In re Oil Spill By the Oil Rig "deepwater Horizon" In the Gulf of Mexico
| Decision Date | 28 December 2011 |
| Docket Number | MDL No. 2179 |
| Parties | In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010 This Document Applies to: All Cases (including 10-2771) |
| Court | U.S. District Court — Eastern District of Louisiana |
[As to the Motion to Establish Account and Reserve for Litigation Expenses (Rec.
The Plaintiffs' Steering Committee ("PSC") has filed a Motion to Establish Account and Reserve for Litigation Expenses, seeking the creation of a common benefit "hold-back" fund. Rec. Doc. 4507. As requested by the PSC, the Defendants who are parties to this Multidistrict Litigation ("MDL") would be required upon settlement of any claimants' case, to hold-back and pay into a special common benefit account within the registry of the Court, a sum equivalent to 6% of the gross settlement amount in the case of private claimants. In the case of state or local governmental claimants, the hold-back would be 4% of the gross settlement. As explained by the PSC in its motion, such an order by the Court would not set the amounts of or award any common benefit fees or expenses, but rather simply establish a fund from which common benefit fees, if any, might later be disbursed. Such common benefit funds are often used by Courts in the MDL context where the Court appoints a Plaintiffs Steering Committee and other lead or liaison plaintiff counsel toorganize and spearhead the litigation on behalf of thousands of claimants and hundreds of attorneys. See In re Air Crash Disaster at Florida Everglades on Dec. 29, 1972, 549 F.2d 1006, 1017-18 (5th Cir. 1977); In re Zyprexa Prods. Liab. Litig., 594 F.3d 113, 128-30 (2d Cir. 2010) (Kaplan, J., concurring); In re Genetically Modified Rice Litig., No. 4:06-md-1811, 2010 WL 716190 at *4 & n.2 (E.D. Mo. Feb. 24, 2010); Fed. Judicial Ctr., Manual for Complex Litigation, Fourth §§ 14.215, 20.312 (2004).
The Louisiana Attorney General has objected to the creation of a hold-back account insofar as it applies to the State of Louisiana. Louisiana is one of only two Gulf Coast states that have filed claims in this MDL, the other being Alabama. Notably, the Attorney General for the State of Alabama long ago reached agreement with the PSC to work cooperatively to further their joint or aligned interests. Largely for this reason, the Court appointed Alabama Attorney General Luther Strange as Coordinating Counsel for the Gulf Coast States. The Court has on multiple occasions encouraged the State of Louisiana to cooperate with the PSC and the State of Alabama insofar as their interests are aligned versus the Defendants in this complex MDL. Rather than cooperate or attempt to work collaboratively, the State of Louisiana, through its retained private counsel, has instead often obstructed and frustrated the progress of the litigation.
Recently, after it became clear that the State of Louisiana was unable to comply with several orders of this Court, the PSC reached out and offered its technical assistance to assist the State with its ESI production obligations. Notably, it apparently required the intervention of the Governor of Louisiana for this to occur. In fact, the Governor's office and the PSC have reached an agreement to work collaboratively to pursue their common interests. See State of La., Off. of the Governor, Mot. to File Mem. in Supp., Rec. Doc.4916.
The PSC's motion sets forth in great detail the tremendous amount of work, and the large investment of money that the PSC has advanced since the creation of this MDL in August 2010.1 There can be no question that the PSC has taken seriously its fiduciary obligations in the best interests of all claimants, both private and governmental.
The Court does not at this time decide whether to award common benefit fees or expenses to the PSC. Those matters are reserved for another day. But, it is necessary to establish a mechanism to create a fund that could potentially be available to pay such fees and expenses if and when deemed appropriate. Before any such awards are made, there will be adequate due process given, with notice and opportunity to be heard on issues relating to any request for disbursements from the common benefit fund. As the PSC's motion points out, there are several possible outcomes in this case under which the hold-back fund will either be reduced, or possibly totally refunded to those who are required to contribute.
The Governor of Louisiana has filed a response to the PSC motion, stating that he has no objection to the requested 4% hold-back, as long as certain categories of recovery by the State are exempted therefrom. The PSC has advised the Court that it agrees with the Governor's position, and has submitted a revised proposed Order. The Alabama Attorney General has also advised that he has no objection to the proposed hold-back. Forthese reasons, the Court will issue an Order requiring a 4% hold-back contribution by the States of Louisiana and Alabama, with the exceptions as noted and requested by the Governor of Louisiana.2
Turning to other issues, some parties argue that claims which are settled through the Gulf Coast Claims Facility ("GCCF") should not be subject to the hold-back. See, e.g., Rec. Doc. 4682. They note that the Oil Pollution Act of 1990 ("OPA") required BP to establish a procedure for receiving and settling claims, 33 U.S.C. § 2714, and further required claimants to present their claims to BP before proceeding in court, 33 U.S.C. § 2713. Thus, it is argued that settlements produced via the GCCF are not the result of any common benefit work.
The PSC has strongly advocated on behalf of persons submitting claims to the GCCF, continuing to apply public and private pressure to improve the GCCF claims handling operations. For example, the PSC has actively lobbied and argued for increased supervision and monitoring of the GCCF and Kenneth Feinberg/Feinberg Rozen, LLP. These efforts have met with at least partial success.
For instance, on February 2, 2011 the Court granted the PSC's motion (in part) and ordered the GCCF and BP to:
Early on, the PSC successfully advocated on behalf of Vietnamese and other non-English speaking claimants, and convinced the GCCF to employ translated forms, instructions, etc. The PSC also arranged to make translators available to claimants. The PSC has advocated for a full and transparent audit of the GCCF and its claims handling practices, and together with the U.S. Department of Justice, has persuaded Mr. Feinberg to agree to such an audit which is now in progress. The PSC has advocated, again with some success, for the GCCF to employ a more liberal causation standard in evaluating claims and has advanced similar causation arguments in this MDL proceeding. See Orderof Aug. 26, 2011, Rec. Doc. 3830 at 32-33. The PSC has successfully argued for the application of general maritime law and the possibility of punitive damages. Id. at 18-27. Although the GCCF does not pay punitive damages, the PSC may be able to show that this finding enhances the settlement value of compensatory claims.
Considering the unique circumstances of this case, it would be unfair to allow parties to benefit from these activities of the PSC, but avoid contributing to the common benefit fund simply because they are able to settle directly with the GCCF and avoid filing a claim in the MDL. Other parties have filed lawsuits or claims in this MDL, but then withdraw their claims once they have settled with the GCCF. Again, such parties have likely benefited from all of the common benefit work performed by the PSC.
A related argument concerns whether this Court has subject matter jurisdiction to order the hold-back in (1) cases that were filed in state court, removed to this Court (or removed to another federal court, then transferred to this Court), and have pending motions to remand, and (2) cases filed in state courts that were not removed. See, e.g., Rec. Doc. 4657.
As to the first category of cases, the Court agrees with the concurring opinion in In re Zyprexa Products Liability Litigation, 594 F.3d 113 (2d Cir. 2010). In that case, the district court imposed attorney compensation protocols, including the creation of a common benefit fund, on a law firm that had sixty-one pending motions to remand. The law firm petitioned for a writ of mandamus to set aside the district court's decision. While the court of appeals simply denied the writ of mandamus,3 the concurring opinion—with which themajority was "in sympathy," id. at 119—expressly approved of the district court's decision. The concurring judge explained:
To continue reading
Request your trial