Judge sounds supportive of spill deal despite opt-out requests

NEW ORLEANS — About 79,000 Gulf Coast residents have filed damage claims under a proposed settlement with BP over the 2010 oil spill, but 25,000 others want out of the deal, the claims administrator told a federal judge Thursday.

BP and a steering committee of plaintiffs’ lawyers who negotiated the proposed settlement earlier this year defended it against objections that it’s unfair, and U.S. District Judge Carl Barbier also voiced skepticism about those complaints.

BP attorney Rick Godfrey reaffirmed the British oil giant’s commitment to the deal despite the possibility that those who opt out may sue the company later.

Barbier, who is overseeing the litigation surrounding the disaster, conducted the hearing on the fairness of the proposed settlement as he considers whether to give it final approval.

Patrick Juneau, who heads a claims center established as part of the agreement, said 25,000 prospective plaintiffs applied to opt out ahead of a Nov. 1. deadline. But he predicted the actual number will be much lower, saying about half the opt-out applications didn’t comply with court requirements.

Claimants who don’t opt out must proceed under the terms of the settlement.

“This settlement should amicably resolve in excess of 100,000 economic claims from the world’s largest oil spill disaster,” said James Roy, a lawyer on the steering committee that negotiated the settlement. “The settlement creates a court supervised settlement program — it gives those individuals who suffered economic damages a fair and objectively determined settlement.”

He said experts spent nearly two years developing the formulas for establishing the range of damage awards to offer claimants.

Among objections to the settlement is its establishment of geographical zones as one criterion for determining what claimants are eligible and how much they should receive.

“They are flawed and would not survive analysis,” said lawyer Stuart Smith, representing some claimants who oppose the settlement. “They are inherently unfair and treat different victims differently.”

Steering committee lawyer Stephen Herman said, however, that the geographical zones make sense. “You have to draw lines and we have done a good job of doing that,” he said.

Barbier sounded sympathetic to that argument.

“If you are getting an adequate settlement, it does not seem to matter what somebody else is getting,” he said.

Barbier also reminded Smith that the court has no authority to revise the deal the parties reached after months of negotiation.

“Your gripe is that maybe you weren’t in the room and would have done things differently,” he said. “That is not the issue here. The issue is whether I approve this settlement.”

At the end of the hearing, Barbier said that he would review the objections to the settlement and make a final ruling later, but telegraphed his inclination  in comments directed at  objecting attorneys and claimants who opted out.

“I think a lawyer owes a fiduciary duty or an ethical duty to analyze each client’s claim and inform the client to let them make a claim,” Barbier said. “To just send form letters to thousands of clients and say, ‘we don’t like this settlement’, without further analysis, is not serving your client well, at the least.

“Those who do opt out, you have to consider that when you opt out of settlement, what are you opting in to? You are giving up payment now for years of litigation and delays.”