Barbier's order takes control of BP trust fund

Steve Korris Feb. 7, 2011, 3:49am


NEW ORLEANS – U.S. District Judge Carl Barbier seized jurisdiction over a $16 billion trust fund for oil spill damage claims.

On Feb. 2, he ruled that when the Gulf Coast Claims Facility and director Ken Feinberg process claims, they must follow a script that plaintiff lawyers drafted.

Barbier wrote that he didn't intend to impede or interfere with Feinberg's ability to process claims, but he charted a whole new course for Feinberg to follow.

He ordered Feinberg and the facility to disclose clearly at all times that they act for and on behalf of oil company BP.

He ruled that a claim handler must begin any communication by telling a claimant he has the right to consult with an attorney of his own choosing.

Barbier prohibited direct contact between the facility and anyone who has hired a lawyer.

He ruled that the facility must not tell claimants they shouldn't hire a lawyer.

He ordered full disclosure of options under the Oil Pollution Act including the right to file a claim in his court. And, he ordered the facility to advise claimants that BP directly or indirectly compensates attorneys and community representatives providing assistance to claimants.

Having dictated these messages, he wrote that "this will not unduly burden BP's, Mr. Feinberg's and the GCCF's ability to speak on their own behalf."

He treated Feinberg as a scapegoat for BP, adopting the view of a plaintiff steering committee that Feinberg is neither neutral nor independent of BP.

Barbier wrote that "district courts are free to prohibit false or misleading speech by a defendant and may restrict a defendant from using methods of speech that are inherently coercive or prone to abuse."

He rejected BP's argument that President Barack Obama appointed Feinberg, writing that BP picked him and Obama approved.

Barbier, who selected the plaintiff steering committee, observed that BP picked Feinberg without input from the committee and without an order from him.

More ominously for BP, Barbier gave both sides nine days to submit briefs on whether BP has complied with the Oil Pollution Act in processing claims.

The briefs are due Feb. 11.

Plaintiff lawyers want Barbier to declare the facility's standard release illegal because it relinquishes claims against all defendants.

After the Deepwater Horizon explosion last April and the resulting release of oil into the Gulf of Mexico, BP began receiving and paying claims.

On June 16, President Obama announced that BP would establish a claims facility with a $20 billion trust fund.

Under the Oil Pollution Act, BP assumed liability as the party responsible for the spill.

After paying claims, a responsible party can try to recover from other parties.

In December, after the Gulf Coast Claims Facility had paid more than $3 billion to settle claims, the plaintiff steering committee asked Barbier to supervise its communications.

The committee sought relief on behalf of a class of spill victims, though Barbier had stayed all motions for certification of class actions.

Barbier decided that initiation of actions that might become class actions subjected the proceedings to Rule 23, which governs class actions.

He wrote that Rule 23 allows him to protect class members, fairly conduct their action, and impose conditions on parties.

"Even prior to certification of a class, this court has both the inherent authority and the responsibility under Rule 23 to supervise or control certain communications with potential class members, especially those who are unrepresented by their own counsel," Barbier wrote.

"If potential class members have received inaccurate, confusing or misleading communications, the court may take action to cure the miscommunication and to prevent similar problems in the future.

"This court encourages and commends any claims process that will fairly, quickly, and efficiently resolve claims in this litigation.

"Innovative and thoughtful procedures are to be encouraged.

"Those procedures must, however, be fully transparent so that claimants can evaluate them appropriately.

He wrote, "The court recognizes and appreciates the enormity of the undertaking of Mr. Feinberg and does not intend to impede or interfere with his ability to fairly and efficiently process claims.

He defined the facility as a hybrid, finding Feinberg is not a truly neutral third party such as a mediator, arbitrator or court appointed special master.

"The clear record in this case demonstrates that any claim of the GCCF's neutrality and independence is misleading to putative class members and is a direct threat to this ongoing litigation, as claimants must sign a full release against all potential defendants before obtaining final payments," Barbier wrote.

More News