Trust on August 6, 2010. The Trust Agreement provides, “To secure the payment and performance of its obligations to make the contributions to the Trust hereunder, BP hereby agrees to grant, convey, and/or assign to the Trust first priority perfected security interests in production payments pertaining to BP’s U.S. oil and natural gas production.”
The fact that future production payments pertaining to BP’s U.S. oil and natural gas production, rather than hard U.S. assets, are being used as collateral by BP guarantees BP’s continued long-term operation in the offshore Gulf of Mexico E&P sector. Ironically, the federal government has acquired a vested interest in ensuring the financial well-being of BP.
Given that BP’s financial health and its ability to meet its obligations under GCCF are now tied together, CWA fines and OPA royalty payments for each barrel of oil spilled will most likely be kept to a minimum.
Failure of President Obama to Block BP’s Tax Credit
Adding insult to injury, on July 27, 2010, BP revealed that it is taking a charge of $32.2 billion (and thereby claiming a $9.9 billion tax credit) to reflect the impact of the Gulf of Mexico oil spill, including costs to date of $2.9 billion for the response and a charge of $29.3 billion for future costs, including the funding of the $20 billion escrow fund.
During negotiations with BP in regard to creating the Deepwater Horizon Oil Spill Trust, President Obama failed to even mention that BP should not claim a tax credit. As a result, BP is allowed to substantially offset the amount it is paying to meet its responsibilities for cleanup and compensating victims. In short, President Obama has permitted BP to shift these costs indirectly to U.S. taxpayers.
Failure of President Obama to Fully Utilize the Oil Spill Liability Trust Fund (OSLTF)
During town hall meetings organized to promote GCCF, Feinberg repeatedly tells victims of the BP oil spill, “the litigation route in court will mean uncertainty, years of delay and a big cut for the lawyers.” “I am determined to come up with a system that will be more generous, more beneficial, than if you go and file a lawsuit.” “It is not in your interest to tie up you and the courts in years of uncertain protracted litigation when there is an alternative that has been created,” Feinberg says. He adds, “I take the position, if I don’t find you eligible, no court will find you eligible.” Feinberg and the Obama administration intentionally fail to mention that litigation is not the only alternative to GCCF. A financially viable OSLTF is a better alternative.
Under OPA, claims for damages must be presented first to the responsible party. 33 U.S.C. § 2713(a) In the event that a claim for damages is either denied or not paid by the responsible party within 90 days, the claimant may elect to commence an action in court against the responsible party or to present the claim to OSLTF. 33 U.S.C. § 2713(c)
Although Congress created OSLTF in 1986, Congress did not authorize its use or provide taxing authority to support it until after the Exxon Valdez incident in 1989. OPA, signed into law on August 18, 1990, provided the statutory authorization and funding necessary for OSLTF. The National Pollution Funds Center (NPFC), an administrative agency of USCG, manages OSLTF and acts as the implementing agency of OPA. Since 2003, USCG has operated in the Department of Homeland Security.
A primary purpose of OSLTF is to compensate persons for removal costs and damages resulting from an oil spill incident. In essence, OSLTF is an insurance policy, or backstop, for victims of an oil spill incident who are not fully compensated by the responsible party.
As Representative Lent explained in urging passage of OPA, “The thrust of this legislation is to eliminate, to the extent possible, the need for an injured person to seek recourse through the litigation process.” Prior to OPA, federal funding for oil spill damage recovery was difficult for private parties. To address this issue, Congress established OSLTF under section 9509 of the Internal Revenue Code of 1986 (26 U.S.C. 9509).
OSLTF is currently funded by: a per barrel tax of 8 cents on petroleum products either produced in the United States or imported from other countries, reimbursements from responsible parties for costs of removal and damages, fines and penalties paid pursuant to various statutes, and interest earned on U.S. Treasury investments. On September 30, 2010, the unaudited OSLTF balance was approximately $1.69 billion.
