BP Settlement Document

BP Settlement Document

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF LOUISIANA
In Re: Oil Spill by the Oil Rig “Deepwater
Horizon” in the Gulf of Mexico, on April
20, 2010
This document relates to all actions.
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MDL NO. 2179
SECTION J
Honorable CARL J. BARBIER
Magistrate Judge SHUSHAN
Bon Secour Fisheries, Inc., et al., individually
and on behalf of themselves and all others
similarly situated,
Plaintiffs,
v.
BP Exploration & Production Inc; BP
America Production Company; BP p.l.c.,
Defendants.
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Civil Action No. 12-970
SECTION J
Honorable CARL J. BARBIER
Magistrate Judge SHUSHAN
THE PLAINTIFFS’ STEERING COMMITTEE’S AND BP DEFENDANTS’
MEMORANDUM IN SUPPORT OF JOINT MOTION FOR
(1) PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT,
(2) SCHEDULING A FAIRNESS HEARING, (3) APPROVING AND ISSUING
PROPOSED CLASS ACTION SETTLEMENT NOTICE, AND
(4) BP’S MOTION FOR ADJOURNING THE LIMITATION OF LIABILITY TRIAL
COUNSEL FOR ALL MOVING PARTIES ARE LISTED AT END OF MOTION
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TABLE OF CONTENTS
Page
INTRODUCTION…………………………………………………………………………………………………………..1
BACKGROUND …………………………………………………………………………………………………………….2
I. PROCEDURAL HISTORY ………………………………………………………………………………….2
II. SETTLEMENT NEGOTIATIONS……………………………………………………………………….4
III. SETTLEMENT CLASS DEFINITIONS AND EXCLUSIONS ………………………………7
IV. SUMMARY OF THE PROPOSED ECONOMIC AND PROPERTY
DAMAGES SETTLEMENT…………………………………………………………………………………7
A. The Proposed Settlement’s Procedural Elements …………………………………………….8
1. The Transition Process ………………………………………………………………………8
2. Creation Of The Court Supervised Settlement Program…………………………9
3. Settlement Program Appellate Procedure …………………………………………..10
4. Assignment, Release, And Other Protections ……………………………………..11
5. Final Judgment ……………………………………………………………………………….11
6. Class Notice …………………………………………………………………………………..12
B. Four Unique Features Of The Proposed Settlement Guarantee
Exceptionally Full And Fair Compensation. …………………………………………………13
C. The Proposed Settlement’s Payment Categories ……………………………………………15
1. Economic Loss ……………………………………………………………………………….16
2. Property Damage ……………………………………………………………………………21
3. Vessels Of Opportunity (“VoO”) Charter Payment ……………………………..22
4. Vessel Physical Damage Claims ……………………………………………………….23
5. Subsistence Damage Payments …………………………………………………………23
6. The Seafood Compensation Program ………………………………………………..23
7. The Gulf Coast Promotional Fund …………………………………………………….25
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ARGUMENT ………………………………………………………………………………………………………………..25
I. THE PROPOSED SETTLEMENT IS FAIR, REASONABLE, AND
ADEQUATE. ……………………………………………………………………………………………………..25
A. The Settlement Agreement Meets The Standard For Preliminary Approval. ……..26
B. The Settlement Agreement Meets The More Demanding Requirements
For Final Approval. ……………………………………………………………………………………29
1. Absence Of Fraud And Collusion ……………………………………………………..31
2. Complexity, Expense, And Likely Duration Of The Litigation …………….34
3. The Stage Of The Proceedings And Amount Of Discovery
Completed ……………………………………………………………………………………..37
4. The Probability Of Plaintiffs’ Success On The Merits …………………………38
5. Range Of Possible Recovery ……………………………………………………………40
6. Opinions Of Class Counsel, Class Representatives, And Absent
Class Members ……………………………………………………………………………….41
II. THE PROPOSED NOTICE TO THE CLASS COMPLIES WITH RULE
23(C)(2) AND RULE 23(E). ………………………………………………………………………………..43
A. The Proposed Notice Distribution Method And Notice Contents Comply
With Rule 23(c)(2). ……………………………………………………………………………………44
1. The Proposed Notice Distribution Method Satisfies Rule 23(c)(2). ……….44
2. The Proposed Notice Contents Satisfy Rule 23(c)(2). ………………………….46
B. The Proposed Notice Complies With Rule 23(e). ………………………………………….47
III. THE COURT SHOULD ADJOURN THE LIMITATION AND LIABILITY
TRIAL UNTIL AFTER THE FAIRNESS HEARING. ………………………………………..49
IV. REQUESTED PROCEDURES AND TIMETABLE ……………………………………………51
CONCLUSION …………………………………………………………………………………………………………….51
APPENDIX A — PROPOSED CLASS DEFINITION ………………………………………………… A-1
APPENDIX B — SETTLEMENT EXHIBIT 22 …………………………………………………………..B-1
APPENDIX C — SETTLEMENT EXHIBIT 23 …………………………………………………………. C-1
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TABLE OF AUTHORITIES
CASES
Altier v. Worley Catastrophe Response, LLC,
No. 11-241, 2012 WL 161824 (E.D. La. Jan. 18, 2012) ……………………………………………………. 7
Armstrong v. Bd. of Sch. Dirs. of City of Milwaukee,
616 F.2d 305 (7th Cir. 1980) ……………………………………………………………………………………….. 30
Ass’n For Disabled Ams., Inc. v. Amoco Oil Co.,
211 F.R.D. 457 (S.D. Fla. 2002) …………………………………………………………………………….. 28, 36
Ayers v. Thompson,
358 F.3d 356 (5th Cir. 2004) …………………………………………………………………………….. 30, 37, 41
Billitteri v. Secs. Am., Inc.,
2011 WL 3586217 (N.D. Tex. Aug. 4, 2011) ………………………………………………………………… 34
Bowling v. Pfizer, Inc.,
143 F.R.D. 141 (S.D. Ohio 1992) ………………………………………………………………………………… 31
Brunson v. La.-Pac. Corp.,
818 F. Supp. 2d 922 (D.S.C. 2011) ………………………………………………………………………………. 33
Carlough v. Amchem Prods., Inc.,
10 F.3d 189 (3d Cir. 1993) ………………………………………………………………………………………….. 50
Collins v. Sanderson Farms, Inc.
568 F. Supp. 2d 714 (E.D. La. 2008) …………………………………………………………………. 29, 31, 35
Cotton v. Hinton,
559 F.2d 1326 (5th Cir. 1977) ……………………………………………………………………… 29, 30, 40, 41
DeHoyos v. Allstate Corp.,
240 F.R.D. 269 (W.D. Tex. 2007) …………………………………………………………………………… 38, 41
Domingue v. Sun Elec. & Instrumentation,
No. 09-682, 2010 WL 1688793 (M.D. La. Apr. 26, 2010) ………………………………………………. 32
Eatmon v. Palisades Collection LLC,
No. 08-306, 2011 WL 147680 (E.D. Tex. Jan. 18, 2011) ………………………………………………… 45
Exxon Shipping Co. v. Baker,
554 U.S. 471 (2008) …………………………………………………………………………………………………… 36
Faircloth v. Certified Fin., Inc.,
No. 99-3097, 2001 WL 527489 (E.D. La. May 16, 2001) …………………………………….. 35, 36, 37
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iv
Fowler v. Birmingham News Co.,
608 F.2d 1055 (5th Cir. 1979) ……………………………………………………………………………………… 47
Gautreaux v. Pierce,
690 F.2d 616 (7th Cir. 1982) ……………………………………………………………………………………….. 27
Granada Invs., Inc. v. DWG Corp.,
962 F.2d 1203 (6th Cir. 1992) ……………………………………………………………………………………… 32
Harris v. Vector Mktg. Corp.,
No. 08-5198, 2011 WL 1627973 (N.D. Cal. Apr. 29, 2011) ……………………………………………. 33
In re Catfish Antitrust Litig.,
939 F. Supp. 493 (N.D. Miss. 1996) …………………………………………………………………………….. 34
In re CertainTeed Roofing Shingle Prods. Liab. Litig.,
269 F.R.D. 468 (E.D. Pa. 2010) …………………………………………………………………………………… 43
In re Chinese-Manufactured Drywall Prods. Liab. Litig.,
MDL No. 2047, 2011 WL 2313866 (E.D. La, June 9, 2011) ……………………………………… 44, 50
In re Chinese-Manufactured Drywall Prods. Liab. Litig.,
MDL No. 2047, 2012 WL 92498 (E.D. La. Jan. 10, 2012) ……………………………… 26, 27, 44, 45
In re Combustion, Inc.,
968 F. Supp. 1116 (W.D. La. 1997) ……………………………………………………………………….. passim
In re Corrugated Container Antitrust Litig.,
643 F.2d 195 (5th Cir. 1981) ……………………………………………………………………….. 29, 31, 38, 41
In re Corrugated Container Antitrust Litig.,
659 F.2d 1322 (5th Cir. 1981) ……………………………………………………………………………………… 40
In re Currency Conversion Fee Antitrust Litig.,
263 F.R.D. 110 (S.D.N.Y. 2009) ………………………………………………………………………………….. 34
In re Diet Drugs Prods. Liab. Litig.,
282 F.3d 220 (3d Cir. 2002) ………………………………………………………………………………………… 50
In re Educ. Testing Serv. Praxis Principles of
Learning & Testing: Grades 7-12 Litig.,
447 F. Supp. 2d 612 (E.D. La. 2006) ………………………………………………………………………. 29, 37
In re Enron Corp. Secs., Derivs., & “ERISA” Litig.,
No. MDL-1446, 2008 WL 4178151 (S.D. Tex. Sept. 8, 2008) ………………………………………… 48
In re Exxon Valdez,
229 F.3d 790 (9th Cir. 2000) ……………………………………………………………………………………….. 29
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In re Heartland Payment Sys., Inc. Customer Data Sec. Breach Litig.,
— F. Supp. 2d —-, No. 09-2046, 2012 WL 948365 (S.D. Tex. Mar. 20, 2012) ……………. 32, 39
In re Initial Pub. Offering Sec. Litig.,
243 F.R.D. 79 (S.D.N.Y. 2007) ……………………………………………………………………………………. 39
In re Katrina Canal Breaches Litig.,
628 F.3d 185 (5th Cir. 2010) ……………………………………………………………………………………….. 30
In re Lease Oil Antitrust Litig.,
186 F.R.D. 403 (S.D. Tex. 1999) …………………………………………………………………………………. 30
In re Mills Corp. Sec. Litig.,
265 F.R.D. 246 (E.D. Va. 2009) ………………………………………………………………………………….. 32
In re Napster, Inc. Copyright Litig.,
MDL No. 1369, 2007 WL 2907892 (N.D. Cal. Oct. 2, 2007) ………………………………………….. 50
In re Nasdaq Market-Makers Antitrust Litig.,
176 F.R.D. 99 (S.D.N.Y. 1997) ……………………………………………………………………………………. 27
In re OCA, Inc. Sec. & Deriv. Litig.,
No. 05-2165, 2008 WL 4681369 (E.D. La. Oct. 17, 2008) ……………………………… 27, 42, 45, 46
In re Oil Spill by Amoco Cadiz,
4 F.3d 997 (7th Cir. 1993) …………………………………………………………………………………………… 35
In re Oil Spill by the Oil Rig “Deepwater Horizon”
in the Gulf of Mexico, on April 20, 2010,
731 F. Supp. 2d 1352 (J.P.M.L. 2010) ……………………………………………………………………………. 2
In re Serzone Prods. Liab. Litig.,
231 F.R.D. 221 (S.D. W. Va. 2005) ……………………………………………………………………………… 43
In re Shell Oil Refinery,
155 F.R.D. 552 (E.D. La. 1993) …………………………………………………………………… 27, 34, 35, 37
In re Sony Corp. SXRD Rear Projection Television Mktg.,
Sales Practices & Prods. Liab. Litig.,
MDL No. 09-2102, 2010 WL 1993817 (S.D.N.Y. May 19, 2010) ……………………………………. 50
In re Traffic Exec. Ass’n.-E. R.R.,
627 F.2d 631 (2d Cir. 1980) ………………………………………………………………………………………… 28
In re Train Derailment Near Amite La.,
No. 1531, 2006 WL 1561470 (E.D. La. May 24, 2006) ………………………………………………….. 32
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In re Trans Union Corp. Privacy Litig.,
629 F.3d 741 (7th Cir. 2011) ……………………………………………………………………………………….. 48
In re U.S. Oil & Gas Litig.,
967 F.2d 489 (11th Cir. 1992) ……………………………………………………………………………………… 34
In re Vitamins Antitrust Litig.,
305 F. Supp. 2d 100 (D.D.C. 2004) ……………………………………………………………………………… 39
In re Warfarin Sodium Antitrust Litig.,
391 F.3d 516 (3d Cir. 2004) ………………………………………………………………………………………… 29
Int’l Union, United Auto., Aerospace & Ag. Implement
Workers of Am. v. Gen. Motors Corp.,
497 F.3d 615 (6th Cir. 2007) ………………………………………………………………………………….. 43, 48
Int’l Union, United Auto., Aerospace, & Agric.
