Apparently the British are known for saying one thing while meaning another. That tendency may help explain British Petroleum’s complete position reversal over the past twelve months with regard to the Settlement Agreement the company itself authored. The Agreement was meant to compensate businesses negatively impacted by BP’s Deepwater Horizon Oil Spill. Now the company wishes to renege, even though thousands of affected businesses have relied upon BP’s word.
With that in mind, I thought I would dig through the court archives for the past year to find statements made by various BP officials, under oath and to the Judge, where the company sang the praises of it’s 1,200 page Settlement Agreement.
Best thing since sliced bread
The following statements, declarations, and comments were largely made in advance of Court approval of the Settlement Agreement. In hindsight, it seems that BP was keenly interested in winning such approval, knowing it could nickle and dime claimants over time.
“Indeed, in many ways, the causation principles are remarkably favorable to claimants. Once a business meets the causation requirements, for purposes of quantifying compensation, all profit declines 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. In contrast, in litigation, a detailed analysis of the reasons for the profit declines is undertaken because it is part of the plaintiff’s burden of proof.” – BP court filing in support of Settlement Agreement approval, August 2012
“The causation requirements appear more than reasonable. For businesses in certain areas, there is a presumption of causation, which will inevitably include businesses that were not economically or financially affected by the DWH Spill. This alone is an unusually generous feature and atypical, in my experience, in economic loss cases. For those businesses that do not qualify for a presumption of causation, there are multiple tests under which they can qualify and establish causation. This variety of test options gives claimants multiple ways to establish causation, which appears to be more than fair. Moreover, the causation tests reflect reasonable expectations about the economic harm the DWH Spill could have caused to a business, and therefore are appropriate tests for the purpose of establishing causation.” – Statement of BP financial expert, James Henley, in BP court filing in support of Settlement Agreement approval, August 2012
Losses experienced by businesses in certain geographic locations and particular industries “are presumed to be due to the DWH Spill and the Claimant need not provide evidence to establish causation. This approach is consistent with economic principles, which would predict that the DWH Spill would most directly affect industries tied to the Gulf. The available data reflect some decline in performance in these industries in the months after the DWH Spill. Granting a presumption that losses experienced by such Claimants are spill-related benefits Claimants by simplifying the Settlement claims process to avoid costs associated with determining causation for Claimants in areas and industries most likely to have been directly affected by the DWH Spill.” – Statement of BP financial expert, Henry Fishkind, in BP court filing in support of Settlement Agreement approval, August 2012
“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.” – Statement of BP financial expert, Henry Fishkind, in BP court filing in support of Settlement Agreement approval, August 2012
“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.” – Statement of BP lead attorney, Richard Godfrey, made during oral presentation to Judge Barbier, November 2012
“The Settlement reasonably requires that some business claimants demonstrate that their business was affected by the spill. Where class members are required to prove causation, there are multiple reasonable options for doing so. The causation tests are reasonable and flexible; they use standardized and transparent approaches. The causation tests reflect rational expectations about the economic harm that the spill could have caused businesses.” – BP & Class Counsel’s Joint Proposed Findings, filed with the Court in November 2012
“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.” – BP & Class Counsel’s Joint Proposed Findings, filed with the Court in November 2012
“Qualifying businesses receive compensation for all losses regardless of actual facts and circumstances.” (emphasis in original) – BP PowerPoint presentation to Court Supervised Claims Administrator, May 2012
“Nothing in the [Settlement Agreement] provides for an offset where the claimant’s firm’s revenue decline 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.” – Statement by Mark Holstein, managing attorney for BP America Inc., to Court Supervised Claims Administrator, September 2012
“This is a settlement, and with respect to the causation issue, that is not the issue that is before this court . . . It was a compromise, which every settlement agreement is. … With respect to causation issues, it was a part of a compromise. … Judgments were made with respect to compromises on a proof of causation.” – Statement by BP lead appellate attorney Ted Olson to 5th Circuit Court of Appeals during Oral Arguments, July 2013
What BP Says v. What BP Means
They say: “The settlement is placing large sums of money today and tomorrow and next week into the hands and the communities of the Gulf, the victims of this tragic event. We believe that it’s fair, just and reasonable, and that this process should not be interrupted or stopped based upon the objections of the few for the purpose of injuring the many who need to be compensated now.” – BP Lead Attorney, Richard Godfrey
They mean: “Good luck collecting from us. We talk a big game but will tie this thing up for years in the court system and the court of public opinion. Your names will be Mud once we get done with you.”