OSLTF: The Issue of Subrogation
Any person, including OSLTF, who pays compensation pursuant to OPA to any claimant for damages shall be subrogated to all rights, claims, and causes of action that the claimant has under any other law. 33 U.S.C. § 2715(a) Moreover, at the request of the Secretary of the Department of Homeland Security, the Attorney General shall commence an action on behalf of OSLTF to recover any compensation paid by OSLTF to any claimant pursuant to OPA, and all costs incurred by OSLTF by reason of the claim, including interest (including prejudgment interest), administrative and adjudicative costs, and attorney’s fees. Such an action may be commenced against any responsible party or guarantor, or against any other person who is liable, pursuant to any law, to the compensated claimant or to OSLTF, for the cost or damages for which the compensation was paid. 33 U.S.C. § 2715(c)
CONGRESS
Proposed Retroactive OPA Legislation
The maximum amount which may be paid from OSLTF with respect to any single incident shall not exceed $1 billion. 26 U.S.C. § 9509(c)(2)(A) Furthermore, except in the case of payments of removal costs, a payment may be made from OSLTF only if the amount in OSLTF after such payment will not be less than $30,000,000. 26 U.S.C. § 9509(c)(2)(B)
The cost of this catastrophic BP oil spill will far exceed the current OSLTF per incident expenditure limit. In response, since the BP oil spill disaster of April, 2010, several bills have been introduced in Congress to amend OPA to increase the liability limit of the responsible party and OSLTF’s per incident expenditure limit for oil spills. For example, H.R. 4213, the American Jobs and Closing Tax Loopholes Act, passed by the House on May 28, 2010, includes provisions that would raise the per barrel tax used to fund OSLTF to 34 cents and increases the per incident expenditure limit to $5 billion, including up to $2.5 billion in natural resource damage claims.
An important question is whether this legislation can and should be applied retroactively to the BP oil spill disaster of April, 2010. The constitutional issues that may be raised from retroactive application of this legislation are based on the Ex Post Facto Clause, Substantive Due Process, the Takings Clause, the Bill of Attainder Clause, and the Impairment of Contracts Clause.
OSLTF: The Need to Properly Define “Expenditure”
This is an incident of first impression for OSLTF. The BP oil spill of April 22, 2010, a catastrophic oil spill incident, represents the first time that the viability of OSLTF has been threatened. Federal statutes and relevant regulations neither specifically address such a scenario nor provide authority for further compensation. However, OPA legislative history and statements from OPA drafters indicate that drafters intended OSLTF to cover “catastrophic spills.”
The question is if an expenditure is reimbursed, is it still an expenditure? OSLTF is established under Internal Revenue Code. 26 U.S.C § 9509 Under the Internal Revenue Code, a reimbursed expenditure is not deductible. It is not considered to be an expenditure. Therefore, under OSLTF, why should an expenditure, reimbursed by the responsible party, be defined as an expenditure?
Legislative history and the Internal Revenue Code strongly support the conclusion that, in the case of a catastrophic oil spill, the proper definition of the term “expenditure,” under OSLTF, means “an expenditure that is not reimbursed by the responsible party.”
The advantage of defining an expenditure, under OSLTF, as “an expenditure that is not reimbursed by the responsible party,” is twofold:
(a) It eliminates, without the need to pass retroactive legislation, the $1 billion cap which may be paid from the OSLTF with respect to any single incident and allows OSLTF to maintain a balance of at least $1 billion for the purpose of paying claims for damages resulting from other oil spill incidents. As the OSLTF pool of $1 billion is depleted by payments made to oil spill claimants, it is replenished, by virtue of subrogation, by reimbursements made to OSLTF by the responsible party; and
(b) It ensures that the cost of a catastrophic oil spill incident shall be borne by the responsible party, not the federal taxpayer.
THE PLAINTIFFS’ BAR
Class Action Lawsuits
On December 21, 2010, attorneys representing victims of the BP oil spill of April, 2010 filed a Motion in the United States District Court for the Eastern District of Louisiana requesting Judge Carl J. Barbier to issue an order governing ex parte communication between the BP Defendants and putative class members.
Specifically, the plaintiffs’ attorneys seek to ensure that Feinberg’s communications with putative class members are neither “confusing nor misleading.”
The Motion notes, in part, that “Feinberg has, in various ways, communicated the following messages to both represented parties and putative class members:
• Don’t seek the advice of a lawyer;
• If you litigate, it will take years;
• If you hire a lawyer, he or she will take 40% of your recovery;
• I, and the GCCF, are “independent;”
• We are making “independent” findings or determinations regarding the merits of your claims;
• I will give you more money than you will get (with another lawyer) in litigation; and
• My offer will be based upon the best available independent scientific evidence.”
This Motion filed by the plaintiffs’ attorneys is disingenuous and self-serving. If Feinberg is ordered to ensure that his communications are neither “confusing or misleading,” then the BP plaintiffs’ attorneys should also be ordered to inform their potential clients of the following:
I. A class action lawsuit, brought pursuant to Rule 23 of the Federal Rules of Civil Procedure, was never intended to address mass torts. The Supreme Court observed that, while the text of Rule 23(b)(3) does not preclude certification in cases with significant damages, the drafters “had dominantly in mind” the use of the class action to aggregate relatively small individual recoveries into a case that would be worthwhile for an attorney to litigate. Amchem Products, Inc. v. Windsor, 117 S.Ct. at 2244.
