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In re Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico

United States District Court, E.D. Louisiana

October 20, 2017

In Re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010 This Document Relates To: Certain s Remaining in the B1 Pleading Bundle

         SECTION: J

          WILKINSONMAG. JUDGE.

          ORDER & REASONS [AS TO BP'S DISPOSITIVE MOTION AS TO RELEASED CLAIMS (REC. DOC. 22479)]

          BARBIER JUDGE.

         Before the Court is BP's Dispositive Motion as to Released Claims (Rec. Doc. 22479), responses by various plaintiffs, [1] and BP's reply (Rec. Doc. 23272). Pursuant to this Court's instruction in Pretrial Order No. 64 (“PTO 64, ” Rec. Doc. 22297), BP moves to dismiss the claims of 38 Remaining B1 Plaintiffs, [2][3] urging that these plaintiffs have settled and released their claims through either the Gulf Coast Claims Facility or by virtue of being a member of the Deepwater Horizon Economic and Property Damages Settlement Class. Having considered the parties' arguments, the relevant record, and the applicable law, the Court will grant in part and deny in part BP's motion, as set forth below.

         I. 16 Plaintiffs Did Not Oppose BP's Motion

         Sixteen of the plaintiffs targeted by BP's motion did not file responses. Consequently, the Court deems BP's motion to be unopposed with respect to these plaintiffs and will dismiss their claims:

Plaintiff

Case No.

Reason for Release

Lamulle Construction, L.L.C.

16-cv-04181

GCCF Release

Alabama Roll, Inc.

13-cv-02232

E&PD Class Member

Cephas Concrete (Patrick D Franklin, Sr.)

16-cv-06003

E&PD Class Member

Cutting Horse Yachts, LLC d/b/a Chittum Skiffs

16-cv-05831

E&PD Class Member

Barry Gene Fanguy

13-cv-01900

E&PD Class Member

Sidney Rafael Floyd, Jr.

16-cv-03804

E&PD Class Member

Fred Gossen Co., LLC

16-cv-07262

E&PD Class Member

Mitchell Lee Galbreath

13-cv-01626

E&PD Class Member

Harris Builders, LLC

16-cv-05451

E&PD Class Member

Ryan C. Harry

16-cv-03878

E&PD Class Member

Kibbe & Company, Inc.

13-cv-02677

E&PD Class Member

Samuel Jay Lyons

16-cv-05770

E&PD Class Member

Nicole Moxey

16-cv-05906

E&PD Class Member

O'Brien Crab Company (Stacie T. O'Brien)

16-cv-04799

E&PD Class Member

Peyton Cottrell Interest, Inc.

13-cv-01829

E&PD Class Member

RK Turbine Consultants, LLC

16-cv-06980

E&PD Class Member

         II. GCCF Release

         BP moves to dismiss seven plaintiffs on the grounds that they signed a release after settling their claims with the Gulf Coast Claims Facility (“GCCF”). Six of those seven plaintiffs filed oppositions, which are discussed below. The Court also received oppositions from plaintiffs who were not explicitly named in BP's motion.

         By way of background, the Oil Pollution Act of 1990 (“OPA”) typically requires claimants to first present claims for “removal costs” or “damages” to the “responsible party” and wait until that party denies all liability or until 90 days have passed before the claimant may commence an action in court or submit the claim to the Oil Spill Liability Trust Fund, which is administered by the Coast Guard's National Pollution Funds Center. See 33 U.S.C. § 2713; Nguyen v. Am. Commercial Lines L.L.C., 805 F.3d 134, 139 (5th Cir. 2015). OPA likewise requires the responsible party to promptly establish and advertise the procedures by which claims may be presented. 33 U.S.C. §§ 2705, 2714(b)(1). OPA explicitly requires that the responsible party's claim process include a “procedure for the payment or settlement of claims for interim, short-term damages, ” payment of which “shall not preclude recovery by the claimant for damages not reflected in the paid or settled partial claim.” 33 U.S.C. § 2705(a); see also 33 U.S.C. §§ 2713(d), 2714(b)(2).

