Florida lawsuit against GCCF removed to federal court

Alejandro de los Rios Jul. 29, 2011, 4:52am


A Florida state lawsuit against Gulf Coast Claims Facility (GCCF) Administrator Kenneth Feinberg has been removed to the U.S. District Court for the Middle District of Florida.

In June, Tampa attorney Brian Donovan filed suit against Feinberg and the GCCF, claiming the process "starves" claimants before paying a "miniscule percent of all damages."

Feinberg was placed in charge of the $20 billion fund last year in the wake of the Deepwater Horizon oilrig explosion and oil spill in the Gulf of Mexico.

Feinberg and the GCCF have been harshly criticized by plaintiff attorneys in the massive multidistrict litigation (MDL) surrounding the oil spill, which is taking place in the U.S. District Court for the Eastern District of Louisiana.

This is the second lawsuit filed by Donovan's firm.

In February, Donovan filed a similar suit on behalf of a marine salvage facility that allegedly saw a dramatic drop in business as a result of the 2010 BP oil spill.

The suit in February claimed Feinberg and the GCCF have circumvented "many of the rights provided to victims of the BP oil spill under the Oil Pollution Act (OPA) of 1990." It also claims that the defendants "employ a 'delay, deny, defend" strategy against claimants.

In the most recent suit, Donovan alleges that, "274 days after Mr. Salvesen presented a claim for damages to BP, GCCF finally denied his claim."

The lawsuit claims Feinberg's denial of Salvesen's claim "is in keeping with the 'Delay, Deny, Defend' strategy."

"Mr. Salvesen is not able to sue Defendants under the Oil Pollution Act of 1990 ("OPA") because his damages did not 'result from' the oil spill and Defendants are not 'responsible parties,'" the press release states.

"Here, [Feinberg's] "Delay, Deny, Defend" strategy and associated tortious acts, not acts by BP, resulted in the financial ruin of Mr. Salvesen."

This week, the plaintiff steering committee (PSC) filed a motion seeking a special master to oversee the GCCF.

The PSC's motion claims that BP uses "coercive" tactics when dealing with claimants seeking compensation through the GCCF.

The motion asks U.S. District Judge Carl Barbier, who is overseeing the MDL, to appoint a special master to ensure BP and the GCCF are OPA compliant.

The motion also asks that Barbier place a hold on releases signed by claimants who gave up their right to sue BP in exchange for quick payments.

The motion claims that the GCCF is violating OPA by only paying 16 percent of interim claims filed.

"This telling statistic demonstrates that the GCCF continues to follow the BP litigation mandate of settling as many claims as possible to reduce the size of the putative class," the motion states.

"The abject failure of the interim claims process administered by the GCCF is the latest, and most troubling, in a long line of actions by BP designed to 'close the books' on the oil spill."

Last week, U.S. Attorney General Eric Holder requested an independent audit of the GCCF.

GCCF administrator Kenneth Feinberg said one would commence before the end of the year.

In February, facing criticisms from plaintiff attorneys and attorneys general from the Gulf states most affected by the spill, Feinberg's attorneys filed a brief stating that the GCCF is OPA compliant.

New York attorney David Pitofsky filed an amicus curiae brief on behalf of Feinberg which states any review by the court of the claims process would show the GCCF is "substantially exceeding ... all of OPA's requirements."

Feinberg's attorneys submitted a report of more than 150 pages which includes details on his personal background and that of the GCCF and its procedural history.

The brief states that "neither OPA nor any other statute or rule empowers a court to regulate an OPA claims process," nor does OPA outline any specific way in which the claims are to be handled.

Feinberg claims that his work with the GCCF "has been and continues to be actively monitored by, among others, multiple committees of the United States Congress, the Department of Justice, the National Pollution Funds Center ... and the Governors and Attorneys General of five Gulf States."

Alabama, Mississippi Florida and Louisiana all filed memos criticizing Feinberg and the GCCF.

Louisiana Governor Bobby Jindal and Attorney General Buddy Caldwell's memo claimed that Feinberg was not complying with OPA.

In March, Alabama Attorney General Luther Strange wrote a memo that said the GCCF payments "do not amount to much" and Alabama residents have been "reduced to begging for handouts from an organization ... whose primary missions seems to be turning them down."

In April, Mississippi Attorney General Jim Hood filed a request that Barbier intervene in the GCCF process.

Feinberg's attorneys fired back against critics who say the GCCF has given out too few payments since it was established.

"To date, in just nine months of operation, the GCCF has paid almost $4 billion to over 174,000 claimants in honoring approximately 300,000 claims," it states. "In the face of such overwhelming statistics, the [Mississippi] Attorney General's naked claims of malfeasance ... must be summarily dismissed."

The Louisiana legislature also expressed concern with the GCCF and has formed a special committee to oversee the claims process.

In Florida state court, a marine salvage company filed a lawsuit against Feinberg and the GCCF alleging that they committed negligence and fraud in the claims process.

Conversely, BP has criticized Feinberg and the GCCF for handing out payments that are too high and that there "is no credible support for adopting an artificially high future loss."

Federal MDL 2:10-md-2179

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