II. Given that the damages suffered by the vast majority of individual potential plaintiffs as a result of the BP oil spill of April, 2010 are potentially so great, it should be economically feasible for many individual plaintiffs to file individual lawsuits. Here, class treatment would not be necessary to permit effective litigation of the claim. An individual lawsuit will: (a) ensure the plaintiff that the plaintiff’s attorney has his or her best interests in mind; (b) protect the plaintiff’s due process rights; (c) ensure that the plaintiff is not a victim of a so-called “faux” class action case, i.e., a case in which individual class members receive little or no compensation and only plaintiffs‘ counsel stand to benefit from class certification; (d) give the plaintiff control over the prosecution of the case; (e) allow the plaintiff to present evidence of exposure, injury, and damages relating to his or her particular claim; and (f) allow the plaintiff to make the decision on whether or when to settle.
III. BP, the responsible party, is a powerful and well-funded defendant, does not lack imagination or incentive to pose innumerable legal barriers, and will aggressively assert its legal rights and otherwise use the law, the courts and the judicial system to serve its interests. BP can afford to stall, and actually benefits from delay, but its victims cannot afford to wait for years to be fully compensated for their losses.
IV. In the event that a claim for damages is either denied or not paid by GCCF within 90 days, the claimant should immediately present the claim to OSLTF prior to commencing an action in court against BP, et al.
CONCLUSION
As of the date of this article, it has been 254 days since the blowout of the BP offshore well in the Gulf of Mexico.
In lieu of ensuring that BP oil spill victims are made whole, the primary goal of GCCF and Feinberg is the limitation of BP’s liability via the systematic postponement, reduction and denial of claims against BP. Victims of the BP oil spill must understand that “Administrator” Feinberg is merely a defense attorney zealously advocating on behalf of his client BP.
Victims of the BP oil spill should not focus their anger on Feinberg but should properly channel their anger by focusing on: (a) an administration that refuses to hold BP accountable and ensure that victims of the BP oil spill are fully compensated via OSLTF; (b) a Congress that introduces unnecessary, and potentially unconstitutional, retroactive legislation in response to the BP oil spill; and (c) a plaintiffs’ bar that values profit over justice.
The question is whether victims of the BP oil spill will have to pay three times: (a) once for the massive BP oil spill, the environmental and economic damages of which will devastate their way of life and leave many in financial ruin; (b) again by being mislead by the Obama administration and undercompensated by GCCF; 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 class action or individual lawsuits.
It is the Obama administration’s duty to guarantee the claims process established by BP provides at least the same protections and rights mandated by OPA. The Secretary of DHS is uniquely positioned, and has a duty pursuant to 33 U.S.C. § 2715(c), to ensure that victims of the BP oil spill are: (a) not victimized by BP/GCCF; (b) not forced into joining class action lawsuits by the Plaintiffs’ Bar; and (c) made whole by the OSLTF.
The primary focus of anger for BP oil spill victims should center on the fact that there is no need to be held hostage by GCCF. A victim of the BP oil spill may merely present a claim for damages to BP/GCCF and wait 90 days. If BP/GCCF does not pay the claim, the victim may present the claim to OSLTF. At that point, OSLTF may pay the victim and then the U.S. Attorney General may commence an action on behalf of OSLTF against BP and collect the amount from BP. “Any person, including OSLTF, who pays compensation pursuant to OPA to any claimant for damages shall be subrogated to all rights, claims, and causes of action that the claimant has under any other law.” Moreover, once “expenditure” is properly defined, it eliminates, without the need to pass retroactive legislation, the $1 billion cap which may be paid from OSLTF with respect to any single incident. As the OSLTF pool of $1 billion is depleted by payments made to oil spill claimants, it is replenished, by virtue of subrogation, by reimbursements made to OSLTF by the responsible party.
Brian J. Donovan can be reached at BrianJDonovan@verizon.net.
UPDATE
Second Lawsuit Filed Against Kenneth R. Feinberg, Feinberg Rozen, LLP and Gulf Coast Claims Facility
BP Oil Spill Victims: Gulf Coast Claims Facility, Litigation or Oil Spill Liability Trust Fund?
BP Oil Spill Victims: Gulf Coast Claims Facility, Litigation or Oil Spill Liability Trust Fund?
By Brian J. Donovan
November 3, 2010
INTRODUCTION
During town hall meetings organized to promote the Gulf Coast Claims Facility (GCCF), Kenneth Feinberg repeatedly tells victims of the BP oil spill, “the litigation route in court will mean uncertainty, years of delay and a big cut for the lawyers.” “I am determined to come up with a system that will be more generous, more beneficial, than if you go and file a lawsuit.” “It is not in your interest to tie up you and the courts in years of uncertain protracted litigation when there is an alternative that has been created,” Feinberg says. He adds, “I take the position, if I don’t find you eligible, no court will find you eligible.” Mr. Feinberg intentionally fails to mention that litigation is not the only alternative to GCCF.