         BP was designated by the Coast Guard as a “responsible party” for the DEEPWATER HORIZON/Macondo Well oil spill. Within days of the blowout and explosion, BP established a process to receive and pay claims arising from the oil spill (“Initial BP Claims Facility”). See In re Oil Spill by the Oil Rig “Deepwater Horizon, ” No. 10-md-2179, 2011 WL 323866, at *1 (E.D. La. Feb. 2, 2011); see also BDO Consulting, Independent Evaluation of the Gulf Coast Claims Facility Report of Findings & Observations to the Dept. of Justice at 11-12 (June 5, 2012), available at https://www.justice.gov/iso/opa/resources/66520126611210351178.pdf (hereinafter “BDO Report”).[4] BP contracted with one or more claims adjusting firms to assist in handling claims. The Initial BP Claims Facility paid only interim claims for past damages; claimants were not required to release claims not covered by the interim payment (e.g., future damages). Between May 3, 2010 and August 22, 2010, the Initial BP Claims Facility made over 127, 000 payments, totaling nearly $400 million, to over 30, 000 claimants. BDO Report at 12.

         Following discussions between BP and the U.S. Government, the White House announced on June 16, 2010, that BP would establish a $20 billion trust to fulfill BP's legal obligations, which would be administered by a new claims facility, the GCCF. Kenneth Feinberg was selected to administer the GCCF. On August 23, 2010, the GCCF replaced the Initial BP Claims Facility. During “Phase I, ” the GCCF processed and paid only “Emergency Advance Payment” (“EAP”) claims. These were claims for documented losses sustained during the first six months following the spill. Claimants who accepted an EAP were not required to sign a release. The documentation requirements generally were less stringent for EAP claims than they were for Interim Payment Claims and Full Review Final Payment Claims, which became available later (discussed below). The GCCF stopped accepting EAP claims on November 23, 2010, although it continued to process and pay EAP claims through mid-February, 2011. The GCCF paid in excess of $2.5 billion to more than 169, 000 claimants under the EAP process. See BDO Report at 29-30, 34, 36.

         In “Phase II” of the GCCF, three types of claims were available: Interim Payment, Full Review Final Payment, and Quick Payment Final. Interim Payment Claims were for documented past losses which had not been previously compensated. Similar to the EAP process and the Initial BP Claims Facility, claimants did not have to sign a prospective release in order to receive an Interim Payment from the GCCF. In most instances, the GCCF permitted a claimant to submit an Interim Payment Claim once every three months. Full Review Final Payment was intended to resolve all losses, past and future, for which the claimant had not been previously compensated. The claimant was required to sign a prospective release and covenant not to sue, waiving all rights against BP and other parties for claims arising from the oil spill, in order to receive a Full Review Final Payment. As mentioned above, the GCCF's documentation requirements were generally more stringent for Interim Payment and Full Review Final Payment than they were for EAP claims. Finally, Quick Payment Final was available to claimants who had received a prior EAP or Interim Payment Claim. Under this option, claimants did not have to provide further documentation (in contrast to Interim Payment and Full Review Final Payment) and would receive a one-time final payment of $5, 000 (for individuals) or $25, 000 (for businesses). As with Full Review Final Payment, Claimants accepting a Quick Payment Final were required to sign a full release and covenant not to sue. See BDO Report at 34-35 & Exs. L, P, Q, R.

         The GCCF ended in 2012 after BP agreed to a class-wide settlement, the Deepwater Horizon Economic and Property Damages Settlement (“Economic Settlement”).[5] (See March 8, 2012 Order Creating Transition Process (Amended), Rec. Doc. 5995). During its one-and-a-half-year existence, the GCCF processed over one million claims and paid over $6.2 billion to approximately 220, 000 claimants. BDO Report at 59. In June 2012, BP instituted a new process to receive and pay claims that were not covered by the Economic Settlement.

