Friday, July 23, 2010
Next week, on July 29, the Multi-district Litigation Panel, a panel comprised of seven judges throughout the country, will gather to determine where to transfer the cases filed against BP arising from the oil spill. (In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, MDL No. 2179) The cases on the docket include around 24 from Alabama, 10 from Florida, 33 from Louisiana, 8 from Mississippi, and 2 from Texas.
Despite the spate of new articles, the story hasn't changed much in the past few months. Plaintiffs' attorneys are, by and large, pushing for New Orleans where they suspect that a potential jury pool would be hostile to the oil industry. And, not surprisingly, defendants are pushing for a Houston venue, in the heart of the oil industry. Much the same scenario plays out in less high-profile cases on a regular basis.
Plus, the MDL Panel doesn't always choose a side. For example, the MDL Panel in the In re Silicone Gel Breast Implant Products Liability Litigation in the early 1990s sent the cases to the Northern District of Alabama despite a push by plaintiffs for the Northern District of California or the District of Kansas and a push by defendants (and a few plaintiffs) for the Southern District of Ohio. Of course, just as in BP's case, the litigants in the Breast Implant litigation urged the Panel to appoint a particular judge (i.e., Judge Henderson or Patel in the Northern District of California or Judge Kelly from Kansas). Back then, the Panel noted in its order that either Ohio or California would be an appropriate forum, but it was "troubled" "by the volume and tone of the negative arguments with which opposing counsel have sought to denigrate each other's forum choices, litigation strategies, and underlying motives." 793 F. Supp. 1098 (JPML 1992).
The same logic seems to apply with equal force to the BP oil spill litigation, so it wouldn't come as a huge surprise if the Panel rejected Louisiana and Texas as a forum. That said, as someone who's written about the value of process and, in particular, about the value of participating in process as a vital component of procedural justice, I would hope that the Panel's forum selection wouldn't undermine the ability of those plaintiffs with fewer resources to participate. And by "plaintiffs" I do mean the plaintiffs themselves, not just their attorneys who will certainly participate regardless of where the lawsuits land.
Sunday, July 18, 2010
The Forbes article, BP's Legal Blowout, by Daniel Fisher and Asher Hawkins, looks at the benefits, risks, and remaining issues surrounding the BP claims fund. I'm quoted in the article's discussion of legal fees.
Today, I saw on Bloomberg Rewind a video of several questions to Kenneth Feinberg, administrator of the $20 billion BP oil-leak compensation fund. (Video of the interview apparently not yet available on the internet.) At one point, the reporter asked Feinberg how he would be paid, and Feinberg responded that BP would pay because neither the victims nor taxpayers should have to pay him. Fair enough. But when the reporter asked Feinberg whether his compensation would be disclosed, Feinberg said that his compensation "would be confidential."
The issue of Feinberg's compensation is interesting. Feinberg worked pro bono on the 9/11 victim compensation fund -- a remarkable and laudable commitment given the substantial time involved. I'm not suggesting that Feinberg should go on doing such monumental administrative tasks pro bono -- but is it appropriate for him to keep his compensation from BP confidential?
As with the 9/11 fund, Feinberg will likely have tremendous discretion in fashioning the administrative claim mechanism for the BP compensation fund. His exercise of discretion could possibly result in BP saving substantial funds, especially if any remainder of the $20 billion fund is to be returned to BP. Accordingly, a fair process at a minimum requires that both the amount of his compensation, and the method of compensation be disclosed publicly. If BP has the ability to review and cut his billable hours or his billable-hour rate, for example, Feinberg might have a conflict of interest that could lead him unconsciously to favor BP in structuring the administrative fund or making awards. As a result, in addition to public disclosure, an even better solution might be for BP and Feinberg also to agree to have a federal judge review Feinberg's billable hours, billable-hour rate, and total fee, much as is already typically done by judges reviewing class counsel fee awards in class-action settlements under Rule 23. See Fed. R. Civ. P. 23(h) ("In a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement.").
I of course do not mean in any way to call into question Feinberg's integrity; he is widely viewed as the nation's leading claims administrator. But even federal judges have their compensation set publicly and in a manner that could not be said to incentivize them to favor one litigant over another. We would never approve of a judge being paid confidentially by only one litigant -- and we shouldn't here either, especially when the claims structure could be seen as quasi-public in light of the President's central involvement and comments that "[i]n order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party." Ultimately, removing the issue of Feinberg's fees from any controversy would aid Feinberg in making the BP fund a success.
UPDATE -- Professor Andrew Perlman (Suffolk) comments at Legal Ethics Forum on my post above.
UPDATE #2 -- Forbes' On The Docket blog discusses my post above: Feinberg's BP Pay: Should It Be Disclosed?, by Daniel Fisher.