Wednesday, May 28, 2014

BP to ask US Supreme Court to let them off the hook; Scalia's son's firm to do the asking

*** Please excuse all typos, as I am posting this from a mobile device. The source for this post is http://www.wwltv.com/news/Appeals-Court-denies-BPs-effort-to-keep-claims-payments-stopped-260815371.html ***

A nightmare scenario has developed for the United States Supreme Court. In a case that will easily be as controverial as Bush V. Gore, Justice Antonin Scalia will be asked by his son's law firm to let BP avoid making payments under the Deepwater Horizon Oil Spill economic settlement agreement.

By way of background, in the wake of the catastrophic Deepwater Horizon oil spill, BP sought to buy its way out of thousands upon thousands of lawsuits brought under the federal Oil Pollution Act. BP knew that defense of many of those cases would be nigh on impossible, and would take literally decades and untold billions of dollars in legal fees. The beleaguered business owners of the Gulf Coast states, who'd seen their businesses throttled by BP's massive pollution, knew that protracted litigation would not serve their interests, either. After all, when your seafood restaurant in Jackson faces both a decline in sales due to a concern over safety and an increase in price for inferior replacement items, the prospect of money 5 years down the line is cold comfort. 

Enter the class action settlement of all Business Economic Loss (BEL) claims. 

Through thousands of hours of negotiations, and a false start with the Gulf Coast Claims Center, the class plaintiffs and BP entered into a binding contract regarding settlement, and sought approval from Judge Carl Barbier of the Eastern District of Louisiana, the judge to whom all oil spill cases had been assigned. 

All was well for a short time. Claims were being paid, and BP appeared to be doing what it could to right their wrong. Then BP changed their tune. 

Citing instances in which businesses allegedly not harmed by the spill were receiving settlement checks, BP began asking the court to let them out of the settlement agreement. At first, everyone sort if rolled their eyes. BP had not only agreed to the settlement program and the formula by which eligibility for settlement payments would be determined; they'd helped create the formula and specifically asked Judge Barbier to approve it. 

But then a three judge panel from the 5th Circuit said that maybe the accounting rules needed to be clarified. (Cash-basis vs. accrual, etc.) And a stay was ordered to sort that out, meaning that there would be no further payments under the settlement until further order of the court. 

Well, last week, BP completely struck out at the 5th Circuit. (The 5th Circuit is the intermediate appellate court that hears appeals from all federal courts in TX, LA, and MS, including Judge Barbier's court.). Essentially, the 5th Circuit held that BP was going to have to honor its word and make the payments under the settlement, just like they'd said they would.  They also held that the mandate would issue on May 27th. 

The stay, however, remained untouched until yesterday, when the 5th Circuit ruled that the stay would be over come June 3rd. 

Here's where the nightmare begins for our Supreme Court, and frankly, our concept for the rule if law. 

The United States Supreme Court is often asked to weigh in on injunctive matters. (Think mass murderer's last second appeal to the Supreme Court before his execution.) In order to effectively handle such matters, the Supreme Court has divvied up the Circuit Courts amongst themselves. Justice Antonin Scalia presides over these sorts of thing for the 5th Circuit, meaning that when BP asks the United States Supreme Court to extend the stay and continue to withhold settlement payments to Gulf Coast business owners, Scalia will be in charge. 

Now, those of you who pay close attention to this sort of thing know already that that's bad news. Scalia is nothing if not a friend of business. (And by business, I mean Fortune 500 megacorporations, not you, local construction company, seafood distributor, or clothing store.) But it's worse than that. You see, Justice Scalia's son, Eugene, is a partner at the law firm Gibson Dunn. And Gibson Dunn is representing BP. 

So when BP asks the Supreme Court to continue the stay and to deprive thousands of business owners of relief, they will be asking Justice Scalia through his own son. 

If the American public has any faith left in its highest court, it will likely be destroyed by Scalia unless he recuses himself from this case. I'm not holding my breath. 

1 comment:

Cher Ami said...

Bp’s Request for stay to SCOTUS/Scalia revolves around a single issue, that is:

“…certify a class settlement that includes numerous members who have suffered no injury plausibly traceable to the defendant’s actions…”

BP restates this in numerous ways in their 34 page request submitted to Judge Scalia. Each time BP’s attorneys state that the class as constructed includes numerous or insinuates “huge” numbers of claimants who have no loss traceable to the BP oil spill of 2010.

I would suggest that the PSC and the 5th Circuit have missed an opportunity to dismiss these specific points. (Please note that the lack of full file disclosure of past claims information that BP uses keeps all such discussions as theoretical, but importantly PLAUSIBLE connections.)

Please consider the following explanations for defeating BP’s assertions of no causal nexus for their “poster child” fraud case claims:

A car dealer who lost his franchise for a car line (Pontiac) – This dealer publicly stated that he tried unsuccessfully for the entire summer and fall of 2010 to get a new franchise to sell new vehicles. Prior to the spill they had 3 contacts with other auto makers bidding to give them their franchises to sell their new vehicles. The spill ended those talks and the business shut for the year. That is a real loss as opposed to the BP half truth.

An RV park that had a foreclosure filed against it prior to the spill – This is a not an RV park that had closed it’s business. It simply had a filing against it. Their business remained open at that location through 2010. A foreclosure does NOT mean a closure of business in the current FL real estate market for businesses. Most negotiate for a rental contract with the bank who forecloses as the banks prefer a property to be occupied and thus keeping the property from becoming abandoned. Many home owners are keeping residence in their homes in FL now under the same management agreements with banks (though ownership of the property is lost their business income was not.) This property faced the effects of the tourist exodus from the region in 2010 caused by the oil spill.

The cellular phone business that burned down prior to the spill – This company was reported to have been ready with contractors to use their insurance money to move to a different adjacent location and restart their business, but failed to be able to do so as there was simply no customer base to move forward.

The oft quoted “4 partner accounting firm” where one partner takes a medical leave during the oil spill…this was a hypothetical case not a real one. If it was real then there would be other factors that would have allowed the case to proceed against BP in a normal court of law. As it is hypothetical then one might ask first – Did this 4th partner decide to take his medical leave at this time because there simply wasn’t enough business for him to be needed in the office? Or did his absence from the office result in any turning away of clients? Really…would a business of that type actually lose business because one partner had a forced medical leave? Of course not! They would hire a temporary staff accountant. There were many unemployed accountants due to the prior economic crisis available to hire to take up his work load IF and only if such a work load existed.

Truly these cases put forward by BP are red herrings meant to deceive the public (as well as SCOTUS) and succeeded with at least one...a Judge by the name of Clements.