Published by Rhonda Miller on 02 May 2012 07:23pm
A federal judge in New Orleans granted preliminary approval Wednesday to a proposed settlement of $7.8 billion in BP oil spill claims. MPB’s Rhonda Miller reports the decision affects thousands of Mississippi residents and businesses.

Standing on the porch of his Ocean Springs home, fisherman Anthony Pizzi says he has not been able to earn a living oystering or shrimping since the oil spill. Now, at 54 years old, he’s wondering if he will ever be able to go back to fishing.

“I had to sell my 55-foot boat really cheap to survive, with bills and food.”

Pizzi says his claim with BP for loss of income was denied several times by the Gulf Coast Claims Facility, which does not exist any more. Pizzi says now his claim is part of the proposed settlement given tentative approval by U.S. District Judge Carl Barbier in New Orleans.

“Been watching the news, waiting for the judge to sign off on the suit, and then, hopefully, we’ll find out the legalities of what they’re going to offer us. But besides that, we don’t know what the paperwork means or what they’re offering us.”

That’s no surprise to Ocean Springs Attorney Robert Wiygul, whose firm is representing hundreds of clients in the BP oil spill litigation. Wiygul says the proposed settlement is 1,000 pages long.

“It’s important for people to recognize that this settlement is set up as a class action, and if you’re part of that class, and that would include business owners for example, or owners of coastal property, or fishermen, you’re going to be in that class unless you make the decision to get out of it.”

Wiygul says some groups are not included in the proposed settlement, like oil rig and casino workers. He says those claims will have to resolved through other legal action. Wiygul says he expects BP oil spill lawsuits to go on for many years.

WASHINGTON — The Justice Department filed its first criminal charges related to the BP oil spill Tuesday, accusing a former company engineer of destroying records requested by prosecutors investigating the deadly 2010 oil rig explosion in the Gulf of Mexico, the worst environmental disaster in U.S. history.

Kurt Mix, 50, of Katy, Texas, was charged with two counts of obstruction of justice in a complaint unsealed in New Orleans.

Mix, a drilling engineer who worked on BP’s effort to estimate the amount of oil leaking from the blown-out Deepwater Horizon rig, allegedly deleted 300 text messages with a company supervisor detailing how BP’s controversial program to stop the leak – “Top Kill” – was failing.

Included in the information Mix allegedly deleted, according to court documents, were estimates that oil was flowing at a rate of 15,000 barrels per day.

“At the time, BP’s public estimate of the flow rate was 5,000 (barrels per day),” prosecutors said in court documents.

Before the Top Kill program started, Mix and other engineers had concluded that the effort was unlikely to succeed if the flow rate was greater than 15,000 barrels per day, according to court documents.

If convicted, Mix faces a maximum penalty of 20 years in prison and a fine of up to $250,000 on each count.

BP issued a statement saying it is cooperating with the Department of Justice and other investigations into the spill. BP “had clear policies requiring preservation of evidence in this case and has undertaken substantial and ongoing efforts to preserve evidence,” the statement said.

The charges were filed by the Justice Department’s Deepwater Horizon Task Force, based in New Orleans. The task force’s investigation is continuing.

The Deepwater Horizon oil rig exploded in the Gulf of Mexico on April 20, 2010, killing 11 men and unleashing an environmental disaster with the eventual spilling of 200 million gallons of oil.

The flow rate – or amount of oil gushing from the damaged well – was a hotly debated issue from the earliest days of the disaster, said Aaron Viles, deputy director of the Gulf Restoration Network, a New Orleans-based environmental group.

Estimates provided by BP officials and approved by federal officials were vigorously challenged by independent monitors, he said.

The criminal charges unsealed Tuesday show that BP officials knew what environmentalists were saying all along: There was more oil flowing into the Gulf than BP and government officials let on, Viles said. He said he hopes more charges are pending for higher-up BP executives.

“It was clear to anyone who knew flow rates that those estimates didn’t make sense,” Viles said. “We certainly feel vindicated.”

Orange Beach, Ala., Mayor Tony Kennon agreed.

“This validates our claim all along: They were not being honest, they were not being forthright, and they were not doing the right thing from Day One,” he said.

Kennon said he was happy to hear of the charges but hopes federal investigators implicate higher BP officials in any cover-up. The city’s tourist-driven economy lost half of its annual revenue during the spill, he said.

“To me, it shows the arrogance of a large corporation like this and what I would consider an incestuous relationship between it and Washington, D.C., to think they can get away with this,” Kennon said.

George Barisich, a St. Bernard Parish oyster harvester and shrimper and board member of the Louisiana Shrimp Association, said the charges are good news for folks looking for the deeper truths of the spill – but shouldn’t come as a surprise.

“This is just proof positive that they knew what they were doing, they knew they were taking a risk,” Barisich said. He added: “It was just a matter of time before they arrested somebody. My concern is that they’re going to try to keep the blame from the higher-ups.”

The criminal charges won’t impact a recent settlement reached between BP and a group of plaintiff attorneys, said Robert Wiygul, an Ocean Springs, Miss., environmental attorney whose firm represents fishermen and business owners in the ongoing litigation. That settlement, estimated at nearly $8 billion by BP and involving tens of thousands of plaintiffs, still needs approval from U.S. District Judge Carl Barbier.

But the new charges could affect future litigation, including liability hearings, which could propel BP’s costs for federal environmental fines and punitive damages into the tens of billions of dollars, he said.

“Any kind of criminal activity associated with a person or company seriously affects their credibility,” Wiygul said. “When you’re in court, credibility is what it’s all about.”

Iberville and Ascension parishes should compensate the owners of Alligator Bayou Swamp Tours for opening the bayou’s floodgate in 2009 and ruining the company’s business, an attorney for the firm told a state appellate court Thursday.

“They (Iberville and Ascension governments) destroyed the swamp tour business. They (the company’s owners) should be compensated,’’ Clay Garside, who represents Alligator Bayou Swamp Tours co-owners Frank Bonifay and Jim Ragland, argued to a three-judge panel of the 1st Circuit Court of Appeal in Baton Rouge.

