The Donovan Law Group

BP Oil Spill: A Pattern of Collusive Unfairness Permeates the Deepwater Horizon Proposed Class Action Settlement (Part II)

BP Oil Spill: A Pattern of Collusive Unfairness Permeates

the Deepwater Horizon Proposed Class Action Settlement (Part II)

Tampa, FL (July 25, 2012) – On May 2, 2012, the MDL 2179 Court entered a Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement].

On July 13, 2012, Plaintiffs Pinellas Marine Salvage, Inc. and John Mavrogiannis filed a Motion to Vacate this Preliminary Approval Order.

The following is the second excerpt from this motion.

Click here to download the first excerpt.

D.  The Proposed Settlement Was Not Achieved in the Full Context of the Adversarial  Process.

While settlement classes may have certain attractive aspects, such as reducing litigation expenses, many of the traditional aspects of adversarial litigation are missing. As a result……the settlement class is potentially the product of collusion among the parties: defendants who wish to rid themselves of the burden of litigation and plaintiffs‘ counsel who wish to receive immediate compensation. Douglas G. Smith, The Intersection of Constitutional Law and Civil Procedure: Review of Wholesale Justice – Constitutional Democracy and the Problem of the Class Action Lawsuit, Northwestern University Law Review Colloquy, Vol. 104:319 (2010); See also, e.g., John C. Coffee, Jr., Understanding the Plaintiff’s Attorney: The Implications of Economic Theory for Private Enforcement of Law Through Class and Derivative Actions, 86 Colum. L. Rev. 669, 714 (1986) (“Often, the plaintiff’s attorneys and the defendants can settle on a basis that is adverse to the interests of the plaintiffs. At its worst, the settlement process may amount to a covert exchange of a cheap settlement for a high award of attorney’s fees.”).

The Proposed Settlement intends to resolve certain claims by private individuals and businesses for economic loss and property damage resulting from the “Deepwater Horizon Incident.” The Proposed Settlement defines “Deepwater Horizon Incident” as: the events, actions, inactions and omissions leading up to and including (i) the blowout of the MC252 Well; …………. (vii) the operation of the GCCF; and (viii) BP public statements relating to all of the foregoing. (Proposed Settlement ¶ 38.43, Rec. Doc. 6276-1 at 99).

Pinellas Marine Salvage, Inc., et al. v. Kenneth R. Feinberg, et al. and Selmer M. Salvesen v. Kenneth R. Feinberg, et al. 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.”  In sum, Plaintiffs allege that BP is responsible for the oil spill incident; Feinberg, et al. (independent contractors), via employment of their “Delay, Deny, Defend” strategy, are responsible for not compensating and thereby financially ruining Plaintiffs and other victims of the BP oil spill.

As noted above, the Pinellas case was transferred by the JPML to the MDL 2179 Court on August 9, 2011. Once the Pinellas and Salvesen cases were transferred to the MDL 2179 Court, not only were these cases automatically stayed, but the Pinellas and Salvesen claims were deemed “amended, restated, and superseded” by the allegations and claims of the Master Complaint in Pleading Bundle B1 (See Pre-Trial Order No. 25, Para. 5, Jan. 12, 2011), in which Feinberg, Feinberg Rozen, LLP, and GCCF are not even named as Defendants.

On August 29, 2011, Plaintiffs’ Counsel emailed a letter to James Parkerson Roy wherein he informed Mr. Roy that the Pinellas Marine Salvage, Inc., et al. v. Kenneth R. Feinberg, et al. case had been transferred to MDL 2179. The letter, in pertinent part, stated “I would like to commence discovery as soon as possible. Since this action does not involve common questions of fact with actions previously transferred to MDL No. 2179, please advise as to how we may most expeditiously initiate and coordinate discovery……I look forward to working with you on this case.” On September 5, 2011, Plaintiffs’ Counsel received an email from Stephen J. Herman wherein Mr. Herman stated, “please be advised that the Court has, thus far, declined to permit formal discovery on Feinberg or the GCCF.

Judge Barbier writes, “…the PSC has actively lobbied and argued for increased supervision and monitoring of the GCCF and Kenneth Feinberg/Feinberg Rozen, LLP. These efforts have met with at least partial success. For instance, on February 2, 2011 the Court granted the PSC’s motion (in part) and ordered the GCCF and BP to:

(1) Refrain from contacting directly any claimant that they know or reasonably should know is represented by counsel, whether or not said claimant has filed a lawsuit or formal claim.

(2) Refrain from referring to the GCCF, Ken Feinberg, or Feinberg Rozen, LLP (or their representatives), as “neutral” or completely “independent” from BP. It should be clearly disclosed in all communications, whether written or oral, that said parties are acting for and on behalf of BP in fulfilling its statutory obligations as the “responsible party” under the Oil Pollution Act of 1990.

(3) Begin any communication with a putative class member with the statement that the individual has a right to consult with an attorney of his/her own choosing prior to accepting any settlement or signing a release of legal rights.

(4) Refrain from giving or purporting to give legal advice to unrepresented claimants, including advising that claimants should not hire a lawyer.

(5) Fully disclose to claimants their options under OPA if they do not accept a final payment, including filing a claim in the pending MDL 2179 litigation.

(6) Advise claimants that the “pro bono” attorneys and “community representatives” retained to assist GCCF claimants are being compensated directly or indirectly by BP.” Rec. Doc. 1098 at 14.

Judge Barbier further writes, “The PSC has advocated for a full and transparent audit of the GCCF and its claims handling practices, and together with the U.S. Department of Justice, has persuaded Mr. Feinberg to agree to such an audit which is now in progress. The PSC has advocated, again with some success, for the GCCF to employ a more liberal causation standard in evaluating claims and has advanced similar causation arguments in this MDL proceeding.” See Order of Aug. 26, 2011, Rec. Doc. 3830 at 32-33. (pp. 4-5, Rec. Doc. 5022).

The PSC allegedly represents the Plaintiffs in MDL 2179. These Plaintiffs deserve more than the PSC merely: (a) “lobbying” for increased supervision and monitoring of Feinberg, et al.; (b) trying to “persuade” Mr. Feinberg to agree to an audit; and (c) “advocating,” again with some success, for the GCCF to employ a more liberal causation standard in evaluating claims.

The JPML believes, “Centralization may also facilitate closer coordination with Kenneth Feinberg’s administration of the BP compensation fund.” However, formal discovery on Feinberg and the GCCF, and the associated pressure of a trial, are required in order exert pressure on the parties to negotiate a settlement which reflects the true value of the claims and not one which focuses on minimizing the liability of BP. Certainly, without formal discovery on Feinberg and the GCCF, “certain claims by private individuals and businesses for economic loss resulting from the operation of the GCCF” may not be properly resolved.

E.  The Proposed Settlement Makes a Mockery of the Oil Pollution Act of 1990 (“OPA”).

Plaintiffs respectfully point out to this Honorable Court that the Proposed Settlement makes a mockery of the OPA for at least the following four reasons:

1.  The Proposed Settlement defines Class Members by geographic bounds and certain business activities while requiring proof of a heightened, vague standard of causation.

2.  The Proposed Settlement requires Class Members to waive their right to sue in  exchange for a miniscule single final settlement payment.

3.  The Proposed Settlement provides for a shortened Period of Limitations.

4.  The Proposed Settlement fails to pay interest on the amount paid.

This Honorable Court has already been fully briefed on these issues. See, e.g., Plaintiff’s Memorandum in Support of His Motion to Vacate Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement] filed in this Court on July 2, 2012 by Plaintiff Selmer M. Salvesen (pp. 15-23, Rec. Doc. 6831-1).

Plaintiffs respectfully bring to the Court’s attention that on April 25, 2012 Mississippi Attorney General Jim Hood filed his Statement of Interest, also objecting to the use of the illegal and illegally-obtained GCCF Releases as an eligibility criteria to exclude 200,000 individuals and entities from the “Economic and Property Damages Settlement Class” definition and from the benefits of the proposed “Deepwater Horizon Economic and Property Damages Settlement,” and renewing his request to nullify the illegal, illegally-obtained and unconscionable GCCF Releases. (Rec. Doc. 6356).

As Judge Barbier aptly stated in his Order of August 26, 2011, “The long term effects [of the BP oil spill] on the environment and fisheries may not be known for many years.” (p.31, Rec. Doc. 3830) (Emphasis added). Requiring Class Members to prematurely waive their right to sue in exchange for a miniscule single final settlement payment is unconscionable.

Notwithstanding the utter failure of the Proposed Settlement to comply with the OPA, Interim Class Counsel and the PSC state, “To give it utmost credit, the GCCF can be said to be a good faith effort to fulfill BP’s OPA obligations……………..” (p. 29, Rec. Doc. 6269-1).

F.  A Pattern of Collusive Unfairness Permeates the Proposed Settlement.

For the following reasons, Plaintiffs respectfully point out to this Honorable Court that the Proposed Settlement is not a “fair, adequate, and reasonable” settlement (at least not for the Class Members) which has been entered into without collusion between the parties.

(1)  Prior to the Settlement, the Deepwater Horizon Oil Spill Trust had a balance of approximately $13.8 billion from which BP oil spill victims believed they would be compensated by GCCF for all “legitimate” claims.

(2)  After the Settlement, the proposed “Settlement Trust” will only have a balance of $7.8 billion from which BP oil spill victims are being told they will be compensated by the CSSP “so long as they execute an individual release.” (p. 7, Rec. Doc. 6418).

(3)  Under the Proposed Settlement, BP will receive a refund of approximately $6 billion; the PSC and other counsel allegedly performing common benefit work will receive $600 million.

(4)  The Proposed Settlement doesn’t actually provide for funds to be distributed to Class Members; it merely gives BP oil spill victims the right to submit, yet again, a claim for economic and property damages. Plaintiffs respectfully ask, “Where’s the settlement?”

(5)  Prior to the Proposed Settlement, under the GCCF, the evaluation and processing of claims were performed by Garden City Group, Inc., BrownGreer, PLC, and PricewaterhouseCoopers, LLP. The GCCF denied payment to approximately 61.46% of the claimants who filed claims; the average total amount paid per claimant was $27,466.47.

(6)  After the Proposed Settlement, under the CSSP, the evaluation and processing of claims shall continue to be performed by Garden City Group, Inc., BrownGreer, PLC, and PricewaterhouseCoopers, LLP. Accordingly, there is no reason to believe that the percentage of claimants denied payment and the average total amount paid per claimant under the GCCF will increase under the CSCP.

(7)  “BP has estimated the cost of the proposed settlement to be approximately $7.8 billion.” (p. 156, Rec. Doc. 6266-2). Here, Judge Barbier’s admonition in his Order of August 26, 2011 is instructive: “The long term effects [of the BP oil spill] on the environment and fisheries may not be known for many years.” (p. 31, Rec. Doc. 3830) (Emphasis added). Since, as Judge Barbier points out, the long term effects, and therefore the associated costs, of the BP oil spill on the environment and fisheries may not be known for many years, BP can only estimate its cost by multiplying the approximate number of Claimants by an average amount BP is willing to pay each claimant.

The average amount BP proposes to pay each Claimant under the Proposed Settlement is not difficult to surmise. “The BP Parties may appeal a final compensation award determination only where the compensation amount determined by the settlement program is in excess of $25,000.” (p. 58, Rec. Doc. 6276-1).

(8)  “The BP Parties shall make a non-refundable payment of $75 million (the “Initial Payment”) into the Common Benefit Fee and Costs Fund on the first date on which all of the following have occurred: (i) 30 days have elapsed after the Court has granted preliminary approval of the Economic Agreement, and (ii) the Court has entered an Order modifying the Holdback Order to provide that it shall not apply to any Settlement Payments or Other Economic Benefits paid pursuant to the Economic Agreement…..” “……within 15 days after the end of each calendar quarter, the BP Parties shall irrevocably pay into the Common Benefit Fee and Costs Fund an amount equal to 6 % (six percent) of the aggregate Settlement Payments paid under the Economic Agreement in respect of Claimants that have executed an Individual Release.” (pp. 3-4, Rec. Doc. 6276-46). In sum, the PSC and other counsel allegedly performing common benefit work are financially motivated to have as many Claimants execute an Individual Release as expeditiously as possible regardless of whether the negotiated settlements reflect the true value of the claims.

Advertisements

BP Oil Spill: A Pattern of Collusive Unfairness Permeates the Deepwater Horizon Proposed Class Action Settlement (Part I)

BP Oil Spill: A Pattern of Collusive Unfairness Permeates

the Deepwater Horizon Proposed Class Action Settlement (Part I)

Tampa, FL (July 24, 2012) – On May 2, 2012, the MDL 2179 Court entered a Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement].

On July 13, 2012, Plaintiffs Pinellas Marine Salvage, Inc. and John Mavrogiannis filed a Motion to Vacate this Preliminary Approval Order.

The following is an excerpt from this motion.

INTRODUCTION

On February 25, 2011, Pinellas Marine Salvage, Inc. and John Mavrogiannis filed their action against Defendants Kenneth R. Feinberg and Feinberg Rozen, LLP, d/b/a Gulf Coast Claims Facility, in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida asserting claims for gross negligence, negligence, negligence per se, fraud, fraudulent inducement, promissory estoppel, and unjust enrichment under Florida state law. On March 18, 2011, Defendants removed the Pinellas Marine case to the U.S. District Court for the Middle District of Florida. Plaintiffs filed their Motion to Remand on March 30, 2011. The case was subsequently transferred by the JPML to the MDL 2179 Court on August 9, 2011. See Pinellas Marine Salvage, Inc., et al. v. Kenneth R. Feinberg, et al., 2:11-cv-01987.

Phase I of a multi-phase trial in Transocean’s Limitation and Liability Action, Case No. 10-2771, was scheduled for February 27, 2012. On February 26, 2012, the eve of the Limitation and Liability Trial, the Court adjourned proceedings for one week to allow BP and the PSC to make further progress on their settlement talks. (Rec. Doc. 5887). On March 2, 2012, the Court was informed that BP and the PSC had reached an Agreement-in-Principle on the proposed settlements. Consequently, the Court adjourned Phase I of the trial, because of the potential for realignment of the parties in this litigation and substantial changes to the current trial plan. (Rec. Doc. 5955).