         A. Richard Lee Blick, Richard E. Seward, Sr., and Richard E. Seward, Jr. (“Thiel Plaintiffs”)

         Richard Lee Blick (No. 16-4061), Richard E. Seward, Sr. (No. 16-4068), and Richard E. Seward, Jr. (No. 16-4072) (collectively, the “Thiel Plaintiffs”[6]) allege they are fishing guides in Florida who suffered business losses as a result of the oil spill; they raise identical arguments in opposition to BP's motion. (See Rec. Docs. 23308, 23309, 23310). The Thiel Plaintiffs assert that they each received interim payments from the Initial BP Claims Facility and then $25, 000 from the GCCF under the Quick Payment Final Claim option. In connection with the Quick Payment Final Claim, the Thiel Plaintiffs each signed a release which, if valid, bars their present lawsuits. The Thiel Plaintiffs argue the release is invalid because (1) it violates OPA, (2) it was misleading, (3) they were fraudulently induced into signing it, and (4) they were under economic duress.

         The Thiel Plaintiffs first argue that the release is void because it violated OPA's requirement that the responsible party “establish a procedure for the payment or settlement of claims for interim, short-term damages.” 33 U.S.C. § 2705(a). The Thiel Plaintiffs assert that the GCCF stopped accepting and paying claims for interim damages once it replaced the Initial BP Claims Facility, making the releases they signed unenforceable as a matter of law. As explained above, however, the GCCF did in fact accept and pay interim claims without requiring a full and final release. This was in the form of EAPs and, later, Interim Payment Claims. See BDO Report at 29-36 & Exs. L, P, Q, R; see also GCCF Overall Program Statistics as of March 7, 2012 (Rec. Doc. 6831-2) (noting EAP payments totaling $2.58 billion to 169, 203 claimants and Interim Payments totaling $501 million to 35, 261 claimants). In fact, other plaintiffs who responded to BP's motion state that they received EAP and/or Interim Payments from the GCCF. See discussions infra re Jelp Barber, Johnny's Clams, Inc., and Crabco.[7] Quick Payment Final was one option offered by the GCCF, but it was not the only option. Thus, assuming without deciding that the failure to establish a procedure to receive and pay interim claims would make the release per se invalid, the record clearly establishes that the GCCF was accepting and paying interim claims. The Thiel Plaintiff's unsupported blanket assertion to the contrary does not create a genuine dispute as to a material issue of fact.[8] Their argument that the releases are void as a matter of law fails.

         The Thiel Plaintiffs also argue that the release was misleading because it did not mention ongoing legal proceedings, that they might be class members, or advise them of the “claims process.” (Rec. Doc. 23308 at 5). Under Florida law, [9] clear and unambiguous release provisions are enforceable, and the execution of a valid release results in the termination of all rights covered by the agreement. Beck-Ford Constr., LLC v. TCA Global Credit Master Fund, LP, 240 F.Supp.3d 1256, 1279 (S.D. Fla. 2017); see also Little v. Seterus, Inc., No. 16-cv-60700, 2017 WL 606340, *2 (S.D. Fla. Feb. 13, 2017) (“Releases are a form of contract, and therefore, must be interpreted pursuant to contract law. A party is bound by, and a court is powerless to rewrite, the clear and unambiguous terms of a voluntary contract.” (citations omitted)). The release signed by the Thiel Plaintiffs was part of the Quick Payment Final Claim Form, which is a four-page document plus an attachment naming the “Released Parties.” Page one of the Quick Payment Final Claim Form contains “Instructions” and states, in pertinent part (emphasis in original):

5. Understanding your rights. The Quick Payment Final Claim Form and Release contain important information about your legal rights, including giving up your right to sue BP and other parties. . . . Do not sign the Release unless you understand and agree to its terms.
6. Attorney Representation. If you are represented by an attorney in connection with your claim, do not submit this Form or sign the Release until you have conferred with your attorney about the decision to submit it and sign the Release.

