“Sympathy for the Devil,” an Aug. 14 op-ed in the New York Times, comments in a way generally favorable to BP on its massive federal court litigation in New Orleans. Early next week, more than four years after the Gulf oil spill, BP and the plaintiffs should learn whether the Supreme Court accepts BP’s petition to review two decisions by the U.S. Fifth Circuit Court of Appeals.
The litigation was supposedly settled. Then, like the Deepwater Horizon, the settlement blew up. That occurred when the court-appointed administrator paid claims to businesses that BP claimed must — but did not — prove injuries caused by the spill. (The settlement actually did exempt from the proof-of-causation requirement many businesses in areas most directly affected by the spill.)
According to the New York Times piece, BP has been forced to pay “hundreds … of bogus claims” for damages, like those to “[t]he wireless phone retailer who was awarded more than $135,000, even though its building had burned down before the spill, [and an] attorney who was awarded more than $172,000, even though his license had been revoked in 2009.”
Ironically, a lawyer representing those suing BP commended the company’s response to the spill, saying that “BP did something remarkable [by] voluntarily … set[ting] up an administrative program … that aimed to fully compensate all the victims of the spill. … [a]nd it backed all this up by setting aside $20 billion in a trust fund, with an open-ended commitment should that amount prove insufficient.”
Still, BP doesn’t get much sympathy from the general public. Media reports after the spill caused fear that the environmental damage to the Gulf would be catastrophic. Businesses and employees near the Gulf Coast faced an uncertain economic future. Most of us living along the Gulf Coast, even if not directly affected, knew people who suffered from the effects of the spill.
As an opinion piece on Forbes.com (Jan. 24, 2014) observed, however, “it really doesn’t matter” what the general public thinks about BP. “As long as BP sells oil in colossal quantities, it will continue to attract investment.” BP “remains an economic behemoth and a major player in a commodity the world hopelessly depends on.” Accordingly, a few months ago, the Environmental Protection Agency lifted its ban and allowed BP to bid for new leases in the Gulf.
So if BP neither needs nor receives much sympathy, how important to it is the fraud of a few million dollars? A few million dollars seems like only a rounding error compared to the many billions BP has already paid and will pay before all spill-related matters are resolved. BP will survive and prosper, regardless of what the Supreme Court decides.
Of course, the significance of fraud cannot be measured against the defendant’s size, total net worth or prospects for profitability. Nevertheless, the more important question is what the fraud will do to the federal courts. An unhappy answer is offered in the forceful dissenting opinion of Fifth Circuit Judge Edith Clement.
Judge Clement “indicts” many of her colleagues for refusing to review the fraud, saying that, “Left intact, our holdings funnel BP’s cash into the pockets of undeserving nonvictims. These are certainly absurd results. And despite our colleagues’ continued efforts to shift the blame for these absurdities to BP’s lawyers, it remains the fact that we are party to this fraud ” (my emphasis).
Some businesses objected to the settlement for the obvious reason that they are “inherently harmed by the inclusion of uninjured persons in the class” which therefore “?‘diminishes the relief for class members who are actually harmed.’?”
Federal courts often are accused of expanding their powers in violation of the Constitution. Almost never, however, does anyone accuse a federal court of being party to a fraud. The fact that it is a federal appellate court judge making such an accusation may get the Supreme Court’s attention.
John S. Baker Jr. is a professor emeritus at LSU Law Center. He divides his time between Baton Rouge and Amelia Island, Florida.