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BP again tries to renege on settlement

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A version of the following originally appeared in The Hill’s Judicial Blog on Friday, November 14, 2014.


In response to “In the BP case, the rule of law is on trial” by Lester Brickman, I offer these observations.

Before BP’s change of heart regarding the Settlement Agreement the company itself authored and executed, BP enthusiastically lobbied Federal District Court Judge Carl Barbier for approval of the Settlement, arguing that the causation standards and Claims Administrator Juneau’s application of same, were “more than reasonable,” “more than fair,” “objective,” “transparent,” “standardized,” “economically appropriate,” “consistent with . . . economic reality,” and an “efficient” method of establishing causation.

Mr. Brickman faults Judge Barbier and Administrator Juneau in their application of those standards. In fact, Barbier and Juneau have simply applied the Agreement as instructed by the settling parties. BP told both, in explicit detail, and on multiple occasions, exactly how the standards were to be applied. Barbier and Juneau have simply done what BP said – much to the company’s benefit.

How’s that you say?

While 15,028 claims have been approved under this construct, 28,771 have been denied. Put another way, using the causation formulas BP now attacks, nearly 29,000 businesses have failed to demonstrate the necessary causal connection between BP’s spill and their economic losses. Based on these numbers, if anyone should be complaining it is the Plaintiffs, not BP.

BP’s tired allegations that the claims of a car dealer, a towing company and a handful of others are “fictitious” (a dozen or so claimants out of tens of thousands) can all be refuted, or at least debated by, reasonable minds. Even BP’s hometown newspaper, The Times of London, last month called BP on the carpet saying “it emerged that not all the cases BP complained about were quite as cut and dried as the company made them appear.”

This brings us to why litigants choose to settle in the first place. In a litigation setting, if debated factual situations were “cut and dried,” there would be no appetite for settlements. Both sides do the math, weigh the risks of trial and then choose to fish or cut bait. If they settle, they don’t litigate. When they don’t litigate, there is no trial. If the BP Settlement violates the Constitution because the Plaintiffs didn’t have the opportunity to prove their legal entitlements to a jury, then every settlement violates the Constitution. Public policy does not favor such a viewpoint.

And what of the sanctity of contract? Or phrased differently, the concept that a deal-is-a-deal? Tens of thousands of businesses were impacted by BP’s disaster, from mom-and-pops to Fortune 100 entities. According to Harvard University’s Kennedy School of Government, 50,000 people lost their jobs and 10,000 corporate bankruptcies were filed in the months that followed the spill – in Florida alone. These businesspeople relied upon BP’s word, handshake and written contract, voluntarily ceding their Article III rights to trial by jury by entering into this alternative compensation system, only to be told two years later “nevermind, we didn’t mean it.” It is an outrage.

Finally, there is nothing in BP’s Petition for a Writ of Certiorari with the Supreme Court that should interest the Justices. There are no compelling reasons to hear this case, despite BP’s theatrical protestations to the contrary in its court filings and public relations efforts.

Most importantly, there is no circuit conflict at issue here. While the federal circuits have applied two slightly differing tests to determine Article III standing in class actions, known by their case names as Denney and Kohen, the 5th Circuit Court of Appeals, when hearing BP’s arguments below said “This case is not a vehicle … for us to choose whether Kohen or Denney articulated the correct test. For the purposes of the present case, these questions are entirely academic because BP’s standing argument fails under both.”

In a related opinion, 5th Circuit Judge Leslie Southwick, a George W. Bush appointee, concluded that “there is nothing fundamentally unreasonable about what BP accepted but now wishes it had not.” Fellow 5th Circuit jurist, Judge Eugene Davis, a Reagan nominee, said “ … the reason that BP has identified no [legal] authority for [its] proposition is that it is nonsensical.”

Buyer’s remorse indeed. Case closed.

1 Comment

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  1. Eyeswideopen says:
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    Lester Brickman, writes a laughable article that mimics the BP spin. As if BP was victimized by their own greed to included all of Louisiana, Mississippi, Alabama and the Florida Gulf Coast forever barred from filing a suit by accepting the terms of the settlement that BP drafted.

    Lester read what BP’ s counsel stated at the Fairness Hearing when they didn’t have the right to bid on new oil lease contracts. Months of brutal negotiations and the settlement is working as anticipated awarding $952 million before the judge even ruled.

    Fairness Hearing transcript:

    MR. GODFREY: 9:44am

    Good morning, Your Honor. I’m Rick Godfrey for BP.

    Good morning, Judge Shushan. It’s always a pleasure to see you again. I’ve missed our daily meetings and calls throughout the course of the summer. Last spring, BP and the PSC announced yet another step that BP was taking to make good on its commitment to the citizens and communities of the Gulf Coast states.
    Specifically, BP agreed, after months of intense, indeed brutal negotiations around the clock, nine months and one day, over 145 face-to-face meetings, we agreed to enter into two comprehensive and historic settlement agreements designed to fairly and generously compensate the legitimate claims of those who were injured as a result of the oil spill in this tragic casualty.

    MR. GODFREY: 9:54am

    Point two, the settlement program has already issued over $1.3 billion in payment determinations, over $400 million in the transition process, $952 million as of Wednesday of this week. Ninety-five percent of the claimants who have been issued determinations have accepted them.

    MR. GODFREY: 10:04 am

    The settlement is working as we anticipated and as we negotiated with Mr. Rice and Mr. Fayard.

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