NEW ORLEANS -- A federal judge in New Orleans is holding a hearing Thursday to decide whether BP's settlement with thousands of oil spill claimants is fair.
And billions of dollars are at stake – both for the claimants and their lawyers.
A committee of plaintiffs’ lawyers say the deal they struck with BP back in the spring is not only fair, but generous. BP expects to pay out about $7.8 billion under the deal, on top of the $8 billion it’s already paid for private claims.
But other lawyers plan to argue before U.S. District Judge Carl Barbier that the deal treats certain fishermen unfairly.
And no matter how the judge rules, the lawyers stand to make a mountain of cash. Between fees they’ll charge their clients and a special fund that BP has set up to pay them for their work, a few dozen lawyers could make as much as $2.5 billion.
That’s even more than the $2.3 billion BP has promised to pay to more than 8,000 Gulf fishermen.
Steve Herman, the lead plaintiffs’ lawyer in the case, defended the money he and other attorneys stand to make – and notes that it’s a maximum that depends on several unknowns.
“I think it's an appropriate amount, but it assumes several things that haven't come to pass and probably won't come to pass for years,” he said.
IS IT FAIR?
Most of the lawyers agree that the $2.3 billion is an adequate amount to cover fishing losses. It’s five times what every fisherman typically makes each year harvesting shrimp, oysters, crabs and fin fish.
But Joel Waltzer, who represents 900 fishermen, is the primary lawyer arguing against the settlement in its current form. He argues that $2.3 billion is fine, but too much of it is going to a group of about 15 oyster leaseholders.
He contends that claims for damage to oyster beds should be paid outside of the $2.3 billion seafood program. That program is going to pay fishing claims in two rounds. The first will be based on documented losses and formulas set up by a court-appointed neutral. And the second round is expected to pay whatever is left over on a pro-rated basis.
That concerns Waltzer. He is worried that Herman and the other lawyers who negotiated the settlement failed to account for about $1.1 billion that 19,000 fishermen have already collected from BP, money that will be deducted from what they can collect in the first round of the settlement program.
Once those deductions are accounted for, Waltzer believes claims for actual fishing losses will get an even smaller slice of the seafood-compensation pie, and oyster harvesters – who largely have not received payments for damage to water bottoms and, thus, will not see many deductions – will get an even larger share.
One of Waltzer’s clients, Shell Beach crabber Chris Battle, believes oyster lease claims are siphoning money from hardworking harvesters.
“I think (payments for oyster bed damage) shoulda went to property damage,” he said. “That's their lease. They had to pay to have that lease. (With) landowners, it's not coming out of the seafood compensation. That's where it shoulda came from. If it woulda came from that, the crabbers probably would have gotten a better shake."
Not true, says Herman. The inclusion of oyster leasehold damage is not taking money away from fishermen. Rather, he said, BP only agreed to pay so much in the seafood compensation program precisely because the oyster lease claims were included.
Back when Ken Feinberg was doling out BP's cash, fishermen bonded together to complain about all the money going to land-lubbers -- everyone from McDonald's employees to Bourbon Street bartenders.
Now, they're pointing fingers at each other.
“I don't believe it's fair what they're doing to crabbers. It's not fair,” Battle said. “Why do other fishermen get 10 years and crabbers get four or five. I mean, what's the difference?"
The court-appointed neutral, Baton Rouge mediators John Perry and Dan Balhoff, decided there was, in fact, a difference for shrimpers versus oystermen versus crabbers, and he put that into the settlement payment formula.
Herman says it's counterproductive for claimants to worry about those differences.
"If I were talking to a crabber, I would say, 'Forget about what the oyster guys are getting; this is a good deal for you,’" he said.
And that raises one more important issue that could blow up the whole settlement. Barbier has already signaled that he is inclined to grant class-action status in this case. But, considering the complaints about differences in the settlement formulas for different fishing sectors, the U.S. Fifth Circuit – which is already known to be stingy about approving class-action status – could have the ammunition it needs to deny approval of the class on appeal.
If that happens BP would have an option to pull the plug on the whole settlement and the payment process that’s already under way.