The Donovan Law Group

BP Oil Spill Victims Opt-Out of the Deepwater Horizon Class Action Settlements

BP Oil Spill Victims Opt-Out of the Deepwater Horizon Class Action Settlements

__________________

DHCC Status Report Proves that the Only Beneficiaries Are BP, the Plaintiffs’ Steering Committee, and Other “Common Benefit” Attorneys

Tampa, FL (October 15, 2012) – Victims of the BP oil spill have elected to opt-out of the Deepwater Horizon Economic and Property Damages Class Action Settlement and the Deepwater Horizon Medical Benefits Class Action Settlement. These victims, represented by The Donovan Law Group, Tampa, FL, decided not to be held as class action hostages by settlements which will never adequately compensate them for their losses.

REASONS TO OPT-OUT

The following is a partial list of reasons why these Claimants/Plaintiffs/Class Action Hostages decided to opt-out. The list will be updated daily until November 1, 2012. After that date, the list will no longer matter.

(1) BP oil spill victims receive grossly inadequate compensation.

The Gulf Coast Claims Facility (“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; the average total amount paid per claimant was $27,466.47.

The status report data further indicates that the GCCF paid a total of 230,370 claimants who filed claims with the GCCF during the “Phase II” period. Of these, 195,109 were either Quick Pay or Full Review Final payments; only 35,261 were Interim payments. In sum, the GCCF forced 84.68% of the claimants to sign a release and covenant not to sue in which the claimant agreed not to sue BP and all other potentially liable parties; only 15.31% of the claimants were not required to sign a release and covenant not to sue in order to be paid. See “Gulf Coast Claims Facility Overall Program Statistics” (Status Report, Mar. 7, 2012, p. 1).

The Deepwater Horizon Claims Center (“DHCC”) and the GCCF are virtually identical. Under the GCCF, the evaluation and processing of claims were performed by Garden City Group, Inc., BrownGreer, PLC, and PricewaterhouseCoopers, LLP. Under the DHCC, 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 Ken 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 DHCC.

The DHCC data indicates that a total of 36,468 claimants filed Individual and Business claims with the DHCC during the period from approximately June 4, 2012 to October 5, 2012. The DHCC paid only 71 of these claimants. In sum, the DHCC paid only 0.19% of the claimants who filed claims. Of the 19,338 Individual Economic Loss claims submitted, 79 claimants have received payment offers totaling $860,968, resulting in 6 payments totaling $38,173. This equates to an average payment of only $6,362.17 per Individual Economic Loss Claimant! (DHCC Status Report, Oct. 5, 2012).

“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.

(2) The class action settlements provide for a refund of approximately $6 billion to BP while granting excessive compensation to the PSC and other counsel allegedly performing “common benefit” work.

(a) 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

(b) 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;

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. In order to be awarded a common benefit fee of $600 million, the MDL 2179 Court would have to believe that the PSC attorneys worked two million hours;

(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.”); 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…”

Click here for a list of the attorneys appointed to the PSC by Judge Barbier.

(3)  These class action settlements are not “fair, reasonable, and adequate” and have not been entered into without collusion between the parties.

For the following reasons, these class action settlements are not “fair, adequate, and reasonable” (at least not for the “Class Members”) and have not been entered into without collusion between the parties:

(a) Prior to the class action settlements, 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 the GCCF for all “legitimate” claims.

(b) After the class action settlements, the proposed “Settlement Trust” has only a balance of $7.8 billion from which BP oil spill victims are being told they will be compensated by the DHCC “so long as they execute an individual release.”

(c) As noted above, under the class action settlements, BP will receive a refund of approximately $6 billion; the PSC and other counsel allegedly performing common benefit work will receive $600 million.

(d) The E&PD class action 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. BP oil spill victims have to ask, “Where’s the settlement?

(e) “……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.” 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.

Click here to read the PSC’s INCOMPREHENSIBLE Reply in Response to Objections and in Further Support of Final Approval of the E&PD Class Settlement (Dated: October 22, 2012). 

(4) Judicial efficiency has replaced justice in MDL 2179.

In order to efficiently manage MDL 2179, Judge Barbier consolidated and organized the various types of claims into several “pleading bundles” for the purpose of the filing of complaints, answers and any Rule 12 motions. The “B1” pleading bundle includes all claims for private or “non-governmental” economic loss and property damages.”

On December 15, 2010, the PSC filed a B1 Master Complaint. On January 12, 2011, the MDL 2179 Court issued PTO No. 25, in order to clarify “the scope and effect” of the “B1″ Master Complaint. The Court held that any individual plaintiff who is a named plaintiff in a case that falls within pleading bundle “B1″ “is deemed to be a plaintiff in the “B1″ Master Complaint.” Also, “the allegations, claims, theories of recovery and/or prayers for relief contained within the pre-existing petition or complaint are deemed to be amended, restated, and superseded by the allegations, claims, theories of recovery, and/or prayers for relief in the respective “B1″ Master Complaint(s) in which the Defendant is named.”

On February 9, 2011, the PSC filed a First Amended Master Complaint. Rather than allege claims under the Oil Pollution Act of 1990 (“OPA”) (which governs the MDL 2179 cases alleging economic loss due to the BP oil spill) and the Outer Continental Shelf Lands Act (“OCSLA”) (which governs the MDL 2179 personal injury and wrongful death actions and borrows the law of the adjacent state as surrogate federal law), the PSC made the unfathomable decision to allege claims under admiralty law. In the B1 First Amended Master Complaint, the PSC clearly states, “The claims presented herein are admiralty or maritime claims within the meaning of Rule 9(h) of the Federal Rules of Civil Procedure. Plaintiffs hereby designate this case as an admiralty or maritime case, and request a non-jury trial, pursuant to Rule 9(h).”

