Columnist Joe Nocera of The New York Times made a sweeping negative generalization about "mass tort" lawsuits and "plaintiffs' lawyers" because BP is currently paying out more in damages than it expected for the Deepwater Horizon disaster.
BP pled guilty to the felony manslaughter of 11 workers who perished when the Deepwater Horizon oil rig exploded in April 2010. In addition, BP pled guilty to lying to Congress about the extent of the resulting environmental catastrophe and agreed to a $4 billion plea agreement - a record sum in criminal penalties. BP also settled in civil proceedings for damage beyond the immediate blowout, such as the extensive economic and medical harm caused to those who depend on a Gulf of Mexico unpolluted by millions of barrels of oil.
Currently, BP, which remains the "world leader in deepwater drilling," is attempting to renege on this agreement.
Defending BP's appeal of its settlement and advertising campaign warning against potential claimants "tak[ing] money they don't deserve," Nocera claimed that many Gulf residents and business owners receiving court-ordered damage awards are "basically bystanders...[with] their hands out" represented by "plaintiffs' lawyers [who] gin up cases because, well, that's what they do." From the NYT:
One of the things I find particularly offensive is that the settlement includes criteria that virtually ensure that businesses unharmed by the oil spill will get compensation. All over the Gulf, lawyers are advising clients to line up at the BP trough, and they are doing so.
But how is this righting a wrong? Why is it appropriate to transfer money from BP shareholders to people who were basically bystanders and now have their hands out? When I posed this question to the plaintiffs' lawyers who sued BP, I received a lengthy statement from one of the lead lawyers, Steven Herman, describing a formula that, he noted several times, BP had agreed to, and even encouraged. He said that the Oil Pollution Act of 1990 was aimed at helping people who have been harmed "indirectly." What he didn't say is that the more claimants getting BP's money, the more money winds up with the lawyers themselves.
If some claimants or attorneys have profited from illegitimate claims, that is wrong.
However, not only has the federal judge overseeing the case appointed former FBI Director Louis Freeh to investigate charges that people are not following the claimant guidelines or are improperly receiving awards, he has ruled that BP is complaining about a legal settlement whose terms it has already agreed to. From Bloomberg BusinessWeek:
In multiple appeals to [Judge] Barbier, BP accused [Patrick] Juneau of accepting questionable kitchen-table accounting that fails to match expenses to related revenue. Some outside observers sympathize with BP. "At the time they settled, BP believed the process would be equitable to both sides," Jason Gammel, an industry analyst in London with Macquarie Capital, told Bloomberg News. "It's played out in a way that's clearly awarding claims they would not have viewed as being equitable."
David Berg, a prominent Houston trial lawyer, disagrees. "BP cut itself a bad deal," says Berg, who isn't involved in the case. BP's biggest mistake, he says, was failing to demand a cap on its total payout. "It is a stupid agreement."
Barbier repeatedly brushed off the company's objections. "BP's interpretation injects a subjective notion of alternative causation and a degree of complexity that are contrary to the settlement's terms," the judge ruled on March 5. At a hearing a month later, in response to another BP objection, Barbier repeatedly interrupted the company's lead lawyer from Kirkland & Ellis, Richard Godfrey. "I am having a real hard time understanding how BP is now asking me to enjoin Mr. Juneau from following my order," Barbier lectured. "Basically, you're asking me to enjoin myself."
To challenge Barbier's ruling before the U.S. Court of Appeals for the Fifth Circuit, BP has hired one of the country's premier appellate advocates, Theodore Olson. In his brief, Olson, a partner in Washington with 1,000-lawyer Gibson, Dunn & Crutcher, asks the Fifth Circuit to reject what he disparages as Juneau's "garbage in, garbage out approach." There would have been "no reason for a defendant in BP's position," Olson adds, to agree to the "windfalls" Juneau has distributed.
Berg, the Houston trial attorney, can think of one reason: There was "panic within BP to get the arrangement done and keep the Justice Department at bay by showing good faith." In that environment, even a corporation with top-dollar legal talent might sign something it later regrets.
Loyola Law Professor Blaine LeCesne, who is closely monitoring the multiple lawsuits against BP, agrees that the company is experiencing buyer's remorse for undervaluing its civil liability. Furthermore, LeCesne has noted that some of the challenges to claims whose legitimacy BP is now contesting are based on "ludicrous" defenses. For example, as reported by local news, BP is seeking to deny Louisiana chef John Folse from claiming damages, even though it previously and prominently promoted his Gulf seafood business:
When BP hosted an event at the London Olympics to promote Gulf seafood and highlight its oil-spill cleanup efforts, Louisiana chef John Folse appeared in his BP chef coat with several tons of seafood dishes his company cooked up and shipped overseas from his manufacturing plant in Donaldsonville.
Now, BP is arguing that Chef John Folse & Co. is not a seafood processor at all -- and therefore should not get the millions of dollars a court-appointed claims administrator recently awarded it to cover its spill-related losses.
It's being called a "ludicrous" example of the oil giant's appeal-at-all-costs posture over the last two months - a stance the company staked out once it realized that the multi-billion-dollar settlement it signed last year was costing it far more than it had planned.
Beyond the fact that it seems the contested claims do not all involve "indirect" damages, the NYT columnist additionally ignores the fact that public interest attorneys are also representing plaintiffs pro bono. These plaintiffs' attorneys and their clients are also struggling with the "stall tactics" and anti-settlement media campaign of BP, which Nocera nevertheless praised as "the best example I've ever seen of a company that actually tried to find a better way."
BP is now appealing the settlement - upheld by a judge Nocera insinuates is biased because he was a "Louisiana plaintiffs' lawyer himself" - to the extremely conservative court of appeals for the 5th Circuit. As described by the Alliance for Justice, most of these judges have been appointed by Republican presidents and have ties to the oil and gas industry:
One additional challenge for litigants is that even if they receive a favorable outcome at the trial court level, they will almost certainly be forced through the appellate gauntlet of the Fifth Circuit Court of Appeals, one of the most conservative circuits in the country, with 11 of the 16 sitting judges having been appointed by Republican presidents. As Alliance for Justice reported in 2010, judges in the Fifth Circuit have extensive ties to the oil and gas industry. For instance, 14 out of the 17 judges have financial holdings in the energy industry, and 13 of them represented oil and gas companies before taking the bench. Moreover, plaintiffs may face an unfriendly venue if the case ends up before the Supreme Court, which time and again has proved willing to bend the law to favor powerful corporations like BP over the rights of everyday Americans.
Ultimately, Nocera is defending corporate behavior toward victims of the "second-largest spill of all time" on behalf of a company that really doesn't need his help. Indeed, as Alliance for Justice has documented, his sympathies in regards to this calamity could probably be better placed with the local residents and businesses that are still seeking fair compensation.