Fall 2014

Fordham Law School

BP Settlement
George W. Conk
Adjunct Professor of Law & Senior Fellow, Stein Center for Law &
Ethics
Certified Civil Trial Attorney
Room 409
gconk@law.fordham.edu
212-636-7446
Torts Today tortstoday.blogspot.com
Otherwise Commentaries on Law, Language & Politics
Blackstonetoday.blogspot.com

BP settlement

Scope of liability under the OPA and

Maritime Law Preemption of State Law
Claims

In Re Deepwater Horizon
B1 Order
EDLA August 26, 2011
2011 WL 3805746
Judge Carl J. Barbier
MDL No. 2179

BP Proving Damages part 1

A causal link?

The Gulf Coast Claims Facility

evaluated all claims submitted to
determine whether a loss was caused
by the Oil Spill.
Kenneth Feinberg i/m/o BP Esploration v.
Lake Eugenie Land, etc. October 2014
See Gulf Coast Claims Facility Final
Rules Governing Payment Options,
Eligibility and Substantiation Criteria, and
Final Payment Methodology (Feb. 18,
2011)
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Oil Pollution Act 1990 33 U.S.C.. 2702

Elements of liability
(a) In general
each responsible party for a vessel
or a facility from which oil is
discharged into or upon the
navigable waters or adjoining
shorelines or the exclusive economic
zone is liable for the removal costs
and damages that result from such
incident.
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33 U.S.C.. 2702. Elements of liability

(A) Natural resources
Damages for injury to, destruction of, loss
of, or loss of use of, natural resources...
(B) Real or personal property damage
resulting from destruction of, real or
personal property
(C) Subsistence use

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33 U.S.C.. 2702. Elements of liability

(D) Revenues

Damages equal to the net loss of

taxes, etc. ...by the Government of

the United States, a State, or a

political subdivision thereof.

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33 U.S.C.. 2702. Elements of liability

(E) Profits and earning capacity
Damages equal to the loss of profits or
impairment of earning capacity... due to
the injury, destruction, or loss of real
property, personal property, or natural
resources...
(F) Public services

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FRCP 23 Class Actions

(a) Prerequisites.
(1) the class is so numerous that, joinder
of all members is impracticable
(2) there are questions of law or fact
common to the class,
(3) the claims or defenses of the
representative parties are typical of the
claims or defenses of the class; and
(4) the representative parties will fairly
and adequately protect the interests of the
class.
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Two class action settlements

910 F.Supp.2d 891 (E.D.La.2012)

Economic loss class

Medical benefits class

Affirmed: 739 F.3d 790 (5th Cir. 2014)

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Exclusions

Claims for Economic Damage by Entities

or Individuals based on employment in the
Banking,Gaming, Financial, Insurance, Oil
& Gas, Real Estate Development, and
Defense Contractor industries, as well as
Entities selling or marketing BP-branded
fuel (including jobbers and branded
dealers)

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Exclusions

Bodily Injury Claims

BP Shareholder Claims
Moratorium Loss Claims
Claims relating to menhaden (or pogy)
fishing, processing, selling, catching, or
harvesting
Claims for punitive damages against
Halliburton and Transocean.
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Economic loss zone

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Class definition Business Economic Losses

Businesses in the Gulf Coast Areas who

owned, operated or leased premises and

sold products or bought seafood

Service businesses in the Areas

Owned or leased real estate

Seafood Crew, Commercial Fisherman,

Oyster Leaseholders, and Vessel Owners
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Tourism businesses

Tourism means businesses which provide

services such as attracting, transporting,

accommodating or catering to the needs

or wants of persons traveling to, or

staying in, places outside their home

community.
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Class definition: Natural Persons and

Entities who lost earnings, income, or
profits
Anyone living in Louisiana, Mississippi,
Alabama or specified counties in Texas
and Florida
Crew on vessels homeported or fishing in
Gulf waters
Owners of real estate
Commercial fishermen, vessel owners
Oyster leaseholders
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Categories of recognized economic

harm claims

Individual Loss of Wages

Business Economic Loss
Multi-Facility Business Economic Loss
Start-Up Business Economic Loss
Failed Business Economic Loss
Failed Start-Up Business Economic Loss
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Property Damage

Loss of Use/Enjoyment of Real

Property
Coastal Real Property Damage
Wetlands Real Property Damage
Realized Real Property Sales Loss

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Special Categories

Vessels of Opportunity
Vessel Physical Damage

Subsistence Damage

Seafood Compensation Program

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Causation reqts Business Economic

Losses - Ex. 4B

No causation requirement for:

Businesses in zone A:
Landing sites, commercial, wholesale,
retail, or primary seafood processors
Seafood distributors and retailers
Tourism
Charter fishermen
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Causation reqts for business

economic loss claims

Zones B and C
V shaped pattern:
8.5 % or more downturn compared to
benchmark
Upturn of 5% or more in 2011 compared
to 2010

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Risk transfer premium RTP

Businesses multiplier added to 2010
losses

Tourism Zone A 2.5; zone B 2.0, Zone C

2.0, Zone D 1.25
Charter fishing 2.5 in Zones A,B, or C
Zone D-1.25
Primary seafood processors of
shrimp/crab/oyster 3.0 (any zone)
Other seafood 2.25

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RTP individuals

Tourism employees zones A, B, C 2.0,

zone D 1.25
Charter fishing 2.5 Zones A, B, C
Zone D 1.25
Landing site 2.25 (all zones)
Non-tourism, non seafood
Zone A 1.5 Zone B 1.25 Zones C, D 0.25
Individual periodic vendors 1.0
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Compensation
framework
For business losses

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Gulf shrimp landings 2008-2009

compared to 2010

Business Torts BP Gulf Oil Spill Spring

2012

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Compare actual profit during post-spill

period to profits claimant might have
expected

Step 1 Benchmark period minus 2010

loss period profits

Step 2 compensates for incremental

profits or losses relative to the benchmark
period
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Compensation & Benchmark Periods

The Compensation Period

Selected by the Claimant
- three or more consecutive months
between May and December 2010
The Benchmark Period:
Pre-DWH Spill period claimant chooses as
the baseline for measuring its historical
financial performance.