The PSC appears to be more interested in ensuring significant economy and efficiency in the judicial administration of the MDL 2179 court rather than in obtaining justice for the MDL 2179 plaintiffs.

As noted above, in its B1 First Amended Master Complaint, the PSC alleges claims under general maritime law, not under OPA and OCSLA, thereby assisting the MDL 2179 Court in expeditiously being able to:

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

(b) Find, “…. 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.”

(5) 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).

Requiring Class Members to prematurely waive their right to sue in exchange for a miniscule single final settlement payment is unconscionable.

(6) The E&PD class action settlement violates the Oil Pollution Act of 1990 (“OPA”).

BP and the PSC cherry-pick OPA’s provisions for their benefit at the detriment to Plaintiffs. Contrary to the intent of Congress, the E&PD class action settlement defines “Class Members” by geographic bounds and certain business activities while requiring proof of a heightened, vague standard of causation.

(7) The “Plaintiffs’” Steering Committee (“PSC”) misleads “Class Members.”

(a) Statute of Limitations

The PSC intentionally fails to counsel those claimants who may opt-out of the Proposed Settlements that a lawsuit brought against BP and/or 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.

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 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, a lawsuit which could be brought against a non-Responsible Party may be barred by the statute of limitations.

(b) The Oil Spill Liability Trust Fund (“OSLTF”)

The PSC intentionally fails to counsel those claimants who may opt-out of the Proposed Settlements that they will not be able to pursue their claims via the OSLTF.

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.

(8) The MDL 2179 Court has inexplicably reaffirmed its ruling that the E&PD class action settlement is “fair, reasonable, and adequate” and “free of collusion.”

Since April 8, 2012, our firm has filed: (a) a Motion to Vacate Order and Reasons [As to Motions to Dismiss the B1 Master Complaint]; (b) three Motions to Vacate Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement]; and (c) a Motion to Nullify Each and Every Gulf Coast Claims Facility (“GCCF”) “Release and Covenant Not to Sue.”

Click here to read the memorandum in support of Motion (a).

Click here to read the first memorandum in support of Motion (b).

Click here to read the second memorandum in support of Motion (b).

On October 10, 2012, Judge Barbier issued the following two-sentence Order:

“Before the Court are Plaintiffs’ Motions to Nullify Each and Every Gulf Coast Claims Facility “Release and Covenant Not to Sue” and Vacate Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement]. (Rec. Docs. 7473, 6902, 6831). Having considered the motion, the applicable law, and the relevant record, IT IS ORDERED that the Motions (Rec. Docs. 7473, 6902, 6831) are DENIED.”

(9) The MDL 2179 Court has overreached its authority.

The Supreme Court has held that a district court conducting pretrial proceedings pursuant to 28 U.S.C. §1407(a) has no authority to invoke 28 U.S.C. §1404(a) to assign a transferred case to itself for trial. Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998).

(10) Illegally excluding approximately 200,000 claimants from the proposed settlement greatly decreases the bargaining power of the “Class Members.”

GCCF’s “Release and Covenant Not to Sue” violates OPA: (a) by requiring the release of future damages as requirement for receiving a payment from the GCCF claims process, in contravention of 33 U.S.C. § 2705(a) and 33 U.S.C. §§ 2715(b)(1) and (2); and (b) Feinberg, et al. intentionally failed to provide a process for presenting, processing and paying interim, short-term damages, in contravention of 33 U.S.C. § 2705(a) and 33 U.S.C. §§ 2715(b)(1) and (2).

The text and the legislative history of the OPA statute are clear. OPA expressly prohibits Responsible Parties from engaging in a “Delay, Deny, Defend” strategy wherein the victims of an oil spill are starved and ultimately forced to sign a release and covenant not to sue in order to receive a miniscule payment amount for all damages, including future damages, they incur as a result of the oil spill.

GCCF’s “Release and Covenant Not to Sue” violates State contract law because it: (1) was obtained through the use of economic duress; (2) was obtained without free consent (Claimants did not consent to the release by choice, because the only option for receiving payment required Claimants to sign a release, the terms of which they had no opportunity to negotiate.); (3) was obtained through fraud; (4) requires Claimants to discharge, waive and release future claims (including those resulting from gross negligence) for costs and damages (including punitive damages) that are unknown and have not yet arisen; (5) was obtained in exchange for inadequate consideration; and (6) has as its objective the circumvention of the OPA.

Accordingly, GCCF’s “Release and Covenant Not to Sue” is void ab initio.

In sum, GCCF’s “Release and Covenant Not to Sue” and the Proposed Settlement’s “Release and Covenant Not to Sue” violate federal law, State contract law, and are contrary to public policy. Illegally excluding approximately 200,000 Claimants from the Proposed Settlement also greatly decreases the bargaining power of the Class Members and results in an increased loss of faith in the federal judicial system.

Click here to read the Memorandum in Support of the Motion to Nullify Each and Every Gulf Coast Claims Facility (GCCF”) “Release and Covenant Not to Sue.”

(11) A class action may not be brought in a limitation proceeding.

