01192017Headline:

Baton Rouge, Louisiana

HomeLouisianaBaton Rouge

Email J.R. Whaley J.R. Whaley on LinkedIn J.R. Whaley on Facebook
J.R. Whaley
J.R. Whaley
Attorney • (225) 302-8810

BP Cert Petition — Facts Are Stubborn Things

8 comments

BP filed its promised “Petition for a Writ of Certiorari to the United States Supreme Court.” In its continuing effort to undo its settlement with the people and businesses of the Gulf South, BP asks the Supreme Court to hear its case, and in turn, reverse two separate decisions of the United States Fifth Circuit Court of Appeals.  Those decisions dealt with class certification and how business claims are calculated under the class action settlement BP entered into to resolve all litigation surrounding its oil spill from the Deepwater Horizon.

In the “Question Presented” section of its brief, BP framed the issue for decision by the United States Supreme Court as whether “district courts can, consistent with Rule 23 and Article III, certify classes that include numerous members who have not suffered any injury caused by the defendant.” Throughout the brief, BP argues that “the critical question for certification is whether the class has been drawn so broadly that includes even those with no injury caused by BP” (page 26) and its related complaint that, “As construed by the court below, the class yokes together many claimants that suffered spill related losses with numerous others whose alleged losses are entirely unrelated to the spill, thereby awarding damages without any connection to the theory of liability.” (Page 29.)

BP’s cert petition is unquestionably a nice piece of legal work.  But the brief reminds me of John Adams’ famous quote.  “Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.” The “facts and evidence” that BP’s army of high-paid legal talent “cannot alter” are BP’s previous statements and positions on the very issues that BP raises to the United States Supreme Court — but now wishes just weren’t so.

Boiled down, BP’s petition, as well as its public statements, are premised on the idea that the class action settlement has somehow been interpreted in a manner different than what it intended and implemented in a way that BP did not bargain-for. And the heart of BP’s complaint of the improper interpretation and implementation centers on the issue of causation, or whether class action claimants’ losses were “caused” by BPs oil spill.

BP complains that the Claims Administrator “was interpreting the settlement agreement to include within the class numerous claimants whose alleged injuries were not related to the spill, reasoning that, so long as the tests in Exhibit 4B were satisfied, there was no need for any further inquiry into whether or not the claimant’s loss was factually caused by the oil spill.” (Page 6.)  Exhibit 4B is entitled “Causation Requirements for Business Economic Loss Claims” so that seems to be a logical position for the Claims Administrator to take based on the title of the exhibit itself.  But putting aside that and the fact that BP negotiated, agreed-to, and once advocated for approval of the very class action settlement agreement it now seeks to unwind (including Exhibit 4B), it’s fair to consider the history of Exhibit 4B and the issue of causation in light of BP’s cert petition.

Hopefully, when examining BP’s cert petition and complaints about causation, the Supreme Court justices and their law clerks will spend a lot of time on Appendix F of BPs brief.  Appendix F is the district court’s December 24, 2014 Order and Reasons in which the court, in painstaking detail, considered the issue of causation, including Exhibit 4B. These irrefutable facts and evidence lay waste to BP’s arguments that causation was somehow a big surprise to them or that any “change” in interpretation justifies BP’s moving from an advocate of the settlement to its vicious opponent.  These particular facts are stubborn indeed.

It is first critical to remember that BP had months of evidence to determine exactly how causation was to be interpreted before finalizing the settlement.  The first Order transitioning to the class action settlement was March 8, 2012 [Rec. Doc. 5995].  The court held a hearing on the preliminary approval request on April 25, 2012 [Rec. Doc. 6366] and approved the settlement preliminarily on May 2, 2012 [Rec. Doc. 6418]. Unlike other class-action settlements, the settlement program, and payments issuing from it, were authorized to begin before the final approval of the settlement.  The claims process began in June 2012.   The DHECC began issuing payments on July 31, 2012 and issued Eligibility Notices beginning July 15, 2012.

This gave BP the opportunity to determine the quantity, quality, and demographic of claims that were being brought and, just as importantly, how the Claims Administrator was processing and paying claimants and implementing the settlement.  Throughout this process, communications were had between BP and the Claims Administrator. For example, shortly after preliminary approval and before the DHECC opened operations, BP submitted a PowerPoint presentation to the Claims Administrator on May 8, 2012 that stated that qualified business receive compensation for “all losses” regardless of actual facts and circumstances [Rec. Doc. 11826-1].

