Diving into the wreck: BP and Kenneth Feinberg’s Gulf Coast Gambit

Roger Williams University School of Law is hosting Blowout: the Legal Legacy of the Deepwater Horizon Catastrophe.  The  Agenda is HERE

I will participate in a panel on the tort system's response.  My Abstract follows.

Diving into the wreck: BP and Kenneth Feinberg’s Gulf Coast Gambit

by George Conk

for delivery April 13, 2011

Mass tort claims are mostly associated with heedless industrial manufacturing conditions (asbestos) and mass marketing of little-studied drugs (Vioxx) in which thousands of events were aggregated through litigation.  Many  jury trials (asbestos) and bellwether trials (Vioxx) have provided estimates of value and moral judgment of the defendants.  

The Gulf Oil Spill claims arise from a single event arising from similar regulatory failure and industrial malpractice.  Claims differ in the  directness of their causal relationship to the event.  Historically judges have oscillated between assigning the issue to the jury or themselves declaring the limits of liability.  Here the process has been largely taken from both judges and juries by BP’s agreement to establish a fund plausibly sufficient to satisfy the claims which are overwhelmingly for economic loss.  

BP has sought to navigate the strait by placing both roles in the hands of a solomonic lawyer - Kenneth Feinberg whose broad settlement authority is expected to produce both prompt compensation for current losses and general releases that will both credibly compensate for any future and permanent losses, and protect BP from loss beyond the initial estimate.  

The mechanism of administering claims and making payments has started well.  But the Administrator’s claim of neutrality was a significant misstep.  Kenneth Feinberg was judicially compelled to acknowledge that he is BP’s agent for claims resolution.  His offers of early settlement of future loss claims are burdened  by the belated acknowledgment that he is BP’s agent,  his reliance on a report by a Texas A&M scientist who tentatively predicts a continued strong recovery of the fisheries, and by BP’s public complaints that he has been too generous and has demanded too little documentation.  Traditionally such issues have been resolved in the courts.   The BP settlement plan suffers from its lack of an element for resolution of such issues by public authority.