Implement Workers of Am. v. Gen. Motors Corp.,
No. 07-14074, 2008 WL 2968408 (E.D. Mich. July 31, 2008) ………………………………………… 28
Karvaly v. eBay, Inc.,
245 F.R.D. 71 (E.D.N.Y. 2007) …………………………………………………………………………………… 27
Kincade v. Gen. Tire & Rubber Co.,
635 F.2d 501 (5th Cir. 1981) ……………………………………………………………………………………….. 29
Klein v. O’Neal,
705 F. Supp. 2d 632 (N.D. Tex. 2010) ………………………………………………………………………….. 35
Landis v. N. Am. Co.,
299 U.S. 248 (1936) …………………………………………………………………………………………………… 50
Lazar v. Pierce,
757 F.2d 435 (1st Cir. 1985) ……………………………………………………………………………………….. 29
Louie v. Kaiser Found. Health Plan, Inc.,
No. 08-0795, 2008 WL 4473183 (S.D. Cal. Oct. 6, 2008) ………………………………………………. 33
Lucas v. Kmart Corp.,
234 F.R.D. 688 (D. Colo. 2006) …………………………………………………………………………………… 32
M.D. ex rel. Stukenberg v. Perry,
— F.3d —-, No. 11-40789, 2012 WL 974478 (5th Cir. Mar. 23, 2012) ……………………………. 30
Marcus v. Dept. of Revenue,
206 F.R.D. 509 (D. Kan. 2002) ……………………………………………………………………………………. 50
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Maywalt v. Parker & Parsley Pet. Co.,
67 F.3d 1072 (2d Cir. 1995) ………………………………………………………………………………………… 33
McAlarnen v. Swift Transp. Co., Inc.,
No. 09-1737, 2010 WL 365823 (E.D. Pa. Jan. 29, 2010) ………………………………………………… 33
McNamara v. Bre-X Minerals Ltd.,
214 F.R.D. 424 (E.D. Tex. 2002) …………………………………………………………………………………. 27
Meijer, Inc. v. Warner Chilcott Holdings Co. III,
565 F. Supp. 2d 49 (D.D.C. 2008) ……………………………………………………………………………….. 38
Menkes v. Stolt-Nielsen S.A.,
270 F.R.D. 80 (D. Conn. 2010) ……………………………………………………………………………………. 28
Mullane v. Cent. Hanover Bank & Trust Co.,
339 U.S. 306 (1950) …………………………………………………………………………………………………… 48
Navarro-Ayala v. Hernandez-Colon,
951 F.2d 1325 (1st Cir. 1991) ……………………………………………………………………………………… 48
Neff v. VIA Metro. Transit. Auth.,
179 F.R.D. 185 (W.D. Tex. 1998) ………………………………………………………………………………… 29
Newby v. Enron Corp.,
394 F.3d 296 (5th Cir. 2004) ………………………………………………………………………………….. 30, 38
Parker v. Anderson,
667 F.2d 1204 (5th Cir. 1982) ……………………………………………………………………………………… 38
Pettway v. Am. Cast Iron Pipe Co.,
576 F.2d 1157 (5th Cir. 1978) ……………………………………………………………………………………… 42
Poplar Creek Dev. Co. v. Chesapeake Appalachia, L.L.C.,
636 F.3d 235 (6th Cir. 2011) ……………………………………………………………………………………….. 38
Priceline.com, Inc. v. Silberman,
405 F. App’x 532 (2d Cir. 2010) ………………………………………………………………………………….. 34
Priddy v. Edelman,
883 F.2d 438 (6th Cir. 1989) ……………………………………………………………………………………….. 40
Quigley v. Braniff Airways, Inc.,
85 F.R.D. 74 (N.D. Tex. 1979) ……………………………………………………………………………………. 48
Radosti v. Envision EMI,
717 F. Supp. 2d 37 (D.D.C. 2010) ……………………………………………………………………………….. 38
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Reed v. Gen. Motors Corp.,
703 F.2d 170 (5th Cir. 1983) ……………………………………………………………………….. 30, 38, 39, 42
Rodriguez v. West Publ’g Grp.,
563 F.3d 948 (9th Cir. 2009) ………………………………………………………………………………….. 34, 36
Ruiz v. McKaskle,
724 F.2d 1149 (5th Cir. 1984) ……………………………………………………………………………………… 32
Salinas v. Roadway Express, Inc.,
802 F.2d 787 (5th Cir. 1986) ……………………………………………………………………………………….. 37
San Antonio Hispanic Police Officers Org., Inc. v. City of San Antonio,
188 F.R.D. 433 (W.D. Tex. 1999) ………………………………………………………………………………… 42
Smith v. Ajax Magnethermic Corp.,
No. 02-0980, 2007 WL 3355080 (N.D. Ohio Nov. 7. 2007) ……………………………………………. 36
Smith v. Crystian,
91 F. App’x 952 (5th Cir. 2004) …………………………………………………………………………………… 29
Smith v. Tower Loan of Miss., Inc.,
216 F.R.D. 338 (S.D. Miss. 2003) ………………………………………………………………………………… 34
Stott v. Capital Fin. Servs., Inc.,
277 F.R.D. 316 (N.D. Tex. 2011) ………………………………………………………………………………… 40
Trombley v. Nat’l City Bank,
759 F. Supp. 2d 20 (D.D.C. 2011) ……………………………………………………………………………….. 38
Turner v. Murphy Oil USA, Inc.,
472 F. Supp. 2d 830 (E.D. La. 2007) ……………………………………………………………………… passim
UAW v. Gen. Motors Corp.,
235 F.R.D. 383 (E.D. Mich. 2006) ……………………………………………………………………………….. 28
UAW v. Gen. Motors Corp.,
No. 05-73991, 2006 WL 891151 (E.D. Mich. Mar. 31,2006) ………………………………………….. 43
Union Asset Mgmt. Holding A.G. v. Dell, Inc.,
669 F.3d 632 (5th Cir. 2012) ……………………………………………………………………………………….. 30
Williams v. New Orleans Pub. Serv. Inc.,
No. 75-1635, 1988 WL 98283, (E.D. La. Sept. 15, 1988) ……………………………………………….. 27
STATUTES
28 U.S.C. § 1407 …………………………………………………………………………………………………………….. 2
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28 U.S.C. § 1651(a) ………………………………………………………………………………………………………. 57
Fed. R. Civ. P. 23 ……………………………………………………………………………………………….. 26, 51, 57
Fed. R. Civ. P. 23(a) ……………………………………………………………………………………………………… 27
Fed. R. Civ. P. 23(b) ……………………………………………………………………………………………………… 27
Fed. R. Civ. P. 23(b)(3)…………………………………………………………………………………………….. 49, 53
Fed. R. Civ. P. 23(c)(2) ………………………………………………………………………………….. 49, 50, 52, 54
Fed. R. Civ. P. 23(c)(2)(B) ………………………………………………………………………………….. 50, 52, 53
Fed. R. Civ. P. 23(c)(3) …………………………………………………………………………………………….. 50, 52
Fed. R. Civ. P. 23(e) …………………………………………………………………………………………… 49, 53, 54
Fed. R. Civ. P. 23(e)(1) ………………………………………………………………………………………………….. 54
Fed. R. Civ. P. 23(e)(2) ………………………………………………………………………………………………….. 26
Fed. R. Civ. P. 23(e)(3) ……………………………………………………………………………………………………. 7
OTHER AUTHORITIES
Arnsdorf, Isaac,
Exxon Valdez to Be Junked Years After Worst U.S. Ship Spill, available at

http://www.bloomberg.com/news/2012-03-20/

exxon-valdez-sold-for-scrap-years-after-worst-u-s-tanker-spill.html (Mar. 20, 2012) …………. 34
MANUAL FOR COMPLEX LITIGATION (FOURTH) § 21.311 …………………………………………………….. 45
MANUAL FOR COMPLEX LITIGATION (FOURTH) § 21.632 …………………………………………. 25, 26, 50
MANUAL FOR COMPLEX LITIGATION (SECOND) § 30.44 ……………………………………………………… 26
MCLAUGHLIN, JOSEPH M.,
2MCLAUGHLIN ON CLASS ACTIONS: LAW & PRACTICE § 6:7 (8th ed. 2011) ……………………… 29
NEWBERG ON CLASS ACTIONS § 11:51 (4th ed. 2010) ………………………………………………………… 30
Office of Court Appointed Claims Administrator,
Court Supervised Claim Program,
Press Release, available at
http://www.gulfcoastclaimsfacility.com/PressRelease-03-23-12.pdf (March 23, 2012) ………… 8
Press Release Regarding Transition Process, available at
http://www.gulfcoastclaimsfacility.com/PressRelease-04-10-12.pdf (Apr. 10, 2012) …………… 9
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INTRODUCTION
The Plaintiffs’ Steering Committee (“PSC”) (by and through Interim Class Counsel) and
the BP Defendants (by and through their undersigned counsel) respectfully submit this
Memorandum in support of their joint motion for (1) preliminary approval of the class action
settlement; (2) scheduling a fairness hearing; (3) approval and issuance of class action settlement
notice; and (4) BP’s unopposed request for adjournment of the Limitation and Liability trial.1
After nearly two years of exceptionally complex, resource-intensive, and hard-fought
litigation, the PSC and BP have reached a proposed settlement. Under the Agreement, which is
being filed separately, a new Deepwater Horizon Court Supervised Settlement Program will
resolve claims under rules that (1) have been agreed upon by the parties after lengthy
negotiation; (2) are subject to Court approval; and (3) are transparent, easily understood, and fair
to both sides. At all times, decisions reached by the Claims Administration Vendors as overseen
by the Claims Administrator will be subject to appellate review by neutral, independent
decisionmakers.
As in any settlement, neither side will receive everything it wants—not BP, which
believes that plaintiffs’ claims are subject to considerable litigation risk, and not the PSC, who
maintain that they would one day obtain larger awards if their claims were to proceed to trial.
On balance, however, the Agreement creates a comprehensive compensation system, and thus
represents a resolution that is more than fair, reasonable, and adequate when judged against the
standards of Federal Rule of Civil Procedure 23.
The PSC and BP thus jointly request that the Court enter an order (1) preliminarily
1 Unless otherwise defined herein, capitalized terms in this memorandum refer to defined terms and have the
meaning set forth in the proposed Deepwater Horizon Economic and Property Damage Settlement Agreement filed
concurrently herewith.
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approving the proposed settlement; (2) scheduling a fairness hearing; (3) approving the proposed
notice protocol; and (4) granting BP’s unopposed request to adjourn the Limitation and Liability
trial until after the fairness hearing has occurred and the Court has adjudicated the fairness of the
settlement, either approving or rejecting it.
BACKGROUND
I. PROCEDURAL HISTORY
On April 20, 2010, an explosion and fire aboard the Deepwater Horizon triggered a tragic
chain of events that led to eleven deaths, dozens of injuries, and an oil spill in the Gulf of
Mexico. This Court took charge of the cases filed in this District arising from the incident, and
on August 10, 2010, the Judicial Panel on Multidistrict Litigation (“JPML”) centralized all
federal actions (excluding securities suits) in this District and assigned them to this Court
pursuant to 28 U.S.C. § 1407. See In re Oil Spill by the Oil Rig “Deepwater Horizon” in the
Gulf of Mexico, on April 20, 2010, 731 F. Supp. 2d 1352 (J.P.M.L. 2010).
On October 19, 2010, the Court issued Pretrial Order 11 (Rec. Doc. 569) (“PTO 11”),
creating pleading bundles for various types of claims. Among the pleading bundles is the B1
bundle, which encompasses all private claims for economic loss and property damage. Id. at 3.2
In accordance with PTO 11, plaintiffs filed the B1 Master Complaint on December 15, 2010
(Rec. Doc. 879), and filed a First Amended B1 Master Complaint on February 9, 2011 (Rec.
Doc. 1128). After numerous defendants filed motions seeking to dismiss the First Amended B1
Complaint, the Court issued an order granting in part and denying in part these motions on
August 26, 2011 (Rec. Doc. 3830). BP subsequently answered the First Amended Complaint on
September 27, 2011 (Rec. Doc. 4130). To date, approximately 109,000 claimants have filed
2 A motion for preliminary approval of a proposed medical class settlement is being filed separately. That proposed
settlement encompasses personal injury claims falling within the B3 bundle. See Pretrial Order 11.
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short-form joinders adopting the First Amended B1 Master Complaint. On April 16, 2012,
plaintiffs filed a new class action complaint captioned Bon Secour Fisheries, Inc. v. BP
Exploration & Production Inc., No. 12-970 (Rec. Doc. 6252).
The First Amended B1 Master Complaint (Rec. Doc. 1128) sought relief in six counts:
general maritime law claims (Count I); OPA claims (Count II); state law claims (Count III); a
punitive damages claim (Count IV); and claims seeking declaratory relief relating to the GCCF
(Counts V and VI). After extensive briefing, the Court dismissed counts III, V, and VI. See B1
Order (Rec. Doc. 3830) at 37-39. The Court’s rulings as to the other counts also provided
important guidance to the parties in evaluating the strengths and weaknesses of their respective
claims and defenses. The newly filed Bon Secour Fisheries class action complaint asserts six
causes of action or accompanying forms of relief: (1) negligence, gross negligence and willful
misconduct, and breach of contract, under general maritime law; (2) OPA claims; (3) nuisance,
trespass, fraudulent concealment, and strict liability claims, under federal or other applicable
law; and (4) punitive damages on the foregoing claims. (Rec. Doc. 6252 ¶¶ 319-432.) BP will
file an answer to the Bon Secour Fisheries complaint in accord with the Federal Rules of Civil
Procedure and any future Court orders.
In the 20 months that have passed since the JPML’s centralization order, the parties have
engaged in extensive discovery and motion practice. The Court kept this litigation moving at a
brisk pace, through monthly status conferences and detailed case management orders. The
parties completed all discovery necessary to prepare for trial, including taking 311 depositions,
producing approximately 90 million pages of documents, and exchanging more than 80 expert
reports on an intense and demanding schedule. Depositions were conducted on multiple tracks
and on two continents. Discovery was kept on course by weekly discovery conferences before
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Magistrate Judge Shushan and by prompt rulings by the Court. As a result, the parties arrived at
the eve of trial completely apprised of the operative facts and thoroughly prepared to engage in
adversarial trial litigation.
II. SETTLEMENT NEGOTIATIONS
Consistent with the Court’s instruction to the PSC to “[e]xplore, develop, and pursue all
settlement options pertaining to any claim or portion thereof of any case filed in this litigation,”
Pretrial Order 8 (Rec. Doc. 506) at 4, the PSC and BP have engaged in good-faith, lengthy, and
intricately detailed settlement discussions. They did so without disrupting or distracting from
discovery and trial preparation, on an equally intensive parallel track. The parties were
ultimately able to reach a settlement precisely because of the information and knowledge that
they obtained through the discovery process and pretrial rulings.
The parties initiated contact through their respective counsel and had preliminary
meetings in early 2011 to discuss the possibility of engaging in settlement discussions. The
parties began negotiating in earnest in February 2011, and negotiations were held on a virtually
daily basis commencing in May 2011. The parties negotiated separately, though concurrently,
two distinct class action settlements, the Medical Settlement and the Economic and Property
Damages Settlement. The former is discussed in the parties’ Medical Settlement Preliminary
Review Motion. The latter is discussed here.
