Litigationtorium

While we were reveling in the festival of Bounty-gate this weekend, BP finally settled out of court with the representatives of individual Macondo victims known as the Plaintiffs' Steering Committee.

If approved by a federal court in New Orleans, Friday's deal would settle lawsuits filed by some 100,000 individuals and businesses affected by the spill. They include fishermen who lost work, cleanup workers who got sick and others who claimed harm from the oil giant's April 20, 2010, disaster.

The AP headline on Saturday afternoon read "With Gulf oil spill settlement, BP begins to put disaster behind it" but that seems like an insufficient description of what's happened. BP is still facing multiple rounds of litigation with Halliburton and Transocean, its former partners on the Macondo project, as well as with the United States Department of Justice and the various affected Gulf states seeking claims under the Clean Water Act and the Oil Pollution Act.

On the other hand, one theory... certainly the one laid out in AP's narrative of these events... holds that Friday's settlement frees BP from the hairiest of all potential legal scenarios and sets the stage for a series of increasingly easier negotiations.

Another important element of the settlement deal -- which BP estimates will cost $7.8 billion -- is that it shows a willingness to pay a huge sum in order to resolve issues related to the spill.

That may improve its standing with the federal government, which controls access to oil reserves that are critically important to BP's future.

"The only trial I thought we would see in this case is the one that just went away," said David Uhlmann, a University of Michigan law professor who once headed the Justice Department's environmental crimes section.

A quick settlement with the Feds could mean that BP will get away paying far less than it could ultimately be held responsible for pending the findings of the ongoing Natural Resource Damage Assessment and related data to be collected over the coming years... much of which is already troubling.

Meanwhile here's what Friday's settlement actually does. It takes a pile of money already allocated to Ken Feinberg's Gulf Coast Claims Facility and moves it into a separate space where it can be disbursed in the form of attorneys' fees.

The lawsuits were filed mostly by people who sought greater damages than were likely to be met by the Gulf Coast Claims Facility, the BP fund that has compensated residents for economic losses since mid-2010. But because the settlement will be paid out of the same fund, and amounts to a little more than half of what remains in it, it’s not yet clear how much plaintiffs will receive or what will happen to other claimants if the fund runs dry.

A portion of the settlement also will go to lawyers involved in the case, whereas previously money in the BP fund had gone only to claimants.

“How does that advance the ball at all?” asked Anthony Buzbee, a Houston attorney representing 12,000 plaintiffs against BP, but who was not on the committee that negotiated the settlement. “The lawyers on that committee wanted to settle because it means huge fees.”

So good news for the lawyers, mixed news for the plaintiffs, even murkier news for the environmental health of the Gulf Coast. But worst of all, why is no one asking about the jobs killed by this settlement?

On Monday, the Times-Picayune published the latest in a continuing tradition of "trend-bucking" local journalism in which we learned that the fallout from yet another disaster was actually terrific news for the local economy.

While many people are hoping that the mammoth trial over the Gulf of Mexico oil spill settles before it is scheduled to begin on Monday, Martin Driskell, general manager of the InterContinental New Orleans is not among them. "None of us wants the trial to settle out of court. It's definitely good for business," Driskell said.

The April 2010 blowout of the Macondo well and the ensuing 87-day oil spill may have ruined the seafood industry, slowed down the drilling industry and spoiled Gulf Coast tourist destinations, but the army of attorneys that have been working in New Orleans since the litigation over the spill was transferred to the city in August 2010 has created a mini economic boom.

Scores of out-of-town attorneys have been flying to New Orleans to work each week, creating long-term stays at hotels.

Uh oh. If, as the general consensus in these articles suggests, the PSC settlement will lead to a quick succession of additional settlements, what does this sudden moratorium on litigation mean for the economic survival of New Orleans' luxury hoteliers? Surely they are the real victims here.