BP Settlement Claims

Gulf Coast Disaster News

Horizon Oil Spill, BP’s Most Vulnerable Victims Are Still Struggling

April 15, 2015, 5:33 pm


This article appeared in the May 4, 2015 edition of The Nation.

In the summer of 2014, Skyland Seafood quietly shut down. In Mobile, Alabama, where the shop had been located for 17 years, Skyland’s demise caused a small, heartfelt shock wave, said customer Alice Lang, 67, who regularly mourns the store’s closing in conversations with her neighbors. As she prepared her family’s Christmas gumbo, Lang added that she felt uncertain about the seafood she’d just bought. It was a worry she hadn’t had in years, because she trusted Phoung Nguyen, Skyland’s owner. “Phoung Nguyen was my seafood guy. With him, everything was fresh from the water,” she said.

His customers say that six days a week, Nguyen purchased just enough freshly caught seafood to sell that day. When customers bought brown or white shrimp, they waited as he stood behind the counter and took off the heads. When they bought fish, he fileted it on the table in front of them.

But today, Nguyen’s shop is shuttered and silent, a victim of BP’s Deepwater Horizon oil-rig explosion on April 20, 2010. “Everybody knows that BP helped shut him down,” Lang said.

Nguyen and his customers blame BP’s labyrinthine claims-processing system, which still hasn’t paid him for the $440,000 in losses he sustained in 2010, when there was no seafood to sell because of the spill. The figure was determined by comparing that year’s paltry sales with a tally of past sales, and was documented in hundreds of pages submitted by his New Orleans–based lawyer, Joel Waltzer.

Though Skyland Seafood was just one small shop, its closing resounds well beyond Mobile as an example of the small mom-and-pop stores and family-run wholesalers that have struggled to stay in business after more than 3 million barrels of oil began spewing into the Gulf. These operations have made up the heart of the Gulf Coast seafood industry for generations, a lattice of local businesses that crisscross the coast from Florida to Texas. Yet they can’t seem to get compensation from BP for their modest claims.

Those who work with the water here know catastrophe. They have lived all their lives with the threat and aftermath of hurricanes. But even after the most destructive storms, as people struggled to rebuild, their boats have typically returned to the sea, bringing back the steady stream of fish, crabs, and oysters they rely on.

But the sea is uncertain now.

After the explosion, the Macondo Prospect well gushed for three months. By May, the Louisiana crude oil had traveled 98 miles north to Alabama’s shores, in a gooey mess that officials described as tar balls, tar patties, tar mousse, and tar mats, some the size of a school bus. In the water itself, thick plumes of submerged oil with the consistency of beef liver stretched for miles, fishermen said.

Five years later, many of the fish that fed the Gulf’s vast seafood industry have yet to come back. Fishermen tell of trawling the waters all night and not bringing home enough fish to pay for their fuel. “I don’t know when it will be back to normal,” said Nguyen, who worries about his customers, his livelihood, and his long-standing BP claim.

It’s a familiar story to Florida claims lawyer Tom Young, who noted that he was able to resolve cases in two or three months back in mid-2012, when BP’s court-supervised settlement program was new and the money flowed more freely. Today, Young said, his cases require countless documents and take an average of 18 to 30 months. “The folks who were impacted the most will have the hardest time getting paid,” he added.

* * *

That the Gulf Coast’s small-business owners would ultimately be stiffed by BP is counter to the spirit of a 1,033-page settlement, which was negotiated with a committee of plaintiffs’ lawyers and approved in May 2012 by the federal district court in New Orleans. In some ways, the settlement seemed almost revolutionary, especially to those who had watched the painfully protracted, 20-year claims process for the 1989 Exxon Valdez tanker spill off the coast of Alaska. (In Alaska, after a jury awarded the plaintiffs $5 billion in 1994, Exxon spent nearly 20 years appealing the judgment and eventually got it reduced to about a tenth of the original award. By the time the payments from that judgment began in 2009, 6,000 of the original 32,000 plaintiffs were dead.)