The recently released documentary film Crude Justice, produced by the Alliance for Justice (AFJ), explores the difficulties victims of the BP oil spill will face when seeking access to justice “in the face of corporate domination of the courts, statutes favoring big business, judges with ties to the oil and gas industries, and the uncertainties that accompany an incident where the long-term effects may not be known for years.” According to Nan Aron, the president of the AFJ, victims of the BP oil spill “have two basic paths toward just and fair compensation. On the one hand, a victim can take BP’s offer of short-term help for current losses and then, later, a final payment, one condition of which is that he or she forgoes the right to sue BP in the future. On the other, victims have the right to pursue their claims through the courts, which have the advantage of having rules and procedures that theoretically should level the playing field, but which have the disadvantage of being in a region well stocked with judges who are thoroughly embedded in an oil culture. The route through the courts also takes plaintiffs on a path that leads ultimately to a strongly pro-corporate Supreme Court.” Ms. Aron also fails to mention that litigation is not the only alternative to GCCF.
Contrary to what BP and AFJ would like the American public to believe, GCCF and litigation are not the only avenues of compensation open to BP oil spill victims. A financially viable Oil Spill Liability Trust Fund (the “Fund”) is a third, and probably the best, avenue.
This article briefly discusses: (a) how GCCF, without any legal authority for doing so, circumvents many of the rights provided to oil spill victims under the Oil Pollution Act of 1990 (OPA); (b) why litigation, especially class action litigation, is not in the best interests of victims of the BP oil spill; and (c) why the Fund is probably the best avenue of compensation open to BP oil spill victims.
GULF COAST CLAIMS FACILITY
GCCF was meant to replace the inefficient claims process which BP had established to fulfill its obligations as a responsible party pursuant to OPA. Unfortunately, in lieu of making oil spill victims whole, GCCF’s primary goal appears to be the limitation of BP’s liability via the systematic postponement, reduction or denial of claims against BP.
It was not the legislative intent of Congress for OPA to limit an oil spill victim’s right to seek full compensation from the responsible party.
BP and Feinberg allege that GCCF (and the protocols under which it operates) are structured to be compliant with OPA. The truth is that GCCF violates OPA, and thereby limits BP’s liability, in the following eight ways:
(a) paying only for harm or damage that is proximately caused by the BP oil spill and taking into account geographic proximity, nature of industry, and dependence upon injured natural resources;
(b) a single six-month emergency advance payment for lost income;
(c) a single final settlement payment;
(d) a limitation that no claim may be submitted to the GCCF “more than three years after the date the Protocol becomes operative;”
(e) an intentionally misleading claims procedure;
(f) failure to provide for interest on the amount paid in satisfaction of a claim;
(g) requirement that the claimant sign a general release of all rights the claimant may have against BP in order to receive the final settlement; and
(h) the intentional and systematic delay of payment of legitimate claims.
LITIGATION
Class Action Lawsuit
Teams of lawyers from across the country have descended on the Gulf Coast to file potential class action lawsuits, brought pursuant to Rule 23 of the Federal Rules of Civil Procedure, to recover damages suffered by plaintiffs and the class members as a result of the oil spill that resulted from the explosion and subsequent sinking of the Deepwater Horizon on April 22, 2010.
A class action lawsuit, brought pursuant to Rule 23 of the Federal Rules of Civil Procedure, was never intended to address mass torts. The Supreme Court observed that, while the text of Rule 23(b)(3) does not preclude certification in cases with significant damages, the drafters “had dominantly in mind” the use of the class action to aggregate relatively small individual recoveries into a case that would be worthwhile for an attorney to litigate. Amchem Products, Inc. v. Windsor, 117 S.Ct. at 2244.
Individual Lawsuit
Given that the damages suffered by the vast majority of individual potential plaintiffs as a result of the BP oil spill of April, 2010 are potentially so great, it should be economically feasible for many individual plaintiffs to file individual lawsuits. Here, class treatment would not be necessary to permit effective litigation of the claim. An individual lawsuit will: (a) ensure the plaintiff that the plaintiff’s attorney has his or her best interests in mind; (b) protect the plaintiff’s due process rights; (c) ensure that the plaintiff is not a victim of a so-called “faux” class action case, i.e., a case in which individual class members receive little or no compensation and only plaintiffs‘ counsel stand to benefit from class certification; (d) give the plaintiff control over the prosecution of the case; (e) allow the plaintiff to present evidence of exposure, injury, and damages relating to his or her particular claim; and (f) allow the plaintiff to make the decision on whether or when to settle.
