United States District Court, E.D. Louisiana
ORDER & REASONS
CARL BARBIER, District Judge.
Before the Court is the Motion of the Special Master for Return of Payments Made to Jarrod A. Burrle and Others (Rec. Doc. 13010); the Special Master's Supplemental Memorandum (Rec. Doc. 13163); BP Exploration and Production, Inc., BP America Production Company, and BP p.l.c. (collectively, "BP")'s response to join the Special Master's motion (Rec. Doc. 13182); AndryLerner, LLC's Response to the Special Master's motion (Rec. Doc. 13188) and the Special Master's two Reply memoranda (Rec. Doc. 13263 & 13264); Woodbridge Baric Pre-Settlement Investments, LLC's Memorandum in Opposition (Rec. Doc. 13270), and the Special Master's Reply thereto (Rec. Doc. 13285).
Having considered the motion and memoranda of counsel, the record, and the applicable law, the Court finds that the Special Master's motion should be GRANTED for the reasons set forth more fully below.
FACTS AND PROCEDURAL BACKGROUND
A. Background Regarding the Settlement and the Special Master
On December 21, 2012, this Court approved the Deepwater Horizon Economic and Property Damages Settlement Agreement ("Settlement Agreement"), a class action settlement. (Rec. Doc. 8139) The Deepwater Horizon Court Supervised Settlement Program ("Settlement Program") implements and administers the Settlement Agreement. On July 2, 2013, the Court appointed Louis J. Freeh as Special Master pursuant to Federal Rule of Civil Procedure 53 to investigate allegations of misconduct within the Settlement Program. On September 6, 2013, the Court directed the Special Master to examine and investigate any past or pending claims submitted to the Settlement Program and to initiate legal action to clawback funds paid out on fraudulent claims. (Rec. Doc. 11288)
B. Background Regarding Burrle's Claims
In April 2013, the Deepwater Horizon Economic Claim Center ("DHECC") paid Burrle the sum of $50, 015.87 for his vessel owner claim (Claim No. 42138) pursuant to the Seafood Compensation Program. Burrle also submitted other claims which were not paid and are not the subject of the current clawback motion. The AndryLerner law firm represented Burrle on his claims. Following receipt of the claim payment, AndryLerner deducted 25% for attorneys' fees ($12, 503.97) and $20, 000 as partial repayment of a "non-recourse" advance or loan made to Burrle by Woodbridge Baric Pre-Settlement Investments, LLC. AndryLerner also forwarded 40% of the attorneys' fees to its referral counsel, paying $2, 500.80 each to the Palazzo Law Firm and to David D. Bravo, APLC.
C. Investigation of Burrle's Claims by the Special Master
Pursuant to the Court's September 6, 2013 Order, the Special Master investigated Burrle's claims and, at the request of the Special Master, on February 7, 2014 the Court issued a show cause order to Burrle directing him to sign a release allowing the Special Master to access his IRS records and directing Burrle to produce documentation of the kind that claimants use to support their claims under the Seafood Compensation Program. Burrle did not respond to the latter request, but he did sign a release, and the Special Master subsequently reviewed Burrle's IRS records. These tax records were clearly created only in connection with the filing of his claims and only after being requested by the claims office. For example, the 2008 tax document was prepared in January 2011, and only after the tax return was requested by the claims office. Although Burrle filed the return with the IRS, he has never paid the tax that was due. Burrle did not file a 2009 tax return. Burrle also did not file a 2010 tax return, despite having earned at least $50, 500 in non-commercial fishing income that year. Again, Burrle failed to pay income tax that was due. The Special Master also was unable to verify information contained on purported affidavits submitted by Burrle, which purport to confirm that third parties purchased seafood from him. In fact, the "affidavits", all of which are the same exact form and executed on the same date, appear to have been confected by Burrle and either signed by himself or unsigned.
The evidence relied upon by the Special Master is laid out in greater detail in the memoranda filed in support of this clawback motion, together with the documentary evidence attached. Burrle has failed to file an opposition to the Special Master's motion. Taken as a whole, the undisputed evidence shows clearly and convincingly that Burrle submitted fraudulent documents and made false statements in connection with his claims under the Seafood Compensation program.
ARGUMENTS OF THE PARTIES
In addition to seeking restitution from Burrle, the Special Master also seeks restitution from AndryLerner, The Palazzo Law Firm, David D. Bravo, APLC, and Woodbridge Baric Pre-Settlement Investments, LLC. He bases the right to restitution from these parties not on any allegation that they committed fraud or even knew of the fraud, but rather on notions of "equity and good conscience." He contends that, because each of these parties received their payments based on contingency agreements, they have no right to retain these payments if the award is later revoked because their payment hinges on the success of the claim.
AndryLerner argues that, even if it is found that Burrle committed fraud, existing case law does not allow the Court to enter a judgment requiring an attorney to return his earned fees without an express finding ...