On March 8, 2012, at the parties’ request, the Court entered an Order creating a process to facilitate the transition from the GCCF to the “Court Supervised Settlement Program” envisioned by the settlement. (Rec. 5995). On April 16, 2012, the PSC filed a new class action complaint to serve as the vehicle for the proposed Economic and Property Damage Settlement. See No. 12-970, Bon Secour Fisheries, Inc., et al. v. BP Exploration & Production Inc., et al. The class action complaint was amended on May 2, 2012. (Rec. Doc. 6412). On April 18, 2012, the PSC and BP filed their Proposed Settlement (Rec. Doc. 6276). On May 2, 2012, the Court entered a Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement] (Rec. Doc. 6418).

Plaintiffs re-filed their Motion to Remand and Memorandum in Support with this Honorable Court on November 14, 2011 (Rec. Doc. 4574). On December 1, 2011, Plaintiffs filed their Motion in Opposition to Class Certification of Any Action in MDL No. 2179 and Memorandum in Support (Rec. Doc. 4782). Both motions remain pending in this Court.

LAW AND ARGUMENT

The standard for reviewing a proposed settlement of a class action by courts in this Circuit, as in other circuits, is whether the proposed settlement is “fair, adequate, and reasonable” and whether it has been entered into without collusion between the parties. Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977); see also Hanlon v. Chrysler Corp., 150 F.3d 1011, 1027 (9th Cir. 1998) (“Settlement is the offspring of compromise; the question we address is not whether the final product could be prettier, smarter or snazzier, but whether it is fair, adequate, and free from collusion.”); and In re OCA, Inc. Sec. & Derivative Litig., No. 05-2165, 2009 U.S. Dist. LEXIS 19210, at *32 (E.D. La. Mar. 2, 2009). To do this in the Fifth Circuit, courts evaluate the six Reed factors. The Reed factors are “(1) the existence of fraud or collusion behind the settlement; (2) the complexity, expense, and likely duration of the litigation; (3) the stage of the proceedings and the amount of discovery completed; (4) the probability of plaintiffs’ success on the merits; (5) the range of possible recovery; and (6) the opinions of the class counsel, class representatives, and absent class members.” Reed v. Gen. Motors Corp., 703 F.2d 170, 172 (5th Cir. 1983).

The United States District Court for the Eastern District of Louisiana [has] defined “collusion” as the “lawful means for the accomplishment of an unlawful purpose” and as a “secret understanding between two or more persons prejudicial to another, or a secret understanding to appear as adversaries, though in agreement.” Collusion does not require fraudulent conduct. See Dynamic Marine Consortium, SA v. Latini, MV, 179 F.3d 278 (5th Cir. 1999) (Emphasis added).

In his Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement], Judge Barbier writes, “The Court preliminarily approves the Economic and Property Damages Settlement Agreement filed with this Court on April 18, 2012 (Rec. Doc. 6276-1), as amended as set forth in Interim Class Counsel’s and BP’s Joint Supplemental Motion Related to the Economic and Property Damages Settlement, as fair, reasonable, adequate, entered in good faith, free of collusion, and within the range of possible judicial approval……The Parties engaged in a multi-month, extensive, arms-length settlement process, free of collusion, and overseen by Magistrate Judge Shushan.” (p. 29, Rec. Doc. 6418) (Emphasis added). Plaintiffs respectfully disagree; collusion permeates MDL 2179 and this Proposed Settlement.

The following are merely a few examples of the hallmarks of collusive unfairness which are present in MDL 2179 and this Proposed Settlement.

A.  “Centralization May Also Facilitate Closer Coordination with Kenneth Feinberg’s Administration of the BP Compensation Fund.”

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 oil spill. At the request of the White House and BP, Kenneth R. Feinberg (“Feinberg”), acting through and as Managing Partner of Feinberg Rozen, LLP, established the Gulf Coast Claims Facility (“GCCF”) for the alleged purpose of administering, settling, and authorizing 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.

On August 10, 2010, the Judicial Panel on Multidistrict Litigation (“JPML”) centralized all federal actions (excluding securities suits) in this Court pursuant to 28 U.S.C. § 1407. In its Transfer Order, the JPML clearly stated, “Centralization may also facilitate closer coordination with Kenneth Feinberg’s administration of the BP compensation fund.” (p. 3, Rec. Doc. 1).

On August 23, 2010, the GCCF replaced the original BP claims process and commenced performing BP’s obligations under the Oil Pollution Act of 1990 (‘OPA”) with respect to private economic loss claims. Feinberg Rozen, LLP was paid $1.25 million per month by Defendant BP to administer the GCCF claims process.

In sum, the JPML sought to “facilitate closer coordination” between Feinberg (who was an agent of, and being directly compensated by, Defendant BP) and the MDL 2179 Plaintiffs’ Steering Committee (“PSC”) (which allegedly represents the plaintiffs in MDL 2179). BP, by and through Feinberg, et al., and the PSC entered into “a secret understanding to appear as adversaries, though in agreement.” This secret understanding has been, and continues to be, prejudicial to all BP oil spill victims. Plaintiffs respectfully point out to this Honorable Court that this collusion was accomplished with the imprimatur of the JPML.

B.  The Court Supervised Settlement Program and the Gulf Coast Claims Facility Are Virtually Identical.

On March 8, 2012, the Court entered an Order creating a process to facilitate the transition from the GCCF to the “Court Supervised Settlement Program” (“CSSP”) envisioned by the Proposed Settlement. Claims submitted to the CSSP will be evaluated and processed by Claims Administration Vendors pursuant to the frameworks detailed in the Proposed Settlement for the various damage categories. Those who accept payments under the Proposed Settlement are required to release their claims against BP, government oil spill liability funds, and all other Defendants in MDL 2179 (except Transocean and Halliburton). (p. 6, Rec. Doc. 6418).

Under the GCCF, the evaluation and processing of claims were performed by Garden City Group, Inc., BrownGreer, PLC, and PricewaterhouseCoopers, LLP.

On May 2, 2012, Patrick Juneau was appointed as Claims Administrator to oversee the Claims Administration Vendors, who will process the claims in accordance with the Proposed Settlement. Under the CSSP, the evaluation and processing of claims shall continue to be performed by Garden City Group, Inc., BrownGreer, PLC, and PricewaterhouseCoopers, LLP. Accordingly, although Patrick Juneau has replaced Feinberg, there is no reason to believe that the percentage of claimants denied payment and the average total amount paid per claimant will change under the CSSP.

“I think it’s a tribute to the GCCF that all the people we used have been retained,” Feinberg said. “I take great satisfaction in that fact.”  David Hammer, Louisiana lawyer set to take Kenneth Feinberg’s role in BP oil spill claims process, The Times-Picayune (March 9, 2012). It is unlikely that BP oil spill victims will share Feinberg’s satisfaction.

GCCF Overall Program Statistics (Status Report as of March 7, 2012)

Total Amount Paid                                           = $6,079,922,450.47

Total No. of Paid Claimants                           = 221,358

Average Total Amount Paid Per Claimant  = $27,466.47

The GCCF data indicates that a total of 574,379 unique claimants filed claims with the GCCF during the period from approximately August 23, 2010 to March 7, 2012.  The GCCF paid only 221,358 of these Claimants. In sum, the GCCF denied payment to approximately 61.46% of the claimants who filed claims. See “Gulf Coast Claims Facility Overall Program Statistics” (Status Report, Mar. 7, 2012). (Rec. Doc. 6831-1).

Here again is an example of a “secret understanding between two or more persons” (BP, the GCCF, and the PSC) which is “prejudicial to another” (the BP oil spill victims).

C.  The Proposed Settlement Provides for a Refund of Approximately $6 Billion to BP While Granting Excessive Compensation to the PSC and Other Counsel Performing “Common Benefit” Work.

(1) The Refund

Deepwater Horizon Oil Spill Trust                                                                                                                   $20 Billion

(Amount set aside by BP to allegedly pay economic damage claims

to individuals and businesses affected by the Deepwater Horizon oil spill.)

Approximate Amount Paid to Claimants by GCCF                                                                                       $6.2 Billion

Cost of the Proposed Settlement                                                                                                                       $7.8 Billion

Amount to be Refunded to BP                                                                                                                           $6.0 Billion

(2) The Excessive Compensation

The PSC and other counsel allegedly performing common benefit work in MDL 2179 are not double-dipping; they are triple-dipping. The known sources of compensation received by attorneys allegedly doing common benefit work on behalf of BP oil spill victims in MDL 2179 are:

(a) Six percent (6%) of the gross monetary settlements, judgments or other payments made on or after December 30, 2011 through June 3, 2012 to any other plaintiff or claimant-in-limitation. (p. 3, Rec. Doc. 5274);

N.B. – Plaintiffs’ Counsel received a Final Payment Offer from GCCF on behalf of Plaintiff Pinellas Marine Salvage, Inc. This offer, dated June 3, 2012 and postmarked June 8, 2012, was received by Plaintiffs’ Counsel on June 11, 2012. This offer, along with probably hundreds of other offers made to Claimants by GCCF, is dated one day before Claimants are no longer required to pay six percent (6%) of the gross monetary settlement they receive to the MDL 2179 common benefit fund. Plaintiffs respectfully point out to the Court that June 3, 2012 was a Sunday. These offers were dated June 3rd in order to ensure that the PSC received the maximum amount of payment from the 6% hold-back provision.

(b) BP has agreed to pay any award for common benefit and/or Rule 23(h) attorneys’ fees, as determined by the Court, up to $600 million. (p. 10, Rec. Doc. 6418);

(c) Many attorneys doing common benefit work have their own clients and have also received or will also receive a fee directly from them. (N.B. – On June 15, 2012, the MDL 2179 Court ordered that “contingent fee arrangements for all attorneys representing claimants/plaintiffs that settle claims through either or both of the Settlements will be capped at 25% plus reasonable costs.”) (Rec. Doc. 6684); and

(d) Co-counsel fees received by member firms of the PSC for serving as co-counsel to non-member firms of the PSC. For example, on March 13, 2012, Counsel for Plaintiffs received an unsolicited mass email from a member firm of the PSC. The email stated, in pertinent part, “Co-Counsel Opportunity for BP Oil Spill Cases: News of the recent BP Settlement has caused many individuals and businesses along the Gulf Coast to contemplate either filing a new claim or amending a claim that has already been submitted. If you receive inquiries of this nature we would like you to consider a co-counsel relationship with our firm. Even if someone has already filed a claim it is advisable to retain legal counsel to analyze the impact of this settlement on claimants and maximize recovery. If you receive inquiries and are interested in co-counseling with us on the BP claims, please email…”

On November 7, 2011, the PSC reported: “In all, 340 lawyers from ninety different law firms have invested over 230,000 hours and contributed over $11.54 million in out-of-pocket held and shared expenses for the common benefit of claimants and litigants . . . In addition, the PSC members and other Common Benefit Work Group Members and Coordinators have incurred approximately $1.5 million in unpaid expenses, which are still being processed. At the same time, PSC members and other Common Benefit Attorneys have contributed and additional $1.8 million to a joint account for payment of further shared expenses, as incurred.” (PSC’s Memo. in Supp. p. 9 & n.10, Rec. Doc. 4507-1 at 12 & n.10).

This Court has previously used a range of $300 to $400 per hour for members of a Plaintiffs’ Steering Committee and $100 to $200 per hour for associates to “reasonably reflect the prevailing [billable time] rates in this jurisdiction.” Turner v. Murphy Oil USA, Inc., 472 F. Supp. 2d at 868-69 (E.D. La. 2007).

Amount Awarded                      Billable Hourly Rate                      Hours Required to Have Been Expended

$600,000,000.00                            $300/hr.                                                2,000,000 hours

In sum, in order to be awarded a common benefit fee of $600 million, this Honorable Court would have to believe that the PSC attorneys worked two million hours. This fee amount, which does not include the aforementioned (a), (c), and (d) known sources of compensation, fails the reasonableness test. (Rec. Doc. 6831-1).

“The Total Recovery that BP Has Agreed to Provide is Uncapped.”

In his Preliminary Approval Order Judge Barbier writes, “The comprehensive system of claims frameworks featured in the Settlement Agreement is the product of many months of intensive negotiation, provides for class recovery unlimited by any aggregate cap, does not constitute a limited fund to be divided among competing claimants (with the sole exception of the $2.3 billion Seafood Compensation Program, whose allocation was placed with a court-appointed neutral)..” (p. 31, Rec. Doc. 6418). “With the exception of the Seafood Compensation Program, there is no limit or “cap” on the amount to be paid by BP under these programs. Rather, all claims that meet the criteria for each program will be paid in full. Such claims will be paid without delay – claimants need not await final settlement approval for payment.” (p. 5, Rec. Doc. 6266-1). “In this settlement, the total recovery that BP has agreed to provide is uncapped; BP’s initial estimates place its cost at approximately $7.8 billion.” (p. 28, Rec. Doc. 6266-1).

“There Can Be No Question that the PSC Has Taken Seriously Its Fiduciary Obligations in the Best Interests of all Claimants.”

Judge Barbier writes, “There can be no question that the PSC has taken seriously its fiduciary obligations in the best interests of all claimants, both private and governmental.” (p. 3, Rec. Doc. 5022). See also, “The Parties engaged in substantial discovery and motion practice to evaluate the merits of the claims and defenses and extensively investigated and analyzed the facts and legal issues surrounding those claims and defenses.” (pp. 29, 30, Rec. Doc. 6418). “In the 20 months that have passed since the JPML’s centralization order, the parties have engaged in extensive discovery and motion practice, including taking 311 depositions, producing approximately 90 million pages of documents, and exchanging more than 80 expert reports on an intense and demanding schedule. Depositions were conducted on multiple tracks and on two continents. Discovery was kept on course by weekly discovery conferences before Magistrate Judge Shushan. The Court also held monthly status conferences with the parties.” (p. 3, Rec. Doc. 6418).

