A top U.S. Justice Department official has made clear that discussions involving the status of the BP oil spill litigation were continuing after the oil company announced plans to settle with individual private plaintiffs.
BP PLC officials announced on March 3 that the company had reached a settlement, estimated at $7.8 billion, with private litigants. U.S. District Judge Carl Barbier in New Orleans has postponed the start of the government’s civil action against BP. There was no settlement with the federal government.
“Discussions about that trial, and with all parties involved in that trial, continue,” Assistant Attorney General Tony West, who leads the Civil Division, told reporters on March 5.
The estimated value of the settlement excludes attorney fees, said sources familiar with the negotiations. Although that amount has not yet been determined, BP has agreed to pay class counsel fees on top of the settlement value, the sources said.
The Justice Department’s Civil Division and Environment and Natural Resources Division are the lead government actors in the suit against the oil company stemming from the explosion and spill in the Gulf of Mexico in 2010.
“I think we have to wait and see where those efforts lead,” West said. “Right now we don’t have a new trial date set. The court has basically put things off for a period of time.” Associate Attorney General Thomas Perrelli, for whom West will soon take over, played a lead role in negotiations with BP, and West was also involved.
West declined to say whether any BP settlement with the government will be a global civil and criminal deal. Department officials said they remained open to a settlement but were fully prepared to try the case. “The United States will continue to work closely with all five Gulf states to ensure that any resolution of the federal law enforcement and damage claims, including natural resources damages, arising out of this unprecedented environmental disaster is just, fair and restores the Gulf for the benefit of the people of the Gulf states,” a Justice Department spokesman, Wyn Hornbuckle, said in a formal statement last week. Regarding attorney fees, BP is expected to pay the “hold-back” amounts designated for the plaintiffs’ steering committee, which has been spearheading the multidistrict litigation, according to a source familiar with the negotiations.
U.S. District Judge Carl Barbier in New Orleans on Dec. 28 established an escrow account into which BP and the other defendants were required to stash set percentages of any settlements so that the 19-member committee would be guaranteed payment for its “common benefit” work. The hold-back was 6 percent for cases involving individual claimants, including the fishermen and businesses subject to the recent settlement, and 4 percent for claims by the states or their local governments.
The Justice Department would not receive payments from the fund.
The percentages do not represent actual awards of fees or expenses. Instead, they are to be deducted from the fees of the 300 other lawyers with cases in the MDL as contributions to the committee. With the recent settlement, BP now will cover those costs, according to a source familiar with the negotiations.
Barbier later amended his order twice, exempting from the hold-back funds any claims against BP by individuals who are not involved in lawsuits and certain environmental claims brought by the states. Another key issue was whether BP must provide a hold-back amount from payments made from the Gulf Coast Claims Facility, BP’s $40 billion reparations fund.
West’s remarks about the BP settlement came during a meeting with reporters about the Justice Department’s success in consumer protection initiatives. Monday marked the start of National Consumer Protection Week.
Last year, the department’s Consumer Protection Branch, which is under the Civil Division, obtained $913 million in civil and criminal fines. The branch oversees litigation that involves, among other things, counterfeit pharmaceuticals, off-label marketing of drugs and investor fraud.
West said that health care and food safety cases were the chief sources of the consumer protection branch’s monetary recoveries last year. Thirty-seven defendants were convicted last year. “All of this didn’t happen by accident,” West said. He trumpeted the stepped up resources, including additional attorneys and support staff, for consumer protection initiatives. President Obama issued a proclamation heralding the newfound Consumer Financial Protection Bureau and its director, Richard Cordray. The bureau enforces a wider array of financial laws and regulations that do not fall under the jurisdiction of Justice Department, West said.