Lawyers for as many as 10,000 potential plaintiffs pursuing claims over BP Plc (BP/)’s 2010 Gulf of Mexico oil spill said their clients today will opt out or reject the company’s $7.8 billion settlement reached in March.
“I’m not trying to hold the settlement hostage, but there are too many technical problems” with the claims process, said Houston-based lawyer Brent Coon, who said he will opt out as many as 5,000 clients today. The process set up after the agreement was reached has been “slow, arduous and unexplainable,” Coon said.
The agreement, which settled claims of most private party plaintiffs, covers hundreds of thousands of individuals, businesses and property owners who say they were harmed by the largest offshore oil spill in U.S. history. Plaintiffs included in the settlement faced a deadline today to choose to accept the terms of the agreement or pursue claims on their own.
The opt-outs have been a limited percentage of the potential plaintiffs seeking compensation from BP for economic losses or medical claims. By Oct. 19, the total number of opt- outs had reached 983, including some filed by plaintiffs who aren’t part of the settlement, BP said in court papers seeking final approval of the agreement.
“Given the tiny number of opt-outs to date and the large size of the class, it is no exaggeration that the number of opt- outs would still weigh in favor of final approval even if it were to increase by a factor of 10, 20, or far more before the Nov. 1 opt-out deadline,” BP said in an Oct. 22 filing.
The opt-outs, even at increased levels, won’t stop or hamper the settlement, said Steve Herman, one of the lead lawyers on the plaintiffs’ steering committee. The PSC negotiated the settlement with BP and also represents plaintiffs who aren’t part of the agreement.
“There is very little chance that the deal will fall apart based on the number of opt outs,” Herman said in an e-mail. “Compared to the thousands and thousands of claims that have been filed, and recognized, the number of opt outs is very low.”
The blowout and explosion aboard the Deepwater Horizon drilling rig killed 11 workers and started millions of barrels of crude leaking into the gulf. The accident prompted hundreds of lawsuits against BP; Transocean Ltd. (RIG), the Vernier, Switzerland-based owner and operator of the rig; and Halliburton Co. (HAL), which provided cementing services.
BP’s $7.8 billion proposed partial settlement of private claims, which is pending final court approval, was reached March 2, days before a trial on liability for the spill. The settlement establishes two separate classes, one for economic loss and the other for physical injuries related to the spill or the cleanup.
“BP believes that the settlement is an historic resolution that is fair and reasonable and amply meets all the legal requirements for final approval by the Court,” Scott Dean, a spokesman for the London-based company, said in an e-mail.
“The settlement is a superior alternative to continued lengthy litigation, provides numerous unique claimant-friendly benefits, and fulfills BP’s commitment to pay all legitimate claims stemming from the Deepwater Horizon accident,” Dean said.
The settlement excludes claims of financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from the Obama administration’s moratorium on deep-water drilling prompted by the spill. It also doesn’t cover federal government claims and those of Gulf Coast states Louisiana and Alabama, or lawsuits against co-defendants.
The U.S. sued BP, Transocean and BP’s partners in the well, Mitsui & Co. (8031)’s MOEX Offshore 2007 and The Woodlands, Texas-based Anadarko Petroleum Corp. (APC), alleging violations of federal pollution laws. MOEX has settled the federal claims.
BP has been in negotiations with the U.S. Department of Justice to settle the federal claims as well, the company said in an Oct. 30 regulatory filing. BP has provisioned about $38.1 billion for spill costs and has paid more than $8 billion in compensation to individuals, businesses and government entities so far.
The partial private party settlement was granted preliminary approval in May and will be considered at a so- called fairness hearing Nov. 8, when U.S. District Judge Carl Barbier in New Orleans will hear objections to the agreement. Objections are filed complaining about the fairness of a settlement; opt-outs are filed by members of a class who were included in a settlement who want to pursue litigation on their own.
About 250 objections to the economic loss and medical benefits settlements have been filed, an expert for BP said in court papers Oct. 22. There are about 200,000 people in the medical benefits class and “only about 20” of the objections related to this part of the settlement, BP expert Robert H. Klonoff said in the Oct. 22 filing. More than 80,000 economic loss claims have been filed with the settlement program, BP said in court papers.
“A very high percentage of claimants are accepting the offers made” by the claims program, “evidencing their satisfaction with the process,” Dean said.
The objections to the proposed agreement range from complaints by lawyers representing thousands of fisherman and coastal property owners to the state of Alabama to a seven-page, handwritten letter by a Florida innkeeper who claimed her settlement with BP didn’t cover her losses, taxes and medical bills.
“Many of the objections are from people who are outside of the settlement and want to get into the deal,” Herman said.
Many of the objections contend that the settlement provides wide disparity in compensation. Wolf Bay LLC, which owns a large coastal wetlands in Alabama, complained in a September court filing that “the settlement agreement provides a compensation framework for Louisiana wetland properties, but excludes those same wetland properties in Mississippi, Alabama and Florida.”
Some plaintiffs opting out of the settlement have also objected to it, according to their lawyers. Only the plaintiffs included in the settlement classes had the right to opt out or object.
Lawyers are advising some clients to opt out of the settlement because they haven’t been offered enough compensation or still don’t know what they may receive, Coon said in an interview.
“If I think a client is going to get decent money under the settlement, I’ll leave him in. If I don’t think so, I’ll pull him out,” Coon said. “If I don’t know, then I’ll pull him out too because of an abundance of caution to protect his rights.”
“We’re opting out most of them,” New Orleans attorney Douglas Schmidt said, referring to about 1,600 of his 1,800 spill-related clients who will refuse to participate in the settlement.
Many of his clients are oilfield workers claiming medical injuries stemming from toxic exposure to crude and dispersants during the spill and cleanup. Settlement offers have been too low, he said. “These workers have significant injuries.”
The medical benefits settlement doesn’t “adequately compensate” people with personal injury claims related to exposure to oil or dispersants, said New Orleans attorney Mike Stag, who said his firm would opt out most of these clients. “The maximum payment is pretty low.”
These claimants are “going to have lifelong injuries that are already starting to manifest,” he said. “Toxically injured folks deteriorate over time and can be hard to diagnose.”
All spill-damages claims are presently being processed through the court-supervised Deepwater Horizon Claims Center in Louisiana, which is supervised by lawyer Patrick Juneau, who was appointed by Barbier. The center took over June 5 from the Gulf Coast Claims Facility, which had been administering BP’s claims- payment process since the spill under the direction of attorney Kenneth Feinberg.
Today’s opt-out deadline has forced claimants to make decisions before knowing how much or whether they’ll be paid, said attorney Tony Buzbee, who represents 12,000 clients alleging injuries and economic damages from the incident. Buzbee said thousands of his clients will opt out as a result.
“If you don’t opt out, you are settling, and how can you settle if you don’t know what you’re going to get?” he asked. By remaining in the settlement, claimants are releasing BP from further litigation without knowing what the company intends to pay on their claim, he said.
The settlement program “is going to put money in people’s pockets faster and with more predictability than litigation,” Herman, the PSC leader said. “Who knows how long opt outs might have to wait, or what, if anything, they might recover? That being said, the process has picked up exponentially over the past few weeks.”
Buzbee agreed that Juneau is processing more offers and determinations in recent weeks. “I wish we could’ve pushed the opt-out deadline” to allow more time for clients to get firm offers and determinations from the claims center, he said.
The case is In Re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).
Margaret Cronin Fisk and Laurel Brubaker Calkins
November 1, 2012