In class actions where the attorneys’ fee is negotiated by counsel, courts “must be particularly vigilant in evaluating [class counsel’s] recommendations because there may be a bias toward settlements in which the class attorney agrees to trade off a smaller total award by the defendant for a larger fee.” Wright, et al., supra, § 1797.1; see also Kent A. Lambert, Class Action Settlements in Louisiana, 61 La. L. Rev. 89, 102-04 (2000) (noting that “mixing negotiation of the overall settlement with discussions of attorneys’ fees” can, at a minimum, create “an appearance of impropriety”). Pecuniary self-interest of class counsel has long been cited by courts and scholars as a threat to performance of counsel’s professional and fiduciary obligations to class members. See, e.g., Reynolds, 288 F.3d at 279-80; John C. Coffee, Jr., Class Action Accountability: Reconciling Exit, Voice, and Loyalty in Representative Litigation, 100 Colum. L. Rev. 370, 385-93 (2002); David L. Shapiro, Class Actions: The Class as Party and Client, 73 Notre Dame L. Rev. 913, 958-60 & n.132 (1998). It should also be noted that “clear-sailing clauses,” which are essentially nothing more than negotiated ceilings on fee awards, have also been subjected to criticism. See, e.g., William D. Henderson, Clear Sailing Agreements: A Special Form of Collusion in Class Action Settlements, 77 Tul. L. Rev. 813 (2003) (arguing that courts should reject class action settlements containing clear sailing clauses). Turner v. Murphy Oil USA, Inc., Case 2:05-cv-04206, (p. 20, Rec. Doc. 1072) (E.D. La. 2007).

Given that (a) “the total recovery that BP has agreed to provide is uncapped,” and (b) “there can be no question that the PSC has taken seriously its fiduciary obligations in the best interests of all claimants,” Plaintiffs respectfully request that this Honorable Court ask this simple question:

Why has the PSC negotiated a settlement wherein BP receives a $6 billion refund from the Deepwater Horizon Oil Spill Trust when it is clear that the Proposed Settlement will not fully compensate all class members?

How the BP Oil Spill Proposed Class Action Settlement Makes a Mockery of the Oil Pollution Act of 1990

How the BP Oil Spill Proposed Class Action Settlement

Makes a Mockery of the Oil Pollution Act of 1990

Tampa, FL (July 5, 2012) – On April 18, 2012, the MDL 2179 Plaintiffs’ Steering Committee (“PSC”) and BP filed their Proposed Settlement. The Proposed Settlement allegedly intends to resolve certain claims by private individuals and businesses for economic loss and property damage resulting from the “Deepwater Horizon Incident.” The Proposed Settlement defines “Deepwater Horizon Incident” as the events, actions, inactions and omissions leading up to and including (i) the blowout of the MC252 Well; (ii) the explosions and fire on board the Deepwater Horizon on or about April 20, 2010; (iii) the sinking of the Deepwater Horizon on or about April 22, 2010; (iv) the release of oil, other hydrocarbons and other substances from the MC252 Well and/or the Deepwater Horizon and its appurtenances; (v) the efforts to contain the MC252 Well; (vi) Response Activities, including the VoO Program; (vii) the operation of the GCCF; and (viii) BP public statements relating to all of the foregoing.

On May 2, 2012, the MDL 2179 Court entered a Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement].

On July 2, 2012, Plaintiff Selmer M. Salvesen, a clam farmer in Florida, filed a Motion to Vacate Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement], Rec. Doc. 6418 dated May 2, 2012, with the MDL 2179 Court.

The following is an excerpt from Plaintiff Salvesen’s Motion to Vacate.

B.  The Proposed Settlement Violates the Oil Pollution Act of 1990 (“OPA”).

Judge Barbier clearly states, “Moreover, OPA applies of its own force, because that act governs, inter alia, private claims for property damage and economic loss resulting from a discharge of oil in navigable waters. See 33 U.S.C. § 2702(a), (b)(2)(B), (b)(2)(C), (b)(2)(E).” (p. 11, Rec. Doc. 3830); “OPA is a comprehensive statute addressing responsibility for oil spills, including the cost of clean-up, liability for civil penalties, as well as economic damages incurred by private parties and public entities. Indeed, the Senate Report provides that the Act “builds upon section 311 of the Clean Water Act to create a single Federal law providing cleanup authority, penalties, and liability for oil pollution.” S. Rep. 101-94, at 730 (1989). One significant part of OPA broadened the scope of private persons who are allowed to recover for economic losses resulting from an oil spill. OPA allows recovery for economic losses “resulting from” or “due to” the oil spill, regardless of whether the claimant sustained physical damage to a proprietary interest. OPA allows recovery for “[d]amages equal to the loss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, or natural resources, which shall be recoverable by any claimant.” 33 U.S.C. § 2702(b)(2)(E) (Emphasis added). Furthermore, the House Report noted that “[t]he claimant need not be the owner of the damaged property or resources to recover for lost profits or income.” H.R. Conf. Rep. 101-653, at 781 (1990).” (pp. 20-21, Rec. Doc. 3830).

The Proposed Settlement is replete with references to the OPA: “….the operation of BP’s separate OPA facility…” (p. 27, Rec. Doc. 6276-1); “This provision does not apply to Economic Class Members who have gone through the OPA Process and provided a release as part of that OPA Process.” (p. 66, Rec. Doc. 6276-1); “The Release is not intended to prevent BP from exercising its rights of contribution, subrogation, or indemnity under the OPA……” (p. 72, Rec. Doc. 6276-1); “BP is hereby subrogated to any and all rights that the Economic Class Members, or any of them, may have had or have arising out of, due to, resulting from, or relating in any way to, directly or indirectly, the Deepwater Horizon Incident under the OPA.” (p. 72, Rec. Doc. 6276-1); “Notwithstanding the law applicable to the underlying claims, which the Parties dispute, this Agreement and the Release and Individual Releases hereunder shall be interpreted in accordance with General Maritime Law as well as in a manner intended to comply with OPA.” (p. 90, Rec. Doc. 6276-1); “OPA Process shall mean the claims presentment procedure pursuant to the OPA, including claims that have been submitted to the BP Parties or claims that have been submitted to the GCCF as part of the OPA Process.” (p. 104, Rec. Doc. 6276-1); “….the parties have represented that BP will continue to receive and process Oil Pollution Act (“OPA”) claims for those excluded from the settlement class and those who opt out of the settlement class. (Tr. of Prelim. Approval Hr’g, 4/25/12, pp. 14-15, 49-50, Rec. Doc. 6395); see also Attach. “A” to Supp. Decl. of Cameron Azari, Ques. 15 & 25, Rec. Doc. 6414-4 at 15, 23). Presumably, that process will include an interim payments process, as well as any other requirements imposed by OPA. See 33 U.S.C. §§ 2705(a), 2714(b)(2).“ (p. 18, Rec. Doc. 6418); “This is, unlike most mass torts, a single-incident disaster, governed predominantly by a single body of federal law including OPA and uniform federal maritime law.” (p. 28, Rec. Doc. 6418).

Clearly, BP and the PSC are very familiar with the OPA and quite capable of applying the statute. Unfortunately, BP and the PSC cherry-pick OPA’s provisions for their benefit at the detriment to Claimants and Plaintiffs.

1.  The Proposed Settlement Defines Class Members by Geographic Bounds and Certain Business Activities While Requiring Proof of a Heightened, Vague  Standard of Causation.

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, in pertinent part, 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).

The damages referred to in 33 U.S.C. § 2702(a) 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.” 33 U.S.C. § 2702(b)(2)(E) (Emphasis added).

OPA’s legislative history is shot through with general statements indicative of congressional intent to authorize recovery of “a broad class of damages.” 135 CONG. REC. E842, (daily ed. Mar. 16, 1989) (statement of Rep. Jones). See also S. REP. NO. 101–94, at 12 (1989), reprinted in 1990 U.S.C.C.A.N. 722, 734. (“These provisions are intended to provide compensation for a wide range of injuries and are not so narrowly focused as to prevent victims of an oil spill from receiving reasonable compensation.”); 135 CONG. REC. H7893 (daily ed. Nov. 1, 1989) (statement of Rep. Quillen) (“full, fair, and swift compensation for everyone injured by oil spills”; “residents of States will be fully compensated for all economic damages”).

The OPA statute was carefully drafted by Congress. It seems plain that the combination of Sections 2702(a) and 2702(b)(2)(E) requires an economic-loss claimant to establish that the defendant’s spill was a factual cause of injury, destruction, or loss of tangible property or natural resources that in turn was a factual cause of the claimant’s damages – nothing more and nothing less. Because the prevailing, default test for factual causation in Anglo-American tort law is the but-for test, we can be fairly precise about the evident meaning of Sections 2702(a) and 2702(b)(2)(E) for an economic-loss claimant: The claimant is required to show that if the spill had not brought about the injury, destruction, or loss of tangible property or natural resources, the damages complained of probably would not have been sustained. See David W. Robertson, The Oil Pollution Act’s Provisions on Damages for Economic Loss, 30 Miss. C.L. Rev. 157 (2011).

An early version of a bill culminating in OPA provided that economic loss plaintiffs would have to prove “proximate cause;” Congress took that out of the bill. Neither Section 2702(a) nor Section 2702(b)(2)(E) includes any mention of “proximate cause.” Where Congress includes limiting language in an earlier version of a bill but deletes it prior to enactment, it may be presumed that the limitation was not intended. Russello v. United States, 464 U.S. 16, 23-24 (1983). Therefore, Russello counsels us to conclude that the OPA Congress did not want to require claimants seeking economic loss damages to meet a proximate cause requirement. Id.

OPA’s predecessor legislation included an explicit proximate cause limit. Title III of the Outer Continental Shelf Lands Act Amendments of 1978 provided for the recovery of pollution-caused damages that were “proximately caused by the discharge of oil from an offshore facility or vessel.” OPA repealed this provision, replacing it with Section 2702(a). So here again, the Russello canon calls for the presumption that the OPA Congress did not intend a proximate cause limit to be read into its economic loss provisions. See H.R. REP. NO. 101–653 (1990) (Conf. Rep.) (presenting § 1002(a) of H.R. 1465 as providing for liability for removal costs and damages “that result from” a spill or substantial threat of a spill; the language is identical to the enacted Section 2702(a)). Here once again, the Russello canon requires a presumption that the OPA Congress intended that for purposes of recovering economic loss damages, the only causation requirement should be factual causation (Emphasis added). Id.

The Preliminary Approval Order states that the Economic Loss and Property Damage Settlement Class “would consist of individuals and entities defined by (1) geographic bounds and (2) the nature of their loss or damage. If both criteria are not met……..the individual or entity is not within the settlement class.” “The geographic bounds of the settlement are Louisiana, Mississippi, Alabama, and certain coastal counties in eastern Texas and western Florida, as well as specified adjacent Gulf waters, bays, etc. Individuals must have lived, worked, owned property, leased property, etc., in these areas between April 20, 20108 and April 16, 2012. Similarly, entities must have conducted certain business activity in these areas between April 20, 2010 and April 16, 2012.” (p. 5, Rec. Doc. 6418). “Causation is presumed for some claimants; other claimants must demonstrate that a loss is due to the oil spill as outlined by the Proposed Settlement.” (p. 8, Rec. Doc. 6418).

OPA’s legislative history specifically mentioned classes of claimants as entitled to protection. These included, but were not limited to, fishermen and beachfront hotel owners, fish processing plant employees, and those who work at the companies depending on the fisheries. 135 CONG. REC. E1237 (daily ed. Apr. 13, 1989) (statement of Rep. Miller); “an employee at a coastal motel” 135 CONG. REC. H7898 (daily ed. Nov. 1, 1989) (statement of Rep. Jones); “restaurant operators” 135 CONG. REC. H8263 (daily ed. Nov. 9, 1989) (statement of Rep. Studds); “fishermen and others whose livelihood depended on the once-pristine waters” 135 CONG. REC. H8271(daily ed. Nov. 9, 1989) (statement of Rep. Slaughter).

The following is merely one example of how the Proposed Settlement limits BP’s liability at the expense of BP oil spill victims:

Jack owns a seafood restaurant located in Macon, Georgia which serves seafood exclusively from the Gulf of Mexico. Jack’s restaurant has always catered to those diners who prefer fresh seafood, delivered straight from the Gulf of Mexico, over the processed seafood dishes served by the national seafood restaurant chains.

The BP oil spill incident devastated the commercial fishing industries of Louisiana, Mississippi, Alabama and Florida, thereby virtually eliminating the ability of Jack’s restaurant to serve fresh seafood to its customers. Fresh oysters and mini-shrimp, two of Jack’s most popular items, were unavailable. Jack was forced to pay higher prices for frozen seafood to East Coast seafood suppliers. The negative publicity generated by the constant media coverage of this oil spill incident made even Jack’s loyal customers fearful of eating seafood from the Gulf of Mexico. A marketing survey commissioned by Louisiana’s seafood promotion board reported in January, 2011 that about 71 percent of consumers polled nationally expressed some level of concern about seafood safety.

Jack claims that the stoppage of fresh seafood deliveries from the Gulf of Mexico, the increase in the price of alternative East Coast seafood, and the fear of seafood contamination and seafood poisoning that resulted from the BP oil spill incident decreased gross sales to the point that the restaurant, after approximately 25 years of successful and profitable operation, was forced to close its doors.

In the above example, Jack was forced to close his restaurant as a result of the BP oil spill. Under OPA, since the damages resulted from the BP oil spill incident, damages shall be recoverable by Jack. Under the Proposed Settlement, due to the arbitrary geographic bounds established by BP/PSC, Jack is out of luck.

As the Supreme Court recently explained:

[I]n interpreting a statute a court should always turn first to one, cardinal canon before all others. We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there. Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253–54 (1992).

Congress never intended that a claimant’s recovery of damages under OPA be limited by geographic bounds, pertain solely to certain business activities, or require a heightened, and in this case vague, proof of causation between his or her damages and the oil spill incident.