The parties initially negotiated with each other directly. In early 2012, Magistrate Judge
Shushan became increasingly involved as a neutral mediator between the parties, overseeing
many of the negotiations and ensuring that the process was fair and ethical. Her involvement
was integral to the ultimate resolution of the litigation.
In negotiating the Settlement Agreement, the parties followed the same protocol for each
type of claim: rather than negotiating a total settlement, either a figure for an aggregate class
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settlement or for each type of claim, the parties instead assessed the strength and value of each
type of claim. Without regard to total payout figures, the parties negotiated claims frameworks,
programs, and processes, including details such as what types of proof would be required for
claimants to receive a settlement benefit, what categories of claims would be paid, whether
certain claimants would benefit from causation presumptions, and how settlement benefits would
be calculated. The negotiations were exclusively focused, from the outset, on producing claims
frameworks that could be administered simply, fairly, objectively, and consistently, and, in every
instance, according to the merits of the underlying claims. The principle was two-fold: to design
claims frameworks that fit a wide array of damage categories, and, within each category, to treat
like claims alike, so as to proceed with both fairness and predictability.
During this process, PSC and other Plaintiffs’ counsel most familiar with each type of
claim advised the negotiators to ensure that the frameworks reflected the actual situations faced
by the hundreds of thousands of people potentially affected by the oil spill. For example,
attorneys representing seafood restaurants contributed to the development of the business
economic loss framework, which details the steps by which businesses recover for losses due to
the spill. So, too, did attorneys representing employees inform the development of the individual
lost wages framework; attorneys representing wetlands owners, the property damage framework;
attorneys representing homeowners, the property sales loss framework—and so on.
With the exception of the Seafood Compensation Program, there is no limit or “cap” on
the amount to be paid by BP under these programs. Rather, all claims that meet the criteria for
each program will be paid in full. Such claims will be paid without delay—claimants need not
await final settlement approval for payment. Claimants may submit claims in multiple categories
to recover for all demonstrable losses arising from the Deepwater Horizon Incident.
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The parties also negotiated the claims process for the Seafood Compensation Program
over an extensive period. While the parties had discussed an open-ended framework, it became
clear by early March 2012 that a fixed sum of $2.3 billion would best compensate eligible
participants fully and fairly. At the parties’ suggestion, the Court appointed John W. Perry, Jr.,
to preside over the proposed settlement of the seafood program. (Rec. Doc. 5998.)
On the eve of the Limitation and Liability trial, upon being informed that the parties were
near an agreement in principle, the Court adjourned the trial for one week “to allow the parties to
make further progress in their settlement discussions.” (Rec. Doc. 5887.) The parties continued
negotiating, and on March 2, 2012, the Court adjourned the trial once more after the parties
reached an agreement in principle. As the Court explained, the “settlement would likely result
in a realignment of the parties in this litigation and require substantial changes to the current
Phase I trial plan.” (Rec. Doc. 5955.) By separate order, the Court also designated the PSC Co-
Liaison Counsel as Interim Class Counsel, in order to facilitate the consummation of the
Agreement and the implementation of the settlement approval process. (Rec. Doc. 5960).
At the parties’ request and consistent with the agreement in principle, the Court entered its
First Amended Order Creating Transition Process to facilitate the transition from the Gulf Coast
Claims Facility (“GCCF”) to the Court Supervised Settlement Program envisioned by the
settlement. (Rec. Doc. 5995).
The parties worked out an agreement on the essential terms of the settlement, designed all
of the compensation frameworks, and finalized the procedures that will govern the Settlement
Program. Only then, upon receiving permission from the Court, BP and the PSC proceeded to
negotiate an appropriate Class Counsel fee. As a result, and subject to Court approval, the BP
parties have agreed not to contest a request by Class Counsel for an award, in an amount to be set
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by the Court, not to exceed $600 million, for class counsel’s fees, costs, and expenses, as
detailed fully in Exhibit 27 to the Settlement Agreement.3 Consistent with Federal Rule of Civil
Procedure 23(e)(3), there is no “agreement made in connection with th[is] proposal” other than
the Economic and Property Damage Class Settlement Agreement being submitted herewith to
this Court.
III. SETTLEMENT CLASS DEFINITIONS AND EXCLUSIONS
To effectuate the settlement, the PSC is seeking by separate motion to certify a class of
individuals and businesses that suffered economic loss or property damage as a result of the
Deepwater Horizon Incident. BP does not oppose the motion, and the proposed class definition
is annexed to this memorandum as Appendix A, along with the relevant maps contained in
Appendices B and C. The frameworks and programs to be established to benefit the class are
explained in Section IV immediately below.
IV. SUMMARY OF THE PROPOSED ECONOMIC AND PROPERTY DAMAGES
SETTLEMENT
Like any settlement, this settlement is “a compromise, a yielding of the highest hopes in
exchange for certainty and resolution.” Altier v. Worley Catastrophe Response, LLC, No. 11-
241, 2012 WL 161824, at *14 (E.D. La. Jan. 18, 2012) (quotations omitted). It is, however, a
settlement that stands on its own as a comprehensive, fair, and reasonable compensation system
that does not discount demonstrable losses or compromise procedural fairness. The settlement’s
most salient feature is that it makes whole the myriad of plaintiffs asserting that they have
suffered economic loss or property damage as a result of the Deepwater Horizon Incident.
3 Under this provision, Class Counsel would seek an interim award of $75 million. Additional interim payments
equivalent to 6% of class claims would be paid quarterly, and the fee would not exceed a total of $600 million under
any circumstances. All terms of the fee provision are subject to Court approval.
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A. The Proposed Settlement’s Procedural Elements
Under the Agreement, the GCCF will be replaced by a new Court Supervised Settlement
Program, headquartered and with claims offices located in the same Gulf area as the class
members whose claims they will resolve. The new program will use a highly transparent and
objective process to provide full and fair compensation to individuals and businesses harmed by
the spill. BP has agreed to pay all administrative costs, even though the new Settlement Program
is and will remain independent of BP. The Agreement provides for a claims deadline of April
22, 2014, or six months after the Effective Date of the settlement, whichever is later.
1. The Transition Process
The Transition Orders issued by the Court on March 8, 2012 govern the transition
process pending the Court’s preliminary approval of the settlement and initiation of the
settlement claims process. For all claims submitted to the GCCF for which an unpaid, unexpired
offer is pending, the Transition Coordinator will pay 60% of the offer without requiring a
release. See Am. Transition Order (Rec. Doc. 5995) at 3. Moreover, “[i]f the claimant receiving
the 60% payment is a member of the proposed settlement class, the claimant has a right to
additionally recover from the Court Supervised Settlement Program the greater of: the remaining
40% of the GCCF offer, or the class settlement payment minus any amount previously paid by
the Transition Process.” Id. (emphasis added). The Order also allows eligible claimants to
obtain GCCF “Quick Pay” disbursements until May 7, 2012, id.; provides for notice of the
termination to all eligible participants, id.; and provides that the transition process will terminate
upon entry of preliminary approval and the establishment of the settlement claims process, id. at
4. Any disagreements about the claims administration process that cannot be resolved by the
new Claims Administrator and the parties will be referred to the Court for resolution.
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To aid in the transition from the GCCF to the new Settlement Program, the Court has
already appointed Patrick Juneau as the Claims Administrator and directed him to establish a
Transition Process. See id. at 1-2; see also Office of Court Appointed Claims Administrator,
Court Supervised Settlement Program, BP Oil Spill, Press Release, available at
http://www.gulfcoastclaimsfacility.com/PressRelease-03-23-12.pdf (March 23, 2012). Likewise,
the Court has already appointed (a) Lynn Greer as Transition Coordinator, see Am. Transition
Order, at 1; (b) James Parkerson Roy and Stephen J. Herman as Interim Class Counsel, see Order
(Rec. Doc. 5960); and (c) John W. Perry, Jr. as a neutral to preside over the proposed settlement
of the seafood program, see Order (Rec. Doc. 5998).4
2. Creation Of The Court Supervised Settlement Program
Under the Agreement, the GCCF will be replaced by a new Settlement Program that is
“subject to the ongoing supervision of the court.” Agreement, Section 4.4.7. The new program
(once it fully implements the proposed settlement under the Court’s oversight shortly after
preliminary approval) will use a highly transparent and objective process to provide full and fair
compensation to individuals and businesses harmed by the spill.
Under the proposed settlement, the Settlement Program will compensate class members
pursuant to frameworks described in greater detail in background section IV.C, below. The
Settlement Program is designed to be responsive to claimants. It will function neither as a
depersonalized bureaucracy nor as an adversarial system. Instead, the parties have agreed that
the Settlement Program will assist class members in submitting their claims:
4 According to this Court’s Amended Transition Order, “[t]he Transition Coordinator will: (a) evaluate claims
currently pending with the Gulf Coast Claims Facility; and (b) evaluate any new claims submitted before the
proposed Court supervised claims program.” Rec. Doc. 5995, at 2. Between March 8, 2010, and April 10, 2010, the
Transition Coordinator paid 5,238 claimants a total sum in excess of $134 million. See Press Release Regarding
Transition Process, available at http://www.gulfcoastclaimsfacility.com/PressRelease-04-10-12.pdf (Apr. 10, 2012).
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The Settlement Program, including the Claims Administrator and Claims
Administration Vendors, shall work with Economic Class Members (including
individual Economic Class Members’ counsel and Class Counsel) to facilitate
Economic Class Members’ assembly and submission of Claims Forms, including
all supporting documentation necessary to process Claim Forms under the
applicable Claims Processes. The Settlement Program, including the Claims
Administrator and Claims Administration Vendors, shall use its best efforts to
provide Economic Class Members with assistance, information, opportunities and
notice so that the Economic Class Member has the best opportunity to be
determined eligible for and receive the Settlement Payment(s) to which the
Economic Class Member is entitled under the terms of the Agreement.
Agreement, Section 4.3.7.
Submitted claims will be evaluated and processed by the by the claims administration
vendors. See Agreement, Section 4.38. In the claims administration vendors’ evaluation of
claims, there shall be no relevance or effect to the fact that any claimant previously had a claim
denied or rejected by the GCCF. See Agreement, Section 4.4.9.
3. Settlement Program Appellate Procedure
Beyond providing transparent, objective, and fair rules for calculating awards, the
proposed settlement process provides for ample internal appellate review. Claimants have the
right to appeal denials of claims for insufficient documentation and to challenge any final
determination made in their cases by the new Settlement Program. BP, in contrast, will be able
to appeal only where an individual claimant is awarded more than $25,000 in base compensation.
Appeals as to the amount of compensation will be decided using so-called “baseball arbitration,”
where the appellate panel must select either the amount advanced by the claimant or the amount
advanced by BP. All appellate panelists will be selected by the Court from a list agreed upon by
the parties. If the amount at issue is more than $1,000,000 in base compensation, an appeal will
be considered by a three-member panel; in such an instance, at least one panel member must be
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from the claimant’s home State.5
4. Assignment, Release, And Other Protections
Pursuant to the Agreement, all class members who accept payment under the new
Settlement Program agree to release, forever discharge, and covenant not to sue, inter alia, (i)
BP, (ii) all federal and state oil spill liability funds, and (iii) every one of the other listed
“Released Parties” (including all defendants in the Deepwater Horizon litigation except
Halliburton and Transocean6) for any and all defined released claims arising from or relating in
any way to the DWH Spill.
Participating class members will reserve all punitive damage claims against Transocean
and Halliburton. In addition, the Agreement expressly reserves to class members specific
carved-out claims.7 Finally, subject to final approval, the proposed class will obtain an
assignment of certain of BP’s claims against Transocean and Halliburton.
5. Final Judgment
Under the Agreement, the parties will seek a final judgment approving the settlement,
certifying the class for settlement purposes, and dismissing all of the released economic loss and
property damage claims of the Economic Loss Class against BP.8 BP, moreover, agrees not to
5 Both the $25,000 and $1,000,000 appeal thresholds referred to in this paragraph refer to base compensation, prior
to application of a risk transfer premium (“RTP”). RTPs are explained in background section IV.B, below.
6 The intent of the Agreement is for BP to pay all compensatory damages but to allow the plaintiffs to continue to
seek punitive damage recoveries from Halliburton and Transocean, which is the sole basis for the exclusion of those
defendants from the release. The plaintiffs, moreover, have agreed with BP to a set of special rules to effectuate the
parties’ intent to allow the plaintiffs to seek exclusively punitive damages against Halliburton and Transocean,
including the plaintiffs’ (1) agreeing not to seek compensatory damages against Halliburton or Transocean; and (2)
agreeing, among other protections to BP, not to execute on any compensatory damages that might be awarded to
plaintiffs against Halliburton and Transocean. See Agreement, Section 11.
7 For example, class members can participate in the settlement while reserving any claims for moratorium-related
loss.
8 The Agreement reserves certain claims of the Economic Class Members and, of course, does not affect the claims
of non-Class Members.
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contest a request by Class Counsel for fees, costs, and expenses up to a maximum of $600
million, should such an award be approved by the Court. (The maximum award will include
fees, costs, and expenses paid under the separate Medical Benefits Class Action Settlement;
jointly the total award may not exceed $600 million.) Importantly, this sum will be paid
separately from any amounts paid to the Settlement Class, and it does not reduce their payments
or benefits. (See Settlement Agreement Ex. 27.)
6. Class Notice
The Settlement Notice Program was designed with the requirements of Rule 23 and due
process in mind. The heart of the notice program is a multimedia notice program that will cover
the entire United States, with a particular focus on the Gulf Coast regions. See Ex. 1 (Azari
Decl.); Ex. 2 (Kinsella Decl.); Ex. 3 (Wheatman Decl.) (setting out the methodology, media to be
targeted, and scope of the extensive notice plan prepared to inform potential class members of
their options). The media notice effort will include publication in over 2,100 local and national
newspapers and nationwide publication in leading national consumer magazines, trade, business
and specialty publications, local television, radio and newspapers in the Gulf Coast Areas,
appropriate foreign language and African-American publications, and online banner advertising.
