BP & The Bayou Shakedown
Joseph Nocera explores how the legal culture of Louisiana has shaken down BP. For example, plaintiff’s lawyers were trolling for clients among people who suffered no material loss in the BP oil spill, but who were invited by lawyers to get in on the settlement because hey, it’s BP. Excerpt:
I realize that many people don’t much care that a multinational corporation responsible for a huge oil spill is being fleeced in Louisiana. But they should, for two reasons. First, although BP’s negligence was unquestionably a significant reason for the spill, its response has been the opposite of the unfeeling corporation. It waived the $75 million liability cap that federal law allows. It has spent, so far, $14 billion cleaning up the Gulfand another $11 billion settling claims of various sorts. It has taken its medicine willingly. Yet its efforts to do right by the Gulf region have only emboldened those who view it as a cash machine.
The next time a big company has an industrial accident, its board of directors is likely to question whether it really makes sense to “do the right thing” the way BP has tried to.
What’s more, says Nocera, it sends a terrible message to outside business with regard to the atmosphere of corruption inside a state. Nocera:
We like to talk in the United States about our belief in the rule of law, but the truth is that what is going in Louisiana today is not all that different than when a corrupt Russian official creates a fake tax liability to line his pockets at the expense of some hapless company operating in Russia. “This is Louisiana, after all,” a local plaintiffs’ lawyer told Bloomberg BusinessWeek recently. “A big foreign company with deep pockets, and you’re surprised there’s a feeding frenzy? Come on, man.”
Again, industry is so often the beneficiary of government policy in Louisiana, so it’s hard to feel that sorry for BP. But I do. The company should be made to pay for its negligence in the oil spill, and to restore the livelihoods of those who truly suffered. It should not be made to subsidize the greed of us Louisiana people who weren’t harmed at all by the spill, and the lawyers who egg us on.
UPDATE: I defer to the legal judgment of my Louisiana lawyer friend, who writes:
Nocera’s take on this is an ignorant crock, filled with misinformation that only a dishonest billion-dollar company like BP can buy with its full-page-ad campaign in the NYT and elsewhere.
BP eagerly entered into this settlement agreement to avoid an imminent civil trial of these claims and to resolve serious criminal charges on relatively favorable terms. Now that they’ve got the real danger behind them, they’re trying to change the terms of the civil settlement.
After over six months of running “test cases” under the agreed formulas — a formula that BP’s lawyers expressly agreed was correctly applied — BP urged the court last December to approve the settlement. In the settlement agreement itself, BP agreed that each claimant would receive the greatest compensation amount allowed under the settlement. BP agreed that not only coastal areas would be in the claim zone, but voluntarily included areas in northern Louisiana, Mississippi and Alabama.
Only after the approval of the generous settlement and the avoidance of more serious criminal penalties did BP do a 180 and say that the settlement administrator was interpreting terms wrongly. This argument comes from the same BP lawyers who, in finalizing the settlement, expressly said that the terms should be interpreted the way the settlement administrator is applying them, and who approved of the outcome of “test cases” that included the specific fact pattern and the specific types of calculations of which they now complain.
Yes, it is the nature of an accounting-based settlement that some undeserving claimants will get money, just as a great many deserving claimants will not. That is the nature of objective tests and multi-claimant settlements. It’s not fair to everyone in every case, but overall it’s a better option than pursuing or defending 500,000 lawsuits.
And what Nocera calls a “good-ol’-boy plaintiffs’ lawyer” selected by plaintiffs’ lawyers is actually a highly respected middle-of-the-road lawyer who was also recommended to the court by BP!
The dishonesty from BP and its apologists is breathtakingly frustrating, because once the false narrative is established — in this case by BP’s full-page ads — it’s hard to get journalists to go back to primary sources like the agreement, BP’s e-mail chain, and the court’s actual rulings; journalists just accept and repeat what others have said.
I guess the lesson is that even the NYT can be bought if you have enough money. And Nocera complains about greedy lawyers, apparently with a straight face.
Thanks for the correction. I’d always admired Nocera’s work before.