2.  The Proposed Settlement Provides for a Shortened Period of Limitations.

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)

In violation of OPA, the Preliminary Approval Order states, “The deadline for filing most claims with the Settlement Program is the later of April 22, 2014 or six months after the “Effective Date” of the Proposed Settlement. Claimants in the Seafood Compensation Program must submit their claim within 30 days from the date of entry of a Final Order and Judgment of the Court after it rules upon final approval of the Proposed Settlement.”  (p. 6, Rec. Doc. 6418).

The Proposed Settlement’s “take it or leave it” period of limitations and the final settlement offer are unconscionable, requiring the financially-stressed Plaintiffs to file a claim before Plaintiffs know, and are able to corroborate, the full extent of the damages incurred as a result of the BP oil spill. As Judge Barbier aptly stated in his Order of August 26, 2011, “The long term effects [of the BP oil spill] on the environment and fisheries may not be known for many years.” (p. 31, Rec. Doc. 3830) (Emphasis added).

3.  The Proposed Settlement Requires Class Members to Waive Their Right to Sue in Exchange for a Miniscule Single Final Settlement Payment.

OPA further 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 [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. 33 U.S.C. § 2715(b)(2).

The Preliminary Approval Order states, “Those who accept payments under the Proposed Settlement are required to release their claims against BP, government oil spill liability funds, and all other Defendants in MDL 2179 (except Transocean and Halliburton)….If preliminary approval is given, the Settlement Program will process claims and make settlement payments to class members so long as they execute an individual release.” (pp. 6-7, Rec. Doc. 6418).

OPA’s legislative history is shot through with general statements indicative of congressional intent to ensure that all oil spill victims are fully compensated. 135 CONG. REC. H7959 (daily ed. Nov. 2, 1989) (statement of Rep. Tauzin) (“ensure that all victims are fully compensated”); 135 CONG. REC. H7964 (daily ed. Nov. 2, 1989) (statement of Rep. Hammerschmidt) (“ensure that all justified claims for compensation are satisfied”); 135 CONG. REC. H7969 (daily ed. Nov. 2, 1989) (statement of Rep. Dyson) (“assurances that damages arising from spills will be completely compensated”); 136 CONG. REC. H336 (daily ed. Feb. 7, 1990) (statement of Rep. Carper) (“ensure that those people or those businesses that are damaged by these spills are fairly and adequately compensated”); 136 CONG. REC. S7752 (daily ed. June 12, 1990) (statement of Sen. Mitchell) (“ensure the fullest possible compensation of oil spill victims”).

No claimant should receive any less compensation from the Proposed Settlement than they are entitled to under the OPA. Under OPA, as noted above, 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” and 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).

4.  The Proposed Settlement Fails to Pay Interest on the Amount Paid.

Under 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 Proposed Settlement fails to pay interest on the amount paid in satisfaction of a claim.

Plaintiff Salvesen respectfully points out to this Honorable Court that the Proposed Settlement makes a mockery of the OPA.

Is the BP Oil Spill Proposed Class Action Settlement Fair, Reasonable, and Adequate?

Is the BP Oil Spill Proposed Class Action Settlement Fair, Reasonable, and Adequate?

_____________________________

Plaintiff Files Motion to Vacate Preliminary Approval Order

Tampa, FL (July 4, 2012) – On April 18, 2012, the MDL 2179 Plaintiffs’ Steering Committee (“PSC”) and BP filed their Proposed Settlement. The Proposed Settlement allegedly intends to resolve certain claims by private individuals and businesses for economic loss and property damage resulting from the “Deepwater Horizon Incident.” The Proposed Settlement defines “Deepwater Horizon Incident” as the events, actions, inactions and omissions leading up to and including (i) the blowout of the MC252 Well; (ii) the explosions and fire on board the Deepwater Horizon on or about April 20, 2010; (iii) the sinking of the Deepwater Horizon on or about April 22, 2010; (iv) the release of oil, other hydrocarbons and other substances from the MC252 Well and/or the Deepwater Horizon and its appurtenances; (v) the efforts to contain the MC252 Well; (vi) Response Activities, including the VoO Program; (vii) the operation of the GCCF; and (viii) BP public statements relating to all of the foregoing.

On May 2, 2012, the MDL 2179 Court entered a Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement].

On July 2, 2012, Plaintiff Selmer M. Salvesen, a clam farmer in Florida, filed a Motion to Vacate Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement], Rec. Doc. 6418 dated May 2, 2012, with the MDL 2179 Court.

The following is an excerpt from Plaintiff Salvesen’s Motion to Vacate.

A. The Proposed Settlement Is Not Fair, Reasonable, and Adequate.

Rule 23(e) places the burden of persuasion on the movers that the proposed settlement is “fair, reasonable, and adequate.”  In re Chinese-Manufactured Drywall Prods. Liab. Litig., 2012 WL 92498, at *7 (E.D. La. Jan. 10, 2012). If the proposed settlement “discloses no reason to doubt its fairness, has no obvious deficiencies, does not improperly grant preferential treatment to class representatives or segments of the class, does not grant excessive compensation to attorneys, and appears to fall within the range of possible approval, the court should grant preliminary approval.” In re OCA, Inc. Sec. & Deriv. Litig., No. 05-2165, 2008 WL 4681369, at *11 (E.D. La. Oct. 17, 2008).

1.  The Proposed Settlement Provides Misleading Information to Class Members.

Under the Oil Pollution Act of 1990 (‘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 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 Oil Spill Liability Trust Fund. 33 U.S.C. § 2713(c).

“The Court is satisfied that, pursuant to the terms of the Proposed Settlement, Class Members who opt out or who possess reserved claims will be able to pursue those claims effectively outside the Class Settlement.” (p. 26, Rec. Doc. 6418). BP and the PSC have misled this Honorable Court and Class Members.

(a)  The Oil Spill Liability Trust Fund

The OPA provides the Oil Spill Liability Trust Fund (“OSLTF”) to pay for oil spill costs when the responsible party cannot or does not pay. The OSLTF, administered by the U.S. Coast Guard through its National Pollution Funds Center (“NPFC”), is primarily financed through a tax on petroleum products, and is subject to a $1 billion cap on the amount of expenditures from the OSLTF per incident. For any one oil pollution incident, the OSLTF may pay up to $1 billion. Victims of the BP oil spill are at risk as a result of this cap. The cap is for total expenditures. This $1 billion expenditure limit applies even if the OSLTF is fully reimbursed by the responsible party and net expenditures are zero. OSLTF expenditures for natural resource damage assessments and claims in connection with a single incident are limited to $500 million of that $1 billion. NPFC administers the OSLTF by disbursing funds to government agencies to reimburse them for their oil spill cleanup costs (cost reimbursements), monitoring the sources and uses of funds, adjudicating claims submitted by individuals and businesses to the OSLTF for payment (claims), and pursuing reimbursement from the responsible party for costs and damages paid from the OSLTF (billing the responsible party).

On March 9, 2012, Mr. Craig A. Bennett, Director – NPFC, provided the following OSLTF status report in regard to the Deepwater Horizon oil spill incident:

Deepwater Horizon OSLTF Costs     =          $619 million

Deepwater Horizon Pending Claims =          $410 million (for 1,659 claims received)

On March 9, 2012, total OSLTF expenditures (paid + pending claims) in regard to the Deepwater Horizon was $1.019 billion. In sum, since the OSLTF has exceeded, or will very shortly exceed, its $1 billion expenditure cap for the Deepwater Horizon oil spill incident, the OSLTF cannot pay valid individual or business claims which are not paid by BP.

(b)  The Litigation Option

OPA, a strict liability statute, governs the MDL 2179 cases alleging economic loss due to the BP oil spill. The Outer Continental Shelf Lands Act (“OCSLA”) governs the MDL 2179 personal injury and wrongful death actions and borrows the law of the adjacent state as surrogate federal law.

Judge Barbier aptly stated in his Order dated August 26, 2011, “The Court finds that the text of OPA clearly requires that OPA claimants must first “present” their OPA claim to the Responsible Party before filing suit….The text of the statute is clear. Congress intended presentment to be a mandatory condition precedent to filing suit….There are likely large numbers of B1 claimants who have completely bypassed the OPA claim presentation requirement, others who have attempted to present their claims but may not have complied with OPA, and others who have properly presented their claims but have been denied for various reasons. Claimants who have not complied with the presentment requirement are subject to dismissal without prejudice, allowing them to exhaust the presentment of their claims before returning to court. In the ordinary case, the Court would simply dismiss those claims without prejudice. However, as the Court has previously noted, this is no ordinary case….. A judge handling an MDL often must employ special procedures and case management tools in order to have the MDL operate in an orderly and efficient manner. In this massive and complex MDL, the Court is faced with a significant practical problem. It would be impractical, time-consuming, and disruptive to the orderly conduct of this MDL and the current scheduling orders if the Court or the parties were required to sort through in excess of 100,000 individual B1 claims to determine which ones should be dismissed at the current time. Moreover, such a diversion at this time would be unproductive and would not advance towards the goal of allowing the parties and the Court to be ready for the limitation and liability trial scheduled to commence in February 2012. No matter how many of the individual B1 claims might be dismissed without prejudice, the trial scheduled for February would still go forward with essentially the same evidence…..In summary on this issue, the Court finds that presentment is a mandatory condition precedent with respect to Plaintiffs’ OPA claims. The Court finds that Plaintiffs have sufficiently alleged presentment in their B1 Master Complaint, at least with respect to some of the Claimants.” (pp. 29, 30, 31, Rec. Doc. 3830) (Emphasis added).

Pursuant to the terms of the Proposed Settlement, “Regardless of whether the Agreement becomes effective, Claims with a sum certain and some documentation and/or other proof that are submitted to the Settlement Program shall be deemed to satisfy presentment and all requirements of 33 U.S.C. § 2713.” (pp. 62-63, Rec. Doc. 6276-1); “OPA Process shall mean the claims presentment procedure pursuant to the OPA, including claims that have been submitted to the BP Parties or claims that have been submitted to the GCCF as part of the OPA Process.” (p. 104, Rec. Doc. 6276-1); “Economic Class Members with expired offers from the GCCF who Opt-Out of the Economic Class shall be deemed to have satisfied the presentment requirements under the Oil Pollution Act of 1990 (“OPA”).” (p. 15, Rec. Doc. 6276-1).

BP and the PSC clearly understand that, under OPA, Congress intended presentment to be a mandatory condition precedent to filing suit. However, yet again, the parties mislead this Honorable Court and Class Members by intentionally failing to counsel those Claimants who may opt-out of the Proposed Settlement that, 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 not paid by the responsible party within 90 days, the claimant may elect to commence an action in court against the responsible party. 33 U.S.C. § 2713(c). If a Claimant files a Complaint against BP under OPA prior to first presenting his, her, or its claim to BP and then waiting 90 days, the case will be subject to dismissal and the claimant will again be left out in the cold.

BP and the PSC are obviously aware that the OSLTF is not a viable alternative for Claimants who opt-out and, for many opt-out Claimants, filing a suit against BP under OPA will be either thwarted or delayed by the OPA presentment requirement. However, the Proposed Settlement “generously” provides that, “Any Economic Class Member may revoke his, her or its Opt Out from the Economic Class and thereby receive the benefit of this Economic and Property Damage Settlement up until three (3) days prior to the Fairness Hearing; or later, if the BP Parties consent in their sole and unilateral discretion..” (p. 40, Rec. Doc. 6418).

(i)  The Statute of Limitations

The PSC further misleads Class Members by intentionally failing to counsel those Claimants who may opt-out of the Proposed Settlement that a lawsuit brought against a non-Responsible Party, e.g., a lawsuit asserting claims for gross negligence, fraud, etc. against Kenneth R. Feinberg, et al, may be barred by the statute of limitations. In federal question cases, the federal court will apply the specific statute of limitations period established by the federal statute under which the plaintiff is seeking relief. Federal courts that are hearing a controversy based on diversity of citizenship of the parties must apply the applicable state law of the forum state. In this case, the statute of limitations for a suit brought against a non-Responsible Party may be only two years.

2.  The Proposed Settlement Grants Excessive Compensation to Attorneys.

The question is whether the Proposed Settlement grants excessive compensation to the PSC and other counsel performing common benefit work in MDL 2179. This issue can be determined by a simple two-prong comparison test: First, by comparing the common benefit fees received by attorneys in MDL 2179 with the average total payment amount received by the claimants; and Second, by comparing the common benefit fees received by attorneys in MDL 2179 with the common benefit fees received by attorneys in comparable MDLs.

(a)  The Average Total Payment Amount Received From GCCF by Claimants

GCCF Overall Program Statistics (Status Report as of March 7, 2012)

Total Amount Paid                                           = $6,079,922,450.47

Total No. of Paid Claimants                           = 221,358

Average Total Amount Paid Per Claimant  = $27,466.47

The GCCF data indicates that a total of 574,379 unique claimants filed claims with the GCCF during the period from approximately August 23, 2010 to March 7, 2012. The GCCF paid only 221,358 of these Claimants. In sum, the GCCF denied payment to approximately 61.46% of the claimants who filed claims. See “Gulf Coast Claims Facility Overall Program Statistics” (Status Report, Mar. 7, 2012) (a copy is attached hereto as Exhibit A).

On March 8, 2012, this Honorable Court terminated the GCCF claims process and appointed Patrick Juneau as the Claims Administrator of the Transition Process and the proposed Court Supervised Claims Program (“CSCP”). On May 2, 2012, Patrick Juneau was appointed as Claims Administrator to oversee the Claims Administration Vendors, who will process the claims in accordance with the Proposed Settlement. Under the CSCP, the evaluation and processing of claims shall continue to be performed by Garden City Group, Inc., BrownGreer, PLC, and PricewaterhouseCoopers, LLP. Accordingly, there is no reason to believe that the percentage of claimants denied payment and the average total amount paid per claimant will change under the CSCP.