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Compensation & Benchmark Periods

The claimant can select among the three

Benchmark Periods:

2009

2008-2009 average; or

The average of 2007-2009

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BPs lament expenses and

income do not match

Administrator has interpreted

revenue as cash received and
expenses as cash

Disbursed

Causal link of Business losses must

be shown
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5th Circuit October 2, 2013

Unjustifiable claims may be paid

The District Court must clarify how cashbasis claims are treated
Unlike `accrual accounting cash basis
accounting shows positive or negative
cash flow but does does not demonstrate
profit and loss

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Judicial estoppel? BPs expert

supporting approval of the class

The DWH Oil Spill had some direct

implications for tourism and seafood
industries with consequential effects on
some businesses in related industries. The
tourism and seafood industries are
concentrated in the immediate coastal
area.

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Judicial estoppel? BPs expert

supporting approval of the class

As distance from the coastal area

increases, the composition of economic
activity shifts, with tourism and seafood
becoming less important drivers of
economic activity.
The Economic Damage Claim Frameworks
explicitly incorporate these economic
realities in the methodologies for
compensating Class Members. . . .
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Judicial estoppel? BPs expert

supporting approval of the class

The standardized approaches established

in the Settlement Agreement for
determining the likelihood that a
Claimants losses were caused by the
DWH Spill, including granting a
presumption that certain Claimants losses
are spill-related, are clearly defined,
reasonable and based on sound economic
principles.
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Policy Statement re Ex. 4B

The Claims Administrator will thus

compensate eligible Business Economic
Loss and Individual Economic Loss
claimants for all losses payable under the
terms of the Economic Loss frameworks in
the Settlement Agreement, without regard
to whether such losses resulted or may
have resulted from a cause other than the
Deepwater Horizon oil spill provided such
claimants have satisfied the specific
causation requirements set out in the
Settlement Agreement.
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Judge Edith Clement,dissenting

The judicial power of federal courts
extends only to cases and controversies.
There are but three irreducible
constitutional requirements: an injury in
fact, a causal connection between the
injury and the conduct complained of, and
that the injury is likely to be redressed by
a favorable decision.
BEL panel March 3, 2014
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Class definition Section 1

. . . If a person or entity is included within

the geographical descriptions in Section
1.1 or 1.2, and their claims meet the
descriptions of one or more of the
Damage Categories described in Section
1.3, that person or entity is a member of
the Economic and Property Damages
Settlement Class, unless the person or
entity is excluded under Section 2
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Class definition Section 1

Damage Categories, which are fully

described in the attached Exhibits 1A-15:
Seafood
Tourism
Wetlands
Coastal property
Real property sales
Subsistence, failed, and start-ups
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Medical benefits
Class action

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Amchem v. Windsor (1997)

"Class members were exposed to different

asbestos- containing products, for
different amounts of time, in different
ways, and over different periods. Some
class members suffer no physical injury or
have only asymptomatic pleural changes,
while others suffer from lung cancer,
disabling asbestosis, or from
mesothelioma . . . . Each has a different
history of cigarette smoking, a factor that
complicates the causation inquiry.
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Amchem v. Windsor (1997)

"The [exposure only] plaintiffs especially

share little in common, either with each
other or with the presently injured class
members. It is unclear whether they will
contract asbestos-related disease and, if
so, what disease each will suffer. They will
also incur different medical expenses
because their monitoring and treatment
will depend on singular circumstances and
individual medical histories."
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Medical Benefits Class

Claims for compensatory and punitive

damages and declaratory relief, brought
under federal and maritime law for
negligence, negligence per se, gross
negligence, willful misconduct, and strict
liability for personal injury and/or bodily
injury, later-manifested injury, progression
of existing injury, damage, disease,
mental or physical pain or suffering,
emotional or mental harm or anguish
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DEFINITIONS

CLEAN-UP WORKERS at any time between

April 20, 2010, and April 16, 2012;
Resided in ZONE A for at least sixty days
between April 20, 2010, and September
30, 2010 (ZONE A RESIDENT), and
developed one or more
Resided in ZONE B for some time on each
of at least sixty days between
April 20, 2010, and December 31, 2010
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Excluded

Opt-outs from this settlement

* BP employees
* persons on Deepwater Horizon on April
20, 2010
* anyone who has signed a release for
such claims
* long-term (5 year) workers cleaning,
loading, unloading or storing
hydrocarbons, petrochemicals, or nuclear
materials
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Remedies

Compensation for Specified Physical

Conditions claimed to be caused by
exposure to oil and/or dispersants
Comprehensive Periodic Medical
Consultation Program providing
regular medical examinations and
tests to class members every three
years over a 21-year period

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Remedies

* Preservation of class members

rights to sue BP for compensatory
damages for physical conditions that
manifest at a later date
* A transparent and efficient claims
administration process.
* Establishes Gulf Region Health
Outreach Program

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Conditions

acute ocular, respiratory,

ear/nose/throat, dermal, and
neurophysical/neurological/odorrelated conditions

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Compensation

Clean-Up Workers Zone A and Zone B

Residents
Enhancer for Overnight Hospitalization
and Payment of Actual Hospital
Expenses, if applicable
Lump sum payments plus enhancers
$1,300 to $60,700

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