But an attorney for Iberville Parish countered that the floodgate in Iberville was opened to protect nearby landowners.

“One property owner in the area doesn’t like it — one,’’ Ryan Ours, who represents Iberville, told the 1st Circuit panel.

Ours also argued it is a “privilege’’ to use public waterways, not a “right.’’

Bonifay, who attended the court hearing, said afterward that he is “praying a lot.’’

“We lost all of our bookings. We’ve had no income for three years,’’ he said.

The floodgate between Alligator Bayou and Bayou Manchac was built in 1951 and had generally been kept closed since its construction.

Bonifay and Ragland, who own land adjacent to Alligator Bayou, shut their business down shortly after the gate was opened and the water receded from their land and the bayou.

Garside told Circuit Judges Edward “Jimmy’’ Gaidry, Michael McDonald and Jeff Hughes that Alligator Bayou Swamp Tours started in the mid-1990s.

McDonald noted that the floodgate was in existence when the swamp tour owners bought their property.

“To me it’s like moving next to an airport and then complaining about the noise from the airplanes,’’ the judge said.

Garside argued that Alligator Bayou’s navigability could have been maintained if the water level had merely been lowered to 3.8 feet to 4 feet — what he called the historical bank level — but the opening of the floodgate “drained’’ the bayou and left just six inches of water.

Before the gate was opened, water in the bayou was high enough to permit Alligator Bayou Swamp Tours to offer the public pontoon boat tours of the scenic bayou area.

The decision by the governments of Iberville and Ascension to open the gate stemmed from complaints from nearby landowners that the closed gate kept too much water on their properties, limiting what they could do with their land and interfering with the natural rhythm of the swamp ecosystem.

State District Judge Thomas J. Kliebert Jr. ruled in June that Alligator Bayou Swamp Tours is not entitled to compensation because the company had no private property rights on the bayou.

Kliebert concluded that Alligator Bayou Swamp Tours “doesn’t have a protected, private right in a public waterway.’’

Bonifay and Ragland are seeking compensation on the basis of “inverse condemnation,’’ a legal term in which a private party can seek payment for land taken by a government entity for public use.

“This (the opening of the floodgate) is not a legal action,’’ Garside argued Thursday.

“Where is the protected constitutional right? They don’t have it,’’ Ours countered.

Gaidry, McDonald and Hughes took the arguments under advisement.

Garside said outside the 1st Circuit courthouse that Alligator Bayou Swamp Tours lost millions of dollars in capital investment and hundreds of thousands of dollars in future revenue.

The tidy, 62-room Lighthouse Lodge is perched near the Gulf of Mexico on Highway 23, in the marshlands between Breton Sound to the east and Bataria Bay to the west, an easy jumping off point for what used to be some of America’s most prized commercial and sport fishing waters.

That was before an explosion on April 20, 2010, on the Deepwater Horizon drilling rig, which killed 11 workers and spewed oil for 87 straight days. It soaked hundreds of miles of Gulf Coast shoreline in caramel-colored oil and sent Strohmeyer’s clients fleeing to less troubled waters.

Now, Strohmeyer faces a dilemma. She can sign onto a $7.8 billion settlement struck between BP and lawyers representing people who, like her, have lost money because of the worst oil spill in U.S. history. Or she can take her chances and try to strike a better deal on her own.

All along the Gulf Coast, in a tight-knit community that stakes its reputation on the size of the catch, business owners are wrestling with questions of compensation. Some have accepted a settlement and wonder whether they should have held out for more. Some are angling for an offer. And some, like Strohmeyer, are still pondering their options.

At 80 years old, she has already been through one disaster — Hurricane Katrina flattened her lodge in 2005, forcing her to rebuild it.

She said she has avoided filing a claim so far in part because her lodge got a boost in the weeks after the spill, when cleanup workers filled the guest rooms and slept on the couches in the lobby.

“I’ve never sued anybody in my life,” she said. “I hate to start now.”

But, since the beginning of the spill, even before she lost any money, lawyers have been urging her to file a claim.

“Even before the cleanup workers started coming, hell, I had lawyers from Houston calling me,” Strohmeyer said. “I have been told that I really ought to file a claim, and I’m looking at it.”

Not “chump change”

Down the road, in Venice, Louisiana, Raymond Schmitt wonders if he got short-changed.

Schmitt is co-owner of Saltgrass Lodge, a three-story, eight-room, antebellum-style lodge. He and his partners settled last year with the Gulf Coast Claims Facility, a $20 billion trust set aside by BP in the weeks following the spill and overseen by Washington lawyer Kenneth Feinberg.

“My partners wanted to settle, and so we did,” said Schmitt, a longtime charter fishing boat captain. “I don’t know if we settled for enough or not.”

Schmitt declined to disclose the amount of the payment, and said it covered roughly two years of lost revenue. “It was not a great amount of money but it wasn’t chump change either,” he said.

Feinberg’s fund paid out $6.1 billion on about 225,000 claims, an average of about $27,000 per claim.

Schmitt summed up the dilemma he faced like this: “Do we take this now and survive the next two years and try to keep going, or do we try to fight ‘em and go bankrupt in the meantime?”

Schmitt and his partners filed their claim without the help of a lawyer, to avoid potential fees. “We felt if we did get an attorney and had to fight them, it would take a year and we’d probably end up with the same amount after the lawyers got everything else,” he said.

Pressure to keep the business afloat helped the partners make up their minds. “We took the money and we’ve got our fingers crossed,” said Schmitt, who has been spending heavily on advertising to draw bookings for the spring fishing season.

A lot of talking

In Boothville, just north of Venice, Brooke Andry is still waiting for a deal, as her business sags.

“When the fishing industry bottoms out, the lodging business is gone,” said Andry, who owns the Kingfish Lodges and Venice Palms Lodge. Andry said she filed claims with Feinberg, but has seen no action.