The MDL 2179 Court may not certify a class in the limitation action because it would contravene the Fifth Circuit’s holding in Lloyds Leasing Ltd. v. Bates, 902 F.2d 368 (5th Cir. 1990). In Lloyds Leasing, the Fifth Circuit squarely held that a class action may not be brought in a limitation proceeding. Id. at 370. In affirming the district court’s denial of class certification, the Fifth Circuit reasoned as follows: First, the class action interferes with the concursus contemplated by the limitation of liability proceeding. . . . Second, the notice requirements of the limitation proceeding are more restrictive than the notice requirements of the class action. . . . Third, the entire thrust of Supplemental Rule F is that each claimant must appear individually and this is obviously inconsistent with the class action. Staring, Limitation Practice and Procedure, 53 Tul.L.Rev. 1134, 1150 (1979). In sum, “[t]he two rules are incompatible, and class representation in the sense of Rule 23 should therefore not be allowed in limitation proceedings.” Id.

Following Lloyd’s Leasing, courts in this district have routinely stricken class action allegations when they are filed within a limitation proceeding or dismissed class action complaints when they are filed after a limitation proceeding has been instituted. See, e.g., In re: Ingram Barge Co., No. 05-4419, 2006 U.S. Dist. LEXIS 79403, 2006 WL 5377855, at *1 (E.D. La. Oct. 19, 2006) (striking class allegations pursuant to Lloyd’s Leasing); In re: River City Towing Servs., Inc., 204 F.R.D. 94, 97 (E.D. La. 2001) (same); Humphreys v. Antillen, N.V., Nos. 93-3799, 93-3714, 1994 WL 682811, at *3 (E.D. La. Jan. 31, 1994) (dismissing class action complaint filed after limitation proceeding). The limitation proceedings need not be resolved and limitation of liability upheld in order to dismiss class action allegations. For example, Judge Berrigan in Ingram Barge and Judge Feldman in Humphreys struck or dismissed class action allegations before deciding the limitation issue. See Gabarick v. Laurin Mar. (America), Inc., 2009 U.S. Dist. LEXIS 27180.

(12) The DHCC Data

The DHCC data, dated October 26, 2012, indicates that a total of 41,235 claimants have filed Individual Economic Loss, Individual Periodic Vendor or Festival Vendor Economic Loss, Business Economic Loss, Start-Up Business Economic Loss, and Failed Business Economic Loss claims with the DHCC. The DHCC paid only 407 of these claimants. In sum, the DHCC paid only 0.99% of the claimants who filed claims.

Of the 21,058 Individual Economic Loss claims submitted, 204 claimants have received payment offers totaling $2,190,404, resulting in 43 payments totaling $599,428. This equates to an average payment of only $13,940.19 per Individual Economic Loss Claimant!

What is life worth? According to BP and Feinberg, et al., the life of an individual BP oil spill victim wasn’t worth very much. According to BP/PSC and Juneau, et al., the life of an individual BP oil spill victim is worth even less!

CONCLUSION

The opt-out deadline for the Deepwater Horizon class action settlements is November 1, 2012. After that date, the game is over; BP has won, BP oil spill victims who do not opt-out are left out in the cold, and the PSC and other “common benefit” attorneys are extremely well-compensated.

___________

HOW TO OPT-OUT

Not surprisingly, the Class Action Settlement Notices do not provide “Class Members” with an “Opt-Out” form. Furthermore, the information required to properly opt-out of the Medical Benefits Class Action Settlement, and the mailing address to where the opt-out notice must be sent, differs from the information required and the mailing address to properly opt-out of the Economic and Property Damages Class Action Settlement.

Click here to download a sample Deepwater Horizon Economic and Property Damages Class Action Settlement Opt-Out Notice.

Click here to download a sample Deepwater Horizon Medical Benefits Class Action Settlement Opt-Out Notice.

________________

Approximately 200,000 BP Oil Spill Victims Are Being Illegally Excluded From Proposed Deepwater Horizon Class Action Settlement

Approximately 200,000 BP Oil Spill Victims Are Being Illegally Excluded

From Proposed Deepwater Horizon Class Action Settlement

Plaintiffs File Motion to Nullify Each and Every Gulf Coast Claims Facility “Release and Covenant Not to Sue”

Tampa, FL (September 24, 2012) – Plaintiffs Pinellas Marine Salvage, Inc., John Mavrogiannis, and Selmer M. Salvesen, on behalf of themselves and other Class Members of the Proposed Economic and Property Damages Class Action Settlement who are victims of the “Delay, Deny, Defend” strategy of Kenneth R. Feinberg, et al., have filed a 25-page Motion to Nullify Each and Every Gulf Coast Claims Facility (GCCF”) “Release and Covenant Not to Sue” with the MDL 2179 Court. The motion also requests the Court to vacate its Preliminary Approval Order [As to the Proposed Economic and Property Damages Class Action Settlement], Rec. Doc. 6418 dated May 2, 2012.

The motion explains that GCCF’s “Release and Covenant Not to Sue,” which excludes approximately 200,000 BP oil spill victims from the proposed Deepwater Horizon Class Action Settlement, and the Proposed Settlement’s “Release and Covenant Not to Sue” violate federal law, State contract law, and are contrary to public policy.

Click here to download the memorandum of law in support of the motion.

The following is an excerpt from Plaintiffs’ Motion to Nullify and Vacate.

I.  BACKGROUND

A. The GCCF Payment Methodology

During GCCF Phase I, the GCCF implemented a claims process by which eligible claimants would receive compensation for the loss of earnings or profits, removal and clean-up costs, real or personal property damage, loss of subsistence use of natural resources and physical injury or death caused by the Spill by submitting a lesser level of documentation than would be required in later stages of the GCCF. This was known as the Emergency Advance Payment (“EAP”) claims process. The GCCF accepted EAP claims from August 23, 2010 through November 23, 2010. A claimant who received an EAP was not required to execute a release and covenant not to sue BP or any other party.

