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Tom Young
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BP’s Buyer’s Remorse

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An abridged version of the below appeared as a Letter-to-the-Editor in the November 4, 2014 Wall Street Journal.

In response to your October 23 Editorial, “Tort Blowout Preventer,” 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.

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 parade of a dozen or so claims (out of tens of thousands) the company calls “fictitious losses” can all be refuted, or at least debated by, reasonable minds. Even BP’s hometown newspaper, The Times of London, last week called into question the accuracy of BP’s allegations, 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.

And what of the sanctity of contract? Or phrased differently, the concept that a deal-is-a-deal? I represent hundreds of businesses impacted by BP’s disaster, from mom-and-pops to Fortune 100 entities. 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 under the Constitution, 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, however, 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 the Kohen test and the Denney test.”

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.

2 Comments

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  1. Ben Riggs says:
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    As a former senior executive for BP, I have to say that this kind of behavior was always in the corporate culture. I was recruited and hired by a guy who was the poster child for dishonesty and greed at BP. When I refused to go along with a coverup of something that could potentially cost a number of lives in a customer’s steel plant, he fired me. Later when he was put in charge of the Alaska pipeline, I told my wife, “watch out for a big spill up there”. It happened. Then he went to BP corporate in Texas. I told my wife, “watch out for something bad to happen there”. The oil refinery disaster followed. When he was rewarded with the Chairmanship of BP America, I told her, “watch out for the Gulf of Mexico”. We all know what happened after that. But I never knew for sure what his bosses really knew, and whether he was routinely lying to them to get ahead, or in fact carrying out their directives. His first boss was an intellectually blind workaholic who terrified his subordinates. Who knows what he really wanted done. The later bosses at BP in the U.K. may have really just not known what was being fed to them. But as I learned in business early on, they were accountable just the same.

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    […] praised not only Juneau but the functioning of the class action settlement program itself.  And remember that BP agreed-to the exact methodology that Juneau was using to pay claims.  Importantly, also […]

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