“I think Feinberg and his group did a lot of talking and not a lot of action,” Andry said. When she met with Feinberg’s representatives, she was required to bring extensive documentation of her losses, but Feinberg’s team was never prepared. “They’d just put us off and say ‘We’ll see you in another 30 days,’” she said.

A spokeswoman for Feinberg declined to comment for this story. “I believe the GCCF has successfully fulfilled its mandate,” Feinberg said in a statement on March 2.

Andry said she will decide whether to sign onto the $7.8 billion settlement with BP after looking over the details with her brother, an attorney who has advised her so far. She said she hasn’t decided whether to resubmit her claim or pursue a lawsuit on her own.

“People come from all over the world to come fishing,” Andry said. “But if they’re only going to catch two fish instead of ten, they figure they might as well go to Destin,” a beach resort in Florida.

For now, Andry is stuck in limbo between the old claims processing regime run by Feinberg and a new one to be established under the settlement between BP and plaintiffs’ lawyers, which won’t be operational for several weeks.

The new claims facility, which still must be approved by U.S. District Judge Carl Barbier in New Orleans, will offer settlements to business owners who lost profits from the spill, as well as home owners and individuals, based on set formulas for lost revenues.

BP estimated the total cost of settling with plaintiffs at $7.8 billion, but the amount could rise and is not subject to a cap, plaintiffs’ lawyers say. BP and the plaintiffs’ group have declined to estimate the number of potential claimants.

Both the old and the new claims methods have their detractors. Feinberg has been criticized for slow-walking the claims process and applying over-rigid terms that excluded some legitimate claims.

Critics of the new fund, primarily lawyers who represented clients before Feinberg’s fund, warn that it could allow lawyers representing clients who haven’t settled yet to collect exorbitant fees.

Houston lawyer Tony Buzbee, one such lawyer, said big fees to the plaintiffs’ group, called the Plaintiffs’ Steering Committee, could eat up funds that should go to individuals and businesses.

For plaintiff lawyers, potential fees are enticing. If the settlement is worth $7.8 billion, as BP claims, that could yield $468 million in legal fees, calculated at 6 percent. BP declined to comment on the claims process for this story.

Doing without

Robert Wiygul, an attorney in Ocean Springs, Mississippi, who represents about 1,000 clients who had been seeking payment from Feinberg’s GCCF, said he was optimistic that the new settlement process would resolve his clients’ concerns.

“The amount that’s available looks like it’s going to be something that’s going to protect people adequately from the future risks of this oil spill,” said Wiygul, an environmental attorney who represents a wide range of clients from shrimpers and crabbers to other business owners.

Another option for victims is also on the table: opting out of the settlement and suing BP directly.

Opting out could yield the highest potential payout, because it could include punitive damages if Barbier rules in a coming trial that there was gross negligence on the part of BP or its well partners, said Blaine LeCesne, a law professor at Loyola University in New Orleans. BP vigorously contests any claim to gross negligence.

LeCesne said plaintiffs who sign onto the settlement could leave billions of dollars on the table in potential future punitive damages. Those who opt out “will have extraordinary leverage in negotiating a very generous settlement that will include anticipated punitive damages,” he said.

For the plaintiffs, the choice is uncertain: Accept a quick payment now, or opt out of the settlement and hope for a better deal in the future.

But for some, time and money are running short. At the Lighthouse Lodge, Strohmeyer said she had to give employees a raise to keep them from being lured away by shoreline cleanup contractors. She’s losing money, she said. “I’ve been doing without for some time now,” she said.

Meanwhile, the lawyers keep calling.

BP, Transocean and Halliburton are some of the largest corporations in the world, and they hired hundreds of scientists and lawyers to defend the companies. Questions about how to prove the extent of people’s losses, whether fisheries and tourism economies would suffer in the future, and whether health issues were caused by the spill would all have to be proven in court, with strict standards for evidence.

I’m optimistic that the proposed settlement for people harmed by the BP spill will be a good one. In 2010, the BP spill hurt people who depend on the Gulf of Mexico for their living in some very direct ways – people were put out of jobs, seafood was tainted, and visitors stopped coming. But the harm from the spill didn’t stop there, because the spill also puts them at risk for the future – if fisheries are affected, or a storm puts oil back on the beaches. Any fair settlement has to include not just past losses, but something to protect people against the chance of future losses. The proposed settlement includes mechanisms to do that, and just as important, it will put people back in some control of their lives.

There are still a lot of steps left in the dance before the settlement proposal is final – some key elements remain to be worked out, and the judge has to approve the offer as fair. Some claims will have to be negotiated on an individual basis, and some will probably have to go to court in the end. But for now, the proposed settlement looks like a big step forward.

Robert Wiygul

BP spill settlement promises fast payouts

Published: Sunday, March 04, 2012, 3:11 PM Updated: Monday, March 05, 2012, 6:19 AM

By Rebecca Mowbray, The Times-Picayune

After reaching a deal Friday night to settle health and economic damage claims by individuals and businesses who were harmed by the Gulf of Mexico oil spill, BP and plaintiff attorneys leading the litigation say the court-supervised claims process will begin immediately.

Charles Dharapak/The Associated PressGulf Coast Claims Facility Administrator Kenneth Feinberg, shown testifying before a U.S. Senate committee in 2011, will leave his post sometime this week.
Ken Feinberg, the administrator of the Gulf Coast Claims Facility, which has been paying claims on behalf of BP using money from a $20 billion fund, will step aside sometime this week.

Lynn Greer, a principal in the Richmond, Va., firm BrownGreer PLC, which has been assisting Feinberg, will take over as the temporary claims facilitator. Then, in six to eight weeks, assuming U.S. District Judge Carl Barbier gives preliminary approval to the deal, Patrick Juneau, a special master from Lafayette, will begin overseeing the payment of claims under the terms outlined by the settlement.