During GCCF Phase II, known as the “Interim Payment/Final Payment” claims process, the GCCF received the following three types of claims:

(a) Interim Payment Claim: An eligible claimant could elect to file an Interim Payment Claim to receive compensation for documented past losses or damages caused by the Spill for which the claimant previously had not been compensated by the BP-operated facility, the GCCF or the Real Estate Fund. A claimant seeking an Interim Payment was not required to sign a release and covenant not to sue and, therefore, was able to file future Interim Payment, Quick Pay Final Payment and Full Review Final Payment Claims. According to the protocol, a claimant was permitted to file only one Interim Payment Claim per quarter.

(b) Quick Payment Final Claim: A claimant who had received a prior EAP or Interim Payment from the GCCF could file for a Quick Payment Final Claim and receive, without further documentation of losses caused by the Spill, a one-time final payment of $5,000 for individuals and $25,000 for businesses. Prior amounts received by the claimant from the BP-operated facility and/or the GCCF were not subtracted from this payment amount. Claimants seeking a Quick Payment were required to submit with their claim form a release and covenant not to sue in which the claimant agreed not to sue BP and all other potentially liable parties.

(c) Full Review Final Payment Claim: An eligible claimant could also file a Full Review Final Payment Claim to receive payment for all documented past damages and estimated future damages resulting from the Spill. Claimants wishing to accept a Final Payment were required to sign and submit a release and covenant not to sue in which the claimant agreed not to sue BP and all other potentially liable parties. Additionally, any Full Review Final Payment awarded to a claimant was decreased by the amount of any previous payments received from the GCCF, the BP-operated facility or the Real Estate Fund.

Claim forms for Phase II became available to the public on December 18, 2010. The GCCF began receiving Interim Payment and Final Payment Claims shortly thereafter; however, the assessment of claimant eligibility and calculation of losses for those claims did not begin until February 18, 2011. Independent Evaluation of the Gulf Coast Claims Facility, Report of Findings & Observations, BDO Consulting (June 5, 2012).

B. The “Delay, Deny, Defend” Strategy of Kenneth R. Feinberg, et al.

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.

C. GCCF’s “Release and Covenant Not to Sue”

The ultimate objective of the “Delay, Deny, Defend” strategy of Feinberg, et al. was to obtain a signed “Release and Covenant Not to Sue” from as many BP oil spill victims as possible. Here, the GCCF Status Report as of March 07, 2012 is instructive.

The status report data indicates that the GCCF paid a total of 230,370 claimants who filed claims with the GCCF during the “Phase II” period. Of these, 195,109 were either Quick Pay or Full Review Final payments; only 35,261 were Interim payments. In sum, the GCCF forced 84.68% of the claimants to sign a release and covenant not to sue in which the claimant agreed not to sue BP and all other potentially liable parties; only 15.31% of the claimants were not required to sign a release and covenant not to sue in order to be paid. See “Gulf Coast Claims Facility Overall Program Statistics” (Status Report, Mar. 7, 2012, p. 1) (a copy is attached hereto as Exhibit C).

II.  LAW AND ARGUMENT

In his Preliminary Approval Order, 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). Plaintiffs respectfully disagree.

A. GCCF’s “Release and Covenant Not to Sue” and the Proposed Settlement’s “Release and Covenant Not to Sue” Violate the Oil Pollution Act of 1990.

The proposed Deepwater Horizon Economic and Property Damages Settlement Agreement excludes:

“2.2.6. Any Natural Person or Entity who or that made a claim to the GCCF, was paid and executed a GCCF RELEASE AND COVENANT NOT TO SUE..” (Rec. Doc. 6276-1, p. 11).

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.” (Rec. Doc. 6418, pp. 6-7).

The Honorable Carl J. Barbier addressed the issue of whether OPA prohibits Responsible Parties from requiring victims of an oil spill to sign a release and covenant not to sue in order to be paid for their damages. Judge Barbier stated in his Order of August 26, 2011:

“…….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.” See Order and Reasons [As to Motions to Dismiss the B1 Master Complaint] (Document 3830, pp. 34, 35).

Plaintiffs respectfully disagree with Judge Barbier’s novel interpretation of OPA. OPA expressly prohibits Responsible Parties from engaging in a “Delay, Deny, Defend” strategy wherein the victims of an oil spill are starved and ultimately forced to sign a release and covenant not to sue in order to receive an inadequate, miniscule payment amount for the damages they incurred as a result of the oil spill.

1. The Text of the OPA Statute

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 provides,

“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 that result from such incident.” 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 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) (Emphasis added); and

(b) “Payment of such a claim [i.e. payment to a claimant for interim, short-term damages representing less than the full amount of damages to which the claimant ultimately may be entitled] shall not foreclose a claimant’s right to recovery of all damages to which the claimant otherwise is entitled under this Act or under any other law.’’ 33 U.S.C. §§ 2715(b)(1) and (2) (Emphasis added).