(b)  The Common Benefit Fees Received by Attorneys in Comparable MDLs

In order to determine an appropriate common benefit fee, this Court looks to comparable MDL set-aside assessments and awards of common benefit fees. E.g., In re Diet Drugs Prods. Liab. Litig., 553 F. Supp. 2d at 442, 457-58, 491-96 (E.D. Pa. 2008) (describing 9% federal and 6% state assessments later reduced to 6% and 4%, respectively; awarding less than total fund created by assessments); In re Zyprexa, 467 F. Supp. 2d at 261-63 (E.D.N.Y. Aug. 17, 2007) (1% and 3% of separate settlement amounts); In re Sulzer Hip Prosthesis & Knee Prosthesis Liab. Litig., 268 F. Supp. 2d at 907, 909, 919 n.19 (N.D. Ohio 2003) (awarding common benefit fees out of $50,000,000 fund created through assessment representing 4.8% of settlement value); In re Protegen Sling & Vesica Sys. Prods. Liab. Litig., MDL No. 1387, 2002 WL 31834446, at *1, *3 (D. Md. Apr. 12, 2002) (9% federal, 6% coordinated state assessments); In re Rezulin Prods. Liab. Litig., MDL No. 1348, 2002 WL 441342, at *1 (S.D.N.Y. Mar. 20, 2002) (6% withholding in federal cases, 4% in participating state cases); See also William B. Rubenstein, On What a “Common Benefit Fee” Is, Is Not, and Should Be, 3 Class Action Att’y Fee Dig. at 87 (2009) (collecting cases and concluding that most common benefit assessments range from 4% to 6%); 4 Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 14:9 (4th ed. 2002) (“Most [MDL] courts have assessed common benefit fees at about a 4-6% level, generally 4% for a fee and 2% for costs.”); Paul D. Rheingold, Litigating Mass Tort Cases § 7:35 (2010) (“[P]ercentages awarded for common funds in recent MDLS … were in the 4-6% range.”)(citation omitted). In re Vioxx Prods. Liab. Litig., 760 F. Supp. 2d 640 (E.D. La. 2010) (“October 19, 2010 Order and Reasons”).

The Court’s analysis in the Vioxx MDL case is instructive. In re Vioxx Prods. Liab. Litig. (“MDL 1657”) involves the prescription drug Vioxx. Merck, a New Jersey corporation, researched, designed, manufactured, marketed and distributed Vioxx to relieve pain and inflammation resulting from osteoarthritis, rheumatoid arthritis, menstrual pain, and migraine headaches. On September 20, 2004, Merck withdrew it from the market after data indicated that the use of Vioxx increased the risk of cardiovascular thrombotic events such as myocardial infarction (heart attack) and ischemic stroke. Thereafter, thousands of individual suits and numerous class actions were filed against Merck in state and federal courts throughout the country.

On February 16, 2005, the Judicial Panel on Multidistrict Litigation (“JPML”) conferred MDL status on Vioxx lawsuits filed in various federal courts throughout the country and transferred all such cases to this Court to coordinate discovery and to consolidate pretrial matters pursuant to 28 U.S.C. § 1407. See In re Vioxx Prods. Liab. Litig., 360 F. Supp. 2d 1352 (J.P.M.L. 2005).

On November 9, 2007, Merck and the Negotiating Plaintiffs’ Counsel (“NPC”) formally announced that they had reached a Settlement Agreement. The private Settlement Agreement established a pre-funded program for resolving pending or tolled state and federal Vioxx claims against Merck as of the date of the settlement, involving claims of heart attack (“MI”), ischemic stroke (“IS”), and sudden cardiac death (“SCD”), for an overall amount of $4.85 billion. In Vioxx, Judge Fallon stated, “The Settlement Agreement created a $4.85 billion fund for the compensation of Vioxx claimants. The Court finds no reason to omit any portion of that settlement fund from consideration with respect to the reasonable amount of common benefit fees. Accordingly, $4.85 billion is the appropriate amount for calculation of a reasonable percentage of common benefit fees.”

The Vioxx Court awarded a common benefit fee of $315,250,000, which is equivalent to 6.5% of $4,850,000,000. In Vioxx, unlike MDL 2179, the attorneys came from states across the country. Accordingly, the Court found that an average hourly billable rate of $443.29 was reasonable.

There are two significant differences between MDL 1657 and MDL 2179:

(i)  The Time and Labor Required

The PSC and other counsel performing common benefit work in MDL 1657 documented and submitted over 560,000 hours of work during the course of the litigation. The PSC operated on many fronts, preparing pleadings and Master Class Action complaints, taking over 2,000 depositions, reviewing and compiling over 50,000,000 documents, briefing and arguing over 1,000 discovery motions, assembling a trial package, conducting bellwether trials, negotiating the global Settlement Agreement, and implementing the payout under the Agreement.

In contrast, “In the 20 months that have passed since the JPML’s centralization order, the parties [in MDL 2179] have engaged in extensive discovery and motion practice, including taking 311 depositions, producing approximately 90 million pages of documents, and exchanging more than 80 expert reports on an intense and demanding schedule……..BP and the PSC report that in February 2011 settlement negotiations began in earnest for two distinct class action settlements: a Medical Benefits Settlement and an Economic and Property Damages Settlement.” (p. 3, Rec. Doc. 6418).

In sum, the PSC and other counsel allegedly performing common benefit work in MDL 2179 only took 311 depositions and initiated settlement negotiations “in earnest” merely six (6) months after the JPML created MDL 2179.

The MDL 1657 Court conducted six Vioxx bellwether trials. During the same period that the Court was conducting six bellwether trials, approximately thirteen additional Vioxx-related cases were tried before juries in various state courts.

The MDL 2179 Court did not conduct a single bellwether trial.

(ii)  The Results Obtained

Attorneys doing common benefit work on behalf of Vioxx users in MDL 1657 achieved a favorable and meaningful global resolution. The Settlement Agreement ensured fair and comprehensive compensation to all qualified participants. In only 31 months, the parties to the Vioxx case were able to reach a global settlement and distribute $4,353,152,064 to 32,886 claimants, out of a pool of 49,893 eligible and enrolled claimants.

In contrast, attorneys doing common benefit work on behalf of BP oil spill victims in MDL 2179 did not remotely achieve “a favorable and meaningful global resolution.” The MDL 2179 Proposed Settlement does not ensure fair and comprehensive compensation to all qualified participants. This conclusion is supported by the following comparison:

Average Total Amount Paid Per Claimant in MDL 1657 =  $132,370.98

Average Total Amount Paid Per Claimant in MDL 2179 =  $  27,466.47

(c)  The Common Benefit Fees Received by Attorneys in MDL 2179

The PSC and other counsel allegedly performing common benefit work in MDL 2179 are not double-dipping; they are triple-dipping.

The known sources of compensation received by attorneys allegedly doing common benefit work on behalf of BP oil spill victims in MDL 2179 are:

(a) Six percent (6%) of the gross monetary settlements, judgments or other payments made on or after December 30, 2011 through June 3, 2012 to any other plaintiff or claimant-in-limitation. (p. 3, Rec. Doc. 5274);

(b) BP has agreed to pay any award for common benefit and/or Rule 23(h) attorneys’ fees, as determined by the Court, up to $600 million. (p. 10, Rec. Doc. 6418);

(c) Many attorneys doing common benefit work have their own clients and have also received or will also receive a fee directly from them. (N.B. – On June 15, 2012, the MDL 2179 Court ordered that “contingent fee arrangements for all attorneys representing claimants/plaintiffs that settle claims through either or both of the Settlements will be capped at 25% plus reasonable costs.”) (Rec. Doc. 6684); and

(d) Co-counsel fees received by member firms of the PSC for serving as co-counsel to non-member firms of the PSC. For example, on March 13, 2012, Counsel for Plaintiff Salvesen received an unsolicited mass email from a member firm of the PSC. The email stated, in pertinent part, “Co-Counsel Opportunity for BP Oil Spill Cases: News of the recent BP Settlement has caused many individuals and businesses along the Gulf Coast to contemplate either filing a new claim or amending a claim that has already been submitted. If you receive inquiries of this nature we would like you to consider a co-counsel relationship with our firm. Even if someone has already filed a claim it is advisable to retain legal counsel to analyze the impact of this settlement on claimants and maximize recovery. If you receive inquiries and are interested in co-counseling with us on the BP claims, please email…”

Over the years courts have employed various methods to determine the reasonableness of an award of attorneys’ fees. These methods include the “lodestar” method, which entails multiplying the reasonable hours expended on the litigation by an adjusted reasonable hourly rate, Copper Liquor, Inc. v. Adolph Coors Co., 624 F.2d 575, 583 & n.15 (5th Cir. 1980); the percentage method, in which the Court compensates attorneys who recovered some identifiable sum by awarding them a fraction of that sum; or, more recently, a combination of both methods in which a percentage is awarded and checked for reasonableness by use of the lodestar method.

(i)  The Percentage Method

As noted above, “percentages awarded for common funds in recent MDLS … were in the 4-6% range.” Given that the PSC and other counsel allegedly performing common benefit work in MDL 2179 only took 311 depositions and initiated settlement negotiations “in earnest” merely six (6) months after the JPML created MDL 2179, the appropriate percentage should be no greater than 4%.

BP has estimated the cost of the proposed settlement to be approximately $7.8 billion. (p. 156, Rec. Doc. 6266-2). A 4% award would yield $312 million for common funds.

(ii)  The Lodestar Cross-Check

The lodestar analysis is not undertaken to calculate a specific fee, but only to provide a broad cross-check on the reasonableness of the fee arrived at by the percentage method.

This Court has previously used a range of $300 to $400 per hour for members of a Plaintiffs’ Steering Committee and $100 to $200 per hour for associates to “reasonably reflect the prevailing [billable time] rates in this jurisdiction.” Turner v. Murphy Oil USA, Inc., 472 F. Supp. 2d at 868-69 (E.D. La. 2007).

Amount Awarded                      Billable Hourly Rate                      Hours Required to Have Been Expended

$312,000,000.00                             $300/hr.                                                       1,040,000 hours

$600,000,000.00                            $300/hr.                                                       2,000,000 hours

In sum, in order to be awarded a common benefit fee of $312 million, this Honorable Court would have to believe that the PSC attorneys worked more than one million hours; in order to be awarded a common benefit fee of $600 million, this Honorable Court would have to believe that the PSC attorneys worked two million hours. Both of these fee amounts, which do not include the aforementioned (a), (c), and (d) known sources of compensation, fail the reasonableness test.

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

________________________________

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.

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: https://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.

Tagged with: , , ,

Is The BP Oil Spill Victim Compensation Fund Legitimate?

Is The BP Oil Spill Victim Compensation Fund Legitimate?

By Brian J. Donovan

July 27, 2010

INTRODUCTION

On June 16, 2010 President Obama announced that BP has agreed to set aside $20 billion to pay economic damage claims to people and businesses that have been affected by the BP oil gusher. President Obama stated, “This $20 billion will provide substantial assurance that the claims people and businesses have will be honored. It’s also important to emphasize this is not a cap.  The people of the Gulf have my commitment that BP will meet its obligations to them. BP has publicly pledged to make good on the claims that it owes to the people in the Gulf, and so the agreement we reached sets up a financial and legal framework to do it.

Another important element is that this $20 billion fund will not be controlled by either BP or by the government. It will be put in a escrow account, administered by an impartial, independent third party. So if you or your business has suffered an economic loss as a result of this spill, you’ll be eligible to file a claim for part of this $20 billion. This fund does not supersede either individuals’ rights or states’ rights to present claims in court. BP will also continue to be liable for the environmental disaster it has caused, and we’re going to continue to work to make sure that they address it.”

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 independent claims process commonly referred to as the BP Oil Spill Victim Compensation Fund (BPOSVCF).  Feinberg declines to comment on how much BP is paying him to run the BPOSVCF.

BP OIL SPILL LIABILITY

Estimates of BP’s oil spill liability by financial analysts and environmental economists range from $60 billion to $90 billion. The truth is that these are merely guesstimates. The actual cost will not be known for years.

Containment, Collection and Clean-up
To date, BP has spent $4 billion on oil containment, collection and clean-up. This equates to approximately $40 million per day. Assuming clean-up continues for 750 days, at this rate the cost would total $30 billion.

BPOSVCF
BPOSVCF addresses compensation for victims of the BP oil spill. BP allegedly intends to deposit $20 billion in an escrow account to fund the BPOSVCF. The amount of compensation payable to victims for “legitimate” claims is not capped and could total $40 billion.

Penalties and Fines
Under the Clean Water Act (CWA), BP faces fines of up to $4,300 for each barrel spilled. Furthermore, pursuant to Section 2702 of Oil Pollution Act of 1990 (OPA), BP would be required to pay royalties (18.75%) owed to the federal government for the oil gushing from the well.

As of July 27, 2010, regardless of whether you prefer to say “spill” or “gusher,” these are the numbers to consider:

Total Amount of Oil Released to Date: 4,675,000 barrels
Amount of Oil Recovered by BP to Date (via Containment Cap): 826,800 barrels
Oily Water Recovered (via Skimming): 823,810 barrels of oily water = 82,381 barrels of oil
Oil Consumed by Controlled Burns: 264,286 barrels
Total Amount of Unrecovered Oil in the Gulf of Mexico to Date: 3,501,533 barrels

In this case, it may be argued “Barrels Spilled” means either:
(a) Total Amount of Oil Released to Date: 4,675,000 barrels or
(b) “Oil Consumed by Controlled Burns” + “Total Amount of Unrecovered Oil in the Gulf of Mexico” = 264,286 + 3,501,533 = 3,765,819 barrels of oil spilled.

The definition of “Barrels Spilled” will probably be determined by whether BP has sold the oil that it has recovered via the containment cap and skimming. As explained below, on June 8, 2010, BP announced it would donate the net revenue from the sale of oil recovered via the containment cap and skimming to a wildlife fund to help restore and improve wildlife habitat in Louisiana, Mississippi, Alabama, and Florida.

Under the CWA alone, gross negligence penalties based upon 4,675,000 barrels of oil spilled would equal $20.1 billion; gross negligence penalties based upon 3,765,819 barrels of oil spilled would equal $16.2 billion.