         Page two is titled “Important Information About the Attached Release and Covenant Not to Sue” and states, in pertinent part (emphasis in original):

The attached Release and Covenant Not to Sue (“Release”) is a binding legal document. By signing this document, you are forever waiving and releasing all claims that you may have against BP or any other party . . . in connection with the April 20, 2010 blowout of the Macondo Well, the sinking of Transocean's Deepwater Horizon drilling rig, and the subsequent oil Spill in the Gulf of Mexico (the “Incident”).
You are under no obligation to accept the final payment offered to you by the Gulf Coast Claims Facility. You are free to reject the final payment offered by the Gulf Coast Claims Facility and to pursue other means of compensation. If you want to file a lawsuit regarding the Incident or make a claim against the Oil Spill Liability Trust Fund, do not sign this Release.
By signing the attached Release, you are forever giving up and discharging any rights which you may have for any costs, damages or other relief related to or arising from the Incident . . . even if you are not currently aware of such costs or damages and even if such costs or damages arise in the future (i.e., additional oil impacts) or do not manifest themselves until the future.
By signing the attached Release, you acknowledge that you have read and understand the terms of the Release, and that you execute the release voluntarily and without being pressured or influenced by, and without relying upon, any statement or representation made by any person acting on behalf of BP or any other released party. If you are represented by an attorney in connection with your Claim, confer with your attorney before submitting this Claim and signing this Release.
The Quick Pay option is intended to provide an expedited settlement mechanism for those claimants who believe that the amount offered by the Quick Pay fully and fairly resolves their claim. Do not select the Quick Pay option if you believe you have a claim in an amount greater than the Quick Pay amount. If you elect the Quick Pay amount, you will not be permitted to later seek additional amounts.
Claimant acknowledges that claimant has read and understands [the preceding information]. Claimant elects to receive a $25, 000 Quick Payment as a final settlement of all claims against any party in connection with the Incident . . . .”

         The release required each of Thiel Plaintiffs to sign the bottom of page two, which they did. Page three is titled “Release and Covenant Not to Sue” and states, in pertinent part:

In consideration of payment in the amount of $25, 000, Claimant hereby releases and forever discharges, and covenants not to sue [BP] and the other Released Parties . . . for any losses, damages, costs, [etc., ]. . . or other relief that Claimant has or may have, whether known or unknown, whether present or future, whether direct or indirect, whether legal or equitable, arising from or relating in any way to the April 20, 2010 blowout of the Macondo Well, the sinking of Transocean's Deepwater Horizon drilling rig, and the subsequent oil spill in the Gulf of Mexico (the “Incident”) . . . .
Claimant will dismiss with prejudice within 10 days of executing this Release any litigation concerning the Incident . . . filed by or on behalf of Claimant against BP or any other Released Parties. Claimant also will withdraw (the obligation to withdraw is satisfied by affirmatively declining to participate . . . in a class action or similar procedural device) from any existing and will not join any new class actions or similar procedural devices concerning or relating to the Incident . . . .

         Page four was where the claimant would sign the Release and Covenant Not to Sue. Each of the Thiel Plaintiffs signed page four. (Rec. Doc. 22479-7 at 11-14).

         The release was not misleading; rather, it clearly and repeatedly stated the implication of signing. The release specifically states that by signing it and in exchange for the $25, 000 Quick Payment, “you are forever waiving and releasing all claims that you may have against BP or any other party . . . in connection with the . . . oil Spill in the Gulf of Mexico[, ] . . . even if you are not currently aware of such costs or damages and even if such costs or damages arise in the future . . . . If you elect the Quick Pay amount, you will not be permitted to later seek additional amounts.” Likewise, the release requires the claimant to dismiss any pending litigation and withdraw from any existing or future class actions. The release also made clear that accepting the Quick Payment was voluntary. It states that claimants “are under no obligation to accept” and “are free to reject the final payment offered by the [GCCF] and to pursue other means of compensation.” Contrary to the Thiel Plaintiffs' claim that the release did not inform them of their options, the release specifically identifies two alternatives to accepting the GCCF'S offer: “file a lawsuit” or “make a claim against the Oil Spill Liability Trust Fund.” Notably, these are the very options provided under OPA. See 33 U.S.C. § 2713(c).[10] Moreover, the release instructs claimants to not sign the release if they ...


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