The plaintiffs describe the settlement as uncapped, meaning there’s no limit on how much money is available to pay damages. BP estimates that the deal will cost about $7.8 billion. The proposed settlement is not an admission of liability by BP.

Juneau has broad experience as a mediator and court-appointed special master in a New Orleans train-car leakage fire case, in product liability cases involving the heartburn drug Propulsid and silicone breast implants, and in a case involving Conoco Phillips Co. He will work under Barbier’s supervision, independently from BP and the plaintiffs committee. Juneau could not be reached for comment Saturday.

The plaintiffs say that the new process will be more transparent than the Gulf Coast Claims Facility. Calculations will be made under formulas approved by the court, so people will be able to see exactly how their award was made and can dispute it if necessary. Few details are available about how the claims will be organized, but they take into account the types of damage and proximity to the coast. Each claim will be multiplied by a “risk transfer premium” that will differ by type of claims since no punitive damages were awarded by a court. The plaintiffs say that the risk transfer premium will ensure that their deal will pay more in compensation than what Feinberg did, but not enough details have been worked out from their agreement in principle to say what the multipliers are and how large the biggest multiplier is.

“Under the new program, eligible claimants will generally be paid greater benefits than under the GCCF,” said Stephen Herman and Jim Roy, liaison counsels for the plaintiffs, in a press release.

Feinberg declined to comment on the deal, but called it “good news” in a statement on the Gulf Coast Claims Facility website, and said “it avoids a lengthy complex trial and uncertain appeals.”

Feinberg also congratulated himself for a job well-done: “I point with significant pride and satisfaction to the achievements of the Gulf Coast Claims Facility: reviewing over 1 million claims submitted by 573,000 claimants and paying some $6.1 billion to approximately 225,000 individuals and businesses in just over 18 months. I believe the GCCF has successfully fulfilled its mandate, and urge an orderly transition to the new proposed claims program.”

People who have made applications to the GCCF will not need to reapply; all data will be transferred to the new administrators. Anyone who has received a final offer from Feinberg will receive 60 percent of their money immediately, and then will be put into the new process, dubbed the “court-supervised oil spill settlement program,” where they will get a new offer. People will have the option of whether to take the new deal, which the plaintiffs believe will be richer, or if they don’t like it, get the remaining 40 percent they were owed by Feinberg.

It’s unclear what will happen to the hundreds of people who had sent in final releases, meaning that they agreed with Feinberg’s determination and released BP from future liability to Feinberg but have not yet gotten their money.

People who have already received full payment from Feinberg and have signed off on that award are not eligible for the settlement.

Feinberg’s process criticized

The plaintiffs steering committee had complained bitterly about Feinberg, calling his process arbitrary and opaque, but attorneys outside the deal observe that it couldn’t have been all that bad if the plaintiffs committee is keeping BrownGreer while the new process ramps up. They also note that Feinberg encountered a steeper learning curve than he expected at handling claims, and if the new claims process experiences the same hiccups, the transition could lead to delays or interruptions in the processing. They also worry that the thousands of people who were poised to get paid immediately by Feinberg will now be held hostage for months while forced to wait for their remaining 40 percent or a new offer from the new court-supervised process.

“A lot of this litigation has just delayed what we were trying to do with Feinberg. This trial had nothing to do with people who were trying to get paid,” said Tony Buzbee, a Houston attorney representing a wide variety of claimants.

Buzbee also questioned how his clients are better off in going from a fund with $14 billion left in it to a settlement that BP values at $7.8 billion. “I don’t see how this has advanced the ball. I’m concerned that it’s going to be more money out of my clients’ pockets, and more delay. They’re going to have to do a really good job of selling it. They could be facing a full-scale revolt.”

Other attorneys outside the plaintiffs steering committee were eager to learn more details about the deal and new process.

“I don’t think I can comment until we see the term sheet,” said Stuart Smith, a New Orleans attorney with a large number of claims.

But Joel Waltzer, a New Orleans attorney representing the Wisner Trust and two Indian tribes as well as about 1,000 fishers and deckhands, was optimistic about the $2.3 billion set aside for commercial fishermen.

“If it’s distributed correctly, it’s going to be a deal that people are going to be able to believe in,” he said. “It’s six times the value of the entire catch for the entire seafood industry in Alabama, Mississippi, Louisiana and west Florida.”

Class actions

Attorneys for BP and the plaintiffs are basically working from an agreement in principle, and need to fill in the details and file a proposed settlement agreement with the court within 45 days. Although the court still needs to review the settlement and ask for comments before considering whether it is fair, probably in late summer or early autumn, BP and the plaintiffs decided not to wait for official court approval.

The deal is divided into two class actions, one covering economic loss claims and the other covering medical claims.

Anyone who fits the descriptions in the class actions — even those who had never filed with Feinberg or filed in court — will automatically be included. If they don’t want to participate, they will need to opt out. That process will occur quickly, giving people probably 60 days to opt out.

Structuring the settlement as class actions gives BP greater certainty that the deal will resolve its problems. For the plaintiffs, it adds another year to the clock, moving the ultimate deadline for making claims from April 2013 to April 2014. It also enables the settlements to handle not only individual losses but create things for collective interests, such as the $105 million set aside for improving the capacity for health care delivery on the Gulf Coast and other money reserved for tourism and seafood marketing.

Attorneys’ fees will be determined by the judge at a later date.

The economic agreement will compensate businesses and individuals for lost profits; damage to coastal property, wetlands and real property; loss of enjoyment and use of property; loss of subsistence use; and claims by boat owners who participated in the Vessels of Opportunity cleanup program who say they were improperly compensated.

The medical agreement will compensate cleanup workers and coastal residents who believe they were harmed by exposure to oil and dispersants. People who develop future illnesses linked to the spill will retain their right to sue BP. The deal also sets up a “medical consultation” program for 21 years — the amount of time between the Exxon-Valdez disaster in 1989 and the BP oil spill.

While the settlement assigns priority to medical claims, which had largely been left out of discussion so far, it ignores two key groups of people.