They say: “BP made a commitment to help economic and environmental restoration efforts in the Gulf Coast, and this settlement provides the framework for us to continue delivering on that promise, offering those affected full and fair compensation, without waiting for the outcome of a lengthy trial process.” – BP CEO, Bob Dudley
They mean: “We can litigate this thing until the cows come home. Obviously, money is not an issue for us. We have yet to meet a contract we can’t renege upon. Indeed you will wait – and you will like it – as we file meritless appeal after meritless appeal!”
They say: “Like any settlement, the settlement that has been reached to resolve this litigation is a compromise, a yielding of the highest hopes in exchange for certainty and resolution. The settlement stands alone, however, in its substantive generosity to the class members and in its procedural fairness.” – BP Lead Attorney, Richard Godfrey
They mean: “Ha! We don’t compromise you idiots! Our hopes are higher than ever! We are indeed certain and resolute that you all will be old men, accepting five cents on the dollar for your losses, by the time we’re done with you.”
Judge doesn’t buy what BP is selling
In Judge Barbier’s ruling from Christmas Eve, he summarizes BP’s underhandedness as follows:
“BP not only took the position that causation under the Settlement was determined exclusively through [the formulas in] Exhibit 4B, it promoted Exhibit 4B as providing a benefit to claimants in that it was ‘more than reasonable,’ ‘more than fair,’ ‘objective,’ ‘transparent,’ ‘standardized,’ ‘economically appropriate,’ ‘consistent with . . . economic reality,’ and an ‘efficient’ method of establishing causation. Such attributes, BP claimed, were part of the reason the Settlement deserved Court approval. … This Court accepted BP’s previous position when it certified the Settlement Class and approved the Settlement on December 21, 2012. The Court further finds that BP’s change of position was not inadvertent.” – Judge Carl Barbier, Order & Reasons, December 24, 2013
Judge Barbier echoed this sentiment in a similar statement from a separate ruling on the issue in late November 2013:
“BP accuses the Claims Administrator of ‘rewriting’ and ‘systematically disregarding’ the Settlement Agreement. To the contrary, when it talks about causation, if anyone is attempting to rewrite or disregard the unambiguous terms of the Settlement Agreement, it is counsel for BP.
“Frankly, it is surprising that the same counsel who represented BP during the settlement negotiations, participated in drafting the final Settlement Agreement, and then strenuously advocated for approval of the settlement before this Court, now come to this Court and the Fifth Circuit Court of Appeals and contradict everything they have previously done or said on this issue. Such actions are deeply disappointing.” – Judge Carl Barbier, Order, November 22, 2013
We are not advocating that those unaffected by the spill should enjoy a windfall, to the contrary. The problem is that BP created a set of parameters for businesses to use to determine if their losses were associated with the spill, and if so, to calculate an appropriate level of compensation.
To date, nearly 100,000 businesses have relied in good faith on these formulas. BP has not suggested an alternative. And it is not clear why the company would when its own experts described the qualification system as “‘more than reasonable,’ ‘more than fair,’ ‘objective,’ ‘transparent,’ ‘standardized,’ ‘economically appropriate,’ ‘consistent with . . . economic reality,’ and an ‘efficient’ method of establishing causation.”
The only logical explanation is that BP underestimated the number of businesses that were negatively impacted by the Deepwater Horizon blowout and the company simply wants a mulligan. That is not fair. That is not what was negotiated. That was not what was agreed upon. That is not what BP said. Maybe it is what they meant?