The federal judge overseeing litigation tied to the Deepwater Horizon disaster has denied BP’s request to remove the head of a multibillion-dollar settlement program set up to compensate victims of the 2010 oil spill.
In a four-page order Monday, U.S. District Judge Carl Barbier said BP’s case for dismissing Patrick Juneau, the Lafayette lawyer administering the settlement, was “not persuasive.”
Barbier’s ruling was the latest blow to BP in a two-year battle over the settlement process, which the company once embraced as a way to resolve hundreds of thousands of claims for economic damages.
BP has argued for the past year — in the courts and the media — that a cozy Louisiana legal community has turned the claims program into a feeding frenzy, with “windfall payments to numerous business claimants for non-existent, artificially calculated losses.”
In a statement Monday, company spokesman Geoff Morrell said, “BP strongly disagrees with the district court’s ruling and is considering its appellate options.”
The British oil company contends that Juneau should be dismissed largely because of an apparent conflict of interest: his previous consulting work for the state in the wake of the April 2010 spill.
The company also claims that Juneau failed to prevent misconduct among key claims staff, made public comments disparaging BP and improperly expedited some claims pursued by lawyers who had been involved in brokering the settlement program.
Juneau’s law firm was hired to provide “advice and counsel” to the state after the formation of the Gulf Coast Claims Facility, a predecessor to the settlement program created in June 2010 and headed by lawyer Kenneth Feinberg.
Juneau’s work on behalf of the state ended in July 2011, according to BP’s motion, about seven months before he was nominated to lead the newly proposed settlement process.
BP’s attorneys wrote in a Sept. 9 court filing that the consulting work represented a “clear-cut conflict of interest.”
They also argued that Juneau was not forthcoming about his earlier work during an interview with former FBI Director Louis Freeh, whom Barbier chose last year to investigate allegations of corruption in the claims program. “His failure to disclose it fully and on the record warrants his removal,” BP’s lawyers wrote.
But on Monday, Barbier said remarks made by Juneau that BP relied on to make its case were “taken out of context in a much larger sworn statement.” He pointed out that Juneau had disclosed his previous consulting work to BP and “at least six of its attorneys” before he was selected to oversee the claims program.
As for Juneau’s public comments, Barbier said the claims administrator “does not labor under the same restrictions against public statements that a judge must adhere to” and is allowed to “speak out in order to respond to what he considers to be unfair or unwarranted criticism.”
The rest of BP’s case for removal was “mostly a regurgitation of old issues or complaints” that have been addressed previously, Barbier said, none of which he believed merited Juneau’s dismissal.
In his order Monday, Barbier also downplayed allegations that Juneau had, early in the settlement process, acted improperly by fast-tracking some claims for damages. Instead, Barbier said, administrators made sure some high-dollar claims went forward immediately “in order to demonstrate that the settlement program was working as intended.”
“While the settlement agreement in general terms provides that claims will be processed in the order in which they are received, there are many circumstances which require exceptions, and there is no evidence that the claims administrator acted improperly in this regard,” Barbier wrote.
In a statement issued after the ruling, Juneau said he “will continue to process claims in a fair and consistent manner while following the court’s direction.”
Since opening in June 2012, the settlement program has processed more than 210,000 claim forms, federal court documents show. As of Sept. 30, the program had issued eligibility notices affirming the validity of more than 72,700 claims, with payment offers totaling almost $5.2 billion. Almost 68,800 claims had been paid, adding up to nearly $4.2 billion.
Louisiana residents have accounted for 26 percent of the overall damage claims, second to Florida.
The $4.2 billion is in addition to $400 million that was already in the pipeline when Juneau took over from Feinberg, whose earlier claims facility paid out $6.1 billion to more than 221,000 claimants.
BP initially estimated the settlement would cost it about $7.8 billion; all told, it is now facing a price tag for the spill that could rise to $50 billion, including cleanup costs and potential federal fines.
Earlier this year, BP asked the U.S. Supreme Court to review the high-stakes settlement in an effort to require that businesses prove the oil spill caused them financial losses before they can collect money. Barbier already has ruled that the terms of the 2012 deal mean that even plaintiffs not harmed by the oil spill can receive money and that BP knew as much when it agreed to the deal. His decision has since been upheld by the 5th U.S. Circuit Court of Appeals.
Follow Richard Thompson on Twitter, @rthompsonMSY.