A ruling today by U.S. District Court Judge Carl Barbier proves what victims of the unprecedented Deepwater Horizon spill have claimed for months: the so-called “independent” Gulf Coast Claims Facility is anything but a neutral arbitrator or mediator (download complete ruling here and here is a link to the AP story on the ruling). In fact, the judge ruled that “BP has created a hybrid entity, rather than one that is fully independent of BP” and “the GCCF and Mr. Feinberg are not completely ‘neutral’ or independent from BP.” The judge cited the following facts in support of his conclusion:
1. “Mr. Feinberg was appointed by BP, without input from opposing claimants or the Plaintiffs’ Steering Committee, and without an order from the Court.”
2. “BP pays Mr. Feinberg and his law firm a flat fee each month, pursuant to a written contract which outlines his duties and responsibilities in great detail… This Contract is a private one between only BP and Feinberg Rozen, LLP-the United States is not a party to this Contract.”
3. “BP decided the amount and manner in which it funded the GCCF through this trust agreement.”
4. The GCCF “cannot reveal any confidential information relating to the GCCF without giving BP prior notice so that BP can seek a protective order; that all information gathered from claimants will be turned over to BP, with no restrictions as to its use.” (COMMENT: The claimants have no right of prior notice and cannot protect their privacy.)
5. “BP will ‘indemnify, defend, and hold harmless’ Feinberg Rozen, LLP from and against any and all threatened or commenced actions . . . that are threatened, asserted, brought, commenced, or sought by any person or entity . . . relating to or arising from the operation of the GCCF.”
6. “BP may choose to allow Feinberg Rozen, LLP to ‘use and access certain of its computers, equipment, furniture, [and] properties.’ as well as “use and access certain facilities, properties, and offices owned or leased by BP.” (COMMENT: So Feinberg can use BP’s gym?!)
7. “Under the Contract, BP retains the ability to audit Feinberg Rozen, LLP as long as the firm retains information about claimants.” (COMMENT: The power to audit is the power to control.)
8. “In administering the GCCF, Feinberg Rozen, LLP agrees to comply with BP’s Code of Conduct and to refrain from subcontracting its obligations without prior written approval from BP.” (COMMENT: If I’m following someone else’s conduct mandates, I’m the employee.)
9. “In their releases of BP, the GCCF requires claimants to release and assign all rights or claims not only against BP, but against any other potentially liable party. Whether or not seeking such broad releases is appropriate, the GCCF is clearly acting to benefit BP in doing so. BP may appeal an award of the GCCF if it exceeds $500,000; appeals are decided by a three-judge panel and are binding only on BP.“
10. “BP does retain some degree of control of payments from the GCCF fund, as evidenced by recent media reports that the GCCF was ordered by BP to pay a $10 million business claim which had never been reviewed by the GCCF for merit.”
Any normal person would describe this relationship between BP and the GCCF as that of a corporate parent to its subsidiary. That’s why the court decided that “certain precautions should be taken to protect the interests of claimants,” an extraordinary finding of a lack of confidence in Mr. Feinberg’s ability to remain neutral in fact and appearance. “Any claim of the GCCF’s neutrality and independence is misleading to putative class members and is a direct threat to this ongoing litigation,” continued the judge (emphasis mine). The judge imposed six measures on BP, the GCCF, and Mr. Feinberg and his firm, including ceasing any warning to claimants that they shouldn’t hire a lawyer.
Too often, the press treats Mr. Feinberg as if he is “forcing” BP to pay the thousands of Gulf Coast residents what’s due to them. Actually, he’s forced the victims to choose between their Constitutional right to sue BP in federal court or a final payment, determined in an arbitrary process with no appeal. The GCCF bears no resemblance to many of Mr. Feinberg’s other mediations; the 9-11 Victims Compensation Fund was entirely a creation of federal law, and Feinberg was truly an independent arbitrator. The GCCF has been rigged to minimize BP’s final payments to Gulf Coast residents.
Meanwhile the Senate has left the rig disaster victims out in the cold without their right to sue for non-economic damages, thanks to outdated federal laws enacted years before there were offshore oil operations. In contrast, the House recognized last July, by a unanimous voice vote, the reality of offshore oil rig and shipping accidents and allowed offshore rig victims to fully exercise their rights, just as oil rig workers hurt on land or in the air. The new Congress should enact a permanent fix to federal law to enable the victims to have their day in court.