“Shall” means shall. The Supreme Court has made clear that when a statute uses the word “shall,” Congress has imposed a mandatory duty upon the subject of the command. See United States v. Monsanto, 491 U.S. 600, 607, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989) (by using “shall” in civil forfeiture statute, “Congress could not have chosen stronger words to express its intent that forfeiture be mandatory in cases where the statute applied”); Pierce v. Underwood, 487 U.S. 552, 569-70, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) (Congress’ use of “shall” in a housing subsidy statute constitutes “mandatory language”); Barrentine v. Arkansas-Best Freight Sys., Inc. 450 U.S. 728, 739 n. 15, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) (same under Fair Labor Standards Act); United States v. Myers, 106 F.3d 936, 941 (10th Cir.) (“It is a basic canon of statutory construction that use of the word ‘shall’ [in 18 U.S.C. § 3553(f) ] indicates mandatory intent.”), cert. denied, 520 U.S. 1270, 117 S.Ct. 2446, 138 L.Ed.2d 205 (1997); see also Black’s Law Dictionary 1233 (5th ed. 1979) (“As used in statutes … [shall] is generally imperative or mandatory.”); Environmental Defense Ctr. v. Babbitt, 73 F.3d 867 (9th Cir.1995) (“We believe our ‘shall’-means-shall approach has been implicitly recognized by the Ninth Circuit); Forest Guardians v. Babbitt, 174 F.3d 1178 (10th Cir. 1999) (finding a strict statutory construction); Yu v. Brown, 36 F. Supp. 2d 922 (10th Cir. 1999) (agreeing with Forest Guardians in finding a strict requirement to force agencies to act under certain circumstances).

2. The Legislative History of the OPA Statute

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”); 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.”).

As the Supreme Court 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).

The GCCF essentially stopped processing or paying OPA-mandated interim claims from BP oil spill victims on November 23, 2010. Ending this interim claims program was in direct contravention of OPA’s mandates, as that Act only envisions a claims process for presentment of interim claims.

GCCF’s “Release and Covenant Not to Sue” violates OPA: (a) by requiring the release of future damages as requirement for receiving a payment from the GCCF claims process, in contravention of 33 U.S.C. § 2705(a) and 33 U.S.C. §§ 2715(b)(1) and (2); and (b) Feinberg, et al. intentionally failed to provide a process for presenting, processing and paying interim, short-term damages, in contravention of 33 U.S.C. § 2705(a) and 33 U.S.C. §§ 2715(b)(1) and (2).

The text and the legislative history of the OPA statute are clear. OPA expressly prohibits Responsible Parties from engaging in a “Delay, Deny, Defend” strategy wherein the victims of an oil spill are starved and ultimately forced to sign a release and covenant not to sue in order to receive a miniscule payment amount for all damages, including future damages, they incur as a result of the oil spill.

B. GCCF’s “Release and Covenant Not to Sue” and the Proposed Settlement’s “Release and Covenant Not to Sue” Violate State Contract Law.

Releases, compromises and settlement agreements are contracts and the rules of construction applicable to all contracts are used in the interpretation of such agreements. Dore Energy Corp. v. Prospective Inv. & Trading Co. Ltd., 570 F.3d 219, 225 (5th Cir. 2009).

GCCF’s “Release and Covenant Not to Sue” violates State contract law because it:

(1) was obtained through the use of economic duress;

(2) was obtained without free consent (Claimants did not consent to the release by choice, because the only option for receiving payment required Claimants to sign a release, the terms of which they had no opportunity to negotiate.);

(3) was obtained through fraud;

(4) requires Claimants to discharge, waive and release future claims (including those resulting from gross negligence) for costs and damages (including punitive damages) that are unknown and have not yet arisen;

(5) was obtained in exchange for inadequate consideration; and

(6) has as its objective the circumvention of the OPA.

Accordingly, GCCF’s “Release and Covenant Not to Sue” is void ab initio.

C.  The Severability Clause in the Proposed Settlement is Not an Adequate Solution.

The Proposed Settlement includes a Severability Clause that specifically references the unconscionable releases used by the GCCF and the Release proposed for use in the Proposed Settlement’s claims process. The Severability Clause states:

“21.1. In the event that the Release contained in Section 10 above, or the Individual Releases as to all Economic Class Members contained in Section 4 above, or any portion or provision thereof, shall for any reason be held in whole or in part to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision, or portion thereof, if the BP Parties elect in their sole discretion in writing to proceed as if such invalid, illegal, or unenforceable provision, or portion thereof, had never been included in this Agreement. Alternatively, the BP Parties, in these circumstances, may elect in writing that the entire Agreement be rendered null and void consistent with the terms described in Section 21.3 below.” (Rec. Doc 6276-1, p. 82).

An illegal condition within a contract annuls the entire agreement “only to the extent to which the agreement depends on it.” Lebouef v. Liner, 396 So.2d 376, 378 (La.App. 1st Cir. 1981); La. Civil Code Ann. Art. 1893.

Any class action settlement that incorporates an unconscionable “Release and Covenant Not to Sue” for the purpose of excluding approximately 200,000 Claimants from the settlement benefits, is not “fair, reasonable, and adequate.” However, Plaintiffs respectfully point out to this Honorable Court that merely nullifying the unconscionable releases used by the GCCF, and severing the Release proposed for use in the Proposed Settlement’s claims process, and allowing the BP Parties “to proceed as if such invalid, illegal, or unenforceable provision, or portion thereof, had never been included in this Agreement” is not an adequate solution. The Proposed Settlement would still: (a) have resulted from the B1 Master Complaint which was inexplicably filed under admiralty law rather than the OPA (a strict liability statute); (b) be in violation of the Lexecon Rule; (c) be in violation of Lloyds Leasing Ltd. v. Bates; (c) not be “free of collusion;” (d) still not be “fair, reasonable, and adequate;” and (e) still violate the OPA. See Exhibit A and Exhibit B.

In sum, GCCF’s “Release and Covenant Not to Sue” and the Proposed Settlement’s “Release and Covenant Not to Sue” violate federal law, State contract law, and are contrary to public policy. Illegally excluding approximately 200,000 Claimants from the Proposed Settlement also greatly decreases the bargaining power of the Class Members and results in an increased loss of faith in the federal judicial system.

