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Gulf Spill Reaches the Courtroom

Alabama Attorney General Luther Strange takes aim at BP and compensation kingpin Kenneth Feinberg, preparing for the mother of all lawsuits.

We caught up with Alabama’s attorney general, Luther Strange, who plays a key role in the spill litigation that began in February in New Orleans, in the U.S. District Court for Eastern Louisiana. That case consolidates hundreds of lawsuits filed against BP and its partners. Judge Carl Barbier, presiding in the case, appointed Strange coordinating counsel for the state interests—point man for the attorneys general representing the states in the case.

As a group, these AGs already have taken aim at Kenneth Feinberg, the attorney in charge of the Gulf Coast Claims Facility, the compensation fund set up by the federal government and BP PLC. On Feb. 22, they addressed a letter to Barbier asking him to get involved in the Compensation Fund by broadening the limited scope of damages Feinberg has allowed and making the process more fair and understandable to claimants.

We raised key issues that are of the most concern to those on the coast who have to deal the most with Mr. Feinberg. In my mind they are related to the transparency issue. What do I have to show to get paid? If I am denied, tell me why. It’s been very hard for them to get answers to these questions. I think the court could take control over the Feinberg process if the court had a mind to, but that’s because I believe Mr. Feinberg is operating as agent for BP. That’s my view. My role as coordinating counsel puts me in the courtroom, where I have a lot of interaction with the judge in this case and deal extensively with the other AGs. We are all pretty well in agreement that there has been a lack of responsiveness. We haven’t given Mr. Feinberg high marks for his performance.

That gets to the second issue we raised: What reason is there for the releases that Mr. Feinberg insists on? I think his releases are unnecessary and very strict for the individuals compelled to sign them.

The standard Mr. Feinberg uses to determine whether someone has been impacted is a very narrow position, that the person has to be directly impacted. I certainly don’t agree that that’s the law. That narrow interpretation led to a denial of claims from a whole host of citizens: title companies, professionals, physicians, dentists—all of whom are clearly impacted as a result of the catastrophe. Our position is that it’s broader than that: covering economic harm and the lack of human use. He’s really not taking that into account. All the AGs are consistent on that.

BA: Feinberg has an agreement with BP whereby his pay is determined quarterly, after a meeting with BP officials. Isn't it simple to conclude his pay will be higher the less he doles out?

The thing that we don’t know is what his agreement says. We continue to ask for it, how it’s set and it is revealed. It’s not just me. Every AG has asked for that information, and he’s not willing to share it. The court has taken that under advisement. And the court is mindful not to create new areas for lawyers to be paid: it doesn’t want to open up another excuse to pay claims.

The first part of the case we are involved in is determining the limitation of liability. But within the amount of damages, there are all kinds of potential claims. Alabama is working on a revised complaint to add additional claims, and each includes financial damages and remediation and a pretty broad range.

The way we’ve divided up responsibility in Alabama is that the AG’s office is in charge of litigation and apportioning responsibility to the plaintiffs. The governor’s office is overseeing the damage assessment, through a task force that works closely with agencies to provide information: Revenue, Tourism, ADEM. Their job is to come up with the damage assessment, and every agency will be able to hire private experts.

The first part of the trial is to determine liability: How much BP, how much Transocean, Halliburton? We get the percentage of liabilities established and go to the damages portion of the trial, and there you have the complicating factor of a lot of individual clams: municipalities, counties, cities. Some have hired lawyers and some haven’t.

These types of multi-district litigation trials—with these types of mass torts—have their own manual of rules. They create steering committees to represent hundreds of lawyers and thousands of plaintiffs. The judge creates a plaintiffs’ steering committee. There is one lawyer charged with representing all the private plaintiffs. That lawyer is chosen from among all the lawyers who have applied to the court, and all the plaintiff lawyers work together with a liaison council, to streamline everything so that there are not six different trials. There are two Alabama lawyers on the plaintiffs’ steering committee: Bobo Cunningham, from the Cunningham, Bounds firm, and Rhon Jones, from the Beasley, Allen firm. The U.S. government has its own status, one person to keep all the U.S. government people together. The defendants have their own steering committee. There is one lawyer from BP, one from Transocean, one from Halliburton.

Right now, the judge is scheduling depositions in discovery. For example, if there is the deposition of a BP executive, everyone will want to talk to him and there may be one day to depose him, and individual plaintiffs have x number of hours, and the states and the defendants get their time. Who asks the questions and what questions do they ask? I’m in Louisiana tomorrow and every other Friday, to appear before the judge.

Tomorrow we are agreeing on the list of people to be deposed in June—a number of BP executives, including the former chairman. Some depositions will be taken in New Orleans and some in London. And there are always motions for discovery. I’d like the judge to rule on those kinds of procedural things.

BA: Testimony before the National Commission on the Deepwater Horizon Oil Spill, which reported in January, is that where your discovery begins?

That’s where you start, the national commission, and BP’s own report, their internal investigation. The issues already have been studied pretty hard, so people understand who the key players are. There is little difference as to what the facts are: BP has admitted it could have been prevented. So that narrows down the key players you can get to.

Determining the amount of the spill will be one of the key issues. What the judge will do as part of the unfolding procedures is that there will some mini-trials that aim to answer those questions. How many barrels were spilled and over what period of time? You have to get the right witnesses from BP to know the answers. They will try and delay. I think, personally, that BP knows how much oil was spilled. And then the question is: How much will they tell us?

I am convinced Alabama suffered the greatest damage, because environmentally and economically it is unique. Florida was primarily injured in tourism in the Panhandle. In Alabama, it was all across the coast. And Mississippi doesn't have the same economic model: not near as many condos and white sand beaches. And in Louisiana, it impacted the marshland, but they were untouched as far as tourism.

Chris McFadyen is the editorial director of Business Alabama.

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