Deepwater Horizon settlement sees struggles, including problems with Coon opt outs

By Amanda Robert

NEW ORLEANS (Legal Newsline) — Motley Rice founding member Joseph Rice is no stranger to complex litigation settlements.

He once served as lead private counsel for 26 jurisdictions, including several state attorneys general, and helped negotiate the National Tobacco Settlement. It was the largest civil settlement in U.S. history.

He brought this experience to the Deepwater Horizon oil spill multidistrict litigation, where he acted as a lead negotiator and helped the Plaintiffs’ Steering Committee and BP reach the Economic and Property Damages Settlement — the largest class action settlement in the nation’s history.

The high-profile and heavily scrutinized case arose after an explosion on the BP-operated oil rig killed 11 workers and dumped more than 4 million barrels of oil into the Gulf of Mexico. Although there’s no limit on the total amount of the settlement, BP estimated it would pay around $7.8 billion to resolve accident claims.

“This is the most complex settlement that’s ever been done,” Rice said. “It took me a year-and-a-half to negotiate this deal.”

Those familiar with the Deepwater Horizon case, as well as its recent settlement, say it’s seen its share of struggles. Even now, six months after U.S. District Judge Carl Barbier of the U.S. District Court for the Eastern District of Louisiana approved the settlement, BP has filed an appeal before the Fifth Circuit Court of Appeals in New Orleans, challenging claims administrator Patrick Juneau’s review and payout of certain claims.

Objections, as well as opt outs, have also caused problems in the Deepwater Horizon MDL in recent months.

In November, class counsel and BP filed a joint report on objections to and opt outs from the settlement. They claimed that given the size and scope of the settlement, the number of objections and opt outs were small. They also found that only a fraction of the objections and half of the opt outs were valid.

In the report, the parties pointed out that objections were filed on behalf of an alleged 13,786 individuals. However, they said, the majority of the purported objectors were “simply names on long lists attached to the objection filings made by four law firms.” One of those firms, Brent Coon & Associates, offered objections for 11, 245 individuals.

“It seems unlikely that these mass objections are the product of a good-faith investigation of the fairness of the proposed settlement with respect to the interests of each of more than 13,000 individual potential Class members,” according to the report. “Moreover, at the same time as these four law firms filed these mass objections are urging the Court to reject the proposed Settlement, they are advocating the claims of other clients – and in many cases the same clients on whose behalf they have filed objections – seeking compensation under and pursuant to the Settlement.”

In the example of Brent Coon & Associates, the parties contended that the firm claimed to represent 5,534 objectors who also registered to submit claims under the settlement.

Barbier considered the report when he granted final approval of the settlement in December 2012. In his 125-page order, he referred to issues with opt-out requests. He found that at least 9,460 requests were invalid, since they were not signed by the individual who asked to be excluded from the settlement. Instead, the requests were often signed by “counsel purporting to act on behalf of the purported Class Members.”

Barbier called out Brent Coon & Associates, which submitted 7,925 requests with Brent Coon’s computer-generated signature.

In April, Barbier again challenged Coon, asking him to defend a third-party lien placed on a payment owed to Dien Nguyen, who never agreed to hire Coon. When the judge showed Nguyen a contract that he supposedly signed, Nguyen said the signature was not his signature.

Barbier dismissed the attorneys’ fee lien and released the settlement to Nguyen.

According to Juneau’s May 13 status report, the Deepwater Horizon Claims Center has received 164,758 claims since June 2012. The office found 40,459 claims eligible for payment, with a total value of more than $3.2 billion.

Juneau also reported that as of May 13, his office has already paid more than $2.14 billion on 31,980 claims.

In March, BP asked Barbier to issue a preliminary injunction against the claims administrator, alleging that Juneau was misinterpreting the settlement and mishandling costly business economic loss (BEL) claims.

“As a result of the Claims Administrator’s BEL Policy Decisions, BP is already exposed to hundreds of millions of dollars in fictitious ‘losses’ that were never contemplated by the Agreement,” BP said. “Although the ultimate exposure is at this time inestimable, it grows daily and could cost BP billions.”

BP gave examples of “absurd awards,” including the issuance of $21 million to a rice mill in Louisiana that was located 40 miles from the coast. BP argued that the mill earned more revenue in 2010 than in the previous three years.

BP appealed to the Fifth Circuit in April, after Barbier denied its request and refused to stop settlement payouts. The Fifth Circuit agreed to expedite BP’s appeal, but also stopped short of suspending payments.

For Rice and other class counsel, the appeal acts as a distraction from the larger goal of the settlement, which seeks to resolve claims from individuals and businesses in Louisiana, Mississippi and Alabama, as well as certain coastal counties in eastern Texas and western Florida, and adjacent Gulf waters and bays.

“It’s paid out over $2 billion, liquidated claims of over $3 billion, and now we’re in the Fifth Circuit, in a fight over the interpretation of the settlement agreement,” Rice said.

He expects the Fifth Circuit to rule that Barbier properly interpreted the settlement agreement. He also hopes Juneau can continue processing claims and the court will continue resolving settlement objections.

Despite its setbacks, the Deepwater Horizon MDL continues to move forward. The first phase of the trial, which will determine if BP and other companies acted with willful or wanton misconduct or reckless indifference, ended in April. Barbier will review post-trial briefs before issuing his ruling.

The second phase of the trial will determine how much oil was spilled in the disaster. It is scheduled to start in September.