____________________

UPDATE

Inadequate Consideration

Feinberg, et al. cannot justify limiting payments under the Quick Payment Final Claim program to just $5,000 for individuals and $25,000 for businesses. There is no evidence that these amounts even remotely represent adequate consideration to compensate Claimants for the damages that Claimants did or will suffer as a result of the BP oil spill.

This inadequate compensation and GCCF’s “Release and Covenant Not to Sue” are the product of Claimants’ lack of bargaining power and Feinberg et al.’s use of coercion and economic duress.

The “Delay, Deny, Defend” strategy, although unconscionable, has proven to be very effective for Feinberg, et al. The numbers do not lie: the GCCF forced 84.68% of the claimants to sign a release and covenant not to sue in which the claimant agreed not to sue BP and all other potentially liable parties; only 15.31% of the claimants were not required to sign a release and covenant not to sue in order to be paid. The GCCF denied payment to approximately 61.46% of the claimants who filed claims. The average total amount paid per Claimant by GCCF was $27,466.47.

“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 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.

What is life worth? According to BP and Feinberg, et al., the life of an individual BP oil spill victim isn’t worth very much.

It’s Time for BP Oil Spill Victims to Opt-Out of the Deepwater Horizon Class Action Settlements

It’s Time for BP Oil Spill Victims to Opt-Out of the Deepwater Horizon Class Action Settlements

The Only Beneficiaries Are BP and the Plaintiffs’ Steering Committee

Tampa, FL (August 29, 2012) – The deadline for BP oil spill victims (“Class Members”) to opt-out of the Deepwater Horizon Economic and Property Damages Class Action Settlement and the Deepwater Horizon Medical Benefits Class Action Settlement is November 1, 2012.

It is important to note that these class action settlements do not actually provide for funds to be distributed to Class Members; they merely give BP oil spill victims the right to submit, yet again, a claim for economic and property damages and medical benefits.

“BP has estimated the cost of the proposed settlement to be approximately $7.8 billion.” 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.” 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 Settlements 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).

Class Members who do not opt-out will be at the complete mercy of BP, Garden City Group, Inc., BrownGreer, PLC, and PricewaterhouseCoopers, LLP. Under Feinberg/GCCF, and now under Juneau/DHCC, this means payment will be denied to approximately 61.46% of the claimants who file claims; the average total amount that will be paid per claimant will be $27,466.47.

Who Should Opt-Out

All Class Members, not represented by legal counsel, who have not been fully compensated for damages resulting from the BP oil spill should opt-out. This includes any natural person or entity who or that made a claim to GCCF and was illegally forced to execute a “Release and Covenant Not to Sue” in order to receive a miniscule payment.

Each natural person or entity who or that has suffered damages resulting from the BP oil spill of April, 2010 has the legal right to, and should immediately seek, competent legal counsel to directly represent his, her, or its interests. BP oil spill victims must understand that the Plaintiffs’ Steering Committee, attorneys who unscrupulously signed-up hundreds or even thousands of class members for class action lawsuits immediately after the oil spill incident, and attorneys who represent industry coalitions and organizations do not represent their individual interests.

Given that the damages suffered by the vast majority of Class Members as a result of the BP oil spill of April, 2010 are potentially so great and will be on-going, class action lawsuits should not be necessary to permit effective litigation of these claims. Here, where the amount of damages suffered by the individual is so great, the filing of an individual lawsuit should be economically feasible and in the best interests of the plaintiff.

When Should Class Members Opt-Out

All Class Members who have not been fully compensated for damages resulting from the BP oil spill by September 1, 2012 should opt-out. This will allow sufficient time for Class Members to learn: (a) the legal rights provided to BP oil spill victims under the Oil Pollution Act of 1990 (“OPA”); (b) why BP oil spill victims should not be required to prematurely waive their right to sue in exchange for a miniscule final settlement payment; and (c) why class actions may not be in the best interests of BP oil spill victims.

Opting-out would be an excellent Labor Day weekend activity for all BP oil spill victims. A properly executed Opt-Out Notice for each of the two proposed class action settlements should be mailed by Class Members on September 4, 2012.

How to Opt-Out

Not surprisingly, the Class Action Settlement Notices do not provide Class Members with an “Opt-Out” form. Furthermore, the information required to properly opt-out of the Medical Benefits Class Action Settlement, and the mailing address to where the opt-out notice must be sent, differs from the information required and the mailing address to properly opt-out of the Economic and Property Damages Class Action Settlement.

Click here to download a sample Deepwater Horizon Economic and Property Damages Class Action Settlement Opt-Out Notice.

Click here to download a sample Deepwater Horizon Medical Benefits Class Action Settlement Opt-Out Notice.

Why Class Members Should Opt-Out

The standard for reviewing a proposed settlement of a class action is whether the proposed settlement is “fair, reasonable, and adequate” and whether it has been entered into without collusion between the parties.

The United States District Court for the Eastern District of Louisiana defines “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)

These Class Action Settlements Are Not Fair, Reasonable, and Adequate

Kenneth R. Feinberg, the former administrator of the now defunct Gulf Coast Claims Facility (“GCCF”), during widely-reported town hall meetings organized to promote GCCF, repeatedly told victims of the BP oil spill that they did not need to hire a lawyer. Feinberg explained, “The litigation route in court will mean uncertainty, years of delay and a big cut for the lawyers….I take the position, if I don’t find you eligible, no court will find you eligible….I am determined to come up with a system that will be more generous, more beneficial, than if you go and file a lawsuit.”