People who suffered economic harm from the deepwater drilling moratorium put in place after the disaster are not covered by the settlement. This group, estimated at about 6,000 people or businesses, had also been ineligible for compensation under the Feinberg process. They will probably need to file a separate class action.

People who were injured in the explosion of the Deepwater Horizon rig also are not covered by the settlement.

One area of concern is that the medical provision greatly widens the number of people eligible, yet BP has estimated the settlement at $7.8 billion, meaning that individual compensation may not be as rich as the plaintiffs committee promises.

Other claims linger

The settlement does not include federal, state and local governments. With the private party settlement out of the way, it could make it easier for BP to focus on working with public bodies, but comments on Friday night by the Justice Department and Louisiana’s head of coastal restoration indicate that they’re eager to go to trial.

Walter Leger — who represents Orleans, St. Bernard, St. Tammany, Lafourche and Terrebonne parishes, plus a host of water districts and school boards — said that his clients are similarly ready and eager for a trial over things such as loss of tax revenue, local response costs and damage to parish land.

The agreement between BP and the plaintiffs committee changes the structure of the litigation; BP has assigned the rights to its suits against rig owner Transocean and cement contractor Halliburton to the plaintiffs committee. That gets BP out of all parts of the litigation except the governmental bodies, and makes Transocean and Halliburton bigger targets for the plaintiffs. Those disputes could be subject to a new trial, or new settlement talks.

It is unclear whether subsequent phases of the trial — on how much oil was spilled, where it went and the cleanup effort — will go forward, although the government could litigate over the issues. It is also unclear what will happen to the 72 million pages of evidence and more than 300 depositions that were taken in advance of the trial.

Blaine LeCesne, a tort law professor at Loyola who has followed the oil spill litigation closely, said that the settlement seems to be a bigger help to BP’s litigation strategy than it was to the plaintiffs. BP’s estimate of $7.8 billion strikes LeCesne as low, perhaps because the parties knew that plaintiffs represented by attorneys that were not directly involved in striking the settlement may opt out of the deal. Meanwhile, the plaintiffs agreeing to take on Transocean and Halliburton on BP’s behalf means they’re helping to defend BP and pursue the company’s strategy of placing blame as widely as possible. “I think this case is as poised for trial as it ever was,” he said.

•••••••

Mark Schleifstein and David Hammer contributed to this report.

By David Hammer, The Times-Picayune

BP and the private plaintiffs in the massive Gulf oil spill litigation have reached a settlement that BP estimates will cost $7.8 billion. But that is an uncapped amount, an the court still must supervise the payment of damages. U.S. District Judge Carl Barbier also issued an order delaying the trial for a second time in light of the settlement.

In a statement released late Friday, BP said its settlement with private individual and business claimants includes $2.3 billion specifically for Gulf seafood industry claimants.

An uncapped settlement means a new claims administrator, similar to Kenneth Feinberg who handled claims out of court for the last year and a half, will have to determine payments. But BP put out a statement that emphasized the certainty of the payment amount and that it would not exceed what BP has long reported it had set aside to pay such claims.

Stephen Herman and James Roy, leads for the plaintiffs steering committee, said the process would be transparent and will address economic loss claims, loss of subsistence claims and, in a separate agreement that breaks significant new ground, compensation for medical claims and payment for periodic medical care over the next 21 years.

“This settlement will provide a full measure of compensation to hundreds ofthousands — in a transparent and expeditious manner under rigorous judicial oversight,” Herman and Roy said in a statement. “It does the greatest amount of good for the greatest number of people.”

But there are hundreds of private claimants whose lawyers were not part of the steering committee and may decide to opt out of the settlement.

Herman and Roy contended that the court-monitored payment of claims would generally be more generous than Feinberg has been in paying 221,000 individuals and businesses a total of about $6 billion out of court. The plaintiffs said their negotiated payment process would employ a risk multiplier and would let claimants choose the time frames for measuring their losses.

The plaintiffs attorneys said there would be a transition period in which Feinberg’s Gulf Coast Claims Facility would finish some pending claims and transfer others to New Orleans, with court claimants having the right to take a portion of what Feinberg has offered them while still being able to collect under the new settlement terms.

The plaintiffs also touted the settlement for claimants who say that the oil and chemical dispersants caused major health issues. Government agents have not been able to confirm the connection between reported skin and respiratory illnesses and the spill, and, therefore, Feinberg declined to accept those claims. The plaintiffs’ statement Friday suggested the burden of proof for those who worked on boats cleaning up the oil for BP would be particularly low under the terms of the settlement.

“At one end of the spectrum, cleanup workers can submit a claim with a declaration under penalty of perjury describing the conditions or symptoms after exposure even if they did not seek medical treatment at the time of exposure,” the plaintiffs said. “At the other end, residents and workers who suffer chronic symptoms or conditions from exposure will be required to submit medical records from the time of exposure and for ongoing medical care.”

Magistrate Judge Sally Shushan reported the agreement after moderating talks this week, although specific terms have not been released.

Barbier had already delayed the start of the trial from Monday until this coming Monday, March 5, but now says another delay will be necessary.

Claims by government plaintiffs and others remain against BP, and there are also thousands of claims for damages against BP’s contractors on the Deepwater Horizon rig, which exploded April 20, 2010, killing 11 men and setting off the worst accidental offshore oil spill in history.

Wyn Hornbuckle, a spokesman for the U.S. Department of Justice, said government negotiators remain open to a settlement, too, but are also prepared for trial.

“We are hopeful that the resolution of the private plaintiffs’ lawsuit will provide swift and sure compensation to those harmed by the Deepwater Horizon oil spill,” he said. “With regard to the United States’ outstanding claims, and as Attorney General Holder recently testified before Congress, the United States is prepared to hold the responsible parties accountable for the damage suffered in the Gulf region. The United States will continue to work closely with all five Gulf states to ensure that any resolution of the federal law enforcement and damage claims, including natural resources damages, arising out of this unprecedented environmental disaster is just, fair and restores the Gulf for the benefit of the people of the Gulf states.”