The campaign will also include individually mailed notice to class members (who can be
identified from court filings, court records, and GCCF records), including to all those class
members who filed short-form joinders as part of pretrial preparation for the Limitation and
Liability trial. To the extent that records indicate that individual class members are represented
by counsel, individual notice will also be mailed to their attorneys.
The parties will also make available multiple channels through which class members can
learn more about the settlement. The settlement administrator will establish a toll-free number
staffed by representatives who can field class members’ questions and help them through the
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claims process. And most importantly, the administrator will establish a comprehensive notice
and claims website through which class members can learn about the settlement, submit their
claims online, and check their claim status. The website will feature a list of frequently asked
questions, which will be regularly updated to ensure that the class receives information of
common concern. The settlement web address will be included in all notice materials. Every
potential class member will have access to a complete copy of the Settlement Agreement,
including its exhibits. Finally, BP has agreed to provide up to $5 million in funds for a
supplemental publicity campaign managed by the PSC. As described in argument section II.B
below, notice experts forecast that this notice campaign may come to be regarded as one of the
most comprehensive and elaborate notice programs in litigation history, with 95% of the adults
in the Gulf Coast exposed to class notice materials on average 8.8 times, and 83% of U.S. adults
exposed on average 3.8 times.
B. Four Unique Features Of The Proposed Settlement Guarantee Exceptionally
Full And Fair Compensation.
The Agreement includes four overarching features that are uniquely designed to
guarantee the fairness and adequacy of the proposed settlement:
First, Section 4.4.10.3 of the Agreement provides for the satisfaction of all economic and
property loss claims by class members arising out of the oil spill, even for losses caused by the
actions or omissions of Transocean or Halliburton. In other words, BP has taken the
extraordinary step of agreeing to pay all of those compensatory damages itself even though the
spill was a multi-party, multi-causal event.
Second, claimants in many of the claims categories will receive, in addition to calculated
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baseline damages, Risk Transfer Premium (“RTP”) payments.9 RTP payments are meant to
compensate class members for pre-judgment interest, the risk of oil returning, consequential
damages, inconvenience, aggravation, the risk of future loss, the lost value of money,
compensation for emotional distress, liquidation of legal disputes about punitive damages, and
other factors. These RTPs—which are multiples of baseline damages added to many class
members’ compensatory damages awards, and which were negotiated separately for each
damage category—will fully compensate claimants for all potential future and unknown losses
relating to the DWH Spill, along with all other elements of damage, thereby extinguishing claims
for damages under all conceivable legal theories.10 As the name suggests, from the perspective
of a class member, RTP payments provide additional monetary recoveries to plaintiffs who
contend they bear the risk of future and unknown losses, whereas from the defense perspective
BP pays such additional compensation in exchange for broad releases.
Third, Section 11 of the Agreement, “Assignment and Protections,” assigns to Plaintiffs
BP’s spill-related claims against Transocean and Halliburton. As the Agreement indicates, the
assigned claims include claims for repair of the Macondo Well, related economic losses to BP,
costs that BP incurred to respond to the spill, and any punitive damage claims that BP may have
against Transocean or Halliburton. The Settlement Class may pursue these claims for additional
compensation on top of full compensatory payments that already have been augmented by RTPs.
9 For example, if the compensation amount is $10,000 for a tourism-related injury, and the RTP applicable to a
recovery of that type is 2.5, then $10,000 is multiplied by 2.5, which product is then added to the $10,000 to reach
the total amount of compensation (i.e., $10,000 + $25,000 = $35,000 in total compensation).
10 The parties concur that the Agreement fully and finally resolves any and all claims for damages (including
punitive damages)—under any legal theory—by granting comprehensive releases to the defined released parties,
including BP, while BP expressly continues to deny liability for punitive damages. Additionally, for damage
categories involving RTPs, plaintiffs should not be deemed to concede that baseline damages would provide full
compensation in the absence of RTPs. They agree only that the total of baseline damages and RTP payments
together constitutes compensation acceptable as a compromise in settlement.
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Fourth, unlike most class settlements that do not pay benefits until the court’s approval
order is final and no longer appealable, this Agreement enables class members to receive
settlement payments on an accelerated schedule. Class members can file claims immediately
following the Court’s determination of fairness. The Court Supervised Settlement Program will
process those claims and make settlement payments to class members if they execute an
individual release. Thus, the Agreement allows class members to be compensated promptly, and
much sooner than is normally the case in class action settlements.
C. The Proposed Settlement’s Payment Categories
The settlement permits Class Members to submit multiple claims and receive
compensation for multiple categories of damage. For each of the categories, BP and the PSC
negotiated claims processes that provide the fullest and fairest compensation possible to each
type of individual and entity harmed by the Deepwater Horizon Incident.11 In order to
accomplish this goal, the claims process must take into account the individual circumstances of
each claimant, thereby adding some necessary complexity to the calculation methods. But in
every instance the payment formulas remain transparent, objective, and fair to the individuals
and businesses that will be compensated under them.12
In total, the settlement provides for recovery in the following categories of economic and
property damage or loss:
11 Certain business types are excluded from the class, such as oil and gas. Others, such as gaming, banking and
financial services, insurance, defense contracting industries, and entities that market BP-branded fuel are excluded
for most claims. Also excluded are Federal and State governmental agencies, employees of MDL 2179 defendants,
persons and entities that have been paid by the GCCF and executed a GCCF Release, and persons and entities
engaged in menhaden (“pogy”) fishing and harvesting. Such businesses are excluded either because (1) any claimed
losses are unlikely to have been caused by the DWH Spill and/or (2) the Parties have concluded that such claims
could more appropriately be handled on an individual basis through other pending lawsuits or other settlements.
12 It is important to note that nothing in this Agreement is an admission of law or fact by any party, and nothing
contained in the various claims frameworks or evidence called for under such frameworks or otherwise is intended
to create a presumption or inference for any purpose beyond making claims payments pursuant to the settlement.
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1. Economic Loss
Individual Loss of Wages
Business Economic Loss
Multi-Facility Business Economic Loss
Start-Up Business Economic Loss
Failed Business Economic Loss
Failed Start-Up Business Economic Loss
2. Property Damage
Loss of Use/Enjoyment of Real Property
Coastal Real Property Damage
Wetlands Real Property Damage
Realized Real Property Sales Loss
3. Vessels of Opportunity Charter
Payment
4. Vessel Physical Damage
5. Subsistence Damage
6. Seafood Compensation Program
The formulas were developed with the assistance of various experts (including
economists, accountants, and real estate experts) who analyzed and responded to questions posed
by both BP and the PSC throughout the negotiation process.
BP has also agreed to fund settlement and claims administration and the notice program;
to provide a separate fund of $57 million to promote the Gulf Coast and its waters; to fund a
supplemental publicity campaign up to $5 million to be designed and administered by the PSC;
and to offer reimbursement to all categories of claimants for accounting services required for
filing their claims. This reduces the paperwork burdens associated with presenting a claim and
enhances the fairness of the settlement.
1. Economic Loss
a. Individuals
Individual workers in the affected regions will be eligible for benefits to offset spillrelated
losses, in addition to any applicable RTP determined pursuant to a claims process that
takes into account geographic location, nexus of the worker’s injury to the oil spill, and other
relevant factors.
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The standards for establishing causation for individuals are flexible and provide
claimants with multiple options. Causation is presumed for those individuals most likely to have
been affected by the spill, including those on the coast and those employed in certain seafoodrelated
businesses. Other individual claimants are required to demonstrate a loss of earnings
attributable to the spill during May through December 2010 (or other applicable period in the
case of certain Seafood Industry claimants) based on financial information and/or sworn
statements from their employer(s). In addition, as described below, certain individual claimants
lacking tax documents or other earnings documentation will be eligible for compensation under
the settlement provided that they meet additional causation requirements.
The documentation requirements for individual economic loss claims balance the need
for demonstrating causation and lost earnings with recognition of individuals’ varying
employment circumstances and ordinary record-keeping practices. All claimants must submit a
sworn claim form and varying types of support. Four documentation categories are established:
Category I: Claimants with Tax Information Documents for 2010 and prior periods,
including both full-year and seasonal workers, must submit them, along with Pay Period
Earnings Documentation, if they possess it.
Category II: Claimants without such Tax Information Documents, but who have Pay
Period Earnings Documentation or other earnings documentation for 2010 and prior
periods, must submit such documentation.
Category III: Claimants with Tax Information Documents or Pay Period Earnings
Documentation who lack comparable pre-2010 employment data because they were New
Entrants To Employment, Career Changers, or had less than 12 months of earning history
in the Claiming Job as of April 20, 2010, must provide information for 2010 and prior
and subsequent years so that an appropriate basis for comparison of projected and actual
2010 earnings can be established.
Category IV: Claimants without any earnings documentation who were employed in
Zones A, B, or C must submit sworn written statements, as well as supporting sworn
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written statements by their employer(s) and are subject to additional requirements for
establishing causation.13
Individual compensation includes several components and depends in part on the amount
of documentation provided. Lost earnings are calculated as the estimated difference between a
claimant’s expected earnings from a job within the class geography during May to December
2010 (or April 2011 in the case of certain Seafood Industry claimants), and the claimant’s actual
earnings during that claim period. Expected earnings are estimated based on consideration of (1)
the claimant’s historical earnings or documented anticipated earnings or, for claimants without
sufficiently documented pre-spill earnings, the claimant’s 2011 earnings; and (2) for certain
claimants with contemporaneous documentation of pre-spill and post-spill earnings, application
of defined growth factors so as to take more precise account of year-to-year wage increases.
Depending on the location and/or industry in which the claimant was employed, and the amount
of documentation provided, the claimant may be eligible for an RTP multiple of lost earnings.
Eligible claimants may also receive additional compensation for lost health insurance, pension
benefits, and qualified training costs and qualified job search costs, which will not be multiplied
by an RTP. The claims framework also provides cash benefits for workers who incurred training
or job search costs as a consequence of the oil spill. Compensation calculated using the abovelisted
factors will be reduced to take account of previous spill-related payments.
13 Self-employed individual vendors are compensated subject to a special compensation framework tailored to their
business. Individual Periodic Vendors, who periodically made retail sales of goods or services to Non-Local
Consumers in certain zones during 2009 and 2010, did not maintain a fixed business location in a building from
which they made the sales, and do not have Tax Information Documents sufficient to make a claim for Business
Economic Loss must provide other information regarding those sales and a supporting Sworn Statement from an
adjacent business. Similarly situated Festival Vendors, who engage in comparable activities at defined Festivals or
major sporting events, need to provide similar documentation, including a sworn statement from the Festival
Coordinator or other individual with knowledge of the Festival Vendor’s activities.
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b. Business
Business economic damage claimants will also be compensated under the settlement for
post-spill losses of earnings and profits, and all compensation calculations will factor in any prespill
growth. The compensation amounts for many business economic damage claimants will
also be enhanced by an RTP. The following discussion describes the claims process for preexisting
businesses that lost earnings or profits. The Agreement and accompanying exhibits
detail a similar process for failed businesses, start-up businesses, and failed start-up businesses.
The Claims Administrator will calculate business economic damage claimants’ expected
post-spill earnings by following a two-step process. Step one calculates the value of the
business’s reduction in profit during a claimant-selected loss period (any three or more
consecutive months of the eight months following the spill), by comparing the post-spill earnings
during the loss period to pre-spill earnings from the same months in a claimant-selected
benchmark year.14 Step two accounts for expected profits by calculating a claimant-specific
factor that captures the business’s growth trend during the four months immediately preceding
the spill, and applying it, along with a general, economy-wide growth factor, to determine what
the business’ expected profits would have been during the loss period, but for the spill. The sum
of step one (loss calculation) and step two (expected profit but for spill) results in the business
claimant’s base compensation amount, which may then be enhanced by applying an RTP and/or
offset by prior payments received, depending on the type of business.
Businesses must submit documentation to support their claims that reflect their business
structure, as well as provide their federal tax returns and profit and loss statements (or other
documents) evidencing monthly revenues and expenses. Depending on claimant-specific factors,
14 Business economic damage claimants can choose 2009, an average across 2008 and 2009, or an average across
2007, 2008, and 2009, as their benchmark year.
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businesses may be required to submit additional documentation, such as documents evidencing
client cancellations that may have depressed earnings during the benchmark period.
Businesses in certain geographic zones and industries, such as seafood processing, will
not be required to provide documentation demonstrating causation, while businesses in other
zones will be required to submit varying degrees of evidence of causation. For example,
businesses in Fairhope, Alabama fall into Zone B. In order to recover, they must submit
evidence of causation. One such form of evidence is documentation of a V-shaped revenue
pattern—an aggregate decline of 8.5% or more in total revenues over a period of three
consecutive months in the eight months following the spill followed by an aggregate increase of
5% or more in total revenues over the same period in 2011.
In addition to the lost profits calculated by the two-step process described above,
claimants may receive an RTP multiple of that amount based on a schedule negotiated by the
parties. Total claimant compensation equals lost profits plus the applicable RTP, minus any
OPA payments already received by the claimant from BP or the GCCF. RTP payments vary
according to the Claimant’s proximity to the Gulf and the precise type of business involved.
Seafood processors who process shrimp, crab, and oyster, for instance, will receive four times
their documented damages (i.e., an RTP of 3.00). Likewise, tourist businesses closest to Gulf
waters will receive over three times their documented damages (i.e., an RTP of 2.5), while
tourism businesses even 220 miles from the Louisiana coast will receive over double their
documented damages (i.e., an RTP of 1.25). The proposed settlement provides for similar
compensation methodologies for Start-Up Businesses, Failed Businesses, and Failed Start-Up
Businesses, with modifications tailored to their specific circumstances. In short, the proposed
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settlement will carefully provide full and fair recompense for economic loss claims submitted by
Gulf businesses.
2. Property Damage
a. Loss Of Use And Enjoyment
The Agreement calculates compensation for coastal property damage claims by using a
specified percentage of a standardized property tax applicable to the property parcel; the
percentage used is based on the presence of oil and the environmental sensitivity of the coastal
property. An RTP is then applied to the base compensation amount.
b. Real Property Damage
The Agreement also provides compensation for damages to real property in two subcategories:
(1) Coastal Real Property Claims, and (2) Wetlands Real Property Claims.