The GCCF has been replaced by the Deepwater Horizon Claims Center (“DHCC”). Patrick Juneau, the court-appointed administrator of the DHCC, repeatedly tells victims of the BP oil spill, “If you’re in doubt, file the claim…..We’ll do the homework for you.” Juneau, with a very slight change in rhetoric, is obviously using the same “Delay, Deny, Defend” playbook which proved to be so successful for Feinberg.

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

Recently Feinberg said, “I think it’s a tribute to the GCCF that all the people we used have been retained. I take great satisfaction in that fact.” It is unlikely that Class Members will share Feinberg’s satisfaction.

Here is a perfect example of a “secret understanding between two or more persons” (BP, the PSC, the GCCF, and the DHCC) which is “prejudicial to another” (the Class Members).

The Miniscule Amount GCCF Paid to BP Oil Spill Victims

GCCF Overall Program Statistics

(Status Report as of March 7, 2012)

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

Total Number 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.

These Class Action Settlements Provide 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 to BP

Deepwater Horizon Oil Spill Trust     $20.0 Billion

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 to the PSC, et al.

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. – The Donovan Law Group received a Final Payment Offer from GCCF on behalf of a client. This offer, dated June 3, 2012 and postmarked June 8, 2012, was received 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. 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, The Donovan Law Group 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…”

In order to be awarded a common benefit fee of $600 million, the PSC attorneys and other counsel performing “common benefit” work would have to work two million hours. This fee amount, which does not include the aforementioned (a), (c), and (d) known sources of compensation, fails the reasonableness test.

The PSC, Not Class Members, Shall be Compensated “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.

Collusion Permeates MDL 2179 and These Class Action Settlements

These Class Action Settlements Were Not Achieved in the Context of the Adversarial Process

While class action settlements 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 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. “Often, the plaintiffs’ 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.” 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).

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 initiated settlement negotiations “in earnest” merely six (6) months after the JPML created MDL 2179.

The Oil Pollution Act of 1990 (‘OPA”), a strict liability statute, governs cases alleging economic loss due to the BP oil spill. The Outer Continental Shelf Lands Act (“OCSLA”) governs personal injury and wrongful death actions and borrows the law of the adjacent state as surrogate federal law.

In order to recover damages under OPA, 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).

Rather than allege claims under OPA, the PSC made the unfathomable decision to allege claims under a hodgepodge of statutes. On February 9, 2011, in the B1 First Amended Master Complaint, the PSC states, “The claims presented herein are admiralty or maritime claims within the meaning of Rule 9(h) of the Federal Rules of Civil Procedure. Plaintiffs hereby designate this case as an admiralty or maritime case, and request a non-jury trial, pursuant to Rule 9(h).”

The PSC appears to be more interested in ensuring significant economy and efficiency in the judicial administration of the MDL 2179 court rather than in obtaining justice for the MDL 2179 plaintiffs. As noted above, in its B1 First Amended Master Complaint, the PSC alleges claims under general maritime law, not under OPA and OCSLA, thereby assisting the MDL 2179 Court to expeditiously:

(a) Find, “The Deepwater Horizon was at all material times a vessel in navigation.”

(b) Find, “Admiralty jurisdiction is present because the alleged tort occurred upon navigable waters of the Gulf of Mexico, disrupted maritime commerce, and the operations of the vessel bore a substantial relationship to traditional maritime activity. With admiralty jurisdiction comes the application of substantive maritime law.”

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

(d) Find, “General maritime law claims that do not allege physical damage to a proprietary interest are dismissed under the Robins Dry Dock rule, unless the claim falls into the commercial fishermen exception.”

(e) Find, “…. 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 re Oil Spill by the Rig Deepwater Horizon in the Gulf of Mexico, on April 20, 2010, – F. Supp. 2d -, 2011 WL 3805746 (Aug. 26, 2011 E.D. La.).

In sum, in February, 2011, the PSC: (a) initiated settlement negotiations “in earnest” with BP for two distinct class action settlements: a Medical Benefits Settlement and an Economic and Property Damages Settlement; and (b) filed the B1 First Amended Master Complaint under general maritime law, rather than OPA and OCSLA, thereby ensuring that BP would not be held strictly liable in the bench trial.

Conclusion

For the foregoing reasons, the Deepwater Horizon Economic and Property Damages Class Action Settlement and the Deepwater Horizon Medical Benefits Class Action Settlement are neither “fair, reasonable, and adequate” nor have they been entered into without collusion between the parties.

The motto for Class Members should be: “If in doubt, opt-out!”

_________________

OPT-OUT UPDATE No. 1

Beginning on September 10, 2012, some BP oil spill victims filed requests for discovery with the MDL 2179 Court regarding the economic class action settlement. These individuals are objecting to the economic class action settlement entered into between the PSC and BP. Accordingly, the Court refers to them as “Objectors.”

These victims contend, in part, that: (1) much of the evidence submitted by the PSC and BP on August 13, 2012 in support of the motions for final approval of the settlement was not published or otherwise available prior thereto; (2) communications between the PSC and BP relating to the propriety of the proposed settlement were not shared with counsel for Objectors; (3) the PSC and BP did not produce any of the evidence on which their experts’ opinions are based; (4) it is impossible for the Objectors to evaluate the proposed settlement without “limited discovery;” (5) the Court has discretion to grant their requests for “limited discovery;” (6) the Phase One and Phase Two discovery concerns only the issue of liability; (7) the rationale and bases for the terms of the settlement cannot be found in the record; and (8) discovery is required because the Economic Loss Zones are arbitrary and capricious.

On September 25, 2012, these requests were denied by the MDL 2179 Court. The Court held:

Objectors Have No Absolute Right to Discovery.

