On Exxon Valdez Anniversary, Questions for America’s Legal System
This month marks the 25th anniversary of the Exxon Valdez accident – a mishap that spawned decades of litigation and delayed justice for many. Over the two decades that litigation dragged on, an estimated 8,000 original plaintiffs died while awaiting their compensation as the company and the plaintiffs’ lawyers battled it out in court.
It’s a legacy that BP sought to avoid in the aftermath of the Deepwater Horizon (DWH) accident. Rather than spend decades fighting with plaintiffs in the courts, BP immediately acknowledged its role in the accident, began paying claims, and waived the $75 million statutory cap on its liability. It also established a $20 billion trust fund to assure the nation that funds would be available for economic and environmental restoration in the Gulf. In 2012, BP went further, entering an agreement with the Plaintiffs’ Steering Committee (PSC) to resolve the substantial majority of legitimate private economic loss claims stemming from the accident and oil spill. The company did so because it wanted to do the right thing and compensate claimants that suffered actual losses as a result of the spill.
BP meant what it said, and the company has lived up to its word. In the almost four years since the accident, BP has already paid out more than $12 billion on claims submitted by individuals, businesses, and government entities. That’s on top of the more than $14 billion the company has spent on response and clean-up.
Unfortunately, the company believes that misinterpretations of the settlement agreement have resulted in huge awards for claimants with fictitious losses and losses with no apparent connection to the spill. Among them: A wireless phone store that was closed for nearly all of 2010 as a result of a fire that predated the oil spill; a lawyer located approximately 200 miles from the Gulf who lost his license four months before the spill; and a wheat farm more than 200 miles from the Gulf that elected not to plant and harvest crops in 2010. All got awards from the claims program. No company would agree to pay such awards – and BP certainly didn’t.
Over the last year, these misinterpretations have been the subject of extensive litigation in the courts. BP won a favorable ruling on the question of whether revenues and expenses must be appropriately matched in calculating lost profits, and the company awaits a decision on the proper interpretation of the settlement agreement’s causation requirement for class membership.
But in BP’s opinion, a warped application of the agreement isn’t just BP's problem – it also sends a troubling message to companies involved in future accidents: that they might as well litigate as long as possible rather than risk exposing themselves to new liabilities by trying to make amends.
BP believes that the public policy ramifications of this message are especially perverse in the case of oil spills. As former members of the Presidential Commission that investigated the DWH accident said in a subsequent report last year, the Gulf states “and the country at large were fortunate that BP … ignored the [liability] cap and had both the resources and the willingness to bear the full costs of responding to the spill.”
Moreover, errors in interpretation of this landmark agreement, the company believes, could spell problems for the use of class actions as a means of resolving business problems. The Fifth Circuit warned: “This case is one of the largest and most novel class actions in American history. As such, significant legal questions are involved that will affect the course of class action law in this country going forward, and the class action as a suitable vehicle for the resolution of conflict for businesses and litigants.”
All this week, BP will run a series of ads in Politico about the serious concerns the company has raised regarding the way in which the settlement agreement has been implemented. The company is running these ads to explain why the litigation over the settlement continues and the extent to which the company's commitment to the Gulf is being twisted and exploited. The examples highlighted in the ads speak volumes, but for every one cited, there are many more where the settlement program made an award for alleged losses with no apparent connection to the spill. In all, such awards have thus far totaled at least half a billion dollars.
BP will continue to work hard to return the settlement agreement to what it believes was its original intent: providing compensation to claimants that suffered actual losses as a result of the spill. A quarter century after the Exxon Valdez accident, America’s legal system should encourage fair and efficient resolution of legitimate claims – not endless litigation and huge awards for non-existent or unrelated injuries.
BP Seeks Trial on Harm from Macondo Spill
By Ed Crooks
BP is calling for a trial to hear arguments about the environmental harm caused by its 2010 oil spill in the Gulf of Mexico – and is fighting an attempt by the US government to keep evidence on its effects out of court.
The US government is also attempting to raise in court evidence of BP’s previous safety failures, including the 2005 Texas City refinery explosion that killed 15 people.
Decision of the United States Court of Appeals for the Fifth Circuit of March 3, 2014 (Causal-nexus requirement)
For the last year, BP has been fighting in court to correct misinterpretations of the settlement agreement that it reached with the Plaintiffs’ Steering Committee in 2012.
BP has already secured a favorable ruling in the courts requiring the matching of revenues and expenses in calculating BEL claims. In December 2013, after ten months of litigation, including two appeals to the Fifth Circuit, the District Court reversed its prior rulings and held that the CSSP must ensure that claimants’ reported revenues and expenses are correctly matched for purposes of determining BEL awards under the settlement.
Tallying Up Fraud in the Gulf
A Massachusetts man who faked his death. A Detroit mayoral candidate who concocted owning a boat. A Mississippi man who claimed to own a shrimping and fishing business that didn’t exist.
These are just a few of the individuals who’ve been convicted of or charged with defrauding or attempting to defraud the claims facilities that were put in place to help those with losses traceable to the Deepwater Horizon accident. Since 2010, dozens of cases of fraud and related crimes – accounting for over $9 million in claims – have been prosecuted in courts around the Gulf, with many individuals being sentenced to jail time or ordered to repay the awards that they wrongly received. And as news reports bear out, the prosecutions are ongoing. Public reports show that thus far, there have been 133 reported fraud cases leading to criminal charges and 120 reported fraud cases leading to criminal convictions in nine states.
Laissez les “Feeding Frenzy” Rouler
By Linda Kelly
National Association of Manufacturing - Shopfloor blog
Manufacturers have been watching with great interest as BP continues to push back against a feeding frenzy resulting from numerous questionable claims arising from the Deepwater Horizon accident. A disappointing ruling was issued from the US Court of Appeals for the Fifth Circuit yesterday when a divided three judge panel ruled against BP in its effort to seek relief from an onslaught of questionable claims under the Deepwater Horizon settlement fund. The fund has so far paid out nearly $4 billion, but further payments have been enjoined since December, pending the court’s ruling in this case. BP’s original estimate for compensating business and individual losses was $7.8 billion. A more recent estimate pegged the cost at $9.2 billion. That seems likely to grow after yesterday’s ruling in which the court missed an opportunity to restore some rationality to this situation.
BP’s Response to Fifth Circuit Decision of March 3, 2014
BP disagrees with the decision by the U.S. Court of Appeals for the Fifth Circuit denying the company’s request for a permanent injunction preventing certain payments under the Economic and Property Damages Settlement (the “settlement”) it reached in 2012. BP had asked the Court to prevent payments to business economic loss (BEL) claimants whose alleged injuries are not traceable to the Deepwater Horizon accident and oil spill. BP believes that such BEL claimants are not proper class members under the terms of the settlement and is considering its appellate options.