Under OPA, BP is required to pay a royalty of 18.75% to the federal government for the oil gushing from the well. Assuming oil is selling at an average of $70 a barrel, U.S. taxpayers should receive a royalty payment of $61.4 million from BP for the total amount of oil released to date.

BP’s liability, based upon the above-estimated amounts for oil containment, collection and clean-up, BPOSVCF and penalties and fines would total between $66.3 billion and $90.2 billion.

THE FUND

Funding of BPOSVCF
In a June 16, 2010 news release, BP stated it will pay $3 billion into the fund in the third quarter of this year and another $2 billion in the fourth quarter. That will be followed by quarterly payments of $1.25 billion until the full $20 billion has been paid. The company said the fund will be backed by the assets of its U.S. subsidiary.

On July 24, 2010, the Press-Register reported, “BP spokesman Justin Saia said the company’s agreement with the White House is still being finalized. ‘Funds will be made available immediately upon the conclusion of this process,’ he said.”

On July 26, 2010, the Press-Register reported, “BP spokesman Daren Beaudo said the company had no new information on the negotiations surrounding the $20 billion pledge. Neither Beaudo, nor the U.S. Department of Justice, which is handling negotiations for the government, would discuss how long those talks might take, whether there are serious substantive differences or where the deposited money would be held while claims are processed.”

BP’s Ability to Fund BPOSVCF
BP’s current operating income is estimated to be $34 billion in 2010. BP has the fourth highest revenues and profits of the Fortune 500.

According to estimates from bond rating agency Moody’s, BP has total proven reserves of approximately 18 billion barrels of oil in the ground.

In releasing second-quarter results on July 27, 2010, BP said it was taking a pretax charge of $32 billion to cover damages, business claims and cleanup costs related to its oil spill. That total will be offset against its U.S. tax bill, resulting in a $10 billion reduction in taxes, the company said. Although legal, it would be adding insult to injury to allow BP’s costs from its oil spill to come out of taxes it owes to the U.S. government. According to its 2009 annual report, BP paid $10.4 billion in taxes world-wide last year.

BP has the responsibility and financial wherewithal to fully compensate each and every BP oil gusher victim.
 

The Potential Benefits

The potential benefits of the BPOSVCF include:
(a) the facilitation of settlement for those claims where litigation otherwise would not be brought because the value of individual claims is so small that it is not economically feasible to bring individual lawsuits. Such negative value claims may be feasible only when grouped in a class action, where the overhead of bringing the lawsuit is shared among all class members;

(b) the protection of BP from financial uncertainty due to ongoing and potentially inconsistent litigation;

(c) the protection of the interests of the BP victims if their claims are fully paid in a timely manner by BP;

(d) the provision of a convenient and economical means for disposing of legitimate claims: BPOSVCF could eliminate costly attorneys’ fees associated with time-consuming litigation due to the avoidance of pre-trial procedures, the reduced emphasis on evidentiary processes such as discovery, depositions, etc.;

(e) since BP and BP’s victims are directly engaged in the negotiation of the settlement, the BPOSVCF may be more collaborative and less antagonistic as compared to litigation thereby rebuilding the relationship between BP and the community;

(f) the BPOSVCF settlement is more likely to produce a final payment, resolution of the dispute and closure than is a trial court judgment which can be appealed; and

(g) the BPOSVCF saves the resources of the courts by permitting an issue to be settled in an economical fashion without the need for litigation.
 

The Potential Risks

The potential risks of the BPOSVCF include:
(a) the failure of BP to fund the BPOSVCF: The question is whether the BPOSVCF is merely another hollow BP promise similar to the “BP wildlife fund.” As of July 26, 2010, BP reports that it has made 77,880 payments to claimants for a total amount of $235 million. This equates to an average payment of only $3,018 per claimant.

(b) the fact that memories fade with the passage of time: Therefore, if the BPOSVCF is merely a delaying tactic on the part of BP to postpone the day of financial judgment, lawsuits should be filed by BP’s victims and witnesses should be deposed as soon as possible. In the absence of a well-funded BPOSVCF, postponing litigation will only benefit BP;

(c) the reality that BP’s victims face a settlement offer from BP without benefit of adversarial investigation;

(d) the BPOSVCF terminates emergency payment claims ninety days after the well is capped and allows for just one final lump-sum settlement payment thereafter;

(e) the fact that it is too early to calculate the damages for some potential claimants. For example, the benzene in spilled oil can cause leukemia and lymphoma which may not be diagnosed for several years;

(f) a continued delay in the funding of the BPOSVCF by BP which may place many claimants in the financial position of having to accept a final settlement offer from BP that is substantially lower than the amount an independent third-party mediator would consider to be fair and reasonable. Moreover, in order to receive the final settlement offer, the claimants must waive any right to bring further court proceedings against BP; and

(g) the unique nature of the BPOSVCF: In arbitration and mediation, the parties have considerable control over the selection of the arbitrator or mediator. The parties can agree on the type of experience and expertise the arbitrator or mediator should have. In this case, BP victims have no control over who hears their claims. BP victims must blindly trust the knowledge, experience and fairness of Kenneth Feinberg.

ADMINISTRATION OF THE FUND

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 BPOSVCF.  Feinberg is due to take full control by August 10, 2010.

The BPOSVCF will operate for three years. Feinberg explains the compensation plan includes two components: a no-obligation six month emergency payment for lost income and a final lump-sum payment with acceptance of release for BP. All victims can apply for the six month payment, up until ninety days after the well is capped. However, if claimants choose to accept the second and final BPOSVCF offer, they waive any right to bring further court proceedings against BP.

Feinberg plans to apply tort law principles in weighing claims, meaning plaintiffs will have to show that their losses wouldn’t have occurred “but for” the oil spill.

The Appearance of a Conflict of Interest
Reuters reports, “In Bayou La Batre, a small fishing community in south Alabama, Feinberg convened an early-morning session on Saturday (July 24, 2010) to listen to residents’ concerns and answer questions on the claims process.” “I learned today the depth of frustration in people here on the coast,” a visibly-tired looking Feinberg said. “I am your lawyer. I do not work for BP. I do not work for the White House. I work and answer to the residents of the Gulf.”

The residents of Bayou La Batre find that hard to believe. They know that Feinberg is being compensated by BP, travels on a private jet paid for by BP, and has requested that lawyers for BP, not attorneys general from the Gulf states, be involved in drafting releases that exempt BP – but not other potential defendants – from any future liability for the spill.

Bloomberg reports that on July 15, 2010, during a meeting with local government officials in Harahan, Louisiana, “Councilman Thomas Capella from Jefferson Parish, Louisiana asked Feinberg if claimants should hire an attorney. Feinberg said that’s not necessary because his office will have attorneys on staff to provide free services to individuals and businesses.” The fact that Feinberg’s attorneys intend to represent both BP and BP’s victims, clearly appears to be a conflict of interest to BP victims in Louisiana.
 

BPOSVCF Administrator’s Compensation
Feinberg declines to comment on how much BP is paying him to run the BPOSVCF. Is it appropriate for Feinberg to keep his compensation from BP confidential?

Professor Byron Stier, an expert in mass tort litigation and a member of the Southwestern Law School faculty, makes the following observations on his Mass Tort Litigation blog. Professor Stier states, “Feinberg will likely have tremendous discretion in fashioning the administrative claim mechanism for the BP compensation fund.  His exercise of discretion could possibly result in BP saving substantial funds, especially if any remainder of the $20 billion fund is to be returned to BP. Accordingly, a fair process at a minimum requires that both the amount of his compensation, and the method of compensation be disclosed publicly.  If BP has the ability to review and cut his billable hours or his billable-hour rate, for example, Feinberg might have a conflict of interest that could lead him unconsciously to favor BP in structuring the administrative fund or making awards.  As a result, in addition to public disclosure, an even better solution might be for BP and Feinberg also to agree to have a federal judge review Feinberg’s billable hours, billable-hour rate, and total fee, much as is already typically done by judges reviewing class counsel fee awards in class-action settlements under Rule 23.  See Fed. R. Civ. P. 23(h).

Federal judges have their compensation set publicly and in a manner that could not be said to incentivize them to favor one litigant over another.  We would never approve of a judge being paid confidentially by only one litigant – and we shouldn’t here either, especially when the claims structure could be seen as quasi-public in light of the President’s central involvement and comments that “in order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party.”  Ultimately, removing the issue of Feinberg’s fees from any controversy would aid Feinberg in making the BP fund a success.”

Complete transparency is essential in order to avoid the appearance that the BPOSVCF is not being administered by an impartial, independent third party. Public disclosure of at least the following information is required to ensure this transparency:

(a) The final written agreement entered into between BP and the federal government;
(b) The final written agreement entered into between Mr. Feinberg and the federal government;
(c) The final written agreement entered into between Mr. Feinberg and BP;
(d) Any and all standard written agreements that may be entered into between BPOSVCF and claimants, e.g., emergency payment agreement and final settlement agreement with waiver;
(e) The name and location of the financial institution where the BPOSVCF escrow account is held;
(f) A monthly accounting of the escrow account;
(g) An itemized accounting of payments, if any, made to BP by the BPOSVCF; and
(h) A detailed accounting of the operating costs, including staff attorney compensation, of the BPOSVCF.

THE BP WILDLIFE FUND

On June 8, 2010, BP announced it would donate the net revenue from the sale of oil recovered via the containment cap and skimming to a wildlife fund to help restore and improve wildlife habitat in Louisiana, Mississippi, Alabama, and Florida.

McClatchy Newspapers reported, “The company said it doesn’t know exactly how much money it’ll donate to the fund, but all net revenue from the well will go to the fund. So will the net revenue from any oil skimmed from the ocean’s surface and sold to a refinery for processing.

The wildlife fund will create, restore, improve and protect wildlife habitat along the coastline of Louisiana, Mississippi, Alabama and Florida, Tony Hayward, the company’s chief executive, said in a statement. The company also took pains to note that its contribution is voluntary; the fund it’s creating is ‘over and above BP’s obligations under the Oil Pollution Act of 1990.’ The money will be made available to state agencies and non-profits that are focused on wildlife protection and restoration, the company said.”

According to the McClatchy article, Hayward stated, BP is “committed to protecting the ecosystems and wildlife on the Gulf Coast.” “We believe these funds will have a significant positive impact on the environment in this region.”

BP said it would continue to donate all net revenue from the well until it “is killed and oil is no longer coming from this source.”

As of July 27, 2010, let’s calculate how much the BP wildlife fund should have received:

Given:
Amount of Oil Recovered by BP to Date (via Containment Cap): 826,800 barrels
Oily Water Recovered (via Skimming): 823,810 barrels of oily water = 82,381 barrels of oil
Total Amount of Oil Recovered by BP to Date: 909,181 barrels

Assuming: (a) oil is selling at an average of $70 a barrel; (b) BP has to pay a royalty of 18.75% to the federal government; and (c) BP has to pay the 35 percent share it owes to its co-owners in the lease, as of July 27, 2010, the BP wildlife fund should have received $33.6 million from BP.

As of July 27, 2010, the BP wildlife fund remains merely another BP public relations stunt. BP has not formed a wildlife fund, established an escrow account for Tony Hayward’s promised wildlife fund or donated any percentage of the net revenue from the sale of oil recovered via the containment cap and skimming to a wildlife fund, state agency or non-profit to help restore and improve wildlife habitat in Louisiana, Mississippi, Alabama, and Florida.

CONCLUSION

It is too early to tell if the BPOSVCF is legitimate. This BP fund may be no better than the BP wildlife fund or it may be the vehicle that will rebuild the relationship between BP and the community. BP oil spill victims should treat the BPOSVCF like an approaching hurricane, “hope for the best, prepare for the worst.”

The people and businesses of the Gulf will be made whole either by negotiating a settlement with BP, via the BPOSVCF, or by filing a lawsuit against BP.  BP oil spill victims must realize that Kenneth Feinberg is not their lawyer. Each and every BPOSVCF claimant should immediately seek competent local legal counsel to represent his or her interests. Each and every BP oil spill victim should then immediately file a claim with BPOSVCF for a no-obligation six month emergency payment. The attorney will be able to advise the client on the maximum amount that may be recoverable under the emergency payment and will ensure that the claimant has the proper detailed documentation prior to submitting the claim. Most attorneys will be willing to provide this legal counsel on a pro bono basis. Upon receipt of the emergency payment, the claimant should consult with his or her legal counsel in regard to negotiating a final settlement with BP. The negotiating of a final settlement is complex and requires the claimant to waive any right to bring further court proceedings against BP. Here, it is essential for the claimant to be represented by legal counsel. Most attorneys will be willing to represent claimants during this phase of the negotiations on a contingent fee basis. A contingent fee of seven to ten percent would be money well spent. In order to be made whole, claimants must be willing to transform into plaintiffs if the final settlement offered by BP is unacceptable. However, BP oil spill victims should not become victims of class action lawsuits. Competent local legal counsel will be able to advise as to the proper litigation strategy.

The legitimacy of the BPOSVCF will not be determined by BP’s well-produced TV commercials or well-rehearsed townhall meetings. It will be defined by BP’s willingness to fully meet its obligations to the people and businesses of the Gulf in a transparent and timely manner.

APPENDICES

References
Adams, Mike, “First Amendment suspended in the Gulf of Mexico as spill cover-up goes Orwellian,” NaturalNews (July 3, 2010), available at: http://www.naturalnews.com/029130_Gulf_of_Mexico_censorship.html

Bhattacharyya, S., P.L. Klerks, and J.A. Nyman. 2003. Toxicity to freshwater organisms from oils and oil spill chemical treatments in laboratory microcosms. Environmental Pollution 122:205-215.

