Fund Official Not Neutral, Judge Rules


Kenneth R. Feinberg, the administrator of the $20 billion fund to compensate victims of the Gulf of Mexico oil spill, should not claim that he is fully independent of BP, a federal judge overseeing litigation against the company ruled on Wednesday.

Judge Carl J. Barbier of Federal District Court in New Orleans, who is overseeing federal litigation related to the spill, issued an order in response to protests by lawyers for plaintiffs suing BP. They have said Mr. Feinberg’s statements that he is independent and that settling claims through his fund is superior to lawsuits are improper.

Judge Barbier took no substantive action to change the way Mr. Feinberg runs the fund, but said he must make clear to potential litigants that he is “acting for and on behalf of BP in fulfilling its legal obligations.” He declared the relationship between Mr. Feinberg and the company should be considered a kind of hybrid, and not fully an employee or fully neutral: The company does not control the evaluation of individual claims, but appointed Mr. Feinberg and pays him a flat fee. Claiming complete neutrality, the judge wrote, “is a direct threat to this ongoing litigation.”

A member of the steering committee for plaintiffs, Jim Roy, said, “It’s a good day for the public,” which “now cannot be misled” by claims of neutrality. And while the lawyers had asked the judge to intervene more forcefully, Mr. Roy said that the order “is the linchpin of the relief that we sought.”

Another lawyer in New Orleans, Stuart H. Smith, suggested that the findings could be used to invalidate settlements already reached with tens of thousands of claimants. “This is big,” he said.

But Stephen Gillers, an ethics expert at New York University who wrote a memorandum that declared Mr. Feinberg’s work complied with state ethics rules, said that while the judge’s order might come as a rebuke, it does not change the legal landscape of Mr. Feinberg’s work or the fund.

Amy Weiss, a spokeswoman for Mr. Feinberg, said, “We are focused on moving forward and paying claims.”

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