Victims of the BP oil spill must realize that BP p.l.c., the responsible party, is a powerful and well-funded defendant, does not lack imagination or incentive to pose innumerable legal barriers, and will aggressively assert its legal rights and otherwise use the law, the courts and the judicial system to serve its interests. BP can afford to stall, and actually benefits from delay, but its victims cannot afford to wait for years to be fully compensated for their losses.
OIL SPILL LIABILITY TRUST FUND
The intent of Congress when it enacted OPA was “to eliminate, to the extent possible, the need for an injured person to seek recourse through the litigation process.” Prior to OPA, federal funding for oil spill damage recovery was difficult for private parties. To help address this issue, Congress established the Fund. The Fund, and not BP’s GCCF or costly and protracted litigation, will ensure BP oil spill victims are made whole.
Under OPA, claims for damages must be presented first to the responsible party. 33 U.S.C. § 2713(a) In the event that a claim for damages is either denied or not paid by the responsible party within 90 days, the claimant may elect to commence an action in court against the responsible party or to present the claim to the Fund. 33 U.S.C. § 2713(c)
The maximum amount of money that may be withdrawn from the Fund is $1 billion per incident. 26 U.S.C. § 9509(c)(2)(A) However, any person, including the Fund, who pays compensation pursuant to OPA to any claimant for damages shall be subrogated to all rights, claims, and causes of action that the claimant has under any other law. 33 U.S.C. § 2715(a)
Moreover, at the request of the Secretary, the Attorney General shall commence an action on behalf of the Fund to recover any compensation paid by the Fund to any claimant pursuant to OPA, and all costs incurred by the Fund by reason of the claim, including interest (including prejudgment interest), administrative and adjudicative costs, and attorney’s fees. Such an action may be commenced against any responsible party or guarantor, or against any other person who is liable, pursuant to any law, to the compensated claimant or to the Fund, for the cost or damages for which the compensation was paid. 33 U.S.C. § 2715(c)
On October 18, 2010, in order to ensure the financial viability of the Fund, The Donovan Law Group sent a letter to the Honorable Janet Napolitano, Secretary of the Department of Homeland Security, asking the Secretary to immediately request the Attorney General, pursuant to 33 U.S.C. § 2715, to commence an action against BP on behalf of the Fund to recover any compensation paid by the Fund to any claimant pursuant to OPA.
CONCLUSION
As of the date of this article, it has been 197 days since the blowout of the BP offshore oil well in the Gulf of Mexico.
The question is whether victims of the BP oil spill will have to pay thrice: (a) once for the gusher, the environmental and economic damages of which will devastate their way of life and leave many in financial ruin; (b) again by being mislead and undercompensated by GCCF; 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 class action or individual lawsuits.
It is the federal government’s duty to guarantee the claims process established by BP provides at least the same protections and rights mandated by OPA. The Secretary of DHS is uniquely positioned, and has a duty pursuant to 33 U.S.C. § 2715(c), to ensure that victims of the BP oil spill are: (a) not victimized by GCCF; (b) not forced into filing unnecessary lawsuits; and (c) made whole by the Fund.
About the Author
Brian J. Donovan is an attorney and marine engineer with thirty-five years of international business experience.
Mr. Donovan, a member of The Florida Bar, The U.S. District Court, Middle District of Florida and The United States Court of Appeals for the Eleventh Circuit, holds a J.D. from Syracuse University College of Law (where he was recipient of the “Global Law & Practice Award” as the outstanding graduate in the areas of International Law and International Business Law) and a B.S., with honors, in Marine/Mechanical and Nuclear Engineering from the United States Merchant Marine Academy.
Mr. Donovan, with deep family roots in southern Louisiana, has first-hand knowledge of the catastrophic devastation of the Louisiana Gulf Coast caused by hurricanes Katrina and Rita. He fully appreciates that the damage caused by Katrina and Rita may pale in comparison to the massive and potentially unprecedented environmental and economic impact of the BP oil gusher of April, 2010.
BP Oil Spill: Letter Requests Secretary Napolitano to Take Action
BP Oil Spill: Letter Requests Secretary Napolitano to Take Action
______________________
Gulf Coast Claims Facility and Litigation Are Not the Only
Avenues of Compensation Open to BP Oil Spill Victims
By Brian J. Donovan
October 29, 2010
Contrary to what BP, and the recently released documentary film titled Crude Justice, would like the American public to believe, the Gulf Coast Claims Facility and litigation are not the only avenues of compensation open to BP oil spill victims. A financially viable Oil Spill Liability Trust Fund is a third option.