Garret Graves, the state of Louisiana’s trustee for the its environmental damage claims, welcomed the settlement between BP and private plaintiffs, but also made it clear that the government claims are still ready for trial.

“It is pretty clear that BP feels that they are above the law and the Coast Guard is still looking for it,” Graves said. “We are looking forward to an expedited trial plan to fast track justice and recovery.

“We have been preparing for trial for over 18 months and are very anxious to get into court as soon as possible on the remaining matters before the court,” Graves added. “This would include confirming the obvious gross negligence determination, any criminal issues resulting from the investigation, and tens of billions of dollars in natural resources and Clean Water Act fines reinvested in our coast and the Gulf — it is the only way we will have a long term recovery from one of the nation’s worst environmental disasters.”

Barbier’s order said terms of the proposed settlement will be submitted to the court for approval.

No new date was immediately set.

The judge said the settlement will require substantial changes to the current trial plan but he didn’t elaborate.

The rig owner, Transocean Ltd., said it remains prepared for trial.

“Delays or deals made by other players do not change the facts of this case and we are fully prepared to argue the merits of our case based on those facts,” company spokesman Lou Colasuonno said.

The Deepwater Horizon rig exploded in the Gulf of Mexico about 50 miles off Venice, causing about 4.9 million barrels of oil to spew from an undersea well owned by BP. The rig, owned by Transocean Ltd., sank two days later. The leak a mile below the water’s surface couldn’t be plugged for 87 days, in spite of several attempts by BP and its contractors.

The spill soiled sensitive tidal estuaries and beaches, killing wildlife and shutting vast areas of the Gulf to commercial fishing.

Barbier was assigned to oversee nearly all of the federal claims spawned by the Deepwater Horizon rig explosion.

The main targets of litigation resulting from the explosion and spill were BP, Transocean, cement contractor Halliburton Co. and Cameron International, maker of the well’s failed blowout preventer. BP, the majority owner of the well that blew out, was leasing the rig from Transocean.

The Justice Department sued some of the companies involved, seeking to recover billions of dollars for economic and environmental damage. The department opened a separate criminal investigation, but that probe hasn’t resulted in any charges so far. Attorney General Eric Holder recently promised news on that front within a few months.

The companies also sued each other, although some of those cases were settled last year. In one of the pending lawsuits, BP has sued Transocean for at least $40 billion in damages.

Trial preparations have produced a staggering 72 million pages of documents and included depositions of more than 300 witnesses. The trial also is designed to determine whether Transocean can limit what it pays those making claims under maritime law.

A series of government investigations have spread blame for the disaster.

In January 2011, a presidential commission found that the spill was caused by time-saving and money-saving decisions by BP, Halliburton and Transocean that created unacceptable risk. But the panel also concluded that the mistakes were the result of systemic problems, not necessarily the fault of any one individual.

In September 2011, however, a team of Coast Guard officials and federal regulators issued a report that concluded BP bears ultimate responsibility for the spill. The report found BP violated federal regulations, ignored crucial warnings and made bad decisions during the cementing of the well a mile beneath the Gulf of Mexico.

BP has repeatedly said it accepts some responsibility for the spill and will pay what it owes, while urging other companies to pay their share.

BP established a $20 billion claims fund to resolve claims, and BP says the current settlement will be paid out of that account. As of Thursday, Feinberg’s Gulf Coast Claims Facility, a group run by administrator Kenneth Feinberg after he was selected by President Obama and BP, has paid out more than $6 billion from the fund to more than 221,000 individuals and businesses. In addition, BP paid about $1 billion to claimants before Feinberg took over the process in August 2010.

Staff writer Mark Schleifstein and The Associated Press contributed to this report.