Chokkavelu, Anand, “The BP Stat That Will Shock You,” Motley Fool (July 9, 2010), available at: http://www.msnbc.msn.com/id/38165954/ns/business-motley_fool/

Clean Water Act

Coleman, Leigh and Younglai, Rachelle, “Spill puts Obama’s oil fund chief on hostile turf,” Reuters (July 27, 2010)

EPA: http://www.epa.gov/oem/content/lawsregs/opaover.htm

Fed. R. Civ. Proc. 23(h), Federal Rules of Civil Procedure

Fisher, Daniel and Hawkins, Asher, “BP’s Legal Blowout,” Forbes.com (July 14, 2010)

Greenwald, Glenn, “The BP/Government police state,” Salon (July 5, 2010), available at:
http://www.salon.com/news/opinion/glenn_greenwald/2010/07/05/bp/index.html

Hals, Tom, “Analysis: BP investors face tough road in court fights,” Reuters (July 16, 2010)

Hudson, Kris and Baskin, Brian, “Fears Mount That Fund Won’t Cover All Damages,” The Wall Street Journal (July 15, 2010)

Kindy, Kimberly, “Recovery effort falls vastly short of BP’s promises,” Washington Post (July 6, 2010), available at:
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/05/AR2010070502937.html

Kirby, Brendan, “BP, federal government remain silent on when company will fund Gulf oil spill account,” Press-Register (July 26, 2010)

Lustgarten, Abrahm, “Chemicals Meant To Break Up BP Oil Spill Present New Environmental Concerns,” ProPublica (April 30, 2010), available at: http://www.propublica.org/article/bp-gulf-oil-spill-dispersants-0430

MMS: http://www.mms.gov/

Murtaugh, Dan, “Attorney General Eric Holder says he’ll try to address oil spill claims concerns,” Press-Register (July 15, 2010)

Murtaugh, Dan, “Feinberg says BP hasn’t put money in escrow account yet,” Press-Register (July 24, 2010)

National Contingency Plan

NOAA: http://www.noaa.gov/

Oil Pollution Act of 1990

Peters, Jeremy W., “Efforts to Limit the Flow of Spill News,” The New York Times (June 9, 2010)

Philips, Matthew, “BP’s Photo Blockade of the Gulf Oil Spill,” Newsweek (May 26, 2010), available at: http://www.newsweek.com/2010/05/26/the-missing-oil-spill-photos.html

Schoof, Renee and Bolstad, Erika, “BP well may be spewing 100,000 barrels a day, scientist says,” McClatchy Newspapers (June 7, 2010), available at: http://www.mcclatchydc.com/2010/06/07/95467/bp-well-may-be-spewing.html

Schoof, Renee, “Scientists propose big experiment to study Gulf oil spill,” McClatchy Newspapers (July 11, 20100, available at:
http://www.miamiherald.com/2010/07/11/1725271/scientists-propose-big-experiment.html

Schwartz, John, “More Delicate Diplomacy for the Overseer of the Compensation Fund,” The New York Times (July 16, 2010)

Stier, Byron G., “Ken Feinberg Compensation for Administering BP Fund – A Problem and Possible Solution,” available at: http://lawprofessors.typepad.com/mass_tort_litigation/2010/07/ken-feinberg-compensation-for-administering-bp-fund-a-problem-and-possible-solution.html

USA Today: http://content.usatoday.com/communities/greenhouse/post/2010/05/how-responsible-is-us-government-for-gulf-oil-spill/

USCG: http://www.uscg.mil/

Walsh, Bryan, “The Oil Spill and the Perils of Losing Trust,” Time (July 7, 2010), available at:
http://ecocentric.blogs.time.com/2010/07/07/the-oil-spill-and-the-perils-of-losing-trust/
 

 

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.

 

Further Reading
Will Victims of the BP Oil Gusher Also Be Victims of Class Action Lawsuits and the BP Oil Spill Victim Compensation Fund?

BP’s Strategy to Limit Liability in Regard to Its Gulf Oil Gusher

Why BP Does Not Want an Accurate Measurement of the Gulf Oil Spill

The Oil Pollution Act Provides for the Federalization of the BP Oil Spill

BP is Not the Only Responsible Party

BP Oil Spill of April, 2010: Why Class Action Lawsuits May Not be in the Best Interests of Potential Plaintiffs

Will Victims of the BP Oil Gusher Also Be Victims of Class Action Lawsuits and the BP Oil Spill Victim Compensation Fund?

Will Victims of the BP Oil Gusher Also Be Victims of Class Action Lawsuits
and the BP Oil Spill Victim Compensation Fund?

By Brian J. Donovan

July 16, 2010

INTRODUCTION

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 for daring to demand justice, which will consume their time, energy and hopes for years to come if they are held hostage by class action lawsuits; and (c) a third time by being mislead and undercompensated by the “BP Oil Spill Victim Compensation Fund (BPOSVCF).”

THE BP OIL GUSHER

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.

Pursuant to the Oil Pollution Act of 1990 (OPA), for an offshore facility the total of the liability of a responsible party and any removal costs incurred by, or on behalf of, the responsible party, with respect to each incident shall not exceed the total of all removal costs plus $75,000,000.

However, this limit on liability “does not apply if the incident was proximately caused by gross negligence, willful misconduct of, or the violation of an applicable federal safety, construction, or operating regulation by, the responsible party, an agent or employee of the responsible party, or a person acting pursuant to a contractual relationship with the responsible party.”

OPA broadened the scope of damages (i.e., costs) for which an oil spiller would be liable. Under OPA, a responsible party is liable for all cleanup costs incurred, not only by a government entity, but also by a private party. In addition to cleanup costs, OPA significantly increased the range of liable damages to include the following:

• injury to natural resources,
• loss of personal property (and resultant economic losses),
• loss of subsistence use of natural resources,
• lost revenues resulting from destruction of property or natural resource injury,
• lost profits resulting from property loss or natural resource injury, and
• costs of providing extra public services during or after spill response.

Given BP’s documented violation of federal safety regulations aboard the Deepwater Horizon, e.g., using an improper cementing technique to seal the well, failing to adequately test and maintain blowout prevention equipment and drilling deeper than BP’s federal permit allowed, there will be no limitation on BP’s liability. (Oil Pollution Act of 1990, 33 U.S.C. 2704).

Furthermore, BP may be liable to the United States and to Louisiana for damages resulting from lost royalties. Pursuant to Section 2702 of OPA, “Notwithstanding any other provision or rule of law, and subject to the provisions of this Act, each 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 specified in subsection (b) of this section that result from such incident…”, including revenue losses such as “taxes, royalties, rents, fees, or net profit shares due to the injury, destruction, or loss of real property, personal property, or natural resources, which shall be recoverable by the Government of the United States, a State, or a political subdivision thereof.” (Oil Pollution Act of 1990, 33 U.S.C. 2702(b)(2)(D)).

BP also faces uncapped liability under a little-known Clean Water Act (CWA) civil damages provision.

Pursuant to Section 1321 of the CWA, “Any person who is the owner, operator, or person in charge of any vessel, onshore facility, or offshore facility from which oil or a hazardous substance is discharged in violation of paragraph (3), shall be subject to a civil penalty in an amount up to $25,000 per day of violation or an amount up to $1,000 per barrel of oil or unit of reportable quantity of hazardous substances discharged. In any case in which a violation of paragraph (3) was the result of gross negligence or willful misconduct of a person described in subparagraph (A), the person shall be subject to a civil penalty of not less than $100,000, and not more than $3,000 per barrel of oil or unit of reportable quantity of hazardous substance discharged.” (Clean Water Act, 33 U.S.C. 1321).

Under the CWA, the basic fine is $1,100 per barrel spilled. But the penalty can rise to $4,300 a barrel if a federal court rules the spill resulted from gross negligence. As noted above, the fines were originally set at $1,000 to $3,000 but that was raised in 2004 to keep up with inflation. Accordingly, the number of barrels of oil being released from the well is going to be critical.

If the government pursues civil fines based on the volume of oil spilled, it would take into consideration whether BP has made its best effort to mitigate the spill, its prior history of offenses, if any, and whether BP can bear the cost of fines, among other factors. BP received the third-largest criminal penalty, of $50 million, for an environmental offense in U.S. history for a Texas City refinery fire in 2005. BP subsidiaries remain under federal probation for prior offenses in Texas and Alaska.

As of July 16, 2010, regardless of whether you prefer to say “spill” or “gusher,” these are the numbers to consider:

Total Amount of Oil Released to Date: 4,675,000 barrels
Amount of Oil Recovered by BP to Date (via Containment Cap): 826,800 barrels
Oily Water Recovered (via Skimming): 792,857 barrels of oily water = 79,286 barrels of oil
Oil Consumed by Controlled Burns: 261,191 barrels
Total Amount of Unrecovered Oil in the Gulf of Mexico to Date: 3,507,743 barrels

In this case, “Barrels Spilled” means “Oil Consumed by Controlled Burns” + “Total Amount of Unrecovered Oil in the Gulf of Mexico” = 261,191 + 3,507,743 = 3,768,934 barrels of oil spilled.

Under the CWA alone, gross negligence penalties based upon 3,768,934 barrels of oil spilled would equal $16,206,416,200. This equates to a penalty of approximately $191 million per day. BP’s net profits in the first quarter of 2010 were approximately $6.7 million per day.

It is obvious why BP, despite having the ability to obtain a very accurate flow rate, does not want a more accurate oil spill measurement. It is also very obvious why BP does not want to collect a great deal of the oil spill. Since April 22, 2010, BP admits that its skimming operations have been able to recover only 792,857 barrels of oily water. This equates to collecting a total of only 79,286 barrels of oil from the Gulf of Mexico since April 22, 2010.

The federal government has abdicated its responsibility. Pursuant to OPA Section 4201, and given that the BP oil spill is a “discharge posing substantial threat to public health or welfare,” President Obama should have federalized the collection of the oil that is in the sea and the restoration of the coastal areas impacted by the oil. Both of these activities could be done without having to federalize the operational priority of stopping the flow of oil from the well.

The Obama administration has no intention of holding BP accountable under either OPA 90 or CWA. Under the CWA, BP faces fines of up to $4,300 for each barrel spilled. Furthermore, pursuant to Section 2702 of OPA 90, BP would be required to pay royalties (18.75%) owed to the federal government for the oil gushing from the well.

If the federal government intended to collect $4,300 and a royalty of 18.75% for each barrel spilled, it would:

(a) try to have at least a very rough estimate of the number of barrels gushing from the BP well. This estimate does not exist. From April 28th to May 27th, the official estimated flow rate was 5,000 bbl/day. This intentionally underestimated amount of oil being released from the BP well was from NOAA, not BP. NOAA fully supported, and continues to fully support, BP’s strategy to underestimate the amount of oil being released from the well. “I think the estimate at the time was, and remains, a reasonable estimate,” said Dr. Lubchenco, the NOAA administrator. “Having greater precision about the flow rate would not really help in any way. We would be doing the same things.”

(b) collect every barrel of oil that is released into the Gulf of Mexico before it reaches the marshes of Louisiana and the beaches of Alabama, Mississippi and Florida. This would require stopping the use of dispersants to allow the oil to reach the surface and using tankers to collect the oil. To date, the federal government has allowed BP to use more than 1,840,000 gallons of oil dispersant.

An accurate measurement of the flow of oil and collection of the oil spilled into the Gulf of Mexico could change the way people remember this gusher and their opinion of BP.  Once the leak is plugged and the oil is dispersed throughout the oceans of the world, who’s to say for certain whether BP’s oil well blowout gushed an average of 1,000 or 100,000 bbl/day of oil?

CLASS ACTION LAWSUITS

Teams of lawyers from across the country have descended on the Gulf Coast to file potential class-action lawsuits to recover damages suffered by the lead plaintiff(s) and absent class members as a result of the BP oil gusher.

A class action is a procedural device that permits one or more plaintiffs to file and prosecute a lawsuit on behalf of a larger group. The larger group consists of the class members who have suffered the same wrong at the hands of the defendant but who are too numerous for the court to adequately manage the lawsuit if each class member were required to be joined as named plaintiffs.

In order to proceed as a class action, the case must be “certified” as a class action: that is, a court must determine that the class action criteria set forth in Rule 23 of the Federal Rules of Civil Procedure have been met. A class certified under Rule 23(b)(3) is distinct from a class certified under Rule 23(b)(1) or (2) in one important way. If a Rule 23(b)(3) class is certified, “notice” of the class action must be sent to class members and an opportunity to “opt-out” of the class must be provided. In contrast, a class certified under Rule 23(b)(1) or (2) is “mandatory,” notice is not required, and no class member may opt-out. Despite requirements regarding the notice that must be given to absent class members, there is always the possibility that many class members will not receive notice of the litigation or that such notice will be insufficient to fully inform them of their rights, thereby depriving them of any meaningful opportunity to opt-out.

If a class is certified and the class representatives are unsuccessful, the absent class members‘ claims will be “legally obliterated” by the result of the litigation, even though they did not actively participate in the suit.

The Supreme Court has observed that, while the text of Rule 23 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.

Given that the damages suffered by the vast majority of individual potential plaintiffs as a result of the BP oil gusher 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 would: (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 class action 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.

BP Plc, 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.

Victims of the BP oil gusher who have suffered significant losses should dare to demand justice by immediately seeking competent legal counsel, filing individual lawsuits, and actively participating in the litigation of their claims.

BP OIL SPILL VICTIM COMPENSATION FUND

On June 16, 2010 President Obama announced that BP has agreed to set aside $20 billion to pay economic damage claims to people and businesses that have been affected by the BP oil gusher. President Obama stated, “This $20 billion will provide substantial assurance that the claims people and businesses have will be honored. It’s also important to emphasize this is not a cap.  The people of the Gulf have my commitment that BP will meet its obligations to them. BP has publicly pledged to make good on the claims that it owes to the people in the Gulf, and so the agreement we reached sets up a financial and legal framework to do it.

Another important element is that this $20 billion fund will not be controlled by either BP or by the government. It will be put in a escrow account, administered by an impartial, independent third party. So if you or your business has suffered an economic loss as a result of this spill, you’ll be eligible to file a claim for part of this $20 billion. This fund does not supersede either individuals’ rights or states’ rights to present claims in court. BP will also continue to be liable for the environmental disaster it has caused, and we’re going to continue to work to make sure that they address it.”

The Obama administration indicated any money paid to claimants will be counted against future settlements, to prevent double-dipping.

