This Blog Is No Longer Active

This blog is no longer active. Please visit: Journal of Accountability

Order & Reasons

Before the Court are two motions for sanctions against Brian J. Donovan
(“Donovan”) filed by Stephen J. Herman (“Herman”), James P. Roy (“Roy”), and
Patrick A. Juneau (“Juneau”) (collectively, “Movers”). (Rec. Docs. 26999, 27003). The
motions were thoroughly briefed and then argued to the Court on July 23, 2021. At
the end of the hearing, the Court granted the motions, sanctioned Donovan, and
stated it would issue a written opinion in due course. (Minute Entry, Rec. Doc. 27178).
This is the contemplated opinion.

This Document Relates to: Donovan v. Barbier, et al. and this article.

Order and ReasonsDownload

How MDLs Have Morphed U.S. Federal Courts into Merely Administrative Agencies

Approximately 47% of the civil cases pending in the nation’s federal courts are consolidated in multidistrict litigations (MDLs).

A recently filed lawsuit against the lead counsel in the BP oil well blowout MDL demonstrates how MDLs have morphed U.S. federal courts into merely administrative agencies.

This lawsuit is brought against Defendant Stephen J. Herman under the following causes of action: (a) Gross Negligence; (b) Negligence; (c) Negligence Per Se; (d) Fraud; (e) Fraudulent Inducement; (f) Promissory Estoppel; (g) Unjust Enrichment; (h) Breach of Fiduciary Duty; (i) Fraudulent Concealment; (j) Constructive Fraud; (k) Breach of Fiduciary Duty of Loyalty (Breach of the Aggregate Settlement Rule); and (l) Fraudulent Concealment (MDL 2179 Is Unconstitutional).

The following are the headers in the 130-page complaint.

NATURE OF ACTION

JURISDICTION AND VENUE

PARTIES

BACKGROUND FACTS

   I. Defendant Herman’s 8-Step Plan to Limit BP’s Liability

   and Maximize His Compensation

   A. Step No. 1: Capture Market Share

   B. Step No. 2: The JPML Transfer Order

   C. Step No. 3: Establishment of Feinberg’s Victims’ Compensation Fund

   D. Step. No. 4: Appointment of “Cooperative” Attorneys to the PSC

   E. Step No. 5: Circumvention of OPA, a Strict Liability Statute

   F. Step No. 6: Approval of the Settlement Class Action

   G. Step No. 7: The Post-Settlement Mop-Up Procedures

   H. Step No. 8: Clawback

   II. Defendant Herman Breached His Fiduciary  and Ethical Duties to Plaintiff

   A. “Come Into the Fold,” Pay Us, and Keep Quiet

   B. Defendant Herman Refused to Answer Plaintiff’s Questions

   C. Defendant Herman Violated the Aggregate Settlement Rule

   D. Defendant Herman Colluded with the Members of the MDL 2179 PSC  and BP

   E. Defendant Herman Did Not Hold BP Accountable

   F. Defendant Herman Refuses to Be Fully Transparent and Defendant  Herman Refuses to Be Held Accountable

   G. Why It Is Difficult to Hold Defendant Herman and Self-Dealing PSC Attorneys Accountable

   III. Defendant Herman Intentionally and Systematically Misled Plaintiff, Plaintiff’s Clients, and All Others Similarly Situated

   A. The Agreement-in-Principle

   B. The Highly Compensated “Thought Leaders”

   IV. Defendant Herman Oversees and Steers a Multidistrict Litigation Which is Unconstitutional

   A. Where’s the Case or Controversy in MDL 2179?

   B. Where’s the Due Process in MDL 2179?

   C. Opt-Out vs. Opt-In

   V. Defendant Herman Excessively Compensated Himself and Members of the MDL 2179 PSC by “Quadruple Dipping”

   A. Compensation Paid to Kenneth R. Feinberg by BP

   B. Compensation Paid to BP Oil Well Blowout Victims by Kenneth R. Feinberg (GCCF Program Statistics)

   C. The Deepwater Horizon Claims Center (DHCC Program Statistics)

   D. Compensation Paid to Defendant Herman and MDL 2179 PSC Attorneys

   (1) Common Benefit Fees

   (2) Contingent Fees

   (3) Co-counsel Fees

   (4) Hold-Backs

   E. Calculation of Compensation Paid to Defendant Herman and MDL 2179 PSC Attorneys

   F. Calculation of Compensation Paid to 103 Non-PSC Attorneys

   G.How the Court Allocated the US$720.15 million to Common Benefit  Attorneys

COUNT I: GROSS NEGLIGENCE

COUNT II: NEGLIGENCE

COUNT III: NEGLIGENCE PER SE

COUNT IV: FRAUD

COUNT V: FRAUDULENT INDUCEMENT

COUNT VI: PROMISSORY ESTOPPEL

COUNT VII: UNJUST ENRICHMENT

COUNT VIII: BREACH OF FIDUCIARY DUTY

COUNT IX: FRAUDULENT CONCEALMENT

COUNT X: CONSTRUCTIVE FRAUD

COUNT XI: BREACH OF FIDUCIARY DUTY OF LOYALTY (BREACH OF THE AGGREGATE SETTLEMENT RULE)

COUNT XII: FRAUDULENT CONCEALMENT (MDL 2179 IS UNCONSTITUTIONAL)

The collusive nature of MDLs has devolved to the point where: (a) justice is replaced by judicial efficiency, (b) federal judges sanction fund approaches and settlement class actions which limit the liability of defendants, and (c) a relatively small group of self-interested “cooperative” attorneys are permitted to be grossly over-compensated for merely acting as dealmakers.

As the lawsuit against Defendant Herman moves forward, many articles will be written by investigative reporters and other interested parties. Most of these articles will be the result of honest and unbiased reporting. Unfortunately, as BP has demonstrated since 2010, some of the articles will be written in a biased manner in order to protect the interests of BP and other parties involved in the BP oil well blowout MDL.

Before you read any article, I advise you to first read the complaint. Yes, the complaint is 130 pages in length but it is double-spaced and written in plain English. The above headers are analogous to the chapters in a novel’s table of contents.

A copy of the complaint is available here.