NEW ORLEANS (CN) – With billions of dollars at stake, the trial over the worst environmental disaster in U.S. history was pushed back a week as settlement talks between BP and oil spill plaintiffs’ attorneys continued.
The trial had been set to open today, Monday, but was rescheduled to begin in a week, on Monday, March 5.
Postponement is “for reasons of judicial efficiency and to allow the parties to make further progress in their settlement discussions,” according to the order issued Sunday afternoon by U.S. District Judge Carl Barbier.
Barbier will preside over the trial without a jury.
The trial involves claims of 116,000 plaintiffs who seek compensation for lost revenue and personal injuries from the oil spill. The federal government also has claims for damages against BP and the other defendants, including fines for Clean Water Act violations. Punitive damages are possible. Billions of dollars are at stake.
BP and plaintiff attorneys issued a joint statement on Sunday to confirm the trial’s delay, saying there “can be no assurance that these discussions will lead to a settlement agreement.”
Eleven people were killed in the April 20, 2010 Deepwater Horizon explosion that injured 17 others and set off the worst oil spill in U.S. history. Nearly 5 million gallons of oil were spilled in 87 days.
The broken well was finally capped July 15, 2010, leaving more than 650 miles of coastline soaked in oil.
The trial is the first of three phases, and will assign fault among the defendants for the explosion and sinking of the Deepwater Horizon. This portion is expected to last into May.
The second phase will assess the defendants’ nearly 3-month-long effort to cap the Macondo well.
Phase three will examine cleanup efforts.
BP is one of several defendants accused of negligence before the spill. Other defendants include Transocean, the owner of the Deepwater Horizon; Cameron International, the manufacturer of the failed blowout preventer; and Halliburton, which provided cement services to the rig.
It was unclear Sunday if a settlement now would affect whether subsequent phases of the trial take place. In all, the three phases could last most of the year.
Trial analysts speculated that BP will want to settle now rather than face embarrassing evidence during trial.
Judge Barbier ruled in previous weeks that BP’s extensive history of criminal charges and the maximum air and water pollution fines it paid cannot be brought into this phase of the trial because of time considerations.
Last week, a land trust that owns 35,000 acres of barrier lands, crucial to hurricane protection and affected by the oil spill, filed for summary judgment in Barbier’s court, claims BP has withheld information about its oil spill cleanup and has not funded the whole response or cleaned up all the oil on its land.
The Edward Wisner Donation is a landholding trust whose 35,000 acres include 9 miles along the Gulf of Mexico in the area known as Fourchon Beach.
Fourchon beach is the closest stretch of coast to BP’s ill-fated Macondo well. More than 600 oil platforms sit within a 40-mile radius, which produces roughly 17 percent of the U.S. domestic oil supply.
In addition to being rich in oil, Gulf waters bordering Fourchon Beach are among the most biologically diverse in the world.
The Wisner Donation says oil began washing ashore at its Fourchon Beach property about a month after the Deepwater Horizon explosion.
“Without the Wisner Donation’s Fourchon property, the spit of remaining land on either side of Bayou Lafourche would quickly erode, uniting the Barataria/Caminada and Terrebonne basins and exposing the underbelly of Louisiana to the forces of nature,” according to the memorandum in support of motion for partial summary judgment. “If this were to pass, the historic coastal communities of Cocodrie, Dulac, Montegut, Isle Jean Charles, Pointe-Au-Chien, Lockport, Lafitte and Grand Bayou could become relics of the past, with Houma and New Orleans greatly threatened. If this were to pass, south Louisiana’s unique heterogeneous cultures will be forever changed.”
Wisner adds: “The survival of this critical coastal habitat, and the nationally significant energy infrastructure on Donation property, is directly dependent on the survival of Fourchon beach. The contamination from the Deepwater Horizon oil spill has introduced additional risks for the planned restoration project, and has complicated efforts to save this area.”
Wisner claims: “Despite the massive cleanup operation, oil can still be found throughout the Donation’s property: on the sandy beach, in the washouts and natural bayous, in the salt flats, mangrove and saltwater marshes found behind the beach crest and on the waterbottoms both in front of and behind the beach.”
And, Wisner says: “Although oil also washed deep into the salt marsh behind the beach at Fourchon, BP has never assessed the location of contamination in the marsh, despite requests from the Donation.”
Wisner says that “BP has refused to pay for required monitoring and analysis on the Donation’s property. The practical effect of BP’s refusal to abide by its payment obligations is that funds which would have gone to support philanthropic causes are instead being diverted to fund Deepwater Horizon spill response.”
It claims that “BP’s breach of the Access Agreement literally began as soon as it was signed. On November 9, 2010, the Donation sent a letter to BP’s counsel outlining BP’s breaches of the agreement over the preceding three months. These breaches included failure to pay response costs, failure to provide contact information for people working on the property, and timely notice of meetings affecting the property.”
Neither BP nor the Edward Wisner Donation was available for comment.
A Courthouse News reporter visitedWisner’s Fourchon Beach property in September 2011 to survey tar mats and oil uncovered from Tropical Storm Lee.
Oil was apparent all along the beach.
Forrest Travirca III, field inspector of the Wisner Donation portion of Fourchon Beach, told Courthouse News at the time that bird mortality had increased since the oil spill. He said many juvenile diving birds, including pelicans, had shown up dead along the beach. All had at least one broken wing.
Juvenile dolphins with umbilical cords still attached had also washed up on shore, according to accounts. Travirca said he and his colleagues had found 20 to 25 dead juvenile dolphins on the beach in the past year.
“We live in a different world now,” Travirca said of the changes he had seen since the oil spill.
Wisner’s motion was not the first legal document to accuse BP of shoddy oil spill cleanup. In January, a whistleblowerwho worked for BP in cleanup management filed a lawsuit claims that BP fired him after he refused to skew cleanup records in Mississippi.
In the weeks after the explosion, as oil gushed into the Gulf, coastal Louisiana residents voiced concerns that BP’s objective, first in failing to cap the well, and subsequently in failing to respond immediately to the oil, was to contaminate the wetlands and fragile coastline in order to get mineral rights to the oil beneath. Without endangered wetlands to protect, mineral rights would be easier to obtain, residents said.
The Wisner Donation seeks a partial summary judgment to enforce its access agreement with BP.
It is represented Robert Wiygul of Ocean Springs, Miss. and Joel Waltzer of Harvey, La.

NEW ORLEANS (AP) — On the cusp of trial over the catastrophic 2010 oil spill in the Gulf of Mexico, phalanxes of lawyers, executives and public officials have spent the waning days in settlement talks. Holed up in small groups inside law offices, war rooms and hotel suites in New Orleans and Washington, they are trying to put a number on what BP and its partners in the doomed Macondo well project should pay to make up for the worst offshore spill in U.S. history.

It is a complex equation, and the answer is proving elusive.

The federal government, Gulf states, plaintiffs’ attorneys, BP PLC, rig owner Transocean Ltd. and cementer Halliburton Energy Services Inc. have been in simultaneous and separate negotiations in New Orleans, according to a person with direct knowledge of the talks and others who had been briefed on them.

Trial is set for Monday, and by Friday, no deal had been reached, several people familiar with the negotiations told The Associated Press on condition of anonymity. The biggest stumbling block appeared to be the sheer size and sprawling uncertainty over the unprecedented dollar amounts at stake.

Financial analysts estimate BP’s potential settlement payout at $15 billion to roughly $30 billion. The company itself estimated it would cost about $41 billion in the weeks after the explosion to account for all of its costs, including cleanup, compensating businesses, and paying fines and ecological damage.

“This one is off the charts in terms of size and significance,” said Eric Schaeffer, the director of the Environmental Integrity Project in Washington and former head of the Environmental Protection Agency’s Office of Regulatory Enforcement.

BP has to weigh its chances of getting off cheaper by piecing together a sweeping settlement or put its fate in the hands of one man, a federal judge who will hear testimony in lieu of a jury. If the judge sides with plaintiffs on the amount of oil spilled and determines BP was grossly negligent, the company conceivably could face up to $52 billion in environmental fines and compensation alone, according to an AP analysis.