On October 18, 2010, The Donovan Law Group sent a letter to the Honorable Janet Napolitano, Secretary of the Department of Homeland Security, asking the Secretary to immediately request the Attorney General, pursuant to 33 U.S.C. § 2715, to commence an action against BP on behalf of the Oil Spill Liability Trust Fund (the “Fund”) to recover any compensation paid by the Fund to any claimant pursuant to OPA.
The full text of the letter follows.
October 18, 2010
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED
The Honorable Janet Napolitano
Office of the Secretary
Department of Homeland Security
245 Murray Lane, SW
Washington, DC 20528
Re: BP Oil Spill and the Oil Pollution Act of 1990 (OPA)
Subrogation Rights for Payments Made for Damages, 33 U.S.C. § 2715
Dear Secretary Napolitano:
I am writing in regard to the above-referenced matter.
During town hall meetings organized to promote the Gulf Coast Claims Facility (GCCF), Kenneth Feinberg repeatedly tells victims of the BP oil spill, “the litigation route in court will mean uncertainty, years of delay and a big cut for the lawyers.” “I am determined to come up with a system that will be more generous, more beneficial, than if you go and file a lawsuit.” “It is not in your interest to tie up you and the courts in years of uncertain protracted litigation when there is an alternative that has been created,” Feinberg says. He adds, “I take the position, if I don’t find you eligible, no court will find you eligible.” Mr. Feinberg intentionally fails to mention that litigation is not the only alternative to GCCF.
The intent of Congress when it enacted OPA was “to eliminate, to the extent possible, the need for an injured person to seek recourse through the litigation process.” As explained below, I believe the Oil Spill Liability Trust Fund (the “Fund”), and not costly and protracted litigation, will ensure injured persons are fully compensated for damages which they suffered resulting from the oil spill caused by the blowout of the BP offshore oil well on April 20, 2010.
The following briefly discusses: (a) the Fund and subrogation rights under OPA; (b) how GCCF, without any legal authority for doing so, circumvents many of the rights provided to oil spill victims under OPA; and (c) why litigation, especially class action litigation, is not in the best interests of victims of the BP oil spill.
Secretary Janet Napolitano
October 18, 2010
Page 2
I. Subrogation
Under OPA, claims for damages must be presented first to the responsible party. 33 U.S.C. § 2713(a) In the event that a claim for damages is either denied or not paid by the responsible party within 90 days, the claimant may elect to commence an action in court against the responsible party or to present the claim to the Fund. 33 U.S.C. § 2713(c)
The maximum amount of money that may be withdrawn from the Fund is $1 billion per incident. 26 U.S.C. § 9509(c)(2)(A)
However, any person, including the Fund, who pays compensation pursuant to OPA to any claimant for damages shall be subrogated to all rights, claims, and causes of action that the claimant has under any other law. 33 U.S.C. § 2715(a)
Moreover, at the request of the Secretary, the Attorney General shall commence an action on behalf of the Fund to recover any compensation paid by the Fund to any claimant pursuant to OPA, and all costs incurred by the Fund by reason of the claim, including interest (including prejudgment interest), administrative and adjudicative costs, and attorney’s fees. Such an action may be commenced against any responsible party or guarantor, or against any other person who is liable, pursuant to any law, to the compensated claimant or to the Fund, for the cost or damages for which the compensation was paid. 33 U.S.C. § 2715(c)
In order to ensure the financial viability of the Fund, I ask you to immediately request the Attorney General to commence an action against BP on behalf of the Fund to recover any compensation paid by the Fund to any claimant pursuant to OPA.
The question is whether victims of the BP oil gusher will have to pay thrice: (a) once for the gusher, the environmental and economic damages of which will devastate their way of life and leave many in financial ruin; (b) again by being mislead and undercompensated by GCCF; 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 individual lawsuits or class action lawsuits.
II. How GCCF, Without Any Legal Authority For Doing So, Circumvents Many of the Rights Provided to Oil Spill Victims Under OPA
GCCF was meant to replace the inefficient claims process which BP had established to fulfill its obligations as a responsible party pursuant to OPA. Unfortunately, in lieu of making oil spill victims whole, GCCF’s primary goal appears to be the limitation of BP’s liability via the systematic postponement, reduction or denial of claims against BP.
Secretary Janet Napolitano
October 18, 2010
Page 3
GCCF limits BP’s liability via circumventing OPA in the following ways:
A. Proximate Causation
The GCCF Protocol states, “The GCCF will only pay for harm or damage that is proximately caused by the Spill. The GCCF will take into account, among other things, geographic proximity, nature of industry, and dependence upon injured natural resources.”
GCCF’s requirement that a claimant has the increased burden of proving “proximate causation” between his or her damages and the Deepwater Horizon incident is a clear violation of OPA. Furthermore, paying for damages based on geographic proximity and nature of industry is also a clear violation of OPA.
