The Gulf Coast Claims Facility officially announced that it would halt any and all pending settlement payments for Deepwater Horizon/BP oil spill claims. This action, the direct result of a recent U.S. Eastern District Court order, would require a certain percentage of private and governmental settlements be put in escrow, paving the way for payment of the Plaintiff Steering Committee.

In his order, U.S. Eastern District Court Judge Carl Barbier cites that attorneys and members of the Plaintiff’s Steering Committee (PSC) have invested over 230,000 hours and contributed over $11 million, “for the common benefit of claimants and litigants,” in their dealing with the Courts and GCCF, which included the February 2011 motion that stated that BP and all defendants, “Refrain from referring to the GCCF, Ken Feinberg, or Feinberg Rozen, LLP (or their representatives), as “neutral” or completely “independent” from BP,” and that disclosure those firms were in fact acting on behalf of BP in response to the disaster and for their violations of regulative law.

For their efforts, the PSC filed a motion to collect litigation expenses, and sought, through the Court, the creation of a common benefit “hold-back” fund, which would come out of settlements from the GCCF. The subsequent order, signed by Judge Carl Barbier of the U.S. Eastern District Court, concluded that money should be withheld from settlements, to the tune of four to six percent of the gross settlements, to be put in escrow in preparation to pay for the group of attorneys in the PSC, who have allegedly been working on the behalf of plaintiffs in the ongoing GCCF litigation. Though, a separate judicial action will still be required to issue any actual payment to the PSC.

After the order was filed, the GCCF requested clarification from the Court on the proposed process for collecting funds, and stated that until further notice, all payments were to be placed on hold to prepare for proper payment to the newly created fund.

“Upon receiving a copy of the Court’s order, the GCCF promptly began taking steps to ensure its compliance with the hold-back requirements. Effective December 30, 2011 the GCCF has temporarily frozen all payments to claimants and issuance of any payment determination letters,” said David Pitofsky, in the official response to the Court order handed down.

“Considering the unique circumstances of this case, it would be unfair to allow parties to benefit from these activities of the PSC, but avoid contributing to the common benefit fund simply because they are able to settle directly with the GCCF and avoid filing a claim in the MDL,” the order states. “Other parties have filed lawsuits or claims in this MDL, but then withdraw their claims once they have settled with the GCCF. Again, such parties have likely benefited from all of the common benefit work performed by the PSC.”

“Defendants, or any agent or representative acting on a Defendant’s behalf, shall withhold and deposit an amount equivalent to six percent (6%) of the gross monetary settlements, judgments or other payments made on or after November 7, 2011, by or on behalf of one or more Defendants to any other plaintiff, putative class member or other claimant, arising out of the Macondo / Deepwater Horizon disaster,” says the U.S. Eastern District Court order.

That percentage, and the four percent to be withheld from government and other non-private settlements, will then be placed into a court-supervised escrow account. This includes all settlements made with the State of Louisiana. However, these plaintiffs are being forced to pay for the services provided by the PSC, regardless if they were actually litigants in any suit, or simply settled on their own.

“This hold-back requirement applies to all actions filed in or removed to federal court that have been or become a part of the MDL, whether or not a motion to remand has been filed, claimants who settle directly with the Gulf Coast Claims Facility, or state court plaintiffs represented by counsel who have participated in or had access to the discovery conducted in this MDL,” the order states.

Louisiana Attorney General Buddy Caldwell officially objected to the move for the fund.

“The Court has on multiple occasions encouraged the State of Louisiana to cooperate with the PSC (Plaintiff’s Steering Committee) … insofar as their interests are aligned versus the Defendants in this complex MDL (Multidistrict Litigation),” said the order signed by Judge Barbier. “Rather than cooperate or attempt to work collaboratively, the State of Louisiana, through its retained private counsel, has instead often obstructed and frustrated the progress of the litigation.”

Meanwhile, Governor Bobby Jindal responded favorably to the four percent requirement in the judgment, but requested certain exemptions to the order, including non-monetary settlements. But, to date, no such exemptions for private claimants, and the Court’s order will be considered retroactive for all those claimants who, according to Judge Barbier, benefited from the activities of the PSC and received a settlement offer since November 7, 2011, even if there was no actual suit filed by the claimants themselves.

At this time, the Court has not decided whether to award common benefit fees or expenses for the PSC, according to Judge Barbier order.

“Those matters are reserved for another day. But, it is necessary to establish a mechanism to create a fund that could potentially be available to pay such fees and expenses if and when deemed appropriate.”
Copies of the complete order, as well as the response by the GCCF, are being made available through the GCCF website, at www.GulfCoastClaimsFacility.org.