NEW ORLEANS -- With its efforts to rein in a costly oil spill damage settlement going nowhere, BP has unleashed a media blitz to try to turn the tide in the court of public opinion.
It’s a surprising tactic at this point in the case of the largest accidental offshore spill in U.S. history, but so far, it seems to be succeeding – at least outside the Gulf Coast.
The evidence in the court record has not generally supported BP’s contention that claims administrator Patrick Juneau is compensating claimants who are ineligible under the multi-billion-dollar settlement BP signed with a committee of plaintiffs’ lawyers in the spring of 2012.
In letters and emails written by BP’s lawyers while they worked out settlement details and later as they sought U.S. District Judge Carl Barbier’s approval for the agreement, the company specifically acknowledged how losses would be calculated and that professionals like lawyers and accountants would be eligible to collect – and that if they met basic formulas for eligibility, they could be paid for losses that likely stemmed from something other than the spill.
Since then, BP has gone to Barbier several times asking to stop the payments and lost each time. BP’s well-compensated appellate attorney, former U.S. Solicitor General Ted Olson, didn’t fare any better, getting a cold reception from a three-judge panel of the U.S. 5th Circuit Court of Appeals.
“The agreement defines what is a lost profit in a particular way. And you had a chance to not agree to that – several chances,” Judge James Dennis said to Olson. “So how can we go beyond the four corners of the agreement?”
BP’s media attack
And yet, the oil giant has continued to say it didn’t agree to what’s being paid. Some prominent media voices have taken up the cause.
CNBC “Mad Money” host Jim Cramer interviewed BP chief executive Bob Dudley and asked, “Will some people just never be satisfied until you’re put out of business?”
Dudley then railed against the settlement paying “absurd” claims, “not at all in the spirit of the agreement.”
Dudley then took a shot at Juneau, the claims administrator BP appointed, saying his interpretation of the agreement had “hijacked” the claims process and “is leading to absurd payments to people not affected by this and, in many cases, far away from the Gulf.”
New York Times columnist Joe Nocera joined the anti-Juneau attack, calling him a "good-ol’-boy plaintiffs' lawyer" when he actually spent 48 years as a civil defense attorney. The Times later corrected the error.
And Bloomberg BusinessWeek featured an article saying BP was getting “screwed.” The cover blared: “BP is getting rolled in the Gulf.”
That didn’t earn any sympathy from commercial fisherman George Barasich.
“Have Mr. Bloomberg come see my boat and he'll see who's getting rolled,” said Barasich, an oysterman and shrimper whose boat is in drydock for lack of work. He says he and others got severely underpaid, not overpaid, in the settlement.
“The way this was orchestrated -- you know, we're seeing it now with the benefit of hindsight – (BP) played it out so that they would become the victim,” he added. “And I'll be goddamned, that's exactly what happened. 'Oh we're the victim. We’re getting screwed on the money. We’re paying way too much money.’ But you caused it! And you agreed to it! How could you be a victim?”
Lawyers in cross-hairs
And BP isn’t limiting its message to just saying it is the victim of the claims process to which it agreed. In the last week or so, the company has taken fresh aim at the plaintiffs’ lawyers with whom it struck the deal.
An Aug. 2 guest opinion piece in The Times-Picayune was followed last week by full-page ads in The New York Times and Wall Street Journal, all stating that law firms were getting outlandish payments – not for representing claimants, but from Juneau’s claims facility for purported spill losses.
BP spokesman Geoff Morrell said law firms had been offered a combined $250 million under the settlement, not including their fees for representing clients. He said their offers averaged $812,000 per claim. He also said at least one firm on the committee of plaintiffs that negotiated the settlement also filed a loss claim.
BP’s attacks on lawyers are getting better traction locally. Barasich, for one, was intrigued by the ads and op-ed.
“If that attorney actually did lose or can prove that they lost something, go for it,” the fisherman said.
“But if it's a speculative loss or they just say they lost, and they're going to get an average of $812,000 per law firm -- God, that's twice more than what I'm getting offered, and I catch seafood 250 days out the year. That's kind of sad.”
Danny Becnel, a plaintiff lawyer who has roundly criticized the settlement and had many clients opt out, agrees with BP that there's something wrong if lawyers who stand to make big bucks off the settlement are also collecting for losses.
“At least the honorable thing to do would be wait until all of the people who really suffered a loss -- the oyster fishermen, the shrimpers, the charter boat people, the recreation people from Sandestin all the way down to Grand Isle -- they ought to be paid first,” Becnel said.
Walter Leger, a maritime attorney who was not part of settlement talks but sat on the plaintiffs’ trial team this year, said BP specifically sought to have lawyers included in the settlement, even while excluding other key industries.
He also said it was disingenuous of BP to pin all of the law firm claims on “plaintiffs’ lawyers,” noting that corporate defense attorneys probably will be collecting a big part of the $250 million BP cited. That’s because attorneys whose business clients along the Gulf were injured by the spill were likely to suffer losses.
Whether it’s honorable or not, Leger noted, lawyers are clearly allowed to file for losses under the settlement.
“It is a very odd tactic by BP in this type of a case,” Leger said. “I would say oftentimes the media attacks happen earlier in the case, and after settlement, everyone tries to be friendly and get it concluded.”
In a statement to WWL-TV, BP’s Morrell explained the PR push: “We are shining a bright light on the claims administrator's misinterpretation of the settlement agreement because it is contrary to well-established accounting principles as well as contract law.... We owe it to our shareholders and employees to do so and believe that the unmooring of this settlement from the express terms of the agreement changes the calculus other businesses will consider when deciding whether to settle or litigate."
Leger suggested that BP could be trying to discourage more claims from coming in. That would explain why the company is also buying ads encouraging Gulf residents to turn in anyone making fraudulent claims.
“This case is rather unique in a number of ways, and one is that BP only partially settled the case,” Leger said.
And that might be the rub. BP has paid out $25 billion for cleanup and damages and has about $17 billion more still set aside. But that’s going to be easily exhausted at the rate things are going. Unsettled government claims could be as high as $28 billion if, as many assume, in abier rules BP grossly negligent for the spill, rather than simply negligent -- and state government losses and natural resource damages also come in over $10 billion.
BP still has, by its latest estimates, at least $6 billion yet to pay on the private settlement, and more claims are still coming in. Then, there’s a whole group of plaintiffs who opted out of, or were cut out of, the settlement – such as oilfield-service companies, considered “moratorium claims,” who still must argue that BP bears responsibility for the income they lost ina five-month government shutdown of deepwater drilling after the BP blowout.
In a letter to clients, the partners at lead plaintiff law firm Herman Herman & Katz accused BP of orchestrating a “bait and switch:” playing nice to get legal peace and financial certainty, then changing its tune once it saw that huge gross negligence fines were likely.
“Now that the felony charges have been resolved, and now that the Phase One Liability Trial has concluded, laying bare BP’s gross negligence, and exposing the company to billions more in additional civil fines and damages, BP is looking for a way to save some money,” the June 28 letter stated.
More recently, BP’s PR machine made hay from allegations – some of them apparently credible -- that some of Juneau’s employees are former members of plaintiffs’ firms and are committing fraud. Juneau has brought in former FBI Director Louis Freeh to investigate, but in the meantime, Barbier has not been willing to delay payments.
“The problem I have here is that you all have made a lot of accusations, put out a lot of innuendo, and I want to know what evidence there is to support this,” Barbier said to BP from the bench. “We know there was a problem over there (in Juneau’s office). We know there was a serious problem. But I frankly have not seen any evidence that it affected in any way, or could have affected, the thing we're here about today, and that is … how these claims are calculated and paid.”