As we remember the victims of the Deepwater Horizon oil spill in the Gulf of Mexico on the first anniversary of the tragedy, we have an opportunity to reflect upon BP's response to this disaster and the lessons that can and should be learned from it.
Within weeks of the disaster, BP knew that the Obama Administration was on a mission to hold it responsible. It also knew that Congress was poised to retroactively amend the Oil Pollution Act, which governs the spill, and remove its $750 million damage cap. Facing this reality, BP accepted the designation of "responsible party" under the Act, waived the damage cap protection, and voluntarily set up a $20 billion claim fund to compensate victims.
In this column last July, I lauded BP's decision as being a smart move from political, public relations, and legal perspectives. I also speculated that this may be one of the rare occasions in which a citizen's access to justice may be better protected through this administrative claim fund than through the federal court system.
After all, the $20 billion in the fund was likely greater than the projected $15 billion in damages caused by the spill, and Kenneth Feinberg, the attorney appointed by President Obama to distribute the funds, enjoyed the reputation of being one of our nation's leading settlement administrators. Because pursuing a lawsuit in our court system can be an expensive and lengthy process, the thought of Feinberg serving as an advocate for the people of the Gulf and deciding these claims sounded like a terrific solution. That was last summer.
But now, one year the spill and nine months into Feinberg's watch, I am reminded, once again, that there is no substitute for our civil justice system and the right to a trial-by-jury.
Feinberg was appointed administrator of the claim fund on August 23, 2010. For months, he touted himself as a "neutral party" in this claim process. In reality, however, he was on the payroll at BP. Finally, on February 2, 2011, a federal judge ordered that Feinberg stop referring to himself as "independent" since his law firm is paid $850,000 per month by BP as compensation for his role as administrator!!
Based on this fact, we shouldn't be surprised that even though Feinberg proudly advertises the $3.8 billion which has been paid to Gulf coast residents from his fund, the majority of the 500,000 claimants have received zero dollars, and most others have received only a small fraction of their submitted claims. Many of these folks have expressed frustration over the receipt of paltry settlement checks with no accompanying explanation. Others who have received nothing wonder if anyone has even looked at their claims.
Members of Congress, on both sides of the aisle, are complaining about the administration of this fund and suggesting that the only remedy may lie with the Obama administration. After all, they say, because it was President Obama who put Feinberg in this position, maybe he should be the one to replace him.
So much for the swift and complete out-of-court settlements that BP promised months ago. But there is still hope for these folks.
Fortunately, by submitting their claims to Feinberg for adjudication, Gulf residents did not forfeit their rights to ultimately seek justice in the court system, if need be. In fact, the federal judge who admonished Feinberg for his claimed neutrality likewise ordered him to inform all claimants of their right to hire a lawyer, as well as their right to join the pending federal lawsuit if the administrative claims process fails to satisfy them. So, even though these people may experience the distress and frustration of justice being delayed, they can still access our court system, and hopefully, justice will not be denied.
For the rest of us, while we cannot overlook the stressful and financially devastating effect that this claims process may have upon the victims of the Gulf oil spill, history may record this experience as yet another example of how abbreviated, administrative justice systems never protect the rights of victims. Quite simply, our founding fathers got it right in drafting our Constitution and assuring every citizen the right to a trial-by-jury. As the Gulf oil spill reiterates, any attempt to short-circuit the system only makes the problem worse.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.