BP then began submitting court filings to the same effect.  In its Memorandum in Support of Motion for Final Approval filed August 8, 2012, BP described negotiations that lasted more than 145 days in which “Without regard to total payout figures, the parties negotiated claims frameworks, programs, and processes, including details such as (1) what categories of claims would be paid, (2) what types of proof would be required for claimants to receive a settlement payment, (3) whether certain claimants should be permitted to benefit from causation presumptions that BP was willing to accept for settlement purposes (despite its informed legal views as to whatOPA or maritime law strictly demanded), and (4) how settlement benefits would be calculated. The negotiations were thus exclusively focused, from the outset, on producing claims frameworks that could be administered fairly, objectively, and consistently.”  [Rec. Doc. 7114-1.]

Those “fair, objective, and consistent” frameworks were supported by BP’s own experts.  One expert opined that “[O]nce a business meets the causation requirements, for purposes of quantifying compensation, all revenue and variable profit declines during the claimant-selected compensation period are presumed to be caused by the spill, with no analysis required to determine whether the declines might have been due, at least in part, to other causes.” [Rec. Doc. 7114-18, para. 17.]

Another one of BP’s experts declared: “[T]here is a presumption of causation, which will inevitably include businesses that were not economically or financially affected by the DWH Spill. . . . For those businesses that do not qualifyfor a presumption of causation, there are multiple tests under which they can qualifyand establish causation. This variety of test options gives claimants multiple ways to establish causation, which appears to be more than fair.” [Rec. Doc. 7114-11, para. 18-19.]

A third expert on whom BP relied to move for final approval of the settlement swore under oath that, “For many Claimants . . . economic losses incurred post-Spill in 2010 are presumed to be due to the DWH Spill and the Claimant need not provide evidence to establish causation. . . . Claimants in industries and geographic areas that do not receive a presumption must establish causation by satisfying defined thresholds for establishing that their losses were spill-related, with different revenue threshold for Claimants in Zones B and C as compared to Zone D. . . .[A]reas more distant from the coast and Claimants in industries other than Tourism, Charter Fishing, and Primary and Secondary Seafood fac[e] higher causation thresholds.”

That expert continued that the “Settlement Agreement establishes a variety of standardized mechanisms that can be used by Claimants that do not receive a presumption to establish that their losses are due to the DWH Spill. These mechanisms are straightforward and transparent, facilitating the review of a claim as well as a Claimant’s decision about whether to participate in the Settlement or to opt out and continue to the claim through litigation.” [Rec. Doc. 7114-5, para. 21-22.]

A month and a half later, and after the first payments were made, the Claims Administrator wrote to BP and class counsel on September 25, 2012 to ensure that they knew that the program would apply only the objective formulae of Exhibits 4B and 4C to determine whether and how much the claimant could recover. [Rec. Doc. 8963-66.]  The Claims Administrator gave the parties a hypothetical situation, in which it  was clear that the business claimant’s losses were completely unrelated to the oil spil, but nevertheless satisfied Exhibit 4B.  On September 28, 2012, Mark Holstein, the managing attorney for BP America Inc., and conspicuously an attorney who signed BPs petition for writ of certiorari, stated that:

Nothing in the BEL Causation Framework (Ex. 4B) or Compensation Framework (Ex. 4C) provides for an offset where the claimant’s firm’s revenue decline (and recovery, if applicable) satisfies the causation test but extraneous non-financial data indicates that the decline was attributable to a factor wholly unrelated to the Oil Spill. Such “false positives” are an inevitable concomitant of an objective quantitative, data-based test.

[Rec. Doc. 8963-67 at 3 (footnote omitted).]

Based on this, the Claims Administrator issued a policy announcement on the October 10, 2012 that stated that:

 2. No Analysis of Alternative Causes of Economic Losses.

The Settlement Agreement represents the Parties’ negotiated agreement on the criteria to be used in establishing causation. The Settlement Agreement sets out specific criteria that must be satisfied in order for a claimant to establish causation. Once causation is established, the Settlement Agreement further provides specificformulae by which compensation is to be measured. All such matters are negotiatedterms that are an integral part of the Settlement Agreement. The Settlement Agreement does not contemplate that the Claims Administrator will undertake additional analysis of causation issues beyond those criteria that are specifically set out in the Settlement Agreement. Both Class Counsel and BP have in response to the Claims Administrator’s inquiry confirmed that this is in fact a correct statement of their intent and of the terms of the Settlement Agreement.

