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J.R. Whaley
J.R. Whaley
Attorney • (225) 302-8810

BP Settlement — Maybe This Guy Should Get His Own Column

8 comments

A short while after publishing 60 Minutes And Then Some, I got this well-written and thoughtful response from a self-described “career defense litigator” who is not involved with BP but has followed the twists and turns of the case.  With his permission, I have re-posted the applicable portion of the e-mail which goes into greater detail about BP’s possible motivations in regard to its about-face.  It is worth your time to read.

And speaking of BP’s motivation for the class settlement that it now attacks, I think those who try to explain it — like the author of the LA Times article you referenced — tend to overlook a major strategic driver of the deal, from BP’s perspective, as it was being negotiated back in 2011. Back then, the company had to be concerned about the looming commencement of the Phase I trial, which was scheduled to begin in early 2012, where the main issue was allocation and characterization of fault for the event. 

 Had there been no settlement, BP would have been the focal point of a double-barreled attack in that trial phase: (1) by the class plaintiffs, to whom it faced indefensible exposure to compensatory damages, plus heavy risk of punitive damage exposure to them as well (remember, punitive damages were Exxon’s biggest nightmare following the Valdez incident); and (2) by the US, via the DOJ, which was pursuing a statutory (CWA) per-barrel penalty from BP that could be enhanced four-fold by a “gross negligence” finding. 

 By settling with the class plaintiffs before the Phase I trial, BP completely eliminated its significant punitive damage exposure to them. Plus, as part of the deal, BP got them to dismiss their compensatory damage claims against its co-defendants, Transocean and Halliburton, which BP would have had to indemnify anyway according to the court’s “Partial Summary Judgment regarding Contractual Indemnity” rulings in 1/2012.  But since the class plaintiffs would continue to pursue their (unindemnifiable) punitive damage claims against BP’s co-defendants, the strategic/tactical result of that deal for BP was that when the Phase I trial actually commenced in 2013 (after the lengthy approval process), the parties were realigned in a way that was optimal for BP. The revised Phase I lineup had the US as the only plaintiff taking shots at BP, and the DOJ’s effort was diluted by the PSC attorneys who were focusing 100% of their attack on BP’s co-defendants.   Given that lineup, no matter how the Phase I trial turns out when the trial judge issues his ruling, it almost certainly will be better for BP than it would have been in the absence of any settlement with the class plaintiffs.     

 I don’t think it’s any coincidence that BP’s attitude toward the settlement didn’t change until the evidentiary portion of the Phase I trial was in the can last spring.  Having already reaped the strategic/tactical benefit of the deal, I think BP concluded at that point that the potential benefits it might gain from attacking the settlement (e.g., achieving a reconfigured deal, slowing or stopping the flood of payments, changing its public image from villain to victim, etc.) outweighed the potential costs of its flip-flop (e.g., annoying the trial judge who had approved the deal).      

 A year ago, I thought BP was making a big mistake by annoying Judge Barbier with its blatant turnabout, considering that he sits in judgment of trial issues that are crucial to BP (i.e., Gross negligence? How many barrels were released?).   But now I think BP has been playing “rope-a-dope” with the claimants all along (beginning with Feinberg’s facility), because it always expected the worst from the trial court, and it always intended to appeal whatever rulings it doesn’t like anyway.   So winning the PR battle, bringing the payment process to a halt (or even just complicating it via “Policy No. 495″) are significant victories for BP even if it doesn’t succeed in its crusade to revisit the “presumed causation” aspect of the deal.

Wish I would have said it that way the first time . . .

And in fairness, this individual also took some shots at the plaintiffs’ bar for failing to effectively counteract BP’s PR campaign.  His point was that even if the 60 Minutes team didn’t bother to explore BP’s settlement motivation in order to place its flip-flop in context, there’s nothing stopping the plaintiffs’ side from doing so.  Touché.

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  1. up arrow

    […] BP Settlement — Maybe This Guy Should Get His Own Column 2 weeks ago […]

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    […] the power of spin.  We have seen BP try to crawfish out of its deal to compensate businesses for the economic losses caused by BP’s oil spill and then try to play the victim on 60 […]

  3. up arrow

    […] the power of spin.  We have seen BP try to crawfish out of its deal to compensate businesses for the economic losses caused by BP’s oil spill and then try to play the victim on 60 […]

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    […] BP Settlement — Maybe This Guy Should Get His Own Column 6 days ago […]

  5. J.R. Whaley says:
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    Thanks Trisha. Here is another good article from the Times Pic in which it is stated: “A recent report by the National Wildlife Federation lists independent scientific studies outlining 14 species in distress as a result of the spill and its byproducts, including adrenal and reproductive problems in dolphins, heart defects in tuna and amberjack, and declines in other fish.” http://www.nola.com/environment/index.ssf/2014/04/bp_oil_spill_four_years_later.html

  6. J.R. Whaley says:
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    Al — Not sure that anyone is calling the PSC lazy. Lots of Monday morning quarterbacking to be sure. I think the point the individual was making was his belief that BP has essentially been given carte blanche so far. But I think (and hope) that is changing.

  7. Trisha Springstead says:
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    And Meanwhile the People continue to suffer:
    http://real-agenda.com/2014/04/20/whats-left-of-the-gulf-of-mexico/

  8. Al Ghindal says:
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    Calling the PSC lazy would be an understatement. At the end of the day they’ll get paid their millions. Claimants get screwed once again.