Under the Coastal Real Property Claims Process, claimants will submit their requests to
the Claims Administration Vendor, and if they can satisfy the documentation requirements to
establish ownership, they will recover a percentage of their 2010 Applicable Property Tax for the
parcel, varying from 30% to 45%, depending on the applicable compensation category. An RTP
of 2.5 will be applied to the Coastal Real Property Compensation Amount. Additionally, if
Coastal Real Property Claimants can establish that they incurred physical damage from response
operations, they can recover additional compensation (without augmentation by an RTP).
Under the Wetlands Real Property Claims Process, two categories are established: (1)
Category A, consisting of parcels documented to contain oil on all or part of the relevant acreage
based on several sources, including the published Shoreline Cleanup Assessment Team
(“SCAT”) reports; and (2) Category B, consisting of parcels documented by SCAT as “no oil
observed.” Within Category A, claimants would be compensated a minimum of $35,000 per
oiled parcel. Claimants in Category B would be compensated a minimum of $4,500 per acre on
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a per parcel basis. Finally, an RTP of 2.5 will apply to all Wetlands Real Property Claims.
Overall, these provisions will ensure that real property claims will be fully and fairly
compensated on a generous basis.
c. Realized Sales Losses
Relatedly, the Agreement also provides compensation for those who realized sales losses
as a result of the spill. Under the Agreement, individuals and entities who sold residential
parcels in the Real Property Sales Compensation Zone between April 21, 2010 and December
31, 2010 will receive compensation for sales contracts executed on or after April 21, 2010 or for
other sales contracts that have been subject to a price reduction due to the DWH Spill
(foreclosures or like processes are excluded). The amount of recovery is 12.5% of the sale price
and is not eligible for an RTP.
3. Vessels Of Opportunity (“VoO”) Charter Payment
The proposed settlement will also provide funds for those who participated in the VoO
program. First, all working VoO participants will be entitled to receive at least $41,600 in
compensation, with the amount increasing for those with larger boats. To guard against double
recovery, those working VoO participants who also will receive economic loss compensation
that directly involves the use of their VoO vessel (except in the case of compensation payments
under the Seafood Program) will have their VoO compensation partially reduced. Second, those
VoO participants who were never placed on hire to perform actual services on the water will be
entitled to receive up to $10,200, with no offset, even if such a “non-working VoO participant”
will also be receiving an award under the Seafood Program. VoO claims, being contractual in
nature and not involving a transfer of tort injury risk, are not eligible for an RTP.
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4. Vessel Physical Damage Claims
The Agreement also compensates vessel owners for damage to their vessels. Under the
Agreement, claimants may recover for physical damage to an eligible vessel (as well as its
equipment or rigging) due to or resulting from either the DWH spill itself or cleanup operations.
The amount of recovery is the lesser of the costs necessary to either conduct a reasonable repair
of the vessel or to replace the vessel in its entirety. No RTP is applied to this category of claims.
Vessels are eligible whether or not they were enrolled in the VoO program; the only vessels that
may not recover are those that were working for an Oil Spill Response Organization at the time
of the physical injury.
5. Subsistence Damage Payments
The Agreement compensates claimants who relied on seafood and wildlife for
subsistence purposes for the total value of the subsistence natural resources that they lost due to
the oil spill, plus an RTP enhancement to compensate for factors including the value of
subsistence community customs and culture. Subsistence claimants are defined as individuals
who fish, hunt, or harvest Gulf of Mexico natural resources, including seafood and game, in a
traditional or customary manner and to sustain the basic dietary, economic, shelter, tool, or
clothing needs of themselves and their families. Given the economic challenges facing
subsistence claimants, the Claims Administrator will form a dedicated administrative team to
assist subsistence claimants with filing claims and will establish field teams to verify large
claims. Subsistence claims will be augmented by an RTP of 2.25.
6. The Seafood Compensation Program
The Seafood Compensation Program, which is described in Exhibit 10 to the Settlement
Agreement, ensures that individuals and businesses in the seafood industry harmed by the
Deepwater Horizon Incident are made entirely whole. Notably, the amount that BP has agreed
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to pay to fund the Seafood Compensation Program exceeds the annual revenue of these
industries many times over.
Under the Seafood Compensation Program, Commercial Fishermen, Seafood Boat
Captains, all other Seafood Crew, Oyster Leaseholders, and Seafood Vessel Owners will be
compensated for economic loss claims relating to Seafood, including shrimp, oysters, finfish,
blue crab, and other species. A $2.3 billion Seafood Compensation Program Amount provides
the funding for eligible claims under the program including shrimp, oysters, finfish, blue crab,
and other species. As developed and approved by the Court-appointed neutral, John W. Perry,
Jr., the Seafood Compensation Program allocates the funds on multiple criteria—both between
various industries and amongst different industry participants, such as vessel owners, boat
captains, oyster leaseholders, and seafood crew.
The Seafood Compensation Program contains five separate plans to provide
compensation to claimants. Each plan contains its own eligibility and documentation
requirements and each describes the specific compensation methods available to claimants. The
independent methods of calculation for claims in each plan ensures that claimants will be
compensated fairly and adequately for economic losses related to Seafood. Vessel owners and
boat captains in the shrimp, oyster, finfish, blue crab, and other seafood plans will be
compensated in relation to their seafood harvesting revenues from previous years in Specified
Gulf Waters. Additional payments, such as per-acre compensation to oyster leaseholders and
per-share compensation for Individual Fishing Quotas shareholders in the finfish industry are
available to eligible claimants. Seafood crew—the mates, boatswains, and deckhands other than
the boat captain—are all eligible for compensation tied to either their former or expected wages
and hours. Those seafood crew members who cannot provide tax forms, financial information or
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a sworn statement from an employer to establish employment and compensation may be eligible
for a lump sum payment if they provide sufficient sworn statements from sponsors or attorneys.15
The Seafood Compensation Program allows claimants to file claims for multiple types of
economic losses. For example, a shrimping boat captain who also captains a blue crab vessel
may be eligible for compensation under both compensation plans. Additionally, a vessel owner
who is also the boat captain may be eligible for vessel owner and boat captain compensation.
The RTPs provided are generous, ranging from 2.25 to 8.75.
7. The Gulf Coast Promotional Fund
BP has also agreed to finance a $57 million fund to promote the Gulf Coast. This fund
will be administered for the benefit of the Gulf region. In particular, the promotional fund is
intended to encourage Gulf Coast tourism, as well as to help grow the Gulf’s seafood industry.
Economic analysis suggests that for every dollar of advertising directed towards promoting the
Gulf Coast, one can expect much more in return in increased tourism and seafood revenues.
Individual Gulf tourist industry participants are often unable to establish funds like this purely by
private agreement because the benefits of fund expenditures unavoidably flow to participating
and non-participating businesses alike. Hence, the actual value to the class of the Promotional
Fund that BP is agreeing to establish for the benefit of the Gulf far exceeds its already significant
$57 million face amount.
ARGUMENT
I. THE PROPOSED SETTLEMENT IS FAIR, REASONABLE, AND ADEQUATE.
The parties and their counsel (who have many decades of class action and class
15 The Seafood Compensation Program Sworn Claim Form may be submitted any time after a Preliminary Approval
Order is issued, but no later than 30 days from the date of entry of a Final Order and Judgment of the District Court
after it rules upon final approval of the Settlement Agreement.
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settlement experience) collectively agree that the proposed settlement represents a fair,
reasonable, and adequate resolution of this dispute and should be preliminarily approved.
A. The Settlement Agreement Meets The Standard For Preliminary Approval.
Federal Rule of Civil Procedure 23 governs class actions. Under Rule 23, a class action
may be settled only with the Court’s approval upon a finding that the settlement is “fair,
reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2). Although the Rule does not explicitly
require it, courts generally undertake their Rule 23(e) obligations pursuant to a two-step process:
first, the Court undertakes a preliminary review in order to gain information regarding the
settlement prior to issuing class and settlement notice and scheduling a hearing; second,
following preliminary approval, the Court holds a final fairness hearing and decides whether to
approve or disapprove the settlement. See MANUAL FOR COMPLEX LITIGATION (FOURTH) [“MCL
4TH”] § 21.632, et seq. “The two-step process for evaluation of proposed settlements has been
widely embraced by the trial and appellate courts.” In re Chinese-Manufactured Drywall Prods.
Liab. Litig., MDL No. 2047, 2012 WL 92498, at *7 (E.D. La. Jan. 10, 2012) (citing MCL 4TH §
21.6).
Should the Court grant this motion to preliminarily approve the settlement, the Court will
later have the opportunity to conduct a thorough fairness hearing to ensure that the settlement
merits final approval in the ultimate analysis. Today, however, the parties start the approval
process by requesting preliminary approval. The preliminary approval process provides the
opportunity for the Court to study the details of the settlement and elicit the information that it
needs in order to determine, at the final review stage, whether to approve the settlement. See
MCL 4th § 21.632, et seq. This initial review embodies the Court’s discretion in managing
complex litigation in order to ensure that the settlement is appropriately postured for final
fairness review and to determine whether to issue notice of the final fairness hearing. During
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this process of preliminary review, the Court can also consult with the parties and communicate
any concerns it may have about the settlement terms.
At this preliminary stage, the court makes a “preliminary determination that the proposed
[settlement] class satisfies the criteria set out in Rule 23(a) and at least one of the subsections of
Rule 23(b).” MCL 4TH § 21.632.16 Additionally, the court makes a preliminary determination
on the fairness, reasonableness, and adequacy of the settlement terms, provides for notice to the
class, and sets the date for the formal fairness hearing. Id.; see also Chinese-Manufactured
Drywall, 2012 WL 92498, at *7.
To obtain preliminary approval, the parties need only demonstrate that that the proposed
settlement (i) appears to be the product of serious, informed, non-collusive negotiations, (ii) has
no obvious deficiencies, (iii) does not improperly grant preferential treatment to class
representatives or segments of the class, and (iv) falls within the range of possible approval. See,
e.g., In re OCA, Inc. Sec. & Deriv. Litig., No. 05-2165, 2008 WL 4681369, at *11 (E.D. La. Oct.
17, 2008); accord, e.g., Gautreaux v. Pierce, 690 F.2d 616, 621 n.3 (7th Cir. 1982); McNamara
v. Bre-X Minerals Ltd., 214 F.R.D. 424, 430 (E.D. Tex. 2002); In re Nasdaq Market-Makers
Antitrust Litig., 176 F.R.D. 99, 102 (S.D.N.Y. 1997); In re Shell Oil Refinery, 155 F.R.D. 552,
555 (E.D. La. 1993) (citing MANUAL FOR COMPLEX LITIGATION (SECOND) § 30.44 (1985));
Williams v. New Orleans Pub. Serv. Inc., No. 75-1635, 1988 WL 98283, at *1 (E.D. La. Sept. 15,
1988).
Notably, the standards that apply at this preliminary stage are “not as stringent as those
applied to a motion for final approval.” OCA, 2008 WL 4681369, at *11 (citing Karvaly v. eBay,
Inc., 245 F.R.D. 71, 86 (E.D.N.Y. 2007)); accord, e.g., Chinese-Manufactured Drywall, 2012
16 As noted above, Interim Class Counsel are separately moving for preliminary settlement class certification, and
for settlement purposes BP will not oppose the motion.
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WL 92498, at *7. Rather, preliminary approval constitutes “a determination that there is what
might be termed ‘probable cause’ to submit the proposal to class members and hold a full-scale
hearing as to its fairness.” In re Traffic Exec. Ass’n.-E. R.R., 627 F.2d 631, 634 (2d Cir. 1980);
see also Menkes v. Stolt-Nielsen S.A., 270 F.R.D. 80, 101 (D. Conn. 2010) (citing In re Traffic
Exec, 627 F.2d at 634).17
In this settlement, the total recovery that BP has agreed to provide is uncapped; BP’s
initial estimates place its cost at approximately $7.8 billion. The settlement was negotiated and
crafted by the parties with the guiding principle of providing individualized, fair, and full
compensation for victims of the oil spill. As discussed above, the settlement was negotiated at
arm’s length; does not grant any preferential treatment to class representatives; and provides full
and fair compensation for those in each of the damage categories within the class.
For these reasons, there can be no serious dispute that the proposed settlement satisfies
the comparatively modest standards for preliminary approval. Both because it is already
apparent that the Agreement meets the standard for final approval and because the Court’s
resolution of whether the Agreement has “any obvious deficiencies” or instead “falls within the
range of possible approval” is necessarily informed by the standards that will apply at final
approval, we address these issues in detail in the following section.
17 At the formal fairness hearing stage, the Court will conduct a more thorough review than is required now at the
preliminary approval stage. At no point does the process of reviewing the fairness and adequacy of the settlement
rise to the level of scrutiny demanded by a trial, however. See, e.g., Int’l Union, United Auto., Aerospace, & Agric.
Implement Workers of Am. v. Gen. Motors Corp., No. 07-14074, 2008 WL 2968408, at *22 (E.D. Mich. July 31,
2008) (“The question . . . is whether the parties are using settlement to resolve a legitimate legal and factual
disagreement.”) (quotation omitted); UAW v. Gen. Motors Corp., 235 F.R.D. 383, 387 (E.D. Mich. 2006) (“[A]
fairness hearing is not a trial, but instead has a very singular and narrow purpose—to determine whether the
settlement at issue is fair, reasonable, and adequate.”); Ass’n For Disabled Ams., Inc. v. Amoco Oil Co., 211 F.R.D.
457, 467 (S.D. Fla. 2002) (“In evaluating these considerations, the Court must not try the case on the merits.”).
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B. The Settlement Agreement Meets The More Demanding Requirements For
Final Approval.
The public interest strongly favors the settlement of class actions. See, e.g., Kincade v.
