Recently, Judge Barbier extended the October 1, 2012 deadline for oil spill settlement participants to opt out of the settlement and proceed directly against BP. The new deadline is November 1, 2012. Some lawyers and residents along the Gulf Coast have publically declared that class members should opt out of the settlement due to delays in payments. It is not surprising that a settlement, which by all accounts may be the most complex and expansive settlement in United States history, is having some kinks that need to be worked out. Indeed, there will be some delays in the process while the settlement matures out of its infancy. However, the settlement, as written, still presents the fairest, quickest and most reasonable opportunity for claimants to be compensated in the oil spill litigation. As we will explain below, oil spill opt outs will face a long, treacherous path to compensation.
To start with, almost all oil spill cases are tolled and cannot proceed until the Court can resolve the Limitation trial currently set to commence in January, 2013. The Limitation trial, in all phases, is expected to take at least a year to conclude. Appeals to the Court’s decision could further lengthen the stay by months – or even years. Given the logistical processes needed to get cases remanded back to their originating jurisdictions, not to mention docket delays that would exist after those transfers, it is not inconceivable that it could take multiple years before a case is placed on a docket for discovery. Afterward, these cases would go through significant motion practice and lengthy discovery. In other words, opt outs must consider the idea that their case may not be heard or resolved for many, many years.
Aside from the time it would take to actually litigate claims, the cases will face many legal hurdles that make a positive outcome unpredictable. Cases claiming damage to property will have to prove that damage – and proof will most assuredly require expert testimony and Daubert challenges to that expert testimony. Economic loss claims will likely face challenges from multiple angles. For instance, while the settlement does not allow for a full offset in Vessels of Opportunity payments (and for seafood claims, there is no offset), a court may very well determine that full offsets do apply to any recovery because a Defendant is entitled to mitigate its damages. This alone could make a significant difference in claim payouts.
In addition, unlike the settlement, which compensates for future injury, many courts could be extremely hesitant to award “future” damages due to their speculative nature. Because punitive damages are reserved for a very small subset of claimants (commercial fishermen and oiled property owners) pursuant to general maritime law, punitive damages may not be recoverable for a large number of claimants. In other words, the “risk transfer premium” that exists in the settlement will likely not be recoverable in traditional litigation.
Finally, causation could be a major hurdle for many businesses and individuals in traditional litigation. Unlike the settlement, which has clear, predictable methods to determine causation (and for many businesses, they don’t even have to show their losses are actually connected to the oils spill), litigation will require a strict analysis that specifically connects damages to the oil spill. Even the method of calculation could be much stricter. For instance, there is no guarantee that a claimant could choose some months and discount others in a given year, or be able to utilize a combination of 2009, 2008-2009, or 2007-2009 for benchmark years to determine actual losses.
The settlement may still have a ways to go, but we believe for most of our clients, it will provide the fairest and most efficient method of payment. If you have any questions about the settlement, please contact Parker Miller in our firm at 800.898.2034 or Parker.Miller@beasleyallen.com.
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