In 2012, as the estimated $7.8 billion settlement was put in place, BP executives boasted that most of the people who had applied for damages would now receive “full and fair compensation” without having to wait “through a lengthy trial process.” To that end, the settlement required businesses to demonstrate only that they had suffered losses during the time of the spill; there was no need to prove that the spill had actually caused those losses.

But BP soon began to retreat from this key aspect of the settlement. In March 2013, the company challenged the “causation clause,” contending that two-thirds of all business claims for more than $75,000 were based on “flawed data.” As examples, BP lawyers cited cases like the nursing home in Central Louisiana that received $663,834, even though it had shut down a year before the spill. Or the wheat farmer located 200 miles from the Gulf, who decided not to plant a crop in 2010 and received $266,730 for a diminished harvest that year. Or the dental office that received $137,519 for lost revenue during the months it was closed due to water damage unrelated to the spill.

BP asked US District Judge Carl Barbier to put a stop to all “business economic loss” (BEL) payments, a category that includes small businesses like Nguyen’s. In December of that year, Barbier granted BP’s request, and payments were suspended for five months. Within weeks, however, Barbier issued a ruling that the settlement’s approach to causation made sense: “The delays that would result from having to engage in a claim-by-claim analysis of whether each claim is ‘fairly traceable’ to the oil spill…are the very delays that the Settlement, indeed all class settlements, are intended to avoid.”

Still, he allowed the suspension to continue through May 2014, to give BP and its lawyers time to craft a new, 88-page accounting policy that now applies to anyone who uses cash-basis accounting (basically, the type of bookkeeping that just goes with the flow of life—without, for instance, placing related expenses and payments in the same month). Small businesses that were largely run out of a checkbook now had another hoop to jump through. And ever since the payments were reinstated last year, lawyers say, the money has flowed much more slowly.

At this rate, 75 percent of small-business owners—“the Gulf Coast blue-collar, hand-to-mouth, paycheck-to-paycheck guys”—will never get paid, says Brent Coon, a Texas lawyer whose firm represents 10,000 spill clients. According to BP’s own data, fewer than 19 percent of these BEL claims have been paid to date.

When asked about those unpaid claimants at risk of foreclosure or closing their small businesses, BP spokesman Geoff Morrell didn’t respond to particulars, instead sending a more general response about the settlement hammered out a few years ago, which “fulfills BP’s commitment to pay all legitimate claims stemming from the Deepwater Horizon accident.”

Yet BP’s refusal to pay BEL claims often has nothing to do with legitimacy, Coon said; the problem is that these small businesses simply don’t have every piece of paper that BP requires. And unlike the other broad settlements he’s dealt with, in this one BP doesn’t negotiate over gaps in paperwork. Coon compares the situation to a jigsaw puzzle with 99 of its 100 pieces assembled. “I can see the big picture from those 99 pieces,” he said. “But BP won’t give you 99 percent. If you’re missing one piece, you don’t get paid.”

That intransigence seems contrary to the concerned and kindhearted image that BP cultivated early on. Two months after the spill began, while oil was still pouring from the Macondo well, BP ran an apologetic ad featuring then-CEO Tony Hayward. “To those affected and your families, I’m deeply sorry,” said Hayward, who promised to “honor all legitimate claims.” He closed the ad by stating: “We’ll get this done. We will make this right.”

BP, one of the world’s largest companies, had $236 billion in assets in 2009, the year before the spill. And in the months that followed, it appeared that the company was using its colossal holdings to address the crisis quickly. Or, as Coon said, BP bragged “very early and very often” about the claims it paid. Some types of claims were resolved quickly and fairly, he added, rattling them off: claims by vessel owners, sea captains, and deckhands, claims involving coastal beach property. “But with the bulk of the cases, BP has been horrible about paying,” Coon said, emphasizing that the glacially slow process has had a terrible impact on smaller operators, who don’t have lines of credit.

At this point, with the final filing deadline approaching on June 8, Young believes that BP may be deliberately trying to deter more claims. “BP wants the story at church to be: ‘It’s a nightmare; it’s not worth going through; the paperwork is onerous,’” he said. “The idea is to discourage as much as possible.”

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Brent Coon discussing Oil Spill Settlement

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