Gen. Tire & Rubber Co., 635 F.2d 501, 507 (5th Cir. 1981) (“‘Particularly in class action suits,
there is an overriding public interest in favor of settlement.’”) (quoting Cotton v. Hinton, 559
F.2d 1326, 1331 (5th Cir. 1977)); Smith v. Crystian, 91 F. App’x 952, 955 (5th Cir. 2004)
(similar); Turner v. Murphy Oil USA, Inc., 472 F. Supp. 2d 830, 843 (E.D. La. 2007) (“The
public interest favoring settlement is especially apparent in the class action context where claims
are complex and . . . could lead to years of protracted litigation and sky-rocketing expenses.”); In
re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 535 (3d Cir. 2004) (“Additionally, there is an
overriding public interest in settling class action litigation, and it should therefore be
encouraged.”); In re Exxon Valdez, 229 F.3d 790, 795 (9th Cir. 2000) (“As a result, the general
policy of federal courts to promote settlement before trial is even stronger in the context of largescale
class actions.”); Lazar v. Pierce, 757 F.2d 435, 440 (1st Cir. 1985) (“Last, we should point
to the overriding public interest in favor of the voluntary settlement of disputes, particularly
where class actions are involved.”).
Because “settlement is the preferred means of resolving litigation,” there is a “strong
presumption in favor of finding a settlement fair.” Collins v. Sanderson Farms, Inc., 568 F.
Supp. 2d 714, 720 (E.D. La. 2008) (quotation omitted); accord, e.g., In re Educ. Testing Serv.
Praxis Principles of Learning & Teaching: Grades 7-12 Litig., 447 F. Supp. 2d 612, 619 (E.D.
La. 2006); Neff v. VIA Metro. Transit. Auth., 179 F.R.D. 185, 208 (W.D. Tex. 1998). In
evaluating a class action settlement, courts compare the terms of the settlement with “the likely
rewards the class would have received following a successful trial of the case.” Cotton, 559 F.2d
at 1330. Nevertheless, courts should avoid engaging in “a trial on the merits” in evaluating the
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fairness of a settlement. In re Corrugated Container Antitrust Litig., 643 F.2d 195, 212 (5th Cir.
1981). Instead, the Court’s independent judgment and the judgment of experienced counsel for
the parties can guide the assessment of the parties’ relative strength in the case, since plaintiffs’
and defense counsel seek the most favorable outcome for their clients in the shadow of a fully
litigated trial. Cotton, 559 F.2d at 1330.
With those background principles in mind, the Fifth Circuit has set forth six factors to
guide a court’s review of whether to approve a class action settlement at the final approval stage:
(1) the existence of fraud or collusion behind the settlement; (2) the complexity,
expense and likely duration of the litigation; (3) the stage of the proceedings and
the amount of discovery completed; (4) the probability of plaintiffs’ success on
the merits; (5) the range of possible recovery; and (6) the opinions of the class
counsel, class representatives, and absent class members.
Ayers v. Thompson, 358 F.3d 356, 369 (5th Cir. 2004) (quoting Reed v. Gen. Motors Corp., 703
F.2d 170, 172 (5th Cir. 1983)); accord, e.g., Union Asset Mgmt. Holding A.G. v. Dell, Inc., 669
F.3d 632, 639 n.1 (5th Cir. 2012); Newby v. Enron Corp., 394 F.3d 296, 308 (5th Cir. 2004); In
re Lease Oil Antitrust Litig., 186 F.R.D. 403, 431 (S.D. Tex. 1999). Each of these “Reed”
factors counsels in favor of preliminary approval.
Although these factors are not required to be met for preliminary approval, applying
them here nevertheless counsels in favor of preliminary approval, especially when viewed in
their totality. See JOSEPH M. MCLAUGHLIN, 2 MCLAUGHLIN ON CLASS ACTIONS: LAW &
PRACTICE § 6:7 (8th ed. 2011) (citing Armstrong v. Bd. of Sch. Dirs. of City of Milwaukee, 616
F.2d 305, 322-26 (7th Cir. 1980)) (review and application of the six factors is an exercise in
balancing and the balancing decisions made are reviewed for abuse of discretion); see also In re
Katrina Canal Breaches Litig., 628 F.3d 185, 194 (5th Cir. 2010) (“We review the district
court’s approval of the settlement for an abuse of discretion.”); Newby, 394 F.3d at 300 (“A
district court’s approval of a class action settlement may be set aside only for abuse of
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discretion.”); see also M.D. ex rel. Stukenberg v. Perry, — F.3d —-, No. 11-40789, 2012 WL
974478 at *2 (5th Cir. 2012) (noting a district court’s “inherent power to manage and control
pending litigation”). Indeed, because all six factors are squarely met now, the standard for final
approval is already convincingly satisfied, though the Court need only grant preliminary
approval at this time.
1. Absence Of Fraud And Collusion
To begin with, there is no suggestion of fraud or collusion in the negotiation of this
settlement. BP and the PSC have been engaged in fiercely contested litigation involving
hundreds of depositions, tens of millions of pages in discovery, hundreds of motions, and other
adversarial preparations for an imminent trial. The parties reached a settlement only after
months of hard-fought, contentious negotiation sessions, many of which were mediated and
supervised by Judge Shushan. Dozens of PSC lawyers and hundreds of plaintiffs’ counsel in the
MDL have evaluated the fairness of the settlement. The complete absence of contrary evidence,
combined with the fact that Judge Shushan personally mediated the settlement over the past
several months, should readily lead the Court to conclude there was no fraud or collusion. See,
e.g., Collins, 568 F. Supp. 2d at 725 (citing NEWBERG ON CLASS ACTIONS § 11:51 (4th ed. 2010)
(explaining that the presumption against finding fraud or collusion in a settlement in the absence
of contrary evidence is strengthened when a Magistrate Judge participates in the settlement
process)).
The absence of collusion can also be presumed based on the overall fairness and
generosity of the proposed settlement terms under the commonsense “proof is in the eating test.”
Bowling v. Pfizer, Inc., 143 F.R.D. 141, 152 (S.D. Ohio 1992). Under this test, if the terms of
the proposed settlement are fair, then the reviewing court can deem the formative negotiations to
have been proper. See Corrugated Container, 643 F.2d at 211 (“In general, we think a
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settlement should stand or fall on the adequacy of its terms . . . If the terms are fair, the court
may reasonably conclude that counsel did perform adequately.”); Turner, 472 F. Supp. 2d at 846
(“Finally, a presumption exists that settlement negotiations were conducted properly in the
absence of collusion if the terms of the proposed settlement are demonstrably fair.”).
Likewise, because the settlement has been reached at arm’s length without fraud or
collusion, “the trial court ‘should be hesitant to substitute its own judgment for that of counsel.’”
Ruiz v. McKaskle, 724 F.2d 1149, 1152 (5th Cir. 1984) (per curiam) (citation omitted); see also
Granada Invs., Inc. v. DWG Corp., 962 F.2d 1203, 1205 (6th Cir. 1992) (“Absent evidence of
fraud or collusion, such settlements are not to be trifled with.”). Rather, the fact “that this
settlement is the negotiated result of an adversarial proceeding is an indication of its fairness.”
Domingue v. Sun Elec. & Instrumentation, Inc., No. 09-682, 2010 WL 1688793, at *1 (M.D. La.
Apr. 26, 2010); see also In re Train Derailment Near Amite La., MDL No. 1531, 2006 WL
1561470, *19 (E.D. La. May 24, 2006) (“The fact that a class action settlement is reached after
arms’ length negotiations by experienced counsel generally gives rise to a presumption that the
settlement is fair, reasonable, and adequate . . . .”); In re Mills Corp. Sec. Litig., 265 F.R.D. 246,
255 (E.D. Va. 2009) (“Negotiations were sufficiently thorough, contentious, and at arm’s length
to ensure the propriety of Class Counsel’s decision to enter into the settlement and the
proceedings leading thereto.”).
Notably, the parties negotiated over attorneys’ fees for class counsel only after reaching
an agreement on the relief to be afforded class members. “‘Because the parties have not agreed
to an amount or even a range of attorneys’ fees, there is no threat of the issue explicitly tainting
the fairness of settlement bargaining.’” In re Heartland Payment Sys., Inc. Customer Data Sec.
Breach Litig., — F. Supp. 2d —-, MDL No. 09-2046, 2012 WL 948365, at *16 (S.D. Tex. Mar.
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20, 2012) (quoting Turner, 472 F. Supp. 2d at 845); Lucas v. Kmart Corp., 234 F.R.D. 688, 693
(D. Colo. 2006) (“The fact that the parties did not discuss damages until they had made
substantial progress on the injunctive issues, and did not discuss attorneys’ fees until all other
issues were virtually finalized, is also indicative of a fair and arm’s-length process.”); McAlarnen
v. Swift Transp. Co., Inc., No. 09-1737, 2010 WL 365823, at *12 (E.D. Pa. Jan. 29, 2010)
(“Furthermore, Class counsel did not discuss attorneys’ fees and costs until after they had come
to terms with Defendant over substantive relief to the Class.”).
Moreover, the Agreement has no obvious deficiencies, and does not grant preferential
treatment to class representatives or to segments of the class. See Harris v. Vector Mktg. Corp.,
No. 08-5198, 2011 WL 1627973, at *9 (N.D. Cal. Apr. 29, 2011) (“[T]he absence of any
preferential treatment supports preliminary approval of the Settlement Agreement.”); Brunson v.
La.-Pac. Corp., 818 F. Supp. 2d 922, 927 (D.S.C. 2011) (“There are no grounds to doubt the
fairness nor are there other obvious deficiencies in the Settlement, such as unduly preferential
treatment of Plaintiffs or of segments of the class . . . .”); Louie v. Kaiser Found. Health Plan,
Inc., No. 08-0795, 2008 WL 4473183, at *7 (S.D. Cal. Oct. 6, 2008) (preliminarily certifying a
class for settlement purposes where the division, even as between formal sub-classes, was the
product of “reasonable balancing”). Overall, then, the first factor counsels strongly in favor of
approval.
Finally, Magistrate Judge Shushan played an important supervisory role in facilitating
and mediating the settlement. Her evenhanded and daily, and often minute-by-minute, efforts
throughout the last three months of negotiations strongly counsel in favor of the approving the
settlement. See, e.g., Maywalt v. Parker & Parsley Pet. Co., 67 F.3d 1072, 1079 (2d Cir. 1995)
(“[T]he supervision of settlement negotiations by a magistrate judge, as occurred here, makes it
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less likely that . . . [class counsel have promoted] their own interests over those of the class.”); In
re Currency Conversion Fee Antitrust Litig., 263 F.R.D. 110, 122 (S.D.N.Y. 2009) (settlement
reached after mediation is entitled to a presumption of arms-length dealings and fairness), aff’d
sub nom. Priceline.com, Inc. v. Silberman, 405 F. App’x 532 (2d Cir. 2010); Smith v. Tower
Loan of Miss., Inc., 216 F.R.D. 338, 353 (S.D. Miss. 2003) (upholding settlement where the
Magistrate Judge’s “mediation efforts” helped facilitate the settlement); In re Catfish Antitrust
Litig., 939 F. Supp. 493, 497 (N.D. Miss. 1996) (upholding settlement where the Magistrate
Judge “was intimately involved with the settlement negotiations among the parties in this
action”).
2. Complexity, Expense, And Likely Duration Of The Litigation
There can be “no dispute that this case is one of the most procedurally complex,
expensive, and potentially lengthy cases” in the history of the United States. Shell Oil, 155
F.R.D. at 559. Indeed, this case easily surpasses Shell Oil in complexity. Given the
unprecedented complexity of this litigation, it is appropriate to “consider the vagaries of
litigation and compare the significance of immediate recovery by way of the compromise to the
mere possibility of relief in the future, after protracted and expensive litigation.” Id. at 560
(quotation omitted); see also Rodriguez v. West Publ’g Grp., 563 F.3d 948, 966 (9th Cir. 2009)
(affirming approval of settlement where “a number of serious hurdles remained” for the
plaintiffs”); In re U.S. Oil & Gas Litig., 967 F.2d 489, 493 (11th Cir. 1992) (“Complex litigation
. . . can occupy a court’s docket for years on end, depleting the resources of the parties and the
taxpayers while rendering meaningful relief increasingly elusive. Accordingly, the Federal
Rules of Civil Procedure authorize district courts to facilitate settlements in all types of litigation,
not just class actions.”); Billitteri v. Secs. Am., Inc., No. 09-1568, 2011 WL 3586217, at *10
(N.D. Tex. Aug. 4, 2011) (noting there was little doubt that the amount of time it would take to
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recover on behalf of class members “would measure in years rather than the months
contemplated by the parties at this stage”); Klein v. O’Neal, 705 F. Supp. 2d 632, 651 (N.D. Tex.
2010) (“When the prospect of ongoing litigation threatens to impose high costs of time and
money on the parties, the reasonableness of approving a mutually-agreeable settlement is
strengthened.”).
Notwithstanding the extraordinary amount of litigation progress that has been made in the
two years since the DWH Spill, the remaining trial and appellate proceedings, if litigated through
final judgment, could last for a decade or more.18 Each of the three previously defined phases of
the Limitation and Liability trial raises complex issues of law, science, and operative fact.
Following these three phases, individual plaintiffs would then need to establish their entitlement
to damages, along with the quantum of damages, during trial phases that have not even been
scheduled. As a result, to obtain final judgments in this Court could take many years. See
Collins, 568 F. Supp. 2d at 726 (finding a potential trial lasting “several weeks” weighs in favor
of approving a settlement); Faircloth v. Certified Fin. Inc., No. 99-3097, 2001 WL 527489, at *4
(E.D. La. May 16, 2001) (approving settlement where trial “was estimated to last at least two
weeks”); In re Combustion, Inc., 968 F. Supp. 1116, 1127 (W.D. La. 1997) (finding “the
prospect of a trial lasting months” weighs heavily in favor of approving a settlement); Shell Oil,
155 F.R.D. at 560 (“[E]ven a six month trial is considered extremely lengthy and the expense for
18 Complex cases such as this can take decades to resolve. For instance, the Exxon Valdez spill occurred in March
1989, but litigation remains ongoing today, over twenty-three years after the spill, and eighteen years after the 1994
trial. See, e.g., Isaac Arnsdorf, Exxon Valdez to Be Junked Years After Worst U.S. Ship Spill,

http://www.bloomberg.com/news/2012-03-20/exxon-valdez-sold-for-scrap-years-after-worst-u-s-tanker-spill.html

(Mar. 20, 2012) (“Last month, a judge ruled that U.S. and Alaskan governments could pursue further damage
claims.”). Likewise, while the Amoco Cadiz spill occurred in March 1978, the Seventh Circuit was still resolving
litigation arising out of the spill as of September 1993. See In re Oil Spill by Amoco Cadiz, 4 F.3d 997 (7th Cir.