OPA is a strict liability statute. In order to recover damages, a claimant merely needs to show that his or her damages “resulted from” the oil spill. OPA states, “The responsible party for a vessel or a facility from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon the navigable waters or adjoining shorelines or the exclusive economic zone is liable for the removal costs and damages that result from such incident.” See 33 U.S.C. § 2702(a)
B. Single Emergency Advance Payment
The GCCF Protocol provides, “Emergency Advance Payment applications may be submitted during the period August 23 – November 23, 2010. After that date, applications for Emergency Advance Payments will no longer be accepted.”
A single six-month emergency advance payment for lost income is in violation of OPA. Moreover, the lack of a procedure for the payment or settlement of claims for interim, short-term damages beyond 90 days, as required by 33 U.S.C. § 2705, is also in violation of OPA.
OPA specifically provides for interim partial payments. “The responsible party shall establish a procedure for the payment or settlement of claims for interim, short-term damages. Payment or settlement of a claim for interim, short-term damages representing less than the full amount of damages to which the claimant ultimately may be entitled shall not preclude recovery by the claimant for damages not reflected in the paid or settled partial claim.” See 33 U.S.C. § 2705(a). The fact that a single payment does not preclude recovery by the claimant for future damages demonstrates that the legislative intent of Congress was for the responsible party to pay a series of partial claims in order to ensure that victims of the oil spill are fully compensated. Each of these partial claims would be paid after the date on which the claimant discovers damages resulting from the oil spill.
Secretary Janet Napolitano
October 18, 2010
Page 4
C. Single Final Settlement
A single final settlement payment is in violation of OPA.
OPA provides: (a) “Payment or settlement of a claim for interim, short-term damages representing less than the full amount of damages to which the claimant ultimately may be entitled shall not preclude recovery by the claimant for damages not reflected in the paid or settled partial claim.” See 33 U.S.C. § 2705(a); and (b) Any person, including the Oil Spill Liability Trust Fund, who pays compensation pursuant to OPA to any claimant for damages shall be subrogated to all rights, claims, and causes of action that the claimant has under any other law. Moreover, payment of such a claim shall not foreclose a claimant’s right to recovery of all damages to which the claimant otherwise is entitled under OPA or under any other law. See 33 U.S.C. § 2715(b)(2)
D. Period of Limitations
A limitation that no claim may be submitted to the GCCF “more than three years after the date the Protocol becomes operative,” is in violation of OPA.
Under OPA, an action for damages shall be barred unless the action is brought within three years after the date on which the loss and the connection of the loss with the discharge in question are reasonably discoverable with the exercise of due care. 33 U.S.C. § 2717(f)(1)(A)
The damages suffered by victims of the BP oil gusher will be enormous and on-going. The livelihoods of all persons whose businesses rely on the natural resources of the Gulf Coast are at risk. Commercial fishermen, oyster harvesters, shrimpers, and businesses involved, directly or indirectly, in processing and packaging for the seafood industry will experience the end of a way of life that, in many cases, has been passed down from one generation to the next.
It is too early to calculate the economic damages for many potential claimants. GCCF’s “take it or leave it” final settlement requires a financially stressed victim to file a claim before the individual or business knows, and is able to corroborate, the full extent of the damages incurred as a result of the oil spill.
More importantly, how can a person predict the long-term health effects of his or her exposure to the oil? The benzene in spilled oil can cause leukemia and lymphoma which may not be diagnosed for several years after the date the GCCF Protocol becomes operative.
Secretary Janet Napolitano
October 18, 2010
Page 5
E. Intentionally Misleading Claims Procedure
Under OPA, claims for damages must be presented first to the responsible party. 33 U.S.C. § 2713(a). The term “claim” means “a request, made in writing for a sum certain, for compensation for damages or removal costs resulting from an oil spill incident.” 33 U.S.C. § 2701(3) In the event that a claim for damages is not paid by the responsible party within 90 days, the claimant may elect to commence an action in court against the responsible party or to present the claim to the Fund.
The GCCF Protocol: (a) fails to acknowledge that the filing of a claim with GCCF satisfies 33 U.S.C. § 2713(a); and (b) is ambiguous as to when the 90-day OPA clock for payment starts. The GCCF Protocol states, “Whether or not a claim has been presented shall be governed by OPA and applicable law.” Moreover, GCCF requires that every claimant who has a pending claim with BP will have to refile his or her claim on an 18-page claims form. Does this refiling restart the 90-day clock? What if a claimant fails to refile his or her claim? GCCF is meant to facilitate settlement. It is not meant to confuse claimants or incite litigation as a result of an intentionally misleading claims procedure.
