Arbitrary and capricious BP settlement needs a do-over


As regular readers know, I have been working on behalf of a long list of everyday residents business owners and citizens of the Gulf region, and I have strongly objected to the terms of the $7.8 billion proposed settlement of claims against BP for its reckless actions in the 2010 Deepwater Horizon spill. In September, I lodged some of my written objections to the federal judge overseeing the case — maintaining that there was a rush to judgment even as the environmental carnage from the BP spill remains ongoing, and that aspects of the deal related to both health and property damage were inherently unfair.

Last week, I had an opportunity to state my objections in person before U.S. District Judge Carl Barbier at a fairness hearing in New Orleans. I do support the concept of a settlement between BP and the tens of thousands of residents and small business owners who’ve seen their livelihood — and in too many cases their health — severely damaged by the negligence of a big oil company. But the current deal before the judge, negotiated by BP and a select group of plaintiffs’ attorneys, is arbitrary, capricious, and inherently unfair, and it needs a complete do-over.

In my arguments, I focused particularly on the arbitrary nature of the settlement offers that were made to coastal businesses, especially those focused on tourism. The differences between some similarly situated businesses is so stark that I argued it was the result of a form of gerrymandering, drawing up boundaries in an illogical way that is harmful to affected Gulf businesses. As I noted in my argument:

“Two victims with businesses less than a quarter mile apart will find themselves treated disproportionately under this settlement depending which side of a county line or State Highway they are on or other arbitrary bases. These divisions are unscientific, lack valid evidentiary bases, and are at odds with the known science regarding this environmental disaster.”

I showed slides to the judge that noted, for one example, that about two-thirds of the businesses in Destin, Fla., a Gulf tourism mecca that lost considerable business when news of the Deepwater Horizon spill scarred many tourists away from the region, were lumped into the same class for damages as businesses in Huntsville, Ala., which is hundreds of miles from the coastline.

I also noted a specific example of two nearly identical sheet metal businesses in fairly close proximety — one, which is in Fort Walton Beach, Fla., neat the coast, suffered $91,115 in real damages and is entitled to $113,893; the second in seaside Destin, Fla., suffered less damage, some $48,430, but would receive more money, $121,076

We also made known my concerns about significant problems with the medical aspects of this deal: For example, a worker who bagged oil-soaked items may have passed out on the job and thus qualifies for a settlement, while a boom operator who suffered chronic exposure and didn’t report anything at the time — but now experiences significant symptoms, would not be covered. 

My concern, as I expressed to the court, is that these types of problems could cause the settlement to be thrown out on appeal, which would be a great loss to Gulf residents and businesses who’ve already suffered so much in the spill. For that reason, I proposed several solutions to the court: Granting representative-plaintiff status to the Zones C and D that are further from the coast, adding more uniformity to the Zone A of highest damages, and more opportunity for businesses to prove that their income is related to tourism and suffered a greater impact.

I am fully aware that there are powerful forces giving a powerful momentum to pushing this settlement through. I still maintain, and will maintain to the end, that a fair settlement is much, much better than a rushed settlement. And the settlement we have before us is not a fair one. There’s still time to get it right — if we have the will and the determination to do so.

To read my Sept. 12 post recording our objections to the $7.8 billion settlement, please read:  

© Smith Stag, LLC 2012 – All Rights Reserved

1 comment

  • You are so right….a rushed settlement like the Judge said that happened on the eve of the trial date was not a fair settlement to all the class members.

    #1 complaint is the VoO offsets and deductions to charter boats while other class members DO NOT have this VoO deductions. Not the shrimper crabbers or commercial fisherman… not the personal boats, mostly it was targeted toward charter fishing boats.

    If would be diiferent if BP had NOT pledged that the VoO Income would not be offset against their claims. Only then would this be a fair settlement toward all fisherman.

    BP did and said and promised whatever they could to keep from hiring experienced Oil response vessels at a higher rate promising locals that what you earn doesnt go toward your business fishing loss.

    BP’s attorney knows exactly what Ed Thompson BP Crisis manager told the residents og the Gulf Coast… They also knew full well that BP pledged in a letter that VoO earning would not offset their claim.

    BP’s attorney knew the Dept of Justice also advice the GCCF to keep the promises that was pledged.

    BP knew the GCCF refused to deduct VoO earning by doing the morally fair thing.

    BP could have done this also by making this one change.
    One change they knew would a truly fair one.

    But money and greed must come first to them.

Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

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