1993). Absent a settlement, litigation of this case promises to take as much time as those cases, if not more. Prior to
the testimony of a single witness at the now-stayed Limitation and Liability trial, this case has heard approximately
1,200 motions, and the docket includes more than 6,200 entries.
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the parties, the claimants, and the judicial system would be enormous.”). Moreover, should this
case proceed to trial, it almost certainly would become more complicated, since there is no
reason to suppose that the case would become less complex or contentious as trial began. See
Faircloth, 2001 WL 527489, at *4 (concluding from the “contentious motion practice on behalf
of virtually all parties involved” that the case “would undoubtedly continue on a protracted
litigation path absent approval of the proposed settlement agreement”).
Nor would the road end with the entry of judgments in this Court. This litigation has
raised numerous difficult legal questions under federal statutory and general maritime law, many
of first impression. See id. (approving a settlement where the statutes were “extremely intricate
and technical”). Given the complexities inherent in litigation of this nature, it is not surprising
that nearly twenty years elapsed between the Exxon Valdez oil spill and the Supreme Court’s
decision in Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008). Such litigation represents “an
enormous financial and psychological burden on all parties involved” and counsels in favor of
settlement. Combustion, 968 F. Supp. at 1127; see also Rodriguez, 563 F.3d at 966 (noting that
the “[i]inevitable appeals would likely prolong the litigation, and any recovery by class
members, for years”); Ass’n For Disabled Ams., Inc. v. Amoco Oil Co., 211 F.R.D. 457, 469
(S.D. Fla. 2002) (“[A]bsent settlement, this matter clearly will require a protracted and expensive
trial and appeal, under circumstances where the ultimate results are highly uncertain.”); Smith v.
Ajax Magnethermic Corp., No. 02-0980, 2007 WL 3355080, at *6 (N.D. Ohio Nov. 7. 2007)
(“Absent a settlement, there is the potential for further protracted litigation and the additional
expenditure of significant money, time, and resources. Moreover, Plaintiffs are not assured of
recovery upon the completion of the litigation. A fair settlement, therefore, has significant merit
as a resolution to this matter.”).
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Because “the most controversial and hard-fought of all the issues in this case” remain to
be litigated, Salinas v. Roadway Express, Inc., 802 F.2d 787, 790 (5th Cir. 1986) (per curiam),
this settlement “eliminates the transaction costs that further proceedings would impose” and
“provides relief for the class sooner than continued litigation would,” Ayers, 358 F.3d at 369.
For the parties, it is therefore entirely “proper to take the bird in the hand instead of a prospective
flock in the bush.” Shell Oil, 155 F.R.D. at 560. This is particularly true given that the “bird in
the hand” includes RTPs, which means that the total compensation being paid is several
multiples greater than what plaintiffs claim as their presently demonstrable injury. The second
factor counsels strongly in favor of approval.
3. The Stage Of The Proceedings And Amount Of Discovery Completed
The third factor “asks whether the parties have obtained sufficient information to evaluate
the merits of the competing positions.” In re Educ. Testing Servs., 447 F. Supp. 2d 612, 620
(E.D. La. 2006) (quotations omitted). “Thus, the question is not whether the parties have
completed a particular amount of discovery, but whether the parties have obtained sufficient
information about the strengths and weaknesses of their respective cases to make a reasoned
judgment about the desirability of settling the case on the terms proposed . . . .” Id. at 620-21.
While the question may not be “whether the parties have completed a particular amount
of discovery,” id. at 620, in this case there can be no doubt that the parties have completed an
extraordinary amount of discovery. The numbers are breathtaking. Over the course of 19
months, the parties have deposed 311 fact and expert witnesses with 7,416 documents marked as
deposition exhibits. The parties have produced approximately 90 million pages of documents
and approximately 20 terabytes of data. By any measure, the amount of discovery that has
already occurred is more than sufficient to ensure a fair settlement. Cf. Faircloth, 2001 WL
527489, at *4 (approving a settlement where “thousands” of pages were produced).
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Significantly, the Fifth Circuit has said that formal discovery is not a prerequisite to the
approval of a settlement. See Newby, 394 F.3d at 306. Indeed, “[g]enerally speaking, a
settlement should stand or fall on the adequacy of its terms.” Id. (alterations and quotation
omitted); see also Corrugated Container, 643 F.2d at 211 (rejecting the argument that
“representation in the settlement process is necessarily inadequate unless informed by the
process of discovery”). Here, in light of the staggering amount of discovery that has been
completed in a compressed timeframe, the Court may presume that the settlement represents an
informed, educated, and fair resolution of this dispute. See, e.g., Turner, 472 F. Supp. 2d at 847;
Feinberg v. Hibernia Corp., 966 F. Supp. 442, 445 (E.D. La. 1997); DeHoyos v. Allstate Corp.,
240 F.R.D. 269, 292 (W.D. Tex. 2007). Clearly, the massive information developed to date
leaves all parties in a position to assess their respective positions in fine-grained detail and make
a reasonable decision on settlement; nothing more, and in fact much less, is required. See, e.g.,
Combustion, 968 F. Supp. at 1127.
4. The Probability Of Plaintiffs’ Success On The Merits
Consideration of the factor relating to the “probability of the plaintiffs’ success on the
merits” also supports settlement. Parker v. Anderson, 667 F.2d 1204, 1209 (5th Cir. 1982); see
also Poplar Creek Dev. Co. v. Chesapeake Appalachia, L.L.C., 636 F.3d 235, 245 (6th Cir.
2011). “Counsel should have ‘sufficient information, through adequate discovery, to reasonably
assess the risks of litigation vis-à-vis the probability of success . . . .” Trombley v. Nat’l City
Bank, 759 F. Supp. 2d 20, 26 (D.D.C. 2011) (quoting Radosti v. Envision EMI, LLC, 717 F.
Supp. 2d 37, 62 (D.D.C. 2010)); Meijer, Inc. v. Warner Chilcott Holdings Co. III, 565 F. Supp.
2d 49, 57 (D.D.C. 2008)).
Evaluating this factor requires the Court to compare the settlement terms “with the likely
rewards the class would have received following a successful trial of the case.” Reed, 703 F.2d
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at 172. Thus, “the court must compare the terms of the compromise with the likely rewards of
litigation.” In re Initial Pub. Offering Sec. Litig., 243 F.R.D. 79, 83 (S.D.N.Y. 2007) (quotation
omitted). The Court, however, “must not try the case in the settlement hearings because the very
purpose of the compromise is to avoid the delay and expense of such a trial.” Reed, 703 F.2d at
172 (quotation omitted). The focus is on policing settlements in light of the principle that they
must not “come too early to be suspicious.” In re Vitamins Antitrust Litig., 305 F. Supp. 2d 100,
105 (D.D.C. 2004).
With the extensive motion practice on the B1 amended complaint, the reams of discovery
in this case, and the imminence of the Phase I trial, it is clear that the settlement here is not
coming too early, in a fashion suggesting that parties’ counsel lacked sufficient data to evaluate
the strengths and weaknesses of their claims, or in a way that would interfere with or obfuscate
this Court’s ability to assess the probability of success on the parties’ various claims and
defenses. The negotiations here were protracted and reached conclusion only as the start of the
trial loomed and only after many complicated issues were resolved with Magistrate Judge
Shushan’s assistance. The parties, and the Court, are highly informed on the facts and legal
theories pertinent to the merits of the claims and defenses on which this litigation, absent
settlement, would ultimately be decided.
While the PSC and BP have markedly different opinions regarding the strength of the
claims at issue and ultimate recovery in this litigation, there can be no doubt that both sides have
advanced important arguments, and neither side can confidently expect a complete victory or one
that would not be subject to the potential risk and/or delay of appeal. This Court is well aware of
these issues and it can invoke its experience in the litigation that has occurred to date in weighing
this fourth factor. See Heartland Payment Sys., 2012 WL 948365, at *17 (“The court is well
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aware of the parties’ positions in this case, the legal issues, and the risks to the Consumer
Plaintiffs should litigation continue.” (citing Stott v. Capital Fin. Servs., Inc., 277 F.R.D. 316,
344 (N.D. Tex. 2011)). This factor favors approval of the proposed settlement.
5. Range Of Possible Recovery
Consistent with the fact that there is litigation risk to both sides, the Agreement provides
for compensation somewhere between the best-case scenarios envisioned by either side. “[T]he
essence of a settlement is compromise. A just result is often no more than an arbitrary point
between competing notions of reasonableness.” In re Corrugated Container Antitrust Litig., 659
F.2d 1322, 1325 (5th Cir. 1981). Thus, the “trial court should not make a proponent of a
proposed settlement justify each term of settlement against a hypothetical or speculative measure
of what concessions might have been gained; inherent in compromise is a yielding of absolutes
and an abandoning of highest hopes.” Cotton, 559 F.2d at 1330 (quotation omitted). In other
words, the “fact that the plaintiff might have received more if the case had been fully litigated is
no reason not to approve the settlement.” Priddy v. Edelman, 883 F.2d 438, 447 (6th Cir. 1989);
see also Combustion, 968 F. Supp. at 1129 (“The proposed settlement need only reflect a fair,
reasonable, and adequate estimation of the value of the case in view of what might happen at
trial.”).
In this case, the proposed settlement provides more than sufficient and adequate
compensation to satisfy this standard. This is true for several reasons, including the following:
(1) in the Agreement, BP has voluntarily assumed the responsibility to pay not only its fair share
of the recovery necessary to make the proposed class members whole, but to pay all
compensatory damages to class members; and (2) BP has agreed to pay RTPs applicable to many
categories of class members. Under the baseline process of “comparing the settlement to the
estimated recovery times a multiplier [i.e., a percentage multiplier < 1] derived from the
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likelihood of prevailing on the merits,” which the Fifth Circuit has counseled is a touchstone of
the analysis here, see Corrugated Container, 643 F.2d at 217, this proposed settlement, with its
“risk transfer premium” feature (which adds multipliers of 1 or greater than 1 to the base
compensation applicable to many types of claims), easily passes muster. Were the settlement to
be rejected, further litigation would be unlikely to provide the plaintiffs with the negotiated
RTPs, so any consideration of the range of possible outcomes favors approval of the settlement.
See, e.g., Ayers, 358 F.3d at 373.
Notably, the baseline goal is to compensate the Settlement Class Members for all
demonstrable economic loss claims that are defined in the Agreement’s damage categories. The
recoveries by Class Members under the Agreement are not discounted while certain other claims
they possess are reserved.19 Collectively, that set of outcomes falls well within the reasonable
bounds of a fair settlement. The fifth factor thus likewise robustly supports approval.
6. Opinions Of Class Counsel, Class Representatives, And Absent Class
Members
Here, the PSC and BP both strongly believe that the proposed settlement represents a fair
and reasonable resolution of this sharply contested litigation. Where “counsel for both parties
have significant experience in litigating and negotiating settlement of class actions,” this fact is
strong evidence that the settlement is fair and reasonable. DeHoyos, 240 F.R.D. at 287
(quotations omitted); Cotton, 559 F.2d at 1330 (“In performing this balancing task, the trial court
is entitled to rely upon the judgment of experienced counsel for the parties.”); Turner, 472 F.
19 Six categories of claims are expressly reserved and explicitly defined in the Agreement. They may be
summarized briefly as follows: (1) bodily injury claims; (2) claims of BP shareholders in any derivative or direct
actions; (3) claims of natural persons for moratoria losses; (4) claims relating to menhaden (or “pogy”) fishing,
processing, selling, catching, or harvesting; (5) economic damage claims suffered by entities or employees in the
banking, gaming, financial, insurance, oil and gas, real estate development, defense contractor industries, and
entities selling or marketing BP-branded fuel (including jobbers and branded dealers); and (6) claims for punitive
damages against Halliburton and Transocean.
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Supp. 2d at 852 (same principle); Combustion, 968 F. Supp. at 1128 (noting it was “not lost on
the Court that counsel for the compromising parties, some of the most able attorneys in the
country, when armed with extensive knowledge of the facts, decided that settlement rather than a
. . . trial was in the best interest of their clients”); In re OCA, 2008 WL 4681369, at *11 (“The
settlement was reached after over three years of litigation and extensive discovery, and thus
counsel for all parties were experienced and familiar with the factual and legal issues in the
case”); San Antonio Hispanic Police Officers Org., Inc. v. City of San Antonio, 188 F.R.D. 433,
461 (W.D. Tex. 1999) (“In reviewing the opinions of counsel, the Court is to bear in mind that
counsel for each side possess the unique ability to assess the potential risks and rewards of
litigation . . . .” (quotation omitted)).
The Fifth Circuit has recognized that courts must rely to a large degree on the judgment
of competent counsel, terming such counsel the “linchpin” of an adequate settlement. Reed, 703
F.2d at 175 (further noting “the value of the assessment of able counsel negotiating at arm’s
length cannot be gainsaid” because “[l]awyers know their strengths and they know where the
bones are buried”); see also Pettway v. Am. Cast Iron Pipe Co., 576 F.2d 1157, 1216 (5th Cir.
1978) (holding that if experienced counsel determine a settlement is in the class’s best interests,
“the attorney’s views must be accorded great weight”).
Here, counsel for both the PSC and BP have many decades of experience in prosecuting
and defending class action lawsuits. Collectively, they have been involved in some of the largest
and most complex class and mass tort settlements in the nation’s history—e.g., asbestos, tobacco,
retiree healthcare benefits, insurance, discrimination, pharmaceutical products, etc. In fact,
counsel for the PSC and BP have previously been lead counsel in reaching two of the largest
settlements ever negotiated in this country—i.e., the tobacco settlement with the States (the
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PSC’s Mr. Rice), and union retiree health care benefits for General Motors (BP’s counsel Mr.
