Lawyer is accused of fraudulent conduct during distribution of Deepwater Horizon settlement funds

By Charmaine Little | Feb 19, 2019

Stephen Herman   File photo

Florida attorney Brian J. Donovan has filed a lawsuit claiming fellow lawyer Stephen Herman maliciously misled Donovan’s clients during the fallout of BP’s 2010 Deepwater Horizon oil spill.

Donovan, who filed the civil action in the Circuit Court of the 13th Judicial Circuit In and For Hillsborough County, Florida, alleged Herman, “individually and/or in collusion with the members of the MDL 2179 PSC  (plaintiff steering committee in (a centralized federal action) and BP, in order to limit BP’s liability and thereby maximize his compensation and the compensation of the members of the MDL 2179 PSC, has mis led plaintiff, plaintiff’s clients, and all others similarly situated by fraudulently, recklessly, negligently and/or knowingly designating the ‘B1’ Master Complaint as an admiralty or maritime case, and requesting a non-jury trial pursuant to Rule 9(h),” according to the lawsuit. 

Donovan said Herman should have alleged the claims via the Oil Pollution Act of 1990 as it’s a strict liability statute, as well as the Outer Continental Shelf Lands Act. Because of this, Donovan has sued Herman. He accused Herman of fraudulent conduct with roughly 220,000 victims who had agreed not to sue in exchange for a final payment of $5,000 for individuals and $25,000 for businesses. These were excluded from the settlement class action. Lawyer Kenneth Feinberg is accused of persuading Donovan’s clients into accepting very small settlements.

Judge Carl Barbier, who was ruling in the class-action settlement case, said there was an attempt by the parties and the claims facility to expedite the number of high-value claims to show the settlement program had proper conduct. Still, Donovan claims Herman coerced the remaining plaintiffs into believing that the settlement was actually fair and just.

Donovan alleged more than a dozen claims in his lengthy lawsuit against Herman: gross negligence, negligence, negligence per se, fraud, fraudulent inducement, promissory estoppel, unjust enrichment, breach of fiduciary duty, fraudulent concealment, constructive fraud, breach of fiduciary duty of loyalty, and fraudulent concealment. Herman is also accused of not telling Donovan’s clients that the settlement amounted to $20 billion.

Aside from taking issue with Herman’s eight-step plan that included capturing the market share and circumventing the OPA, he also said Herman refused to answer a number of questions for him once the concerns were raised. One of those questions was why the PSC let Barbier know that the class settlement didn’t comply with the OPA. He said this is just one of the ways Herman has refused to be transparent.

Donovan requested economic and compensatory damages, punitive damages, treble damages, and fee forfeiture if it’s found that Herman breached his fiduciary duties to the plaintiff and Donovan’s clients. Donovan also asked for pre- and post-judgment interest, attorney’s fees and other costs as the court sees fit.

Donovan isn’t the first lawyer to take legal action from the BP oil spill. The Louisiana Record previously reported that Daniel Becnel filed a suit just eight days after the spill. Nineteen lawyers were put on the PSC, not including Becnel, and came up with a settlement that included $660 million for the lawyers plus a percentage of each claim. 

Becnel told the Louisiana Record that those lawyers "were out to get money -- and tons of it."

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