While such a scenario is unlikely, it illustrates the broad range and staggering sums at play.

No matter what, the case is all but guaranteed to set records as the most expensive environmental disaster in history, far surpassing the Exxon Valdez disaster in 1989. Exxon ultimately settled with the U.S. government for $1 billion, which would be about $1.8 billion today.

If BP settles, it’s almost certain to dwarf previous deals the U.S. has reached with corporate offenders in any industry. That record now stands at $2.3 billion against Pfizer Inc. in 2009 to settle claims over the painkiller Bextra, according to the Justice Department.

And once the civil case is resolved, depending on the scope of any settlement, BP still could face criminal fines; penalties for violations of oil pollution, clean water and wildlife protection laws; and still-pending economic losses due to the partial shutdown of the Gulf. Morgan Stanley analysts estimated criminal fines would come in between $5 billion and $15 billion in any eventual settlement.

Robert Wiygul, an environmental lawyer in New Orleans who represents spill plaintiffs but is not involved in the settlement talks, said putting a dollar figure on what is the right sum for BP to pay is extremely difficult.

“There is going to be a lot of voodoo there,” he said.

The bill will be commensurate to the magnitude of the disaster: An epic engineering failure that highlighted the dangers of drilling in extreme conditions miles from shore and miles under water.

The April 20, 2010, blowout of BP’s deepwater Macondo well killed 11 workers and injured 17. The burning drilling rig Deepwater Horizon toppled and sank to the Gulf floor, where it sits today.

It took engineers 85 days to permanently cap the well. By then, more than 200 million gallons of oil leaked from the well and had covered much of the northern half of the Gulf of Mexico — endangering fisheries, killing marine life and shutting down offshore oil drilling operations.

About 900 miles of shoreline were fouled and beaches were closed for months. The spill forced President Barack Obama in June 2010 to make his first Oval Office speech, in which he called the BP spill “the worst environmental disaster the nation has ever faced.”

Under the Clean Water Act, which is designed to punish companies and prevent future spills, a polluter pays a minimum of $1,100 per barrel of spilled oil; the fines nearly quadruple for companies found guilty of grossly negligent behavior. Under this statute, BP could owe $5 billion to $21 billion. Transocean and Anadarko Petroleum Corp., a minority owner of the Macondo well, also face paying hefty fines.

One of the biggest questions facing U.S. District Judge Carl Barbier, a maritime law expert presiding over the trial, will be to determine if BP was guilty of gross negligence.

Under the Oil Pollution Act, companies must pay to restore what they fouled. Based on criteria from what Exxon paid after the 1989 Exxon Valdez spill in Alaska, BP could pay about $31 billion, or $148 per gallon, to cover the ecosystem damage to the Gulf. Exxon paid $900 million for 11 million gallons of spilled oil, or about $81 per gallon. Adjusted for inflation, that’s $148 per gallon.

Experts said Barbier will weigh a number of factors in determining what BP should pay to restore damaged natural resources, and BP’s liability under the Oil Pollution Act could be much higher or much lower than what Exxon paid per gallon.

There are several arguments that BP is likely to make. The company could say the amount it pays should be much lower because it has spent billions on cleanup already and provided $1 billion for early ecosystem restoration. BP may say the spill’s effects were minimized by the Gulf’s warm waters, oil-eating bacteria and other factors.

The Gulf has been soiled by past spills and natural oil seeps, so the oil giant could say it’s too hard to pinpoint what is BP damage and what isn’t, said Mark Davis, a Tulane University law professor who specializes in water resources.

State and federal lawyers are likely to argue that the damage was extensive and that the Gulf’s marine environment is more varied and rich than even that of Prince William Sound, where the Exxon Valdez went aground.

Beyond that, there are more than 110,000 people and businesses — among them large fishing and hotel operations — who have not settled with BP and have outstanding claims against the company. Technically, people have until April 20, 2013, to file claims against BP, which committed to pay $20 billion to cover damage claims and so far has spent about $7 billion.

What makes this trial so good for plaintiffs — and a nightmare for BP, Halliburton and Transocean — is that the spill was a chronicle of corporate failures. Federal investigators have concluded cost-cutting by BP and shoddy work by all three companies caused the blowout.

“It’s the perfect case for plaintiffs’ lawyers,” said Blaine LeCesne, a tort law specialist at Loyola University New Orleans who’s analyzed the case. “They have everything to gain by going to trial.”

While the settlement haggling stretches through the weekend, the hundreds of lawyers who have come to New Orleans are primed for battle.

Garret Graves, an aide to Louisiana Gov. Bobby Jindal and a member of a federal and state council assessing damage from the spill, was adamant that any last-minute settlement in the price range of $20 billion would let BP off too easily.

“We’re not going to sell short the citizens and we’re not going to let BP walk away,” Graves said.

Mike Brock, a BP trial lawyer, said BP was ready to prove “that no single action, person or party was the sole cause of the blowout.”

At trial, BP will try to spread blame to the other companies and try to convince the judge that what happened at the Macondo well was an accident, not an act of gross negligence or willful misconduct.

“How culpable was BP? How bad were they? How bad was the violation and how sloppy was their conduct?” said Schaeffer, the former EPA official. “There are risks for both sides, but they are significantly greater for BP. They don’t want this potential of billions of dollars hanging over them.”

Associated Press writers Michael Kunzelman in New Orleans and Harry R. Weber in Atlanta contributed to this report.

Copyright © 2012 The Associated Press. All rights reserved.

The Court today decided to postpone the start of the three month trial to March 5, 2012 to allow settlement discussions to continue.  Waltzer & Wiygul has participated in settlement discussions to resolve private claims arising from the BP MC252 Deepwater Horizon disaster.  Waltzer & Wiygul will continue to push for flexible, transparent, and protective solutions regarding the damage done to the community and the environment while preserving each individual’s freedom to choose what is best for his or her own family. 

If you have not already joined the litigation or joined the litigation, if you wish to, feel free to give us a call.