Amanda Bronstad, The National Law Journal
Despite the $20 billion settlement BP PLC struck with the U.S. Department of Justice over the 2010 Deepwater Horizon oil spill, tens of thousands of lawsuits could hit the courts this month, adding to the oil company’s ballooning costs.
About 85,000 individuals and businesses claiming nongovernmental economic damages tied to the spill are due to file lawsuits against BP by May 16. Their claims are separate from the $20 billion deal; most were either excluded from or opted out of a 2012 class action settlement that was supposed to resolve economic damages claims.
“It’s commonly believed, and a misnomer, by the American public that those claims have already been resolved but, in fact, 85,000 of them have not,” said Charles Herd, a maritime lawyer at The Lanier Law Firm in Houston, which has 229 clients with claims outstanding.
On April 26, BP reported an unexpected $917 million pre-tax charge relating to costs associated with the spill that so far have totaled more than $56 billion. Most of that charge was due to the class action settlement, whose value BP revised to a record $12.9 billion but is projected to be “significantly higher” once all claims had been processed. BP also continues to face pending litigation that includes the claims from businesses that opted out of the settlement.
BP spokesman Geoff Morell declined to comment.
U.S. District Judge Carl Barbier last month signed off on BP’s $20 billion deal—a consent decree with the U.S. government and five Gulf Coast states that was finalized on Oct. 5 to resolve environmental fines relating to the spill.
But in March, in an attempt to wrap up all remaining lawsuits and claims against BP, Barbier issued a pretrial order that requires individuals and businesses to file certain documents with the court or face dismissal of their claims. Some must file sworn statements that they haven’t released their claims, while others must file individual lawsuits.
“He’s now turned his attention to what most people thought the case was going to be about from the beginning—all the individuals, mom and pop stores, who were economically and otherwise harmed by the spill itself,” Herd said of the judge.
Barbier, who originally set a deadline for May 2, did not indicate what he planned to do once the lawsuits have been identified. Plaintiffs lawyers, some of whom already are working with court-appointed mediators, predicted that some cases could settle. Others said Barbier could send the cases back to the courts in which they were originally filed. Many could get dismissed, having failed to meet the deadline.
“Sadly, I would suspect a large number of claims will be summarily dismissed, which is the most disappointing part of this,” said Brent Coon, of Brent Coon & Associates in Beaumont, Texas, who represents 3,600 clients.
More than 100 law firms filed motions to extend the deadline, citing procedural and logistical hurdles, ongoing settlement negotiations and clients who were out at sea. Some firms had more than 1,000 claimants, while others represented just a handful. Many had asked for 90 more days.
Barbier granted the firms a 14-day extension.
BP has been one of the biggest critics of the settlement. In court, the company has argued that the claims administrator’s interpretations of the settlement have led to payments to businesses that suffered no oil spill damages and has filed numerous challenges before the U.S. Court of Appeals for the Fifth Circuit and the U.S. Supreme Court.
Plaintiffs lawyers have insisted that fraudulent claims, if they exist, are few. But they also have their own complaints about the deal. Herd said many of his clients have gone out of business or filed for bankruptcy while waiting for their claims to be approved or denied. He said most of his clients have grown frustrated with the process, which he called “an administrative and bureaucratic nightmare.”
“For the majority of our clients, the administrative remedy scheme has been at best frustrating and at worst maddening,” he said.
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