There is no “absolute right” to conduct discovery or present evidence simply because a person is a class member. In re Domestic Air Transp. Antitrust Litig., 144 F.R.D. 421, 424 (N.D. Ga. 1992). In evaluating settlements for approval, the fundamental question is whether the Court has sufficient facts before it to approve or disapprove the settlement. In re Gen. Tire & Rubber Co. Sec. Litig., 726 F.2d 1075, 1084 n.6 (6th Cir. 1984). The Court has broad discretion to permit or deny objector discovery requests. Cotton v. Hinton, 559 F.2d 1326, 1333 (5th Cir. 1977).

Objectors’ Discovery Requests Are Unnecessary.

In Newby v. Enron, Corp., 394 F.3d 296 (5th Cir. 2004), the Fifth Circuit held that “formal discovery is not necessary as long as (1) the interests of the class are not prejudiced by the settlement negotiations and (2) there are substantial factual bases on which to premise settlement.” Id. at 306. The “critical question” to determine whether independent discovery by objectors is necessary is whether the Court has “sufficient facts before it to intelligently consider the proposed settlement.” In re Ford Motor Co. Bronco II Prods. Liab. Litig., 1994 WL 593998 at *3 (E.D. La. Oct. 28, 1994). Where significant documentation has already been produced and testimony taken, “independent discovery should generally not be allowed.” In re Ford Motor Co. Bronco II, 1994 WL 593998 at *3.

The Court’s task is to consider the record that appears before it to determine if, on the basis of that record, it may make the findings necessary to certify the settlement class and determine that the settlement agreement is fair, reasonable, and adequate under Rule 23. It is not the role of the Objectors to renegotiate the agreement, nor determine whether the class would receive more compensation in contested litigation. None of the Objectors demonstrate how their discovery is required to enable them to support their objections, to decide whether to remain in the settlement class, or to aid the Court. The Objectors’ discovery is unnecessary because it is not relevant to the Court’s review.

The settlement compensates each and every class member according to frameworks that are transparent and which were filed nearly five months ago. Any class member seeking to determine his compensation may simply read the settlement agreements and determine how his circumstances fit into the frameworks. There is no reason that any objector needs to know the estimated size of the class, because the settlement is uncapped for the majority of claimants. An objector does not need to know the total amount of losses of the class when the settlement agreement provides for the payment of all compensatory damages. The Court may determine that the settlement agreement is fair, reasonable, and adequate without this information.

Since April 18, the Objectors were able to review the settlement agreement, analyze the benefits under the agreement, evaluate the strengths and weaknesses of their own claims and determine whether they are better off participating in the settlement or opting out. By opting out, those who are not satisfied with the settlement’s provisions escape their binding effect, and thus are free to pursue their claims and seek the relief they desire. In re Vitamins Antitrust Class Actions, 215 F.3d 26, 28-29 (D.C. Cir. 2000).

The bottom line is that the proposed discovery will neither materially advance the objectors’ objections nor assist the Court’s consideration of the fairness, reasonableness, and adequacy of the settlement agreement.

The Settlement Agreement is the Product of Arms-Length Negotiations.

The Settlement Agreement was negotiated in good faith and at arm’s length over many months. All told, BP and the PSC engaged in more than 145 days of face-to-face meetings. Rec. Doc. 6418 at 3. The negotiations were extensive and highly contested. In the final months the negotiations were conducted under the supervision of the undersigned as Court mediator.

Because the settlement agreement was reached through arm’s length negotiations, information sought by the movers on why the parties negotiated the terms that they did is unnecessary. See Manual for Complex Litigation (4th), p. 328 (“A court should not allow discovery into the settlement negotiation process unless the objector makes a preliminary showing of collusion or other improper behavior.”)

__________________

OPT-OUT UPDATE No. 2

DHCC Overall Program Statistics

(Status Report as of October 5, 2012)

Individual Economic Loss

19,338 claim forms were submitted,

DHCC made 79 payment offers in the total amount of $860,968,

24 offers were accepted, and

DHCC made 6 payments in the total amount of $38,173.

Individual Periodic Vendor or Festival Vendor Economic Loss

132 claim forms were submitted,

DHCC made 0 payment offers,

0 offers were accepted, and

DHCC made 0 payments.

Business Economic Loss

14,558 claim forms were submitted,

DHCC made 485 payment offers in the total amount of $86,962,974,

280 offers were accepted, and

DHCC made 65 payments in the total amount of $10,181,973.

Start-Up Business Economic Loss

1,202 claim forms were submitted,

DHCC made 7 payment offers in the total amount of $1,235,483,

2 offers were accepted, and

DHCC made 0 payments.

Failed Business Economic Loss

1,238 claim forms were submitted,

DHCC made 0 payment offers,

0 offers were accepted, and

DHCC made 0 payments.

The DHCC data indicates that a total of 36,468 claimants filed the above types of claims with the DHCC during the period from approximately June 4, 2012 to October 5, 2012. The DHCC paid only 71 of these claimants. In sum, the DHCC paid only 0.19% of the claimants who filed claims.

Of the 19,338 Individual Economic Loss claims submitted, 79 claimants have received payment offers totaling $860,968, resulting in 6 payments totaling $38,173. This equates to an average payment of only $6,362.17 per Individual Economic Loss Claimant!

What is life worth?

According to BP and Feinberg, et al., the life of an individual BP oil spill victim wasn’t worth very much. According to BP/PSC and Juneau, et al., the life of an individual BP oil spill victim is worth even less!

Follow

Get every new post delivered to your Inbox.

Join 102 other followers