BP Snipes Away at Oil Spill Settlement

Appeals venues are courts of law, public opinion.

, The National Law Journal

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A sign announces the closing of a seafood stand due to the oil spill June 13, 2010 in Lafourche, Louisiana.
A sign announces the closing of a seafood stand due to the oil spill June 13, 2010 in Lafourche, Louisiana.

Despite a resounding recent setback before an appeals court, BP PLC remains unbowed in its campaign to rewrite its $9.6 billion settlement in the Deepwater Horizon disaster. The company continues to chip away at the deal both in the courts of law and of public opinion. Even hard-bitten plaintiffs attorneys who have taken on big oil companies in the past are finding it remarkable for a company to challenge its own settlement.

In court, BP has objected to the way the deal's scope and compensation methods have been interpreted. It's also opposing disbursements to thousands of seafood businesses and claims made by nonprofits that the company says aren't covered by the settlement.

Meanwhile, BP is assiduously courting public support through pugnacious ads and op-eds in top national news publications."They've achieved a great deal of success," said Blaine LeCesne, professor at Loyola University New Orleans School of Law. "When you influence the public mindset to a degree where it starts to gain critical mass, ultimately it can affect the judicial outcome — which is what they're hoping to do."

BP insists the settlement as administered violates class action law by unfairly awarding billions of dollars to businesses that suffered no direct losses from the 2010 spill. On Jan. 10, the U.S. Court of Appeals for the Fifth Circuit rejected BP's argument in a ruling that, if unchallenged, would pave the way for claimants to collect damages this year.

But BP continues to fight what it calls the "causation" issue — whether or not damages were caused directly by the spill — pinning its hopes on a related appeal to a separate Fifth Circuit panel. That panel will review a ruling by U.S. District Judge Carl Barbier on Dec. 24, in which he refused BP’s request that he order the claimants to prove causation.* "As a result, the litigation seeking to rectify the misinterpretations of the settlement that have led to inflated, exaggerated or wholly fictitious claims — and inappropriate awards by the Gulf claims program — will continue unabated," said Geoff Morrell, senior vice president and spokesman for BP.

Barbier concluded that BP couldn't push for causation because its own attorneys at Kirkland & Ellis hadn’t raised the issue when he first approved the deal. BP's attorneys at that firm and others did not respond to a request for comment. The plaintiffs steering committee has maintained that requiring additional proof that the spill caused one's damages isn't necessary because both parties, in drafting the deal, approved a fair method of compensation based on losses attributed to the spill.** Meanwhile, BP is objecting to ­specific claims, including those by nonprofit organizations seeking damages for lost donations and grants. BP cites three specific nonprofit claims — upheld by the settlement administration's appeals board — that Barbier declined to review. "Nonprofit entities do not 'earn' donations and contributions, nor are they profit-seeking businesses," Morrell said.

Lawyers for the nonprofits are crying procedural foul. "The settlement agreement does not contemplate Fifth Circuit review of claim appeals at all," said E. Armistead "Armi" Easterby of Houston's Williams Kherkher Hart Boundas, who represents one of the organizations.

On another front, BP has accused a former member of the plaintiffs steering committee, Mikal Watts and his San Antonio firm, Watts Guerra, of fraudulently claiming to represent 40,000 deckhands eligible for compensation under a separate $2.3 billion deal with seafood businesses near the Gulf. BP, represented by new counsel at Williams & Connolly, seeks a preliminary injunction to halt the remaining $1.3 billion in payments. An attorney for Watts has called BP's actions "unfair and unwarranted."

"Mr. Watts never committed identity theft and did not defraud BP or anyone else," Robert McDuff of McDuff & Byrd in Jackson, Miss., said in a prepared statement.

THE COURT OF PUBLIC OPINION

Then there's the publicity campaign BP has waged in prominent newspapers, including The New York Times, The Washington Post and The Wall Street Journal, and via a Web site, www.the­stateofthegulf.com, which BP says "sets the record straight" on its legal battles and environmental cleanup efforts. In many posts and through links, the website criticizes Gulf Coast plaintiffs lawyers and some law firms that have filed their own claims in the Deepwater case.

Mobile plaintiffs attorney Robert Cun­ningham felt the sting when he criticized BP's television ads in a November opinion piece on www.al.com, an Alabama news website. The company countered on the same news website, arguing that Cunningham's firm, Cunningham Bounds, stands to gain $45 million in fees from oil spill claims. Cunningham is used to playing hardball with big companies, but most, he said, "don't have multimillion-dollar P.R. budgets focused solely on attacking anybody and everybody involved in the litigation who displeases them."

Morrell, who writes most of BP's opinion pieces, defended the P.R. strategy in an emailed statement: "We hope that in focusing our stakeholders' attention on the more than half-a-billion dollars in awards made by the claims program for alleged losses with no apparent relation to the spill, they will understand why the litigation over the settlement continues and the extent to which the company's commitment to the Gulf is being twisted and exploited."

Some plaintiffs attorneys have experienced a recent drop in calls and believe BP's campaign may be dissuading Gulf businesses from making claims. "Whether they win the legal battle or not, the P.R. battle will save them money at the end of the day," said Tom Young, a solo practitioner in Tampa whom BP has criticized.

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