The ClaimsAdministrator 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. Further, the Claims Administrator will not evaluate potential alternative causes of the claimant’s economic injury, other than the analysis required by Exhibit 8A of whether an Individual Economic Loss claimant was terminated from a Claiming Job for cause.

[Rec. Doc. 8963-71 (emphasis added).]

During the Final Fairness Hearing in November 2012, the lead attorney and negotiator for BP made the following comments regarding the causation requirements while advocating for the approval of the settlement:

 We have presumed causation in Zone A. We’ve presumed causation. It’s irrebuttable. You know as well as I do, Your Honor, how many people come in and think they have got a claim damage for economic loss; but, when the facts come out, they had a bad year because they lost their key manager, they had a bad year because the street was being repaired in front of them, whatever reason.

We’re presuming causation for whole sections of the settlement class depending on where you reside and the nature of your business. Our experts say, thejoint experts, it exceeds the Reed factor.

[Rec. Doc. 7892 at 68 (emphasis added)]

Following the Fairness Hearing, BP and Class Counselsubmitted joint proposed findings in support of final approval that stated:

The Settlement reasonably requires that some business claimants demonstrate that their business was affected by the spill. In many other cases causation ispresumed, which benefits class members. Where class members are required to prove causation, there are multiple reasonable options for doing so. See Settlement Agreement Ex. 4B . . . .

. . . Where causation is presumed, the causation presumption applies to all losses established pursuant to the compensation methodology. . . .

. . .Where causation is not presumed, the causation tests are reasonable and flexible; they use standardized and transparent approaches. The causation testsreflect rational expectations about the economic harm that the spill could have caused businesses. The first option is the V-shaped revenue test, which requires proof of a downturn after the spill followed by a later upturn.

Once the causation tests are satisfied, all revenue and variable profit declines during the Compensation Period are presumed to be caused entirely by the spill, with no analysis of whether such declines were also traceable to other factors unrelated to the spill.

[Rec. Doc. 7945 at 36-39.]

On December 12, 2012, the parties appeared before the district court and confirmed their agreement with the Claims Administrator’s Policy Announcement on October 2, 2012 (quoted above) [Rec. Doc. 8963-75].  It was only after all of this did the court issue a final judgment certifying the settlement class and approving the economic settlement on December 21, 2012.

Of course, that approval was exactly what BP wanted — until it didn’t.  BP got a lot of benefit from settling the class action.  It changed its mind for its own reasons and now seeks to undo the very agreement it once advocated.  But it can’t change the facts or the evidence because “Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.” Stubborn indeed.  Even for BP.

8 Comments

Have an opinion about this post? Please consider leaving a comment or subscribing to the feed to have future articles delivered to your feed reader.

  1. HARRY TZOUMAS says:
    up arrow

    Why is BP even wasting attorney fees to go before the Supreme Court? I hope the court slams the door in their face!

  2. up arrow

    […] John Adams once said, “Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of o… The “facts and evidence” that BP’s army of well-healed legal talent “cannot alter” are […]

  3. Keith D. Jones says:
    up arrow

    Well done, J.R.!
    Based on what’s already in the record, I expect the guys who write the brief in opposition to BP’s writ application will do so clearly and convincingly. I’m sure they’ll make the case on exactly the same basis you do; that BP now wants out of what it expressly said it wanted.
    I was always taught, “A deal’s a deal.”, “A man’s word is his bond.” and other such maxims. Apparently BP’s lawyers didn’t get the benefit of learning the things that guide honest people in their day to day affairs.

  4. Jean Champagne says:
    up arrow

    Bravo! Right on the money. Practically the only ones getting paid are BP’s attorneys and advertising agencies that are responsible for this massive disinformation campaign. What did Goebbels say about “the big lie”?

  5. J. R. Whaley says:
    up arrow

    Agree completely. BP likes to point to a handful of self-selected and exaggerated examples but conveniently ignores the thousands of claimants suffering continuing economic injury because of BP’s stall tactics.

  6. Tom Young says:
    up arrow

    Agreed Eyeswideopen, BP’s settlement antics amount to a secondary tort that may cause as much or more economic damage to the people of the Gulf than the spill itself.

  7. Eyeswideopen says:
    up arrow

    The CA’s latest report #22 now list 1855 claimants
    now in bankruptcy see table 11. So as BP argues against a settlement they drafted and agreed to SCOTUS hopefully will review the stats. This settlement is causing just as much damage as the oil spill as these delays continues.