Judge Holds that Feinberg and GCCF Are Not Fully Independent of BP

Yesterday, Judge Carl Barbier, who is overseeing the Gulf oil spill litigation against BP, held that Gulf Coast Claims Facility (GCCF) and its administrator, Ken Feinberg, are not fully independent of BP. As such, the Court held that GCCF must abide by certain limitations when communicating with people who might have claims against BP and other potentially liable parties.

BP hired Feinberg to discharge its statutory duty to process claims for damages under the Oil Pollution Act (OPA). Judge Barbier wrote that in this sort of third-party arrangement, transparency is essential. The administration of the $20 billion trust fund has been plagued by criticisms that it is not sufficiently consistent and transparent. The Court noted that Feinberg and GCCF’s hybrid role has led to “confusion and misunderstanding by claimants, especially those who are unrepresented by their own counsel,” and that GCCF’s claimed independence and neutrality constitutes a “direct threat” to the legal challenge currently underway against BP.

Judge Barbier set forth a number of specific restrictions GCCF must abide by in communications with claimants, such as refraining from claiming to be “neutral” or “independent,” prominently disclosing the fact that individuals have a right to consult with an attorney, and telling claimants that they can join the litigation against BP if they decline to accept a settlement through GCCF.

In the order, Judge Barbier also indicated that he will soon issue a ruling on the broader question of whether BP is fully complying with OPA. Such a ruling could address whether several GCCF policies run afoul of the law, such as the requirement that individuals sign a release of liability in order to receive a final payment, and the methodology used to evaluate claims. Under the current GCCF protocol, to receive a final payment, claimants must give up their right to sue more than 100 named entities in addition to BP and must even waive claims not subject to OPA – provisions that have been criticized as overly broad. Judge Barbier wrote that “whether or not seeking such broad releases is appropriate, the GCCF is clearly acting to benefit BP in doing so.”

The ruling came after lawyers for individuals pursuing claims against BP in court, as well as Attorneys General from Mississippi, Louisiana, and Florida filed motions arguing that serious deficiencies in the handling of GCCF necessitated judicial oversight. The process has been criticized as not being sufficiently transparent, with inadequate explanation provided as to whether and at what amount claims are paid. Many claimants have also complained of apparent inconsistencies in the way claims are valued. Some have argued that GCCF is interpreting OPA too narrowly and is not adequately paying claims that would be recognized in court, such as subsistence claims for those who live off of damaged resources, and claims for punitive damages. Most recently, GCCF’s projection that the region will largely recover by 2011 has raised ire amongst the Spill’s victims.

Alliance for Justice’s short film, Crude Justice, explores many of the issues currently being raised by the legal process unfolding in the Gulf. The film and additional resources, including Judge Barbier’s ruling, can be found at www.crudejustice.org.

Crude Justice from Alliance for Justice on Vimeo.