F. Interest on the Amount Paid
Pursuant to OPA, 33 U.S.C. § 2705(a), the responsible party or the responsible party’s guarantor is liable to a claimant for interest on the amount paid in satisfaction of a claim. The period for which interest shall be paid is the period beginning on the 30th day following the date on which the claim is presented to the responsible party or guarantor and ending on the date on which the claim is paid.
The GCCF Protocol, in violation of OPA, fails to provide for interest on the amount paid in satisfaction of a claim.
G. Waiver of Right to Sue
GCCF’s requirement that the claimant sign a general release of all rights the claimant may have against BP in order to receive the final settlement is in violation of OPA.
OPA provides: (a) “Payment or settlement of a claim for interim, short-term damages representing less than the full amount of damages to which the claimant ultimately may be entitled shall not preclude recovery by the claimant for damages not reflected in the paid or settled partial claim.” 33 U.S.C. § 2705(a); and (b) Any person, including the Fund, who pays compensation pursuant to OPA to any claimant for damages shall be subrogated to all rights, claims, and causes of action that the claimant has under any other law. Moreover, payment of such a claim shall not foreclose a claimant’s right to recovery of all damages to which the claimant otherwise is entitled under OPA or under any other law. 33 U.S.C. § 2715(b)(2).
Secretary Janet Napolitano
October 18, 2010
Page 6
Partial payments, including a partial “final settlement” payment, do not preclude recovery by the claimant for damages not reflected in the paid or settled partial claim. If the claimant must sign a general release of all rights the claimant may have against BP in order to receive this partial “final settlement” payment, this required GCCF waiver of the right to sue by the claimant is in violation of OPA.
III. Why Litigation, Especially Class Action Litigation, is Not in the Best Interests of Victims of the BP Oil Spill
BP p.l.c., the responsible party, is a powerful and well-funded defendant, does not lack imagination or incentive to pose innumerable legal barriers, and will aggressively assert its legal rights and otherwise use the law, the courts and the judicial system to serve its interests. BP can afford to stall, and actually benefits from delay, but its victims cannot afford to wait for years to be fully compensated for their losses.
For a detailed discussion of why class action litigation may not be in the best interests of BP oil spill victims, visit: http://donovanlawgroup.wordpress.com/2010/05/09/bp-oil-spill-of-april-2010-why-class-action-lawsuits-may-not-be-in-the-best-interests-of-potential-plaintiffs/
IV. Conclusion
The question is whether victims of the BP oil gusher will have to pay thrice: (a) once for the gusher, the environmental and economic damages of which will devastate their way of life and leave many in financial ruin; (b) again by being mislead and undercompensated by GCCF; 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 individual lawsuits or class action lawsuits.
Proponents of the BP claims process and GCCF routinely ask, “But GCCF does not prohibit victims from rejecting the lump-sum payment in the hopes of attaining a larger settlement through litigation, correct?” This is true if the victims have not already starved to death. The BP claims process and GCCF have been a delaying tactic. Some claimants, including my clients, have already been waiting for over 90 days because BP, and now GCCF, have placed their claims on hold. Unfortunately, the purpose of GCCF is to limit BP’s liability, not to fully compensate victims as expeditiously as possible.
Secretary Janet Napolitano
October 18, 2010
Page 7
As of the date of this letter, it has been 181 days since the blowout of the BP offshore oil well in the Gulf of Mexico. Time is of the essence. The economic stress that victims of the BP oil spill continue to experience as a result of the disruption of their business activities caused by the BP oil spill is significant. GCCF’s tactics of: (a) delaying payment by placing claims “under review” for an indefinite period of time; (b) eventually denying claims; and (c) offering a “take it or leave it” final settlement which requires a financially stressed victim to file a claim before the individual or business knows, and is able to corroborate, the full extent of the damages incurred as a result of the oil spill are unacceptable.
It is the federal government’s duty to guarantee the claims process established by BP provides at least the same protections and rights mandated by OPA. As Secretary of DHS, OPA uniquely positions you to ensure that victims of the BP oil spill are: (a) made whole; (b) not victimized by GCCF; and (c) not forced into filing unnecessary lawsuits.
I ask you to immediately request the Attorney General to commence an action against BP on behalf of the Fund to recover any compensation paid by the Fund to any claimant pursuant to OPA.
Thank you for your prompt attention to this matter. If you have any questions, please do not hesitate to contact me at 352-328-7469 or via e-mail at BrianJDonovan@verizon.net.
Very truly yours,
Brian J. Donovan
BJD/rc
cc: The Honorable Edward J. Markey
The Honorable Jeff Sessions
The Honorable Eric H. Holder, Jr.
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