Posts Tagged ‘Deepwater Horizon’
November 14th, 2014 at 11:56 am
SCOTUS Should Accept Golden Opportunity to Constrain Abusive Plaintiffs’ Lawyers

The 2010 BP oil spill in the Gulf of Mexico is by now a fading memory for most Americans.  The U.S. Supreme Court, however, will soon decide whether to hear a case stemming from the spill that could, at long last, restrain abusive trial lawyers who game our legal system.

The case involves BP, which immediately accepted responsibility for the spill and asked attorney Kenneth Feinberg to handle claims on a rapid and completely independent basis. Ultimately, Feinberg ordered more than 200,000 payments totaling $6 billion over 16 months.

The problem at issue arose when opportunistic plaintiffs’ lawyers decided that they weren’t receiving their customary windfall.  Consequently, they rushed to court and demanded a class-action settlement, which a federal district court in Louisiana granted.

Then the court appointed a well-connected local Louisiana lawyer to administer claims for what are broadly categorized as “business economic losses.” For example, a restaurant owner on the coast could demonstrate damages by comparing pre-spill revenues and profits versus post-spill revenues and profits. Victims who could establish a decline in revenues and confirm a causal connection between the losses and the spill itself, were entitled to payment.

Unfortunately, the claims administrator also steered vast sums toward businesses whose losses clearly had nothing to do with the spill. BP’s lawyers cite 64 representative examples of such abuse in their writ to the Supreme Court, including:

  • A real estate rental company that leased properties to two Saturn dealerships, which both went out of business because GM stopped making Saturns in 2009, put in a claim and received $238,000.
  • A group of emergency room physicians received $2.3 million after claiming that revenues dropped sharply, but that decline resulted not from the spill, but from a one-time earnings adjustment to accounts receivable over a period of five years.

BP appealed the awards to the Fifth Circuit, but lost in a sharply-split decision. Judge Edith Clement, a highly-respected appellate judge appointed by President George W. Bush, minced no words in her dissent.  She warned that the judiciary itself was becoming a “party to the fraud” against BP

Citing Judge Clement, Cardozo School of Law professor Lester Brinkman, a premier authority in the academic study of plaintiffs’ lawyers, wrote, “Make no mistake; fraud it is.  The settlement agreement entered into by BP to provide compensation to those that suffered loss from the spill, states that in order to be eligible for compensation, claimants must affirm under penalty of perjury, that they suffered ‘damages arising from’ the Deep Water Horizon incident.  But the Louisiana legal system has obliterated these words from the agreement.”

So why should informed citizens care? After all, BP admitted to doing great damage to the Gulf of Mexico.

We should care because if the abusive and greedy plaintiffs’ lawyers triumph in this case, few restraints will remain. If ever there was an example of discarding the rule of law in favor of enriching a politically-powerful group, this case is it.

At issue in this case is a straightforward proposition. Namely, a class-action settlement is grossly inappropriate where large numbers of that supposed class have even not suffered harm. That seems elementary

Unfortunately, different federal courts of appeal have ruled inconsistently in similar cases. That inconsistency alone constitutes one reason the Supreme Court could and should accept the case. Another reason is the important and fundamental legal issue at stake: people who haven’t suffered actual harm should not receive unjustified windfall damages.

Whatever one thinks of BP, the case now before the Supreme Court is a critical one, and its legal position is the correct one. Accordingly, the Justices should take the important step of granting cert.

April 20th, 2011 at 10:03 am
Gulf Blowout Was Terrible Anomaly

Following up on my column today on the execrable Obama response to last year’s Gulf oil spill, it’s worth reading pieces in the New Orleans Times-Picayune today so as to remind us of certain realities. First, as the caption accompanying this editorial notes (and as has been reported numerous times), this disaster hardly came out of nowhere. Instead, workers and mid-level supervisors had been reporting problems on this particular well for weeks.

Both widows including Courtney Kemp, of Jonesville, La. told committee members that their husbands, Shane Roshto and Wyatt Kemp, had told them in the weeks before the explosion about problems they had in controlling the well. “This well was different in the fact that they were having so many problems, and so many things were happening, and it was just kind of out of hand,” said Kemp.

Other reports confirm that these truths:

The AP recently obtained documents showing that a BP drilling engineer who worked closely on the blown-out well kept quiet about his misgivings in the weeks leading up to the accident.

In an email message to his wife on March 11, 2010, Brian Morel said his team aboard the rig was “out of control.”

“I can’t take it, so I am staying away from the issues today,” he wrote.

A few weeks earlier, the company had reprimanded Morel in a performance evaluation, cautioning him to pick his battles and “learn when to push and when to concede.”

In other words, this was eminently preventable. Warning signs were missed. Decision-making was terrible. And BP had a reputation, at least in some quarters, for cutting corners on safety.

What this means is that the risks of something like this happening again are very, very slim. If it hasn’t happened for many decades, and then when it does happen it turns out to have been preventable, and if everybody is now on the lookout for signs of trouble, and if new safety equipment and well-capping equipment has been developed and are ready at hand… well, then, it stands to reason that all other would-be drillers, and all the businesses and individuals who depend on the wells for their livelihoods, should not be punished by a “permitorium” on offshore drilling. Nor should American consumers nationwide, who are seeing energy prices (especially prices at the pump) rise to near-record levels.

Meanwhile, the T-P’s Bob Marshall (who was my boss nearly a quarter-century ago) updates us all on the continuing efforts to analyze the long-term ecological damages from the spill. This is crucial work. Conservatives rightly skeptical of EPA overreach on matters large and small, and property owners justly angry at the federal government’s assault on private property in the name of protecting “wetlands” that are no more than “prairie potholes,” sometimes forget that some ecological causes are indeed important. I have always argued that the most important of those are the health of the oceans and seas and the fisheries within them, which also means protecting the coastal eco-systems (actual wetlands/marshlands) that serve as the nurseries for those fisheries. Hunters and fishermen, innately conservative on so many levels, understand these things.

The trick to protecting these precious resources held in common is not to regulate people half to death, but to provide incentives for (or remove disincentives from) proper husbandry of the wetlands and seas. Government wetlands replenishment projects, to make up for the effects of government levee-building and canal-dredging, also are appropriate in some places — and they are less expensive than are disaster-relief costs to make up for damages caused by hurricanes whose effects would be far less fierce if healthy wetlands were still available to absorb some of the rising floodwaters and otherwise cushion the blow.

Nobody really needs a heavy hand from government; heavy hands too often come down with the force of a Rocky Marciano clenched fist. What is needed is a government that is responsive and smart, one which reacts quickly (Obama’s administration did not) but that does not overreact in ways that further punish the victims (which is what Obama did).

Future blowouts can be prevented without killing the regional or national economies. Again, the BP disaster was an anomaly. As my colleague Renee Giachino said on this site last week, the whole airline industry isn’t closed down when one plane crashes. Why should energy exploration be treated any differently?