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 independent claims process commonly referred to as the BP Oil Spill Victim Compensation Fund.  Feinberg declined to comment on how much BP is paying him to run the fund.

BP’s offer to settle quickly might be a savvy move if Feinberg can obtain ironclad releases from the shrimpers, hotel owners and thousands of other people who claim they’ve lost money because of the gusher. BP could save hundreds of millions of dollars in legal fees by preemptively funding the settlement. Feinberg said that at his request, lawyers for BP will be involved in drafting releases that exempt BP – but not other potential defendants – from any future liability for the spill. “This makes sense, since the release is designed to provide BP protection from lawsuits, and BP is paying $20 billion to satisfy claims,” Feinberg said in an e-mail message.

In theory, Feinberg and BP’s lawyers can craft an ironclad release, like the ones used to settle car-accident lawsuits every day. However, that could be a difficult proposition. “In practice, with this incident not only is there an ongoing catastrophe today, but its full effects won’t be felt for years,” said Burton LeBlanc, an attorney in the Baton Rouge, La., office of Baron & Budd, a Dallas firm that is prominent in asbestos and toxic-tort litigation. “The damages for some constituencies can’t be calculated yet.” Baron & Budd has even issued a news release reminding potential plaintiffs that the benzene in spilled oil can cause leukemia and lymphoma and pose “a serious health impact that can last for half a century.”

The BP fund is an attempt to buy peace by overwhelming potential plaintiffs with “easy” money. Companies have tried that before, with mixed success. Asbestos manufacturers failed miserably when they negotiated a global settlement with plaintiff lawyers in the early 1990s under which they’d pay out $300 million to injured workers in exchange for having cases of workers who were exposed, but not sick, valued at zero. The Supreme Court rejected the settlement in 1997 because it bound future claimants to terms they had no part in negotiating. The companies were out the $300 million and still faced thousands of asbestos lawsuits.

Feinberg’s Roadshow
On July 15, 2010, Feinberg, flying on a private jet paid for by BP, toured Louisiana and tried to assure affected residents they would be fairly compensated. He announced that he expects to set up shop for the independent BPOSVCF within the next two to three weeks. The BPOSVCF will operate for three years.

Feinberg explained the compensation plan includes two components: a no-obligation six month emergency payment for lost income and a final lump-sum payment with acceptance of release for BP. All victims can apply for the six month payment, up until ninety days after the well is capped. However, if claimants choose to accept the second and final BPOSVCF offer, they waive any right to bring further court proceedings against BP.

If victims do not consider the final offer sufficient, they may turn it down and pursue higher payments through the courts. However, Feinberg views the lack of court proceedings associated with his facility as a win-win for both sides. “Everyone should come in,” and the matter will be over with, in a matter of weeks or months, rather than years.

“When the oil has stopped, and we all know where it is heading, then I really urge you to come forward with a lump-sum request for payment,” Mr. Feinberg said on July 15th at a town-hall meeting attended by hundreds in Houma, La. Fielding repeated queries about how long-term damage from the spill will be measured, he said that his team would make its best estimates in calculating its final reimbursement offers.

Feinberg plans to apply tort-law principles in weighing claims, meaning plaintiffs will have to show that their losses wouldn’t have occurred “but for” the oil spill. “I am determined to come up with a system more generous and more beneficial than if you file a lawsuit,” Feinberg said.

Opposition to the BPOSVCF
On July 13, 2010, Alabama Attorney General Troy King wrote a letter to President Obama, urging the president to scrap Feinberg’s proposals for administering the BPOSVCF. “The document appears collusive at best and contrary to the public interest at worst,” King wrote to Obama. King said he was shocked that the Gulf states hadn’t been asked for input before Feinberg and BP reached the ninth draft of the plan. He called it “an illegal attempt” to limit BP’s liability under federal law. He also said that it aimed to keep people who have suffered damage out of state courts by making them sign a release waiving lawsuits or additional claims against BP.

“The federal government, especially the executive branch, has no business usurping state court jurisdiction and meddling in the state law liability arising from the oil spill,” King wrote.

Given that losses could continue for months or years after the gusher is stopped, King is justifiably concerned that the BPOSVCF would terminate interim claims ninety days after the well is capped and allow just one final claim thereafter.

On July 14, 2010, attorneys general from the five Gulf states met with U.S. Attorney General Eric Holder in Mobile, Alabama. Attorney General  Jim Hood of Mississippi and Attorney General Troy King of Alabama said the meeting was dominated by talk of a proposal Feinberg sent to the Gulf states that would have ended claims payments ninety days after the well is capped and required people to sign a release of liability before collecting their last payment from the BPOSVCF.

Hood said Holder recognized the flaws in the current BPOSVCF plan. “This is going to go on for three, five, ten years after the spill is stopped,” Hood said. Mr. Feinberg “can’t treat it like 9/11,” which, Hood said, for all of its horror, took place on a single day.

King said Holder would put together a panel of attorneys and officials, with heavy representation from the Gulf Coast, to draft a new proposal to submit to Feinberg. “The focus should be on protecting the Gulf states and making sure everyone is made whole,” said King.

Issues BP Victims Must Consider
Many businesses are concerned it will be difficult, if not impossible, to forecast the long-term recovery of the crab and shrimp populations, or how quickly U.S. consumers will re-embrace Gulf seafood, among other things.

Gary Bauer, president of Pontchartrain Blue Crab Inc., a seafood wholesaler and processor on Salt Bayou east of New Orleans, said his sales of blue crab and shrimp have dropped to 20% of their normal $8 million-a-year pace. In addition, foreign seafood suppliers are moving in on his network of grocers, restaurants and other buyers, further denting his long-term prospects. “Are we going to have a crab season next year, and are there going to be fishermen who will fish next year?” Mr. Bauer said. “How does BP reimburse for that? I spent 10 years of my life building a brand, and they destroyed it.”

Wayne Hess, manager of American Seafood Inc., a processor and wholesaler in New Orleans, said his sales were down roughly 30% from their annual average of $5 million to $7 million. “How am I supposed to project my losses not knowing how all of the different species we carry will be affected in the next year to five years?” he said. “The female crabs that are mating right now don’t drop their eggs until October or December. Those larvae may not make it.”

How can those in the tourism and fishing industries possibly know the extent of the damage to their business without knowing what next year’s season will be like? How can a person predict the long-term health effects of his or her exposure to the oil? As noted above, the benzene in spilled oil can cause leukemia and lymphoma and pose “a serious health impact that can last for half a century.”

So far, economic damage estimates vary widely. Greater New Orleans Inc., the economic-development agency for the 10-parish area, published preliminary estimates that the region’s fishing industry stands to suffer annual losses ranging from $900 million to $3.3 billion.

According to estimates from bond rating agency Moody’s, BP has total proven reserves of approximately 18 billion barrels of oil in the ground. BP has the ability and responsibility to fully compensate each and every BP oil gusher victim.

Conflict of Interest
“I’m working for you,” Feinberg repeatedly stated to the crowds of victims in Louisiana, and he called for local collaboration.

Feinberg is being compensated by BP, travels on a private jet paid for by BP, and has requested that lawyers for BP, not attorneys general from the Gulf states, be involved in drafting releases that exempt BP – but not other potential defendants – from any future liability for the spill.

An important rule of interpretation in administrative law is the “duck rule” – if it walks like a duck and quacks like a duck, it’s probably a duck. Abraham Lincoln reportedly explained a stronger version of this rule in his answer to the question, “If you call a dog’s tail a leg, how many legs does a dog have? Four. Just because you call the tail a leg doesn’t make it one.” Feinberg is a BP duck. Just because he says he is working for you doesn’t mean he is.

Councilman Thomas Capella from Jefferson Parish, Louisiana asked Feinberg if claimants should hire an attorney. Feinberg said that’s not necessary because his office will have attorneys on staff to provide free services to individuals and businesses. The fact that Feinberg’s attorneys intend to represent both BP and BP’s victims is an egregious conflict of interest.

“I am determined to come up with a system more generous and more beneficial than if you file a lawsuit,” Feinberg said. The question is whether the system will be more generous and more beneficial for BP or BP’s victims.

Animated and lively, with a little Bostonian humor, it has been reported Feinberg held the attention of the overflowing crowds during his recent roadshow in Louisiana. A reporter stated, “He jabs the air, punches up words to drive home a point and gets laughs with self-deprecating references to his Boston accent.” Rather than saying “cheese” when he posed for a photo with four police officers, he said, “Everybody file a claim?”

The following joke may be more appropriate for Feinberg’s BPOSVCF plan:

Question: What is the name of the bayou that is most representative of the federal government’s response to the victims of the BP oil gusher?
Answer: Bayou Self

CONCLUSION

Under the CWA alone, gross negligence penalties based upon 3,768,934 barrels of oil spilled would equal $16,206,416,200. Unfortunately, the federal government has no intention of holding BP accountable under either OPA 90 or CWA. Pursuant to OPA Section 4201, and given that the BP oil spill is a “discharge posing substantial threat to public health or welfare,” President Obama should have federalized the collection of the oil that is in the sea and the restoration of the coastal areas impacted by the oil. Both of these activities could be done without having to federalize the operational priority of stopping the flow of oil from the well. To date, the federal government has allowed BP to use more than 1,840,000 gallons of oil dispersant. Once the well is capped and the oil is dispersed throughout the oceans of the world, who’s to say for certain whether BP’s oil well blowout gushed an average of 1,000 or 100,000 bbl/day of oil?

Each individual potential plaintiff who has suffered damages as a result of the BP oil gusher should immediately seek competent legal counsel to directly represent his or her interests. If the amount of damages suffered by the individual potential plaintiff is small, it may not be economically feasible for the plaintiff to file an individual lawsuit. Accordingly, a class action lawsuit may be in the best interests of this plaintiff. However, given that the damages suffered by the vast majority of individual potential plaintiffs as a result of the BP oil gusher are potentially so great and will be on-going, class treatment would not be necessary to permit effective litigation of the claim. Here, when the amount of damages suffered by the individual is so great, the filing of an individual lawsuit should be economically feasible and may be in the best interests of the plaintiff. This decision should be made by the potential plaintiff only after a thorough consultation with his or her legal counsel.

The BPOSVCF is not administered by an impartial, independent third party. However, claimants will only waive their right to sue if they accept a final lump-sum payment. They can still sue if they only accept an initial emergency payment. Therefore, acceptance of a no-obligation six month emergency payment for lost income may be in the best interests of victims of the BP oil gusher. The decision to accept a final lump-sum payment, and thereby waive any right to bring further court proceedings against BP, should be made by the BP oil gusher victim only after a thorough consultation with his or her legal counsel.

APPENDICES

References
Adams, Mike, “First Amendment suspended in the Gulf of Mexico as spill cover-up goes Orwellian,” NaturalNews (July 3, 2010), available at: http://www.naturalnews.com/029130_Gulf_of_Mexico_censorship.html

Bhattacharyya, S., P.L. Klerks, and J.A. Nyman. 2003. Toxicity to freshwater organisms from oils and oil spill chemical treatments in laboratory microcosms. Environmental Pollution 122:205-215.

BP is Not the Only Responsible Party, available at: http://renergie.wordpress.com/2010/05/25/bp-is-not-the-only-responsible-party/

Chokkavelu, Anand, “The BP Stat That Will Shock You,” Motley Fool (July 9, 2010), available at: http://www.msnbc.msn.com/id/38165954/ns/business-motley_fool/

Clean Water Act

EPA: http://www.epa.gov/oem/content/lawsregs/opaover.htm

Fisher, Daniel and Hawkins, Asher, “BP’s Legal Blowout,” Forbes.com (July 14, 2010)

Greenwald, Glenn, “The BP/Government police state,” Salon (July 5, 2010), available at:
http://www.salon.com/news/opinion/glenn_greenwald/2010/07/05/bp/index.html

Hals, Tom, “Analysis: BP investors face tough road in court fights,” Reuters (July 16, 2010)

Hudson, Kris and Baskin, Brian, “Fears Mount That Fund Won’t Cover All Damages,” The Wall Street Journal (July 15, 2010)

Kindy, Kimberly, “Recovery effort falls vastly short of BP’s promises,” Washington Post
(July 6, 2010), available at:
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/05/AR2010070502937.html

Lustgarten, Abrahm, “Chemicals Meant To Break Up BP Oil Spill Present New Environmental Concerns,” ProPublica (April 30, 2010), available at: http://www.propublica.org/article/bp-gulf-oil-spill-dispersants-0430

MMS: http://www.mms.gov/

Murtaugh, Dan, “Attorney General Eric Holder says he’ll try to address oil spill claims concerns,” Press-Register (July 15, 2010)

National Contingency Plan

NOAA: http://www.noaa.gov/

Oil Pollution Act of 1990

Peters, Jeremy W., “Efforts to Limit the Flow of Spill News,” The New York Times (June 9, 2010)

Philips, Matthew, “BP’s Photo Blockade of the Gulf Oil Spill,” Newsweek (May 26, 2010), available at: http://www.newsweek.com/2010/05/26/the-missing-oil-spill-photos.html

Schoof, Renee and Bolstad, Erika, “BP well may be spewing 100,000 barrels a day, scientist says,” McClatchy Newspapers (June 7, 2010), available at: http://www.mcclatchydc.com/2010/06/07/95467/bp-well-may-be-spewing.html

Schoof, Renee, “Scientists propose big experiment to study Gulf oil spill,” McClatchy Newspapers (July 11, 20100, available at:
http://www.miamiherald.com/2010/07/11/1725271/scientists-propose-big-experiment.html

Schwartz, John, “More Delicate Diplomacy for the Overseer of the Compensation Fund,” The New York Times (July 16, 2010)

USA Today: http://content.usatoday.com/communities/greenhouse/post/2010/05/how-responsible-is-us-government-for-gulf-oil-spill/

USCG: http://www.uscg.mil/

Walsh, Bryan, “The Oil Spill and the Perils of Losing Trust,” Time (July 7, 2010), available at:
http://ecocentric.blogs.time.com/2010/07/07/the-oil-spill-and-the-perils-of-losing-trust/
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.

%d bloggers like this: