A federal judge gave preliminary approval to a settlement between BP PLC and individuals and businesses that suffered economic harm or medical costs associated with the Deepwater Horizon oil spill – and clarified that BP, and not the claimants themselves, would pay the lawyers who spearheaded the litigation.
In approving the deal, estimated by BP to be worth $7.8 billion, U.S. District Judge Carl Barbier on May 2 rejected nearly a dozen objections by parties including Halliburton Energy Services Inc., which is a remaining defendant in the multidistrict litigation over the spill, and the states of Mississippi and Florida.
However, he gave potential class members until Aug. 31 to object or Oct. 1 to opt out, and scheduled a final settlement hearing for Nov. 8.
“The Court preliminarily and conditionally finds, for settlement purposes only, that the terms of the Proposed Settlement are sufficiently fair, reasonable, adequate, and consistent with governing law,” Barbier wrote. “At this stage, the Settlement Agreement appears fair, has no obvious deficiencies, does not improperly grant preferential treatment to the Class Representatives or to segments of the Class, and does not grant excessive compensation to attorneys.”
BP spokesman Scott Dean and David Falkenstein, a spokesman for the plaintiffs steering committee, declined to comment.
Barbier acknowledged the work that both sides accomplished in crafting the settlement. Negotiations began in February 2011, he wrote; by early 2012, a mediator had become involved. In all, there were 145 full days of face-to-face meetings, phone calls and online conferences.
“In the 20 months that have passed…the parties have engaged in extensive discovery and motion practice, including taking 311 depositions, producing approximately 90 million pages of documents, and exchanging more than 80 expert reports on an intense and demanding schedule,” Barbier wrote.
He noted some unusual terms in the deal – primarily, that claims would be paid ahead of final settlement approval and that BP, not the class members, would be responsible for paying the plaintiffs steering committee’s attorneys fees and costs, referred to as “hold back” fees.
In a subsequent order on May 3, Barbier clarified that no “hold back” fees would be deducted from settlement payments. Plaintiffs would still be responsible for paying their individual attorneys.
The economic damages settlement covers individuals and businesses who lived or worked in Louisiana, Mississippi, Alabama and certain coastal counties in eastern Texas and western Florida from April 20, 2010 – the date of the spill – until April 16, 2012. The class members include those with losses associated with property damage, lost charter payments, physical damage and lost subsistence fishing. It includes $2.3 billion for plaintiffs in the seafood business. The deadline to submit claims would be April 22, 2014, or six months after the settlement becomes effective.
The judge approved a separate settlement specific to cleanup workers with claims for injuries or medical costs after having been exposed to chemicals following the rig explosion and fire.
Barbier rejected objections by Florida and Mississippi that the settlement excludes thousands of people or businesses that fall outside the geographical region or that settled their claims under an administrative process that forced them to waive all future economic damages.
“Generally,” Barbier wrote, “non-class members do not have standing to object to a class settlement.” For similar reasons, he rejected Halliburton’s objection. He also rejected objections from a number of plaintiffs who might qualify for class membership, including commercial fishermen and shrimpers.
“The Court has considered these objections; however, in light of the standard governing preliminary approval, the opportunity for objections and opting out during the notice period, the heightened standard during the final approval stage, and the terms of the Proposed Settlement, the Court finds these objections do not warrant denial of preliminary approval,” he wrote.
He did not address filings on May 2 from the Justice Department and Alabama Attorney General Luther Strange objecting to a request by BP and the plaintiffs steering committee to delay the first phase of trial in the remaining litigation until after the settlement is finalized – perhaps as late as January 2013. Both governments, which aren’t parties to the settlement, want the trial to start this summer.
In a supplemental filing on May 2, BP and the committee dropped their request to delay the trial, “given the Court’s Order stating that it would consider BP’s request concerning the adjournment of the…trial” at a recent in-chambers conference.
Contact Amanda Bronstad at firstname.lastname@example.org.