Godfrey, acting as GM’s counsel in the retiree health care class settlements).20 These and other
extraordinarily experienced negotiating counsel were also armed with the facts developed
through the extensive and fully completed Phase I discovery and Phase I trial preparations. All
of that groundwork deeply informed the reasonable assessments each side reached concerning
the range of outcomes in this case, which is much farther along than cases of concern addressed
in certain judicial decisions, where other litigation was being settled in its nascent stages. Not so
here. The sixth factor therefore also supports preliminary approval.
* * *
In all, the Court’s present task is made relatively uncomplicated thanks to the factors set
out above. The settlement’s structure guarantees fair treatment of each individual claimant,
regardless of type or extent of damage. Accordingly, the parties respectfully request that the
Court preliminarily approve the settlement and schedule a formal fairness hearing where it will
consider whether to grant final approval to the settlement.
II. THE PROPOSED NOTICE TO THE CLASS COMPLIES WITH RULE 23(C)(2)
AND RULE 23(E).
Where parties seek certification of a settlement class pursuant to Rule 23(b)(3) and
approval of a settlement pursuant to Rule 23(e)—as the PSC does here by separate motion,
unopposed by BP—“notice of the class action must meet the requirements of both Rule 23(c)(2)
and Rule 23(e).” In re CertainTeed Roofing Shingle Prods. Liab. Litig., 269 F.R.D. 468, 480
(E.D. Pa. 2010); accord In re Serzone Prods. Liab. Litig., 231 F.R.D. 221, 231 (S.D. W. Va.
2005). In this case, the parties jointly submit that the agreed-upon comprehensive notice
20 See UAW v. Gen. Motors Corp., No. 05-73991, 2006 WL 891151 (E.D. Mich. Mar. 31,2006), aff’d Int’l Union,
United Auto., Aerospace, & Agric. Implement Workers of Am. v. Gen. Motors Corp., 497 F.3d 615 (6th Cir. 2007).
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program easily satisfies these requirements.
A. The Proposed Notice Distribution Method And Notice Contents Comply
With Rule 23(c)(2).
Rule 23(c)(2) provides that where a class is certified pursuant to Rule 23(b)(3), “the court
must direct to class members the best notice that is practicable under the circumstances,
including individual notice to all members who can be identified through reasonable effort.”
Fed. R. Civ. P. 23(c)(2)(B). The notice is required to state (1) the nature of the action; (2) the
definition of the class certified; (3) the class claims, issues or defenses; (4) that a class member
may enter an appearance though an attorney if the member so desires; (5) that the court will
exclude from the class any member who requests exclusion; (6) the time and manner for
requesting exclusion; and (7) the binding effect of a class judgment under Rule 23(c)(3). Id.
The notice protocol agreed upon by the parties is fully described in the Declaration of
Cameron R. Azari, Esq., (Ex. 1); the Declaration of Katherine Kinsella (Ex. 2); and the
Declaration of Shannon R. Wheatman, Ph.D. (Ex. 3). As the exhibits make plain, the notice plan
complies with all requirements pertaining to both the manner of distribution and the contents of
the notice.
1. The Proposed Notice Distribution Method Satisfies Rule 23(c)(2).
Courts routinely approve class notice distribution plans far less robust than that
contemplated here. For example, in In re Chinese-Manufactured Drywall, the court approved a
notice program consisting of nothing more than individual notice to all class members and their
counsel, and the posting of the settlement agreement on the Court’s MDL website. See 2012 WL
92498, at *13. The Court found that the notice was “written in plain and straightforward
language; it also objectively and neutrally apprises all Class Members on the nature of the action,
the definition of Class and Subclasses, and relevant deadlines and restrictions, as well as the date
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and location for the final Fairness Hearing.” Id.
And in In re Combustion, in addition to mailing individual notice to class members, the
class notice was “published in two local newspapers, the Baton Rouge Morning Advocate and
the Denham Springs News on March 13, 1997.” 968 F. Supp. at 1129. The court found the
“direct mailings as well as publication in two local newspapers [to be] reasonable and sufficient
to satisfy the Due Process requirement of notice, as well as all notice requirements of [Rule 23].”
Id.; see also In re OCA, 2008 WL 4681369, at *16 (notice plan calling for direct mailing to class
members, as well as publication in the national edition of the Wall Street Journal and distribution
by a news wire and the Depository Trust Company’s Legal Electronic Notice System was
sufficient).
As discussed above, the Agreement provides for both individual and media notice. Thus,
individual notice will be mailed to every plaintiff in any lawsuit that has been consolidated into
the MDL and every plaintiff who has filed a short-form joinder into the B1 Master Complaint (as
amended), as well as other available lists of potential class members. To ensure that no
individuals are unintentionally omitted, all addresses will be checked against the National
Change of Address Database.
Moreover, because “Rule 23 itself contemplates that current address information might
not be available for all potential class members,” Eatmon v. Palisades Collection LLC, No. 08-
306, 2011 WL 147680, at *4 (E.D. Tex. Jan. 18, 2011), the parties have also agreed upon a
massive, nationwide media effort that will include publication in (1) leading national consumer
magazines; (2) trade, business, and specialty publications; (3) local newspapers; (4) African
American, Vietnamese, Spanish, and Cajun language publications; (5) local television
advertising; (6) local radio advertising; (7) online banner advertising; (8) an informational
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release; (9) a nationally televised public service announcement; and (10) a case website. This
state of the art notice plan is more than sufficient to comply with the dictates of Rule 23(c)(2)(B).
See, e.g., MCL 4TH § 21.311 (“Publication in magazines, newspapers, or trade journals may be
necessary if individual class members are not identifiable after reasonable effort or as a
supplement to other notice efforts.”). Further, the Court may take judicial notice of the
significant media attention engendered by every aspect of this litigation, and thus the resulting
press coverage the settlement will generate. Independent media coverage will increase the
dissemination of information about the settlement and thereby magnify the effect of formal
notice.
2. The Proposed Notice Contents Satisfy Rule 23(c)(2).
In addition to satisfying the distribution requirements, the proposed notice also satisfies
the requirements pertaining to its contents. In compliance with Rule 23(c)(2)(B), the proposed
notice states (1) the nature of the action; (2) the definition of the class certified; (3) the class
claims, issues, or defenses; (4) that a class member may enter an appearance though an attorney
if the member so desires; (5) that the court will exclude from the class any member who requests
exclusion; (6) the time and manner for requesting exclusion; and (7) the binding effect of a class
judgment under Rule 23(c)(3). See In re OCA, 2008 WL 4681369, at *15 (approving class
notice where the “plain language of the Notice apprises all class members of the nature of the
action, the definition of the class, the class claims and the defenses, the class members’ right to
be heard, the class members’ right to exclusion, the time and manner for requesting exclusion,
and the binding effect of a class judgment”) (citations omitted). The notice does so in simple
terms written in plain English. As the experts at Hilsoft Media and Kinsella Media have
concluded, “The Notices have been designed to provide a clear, concise, plain language
statement of Class Members’ legal rights and options.” Azari Decl. ¶ 23; see also Kinsella Decl.
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¶ 7 (concluding that the notice plan “is a multi-faceted notification effort that fully meets the
requirements of Rule 23(c)(2) of the Federal Rules of Civil Procedure”).
The settlement notice will direct class members to a website where class members can
view relevant materials, including the Settlement Agreement with all Exhibits, the Bon Secour
class action complaint, the Court’s orders relating to the settlement, instructions regarding how
to submit a claim, as well as other pertinent pleadings and informational materials. The website
will include a list of frequently asked questions, and the list will be updated regularly to reflect
any areas of common concern. In addition, notice will include a toll-free telephone number for
class members to contact the claims administrator to obtain additional information about the
settlement and the claims process. The proposed notice will apprise class members of the
material terms of the settlement and outline the procedures and related deadlines. These include
how a class member may exclude himself, herself, or itself from the class or object to the
settlement’s terms. The notice also informs class members of the date and place of the hearing at
which the Court will consider final approval of the settlement.
B. The Proposed Notice Complies With Rule 23(e).
In contrast to the form of notice of certification for a Rule 23(b)(3) class as required by
Rule 23(c)(2)(B), the form of notice for a settlement under Rule 23(e) is left in the Court’s
discretion to a greater degree. Thus, under the Rules, the sole requirement is that the Court
“direct notice in a reasonable manner to all class members who would be bound by the
proposal.” Fed. R. Civ. P. 23(e)(1) (emphasis added). Under this Rule, subject to the minimum
requirements of due process, the Court has complete discretion over the form and manner of
notice. See, e.g., Fowler v. Birmingham News Co., 608 F.2d 1055, 1059 (5th Cir. 1979) (noting
the “mechanics of the notice process are left to the discretion of the district court subject only to
the broad ‘reasonableness’ standards imposed by due process”); Navarro-Ayala v. Hernandez-
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Colon, 951 F.2d 1325, 1337 (1st Cir. 1991) (same principle); Quigley v. Braniff Airways, Inc., 85
F.R.D. 74, 77 (N.D. Tex. 1979) (noting a district court’s “virtually complete discretion as to the
manner and method of notice”).
The requirements of due process are straightforward in the settlement context. Notice
must only be “reasonably calculated, under all the circumstances, to apprise interested parties of
the pendency of the [settlement] and afford them an opportunity to present their objections.”
Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950); accord, e.g., Int’l Union,
United Auto., Aerospace & Agric. Implement Workers of Am. v. Gen. Motors Corp., 497 F.3d
615, 629 (6th Cir. 2007). Significantly, compliance with Rule 23(c)(2) itself can satisfy the Due
Process Clause. See In re Enron Corp. Secs., Derivs., & “ERISA” Litig., No. MDL-1446, 2008
WL 4178151, at *2 (S.D. Tex. Sept. 8, 2008).
The extensive notice program here is eminently reasonable and, in fact, is exceptionally
far-reaching. Both BP and the PSC have retained experts to ensure that the notice program more
than complies with all requirements imposed by the Federal Rules. For instance, BP has retained
Hilsoft Notifications. Hilsoft Notifications has been responsible for dozens of class action notice
programs, including for the In Re Trans Union privacy litigation—which included 190 million
class members and required use of the Internet, magazines, newspapers, and both television and
radio. See generally In re Trans Union Corp. Privacy Litig., 629 F.3d 741 (7th Cir. 2011). The
PSC, in turn, has retained Kinsella Media. Kinsella Media also specializes in providing class
action notices in complex litigation and has spent hundreds of millions of dollars on media
outreach efforts to provide notice in over 700 cases.
The experts at Hilsoft Notifications and Kinsella Media have developed the
comprehensive notice program proposed in this case. As noted above, Hilsoft Notifications has
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estimated, using the traditional sources in the field and computer modeling, that 95% of the
adults in the Gulf Coast will be exposed to class notice materials 8.8 times on average, and 83%
of U.S. adults will be exposed 3.8 times on average. See Azari Decl. ¶ 19. Experts in the field
refer to a notice program with benchmarks reaching that level as having both significant “reach”
and “frequency.” Id. ¶¶ 12-14 & n.2; see also id. ¶ 20 (“In my experience, the projected reach
and frequency of the Notice Plan media effort in the Gulf Coast Areas will surpass that of the
vast majority of other court-approved notice programs, and has been designed to meet and
exceed due process requirements. The reach and frequency to all U.S. adults is also consistent
with the most thorough and expansive class action media notice efforts.”); Kinsella Decl. ¶ 10
(stating that the reach and frequency may be even greater than reported, as certain local and
community newspapers, trade publications, and other publications are not measured).
In short, the proposed notice program is extraordinarily robust, and far and away exceeds
the minimum requirements imposed by the Federal Rules and thus of the Due Process Clause.
The Court should have no reluctance in approving the proposed notice program.21
III. THE COURT SHOULD ADJOURN THE LIMITATION AND LIABILITY TRIAL
UNTIL AFTER THE FAIRNESS HEARING.
To facilitate settlement, BP respectfully requests (and the PSC does not object) that the
Court should adjourn the Limitation and Liability trial pending this Court’s final review of the
settlement through the fairness hearing process. The law is plain that the Court has the power to
stay all matters in a MDL pending final approval of a proposed settlement. See, e.g., In re Sony
Corp. SXRD Rear Projection Television Mktg., Sales Practices & Prods. Liab. Litig., MDL No.
21 In the coming days, BP and the PSC will request, by separate motion, that the Court a guardian ad litem,
consistent with Section 31 of the Settlement Agreement. The purpose of appointing a guardian ad litem is to
provide a neutral party whose sole responsibility is to assess the fairness of the proposed Settlement for those class
members who lack the capacity to determine for themselves whether the proposed Settlement adequately and fairly
represents their interests.
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 59 of 77
50
09-2102, 2010 WL 1993817, at *6 (S.D.N.Y. May 19, 2010); In re Napster, Inc. Copyright
Litig., MDL No. 1369, 2007 WL 2907892, at *2 (N.D. Cal. Oct. 2, 2007); cf. Landis v. N. Am.
Co., 299 U.S. 248, 254 (1936) (explaining that “the power to stay proceedings is incidental to the
power inherent in every court”).
The fact that BP has not requested a complete stay of all litigation counsels in favor of
granting this request. Indeed, it is routine for courts to grant a complete stay of all proceedings
until after the fairness hearing—relief that goes far beyond what BP is seeking here. See, e.g.,
Marino v. Pioneer Edsel Sales, Inc., 349 F.3d 746, 749 (4th Cir. 2003) (in light of a class action
settlement “all proceedings were stayed pending a fairness hearing.”); In re Chinese-
Manufactured Drywall Prods. Liab. Litig., MDL No. 2047, 2011 WL 2313866, at *1 (E.D. La.
June 9, 2011) (“[T]he Court issued a written Preliminary Approval Order which included a
number of rulings and terms, including dates and terms for notice to be issued, a final fairness
hearing on October 27, 2011, and a stay order on related proceedings during the Rule 23
approval process.”); Marcus v. Dept. of Revenue, 206 F.R.D. 509, 514 (D. Kan. 2002) (“All
further litigation of this proceeding is hereby stayed pending final determination of the
acceptance of the settlement agreement at the fairness hearing.”).22
The fact that BP is seeking a far more modest stay means that the Court can continue to
move other aspects of this massive litigation along without compromising the ability of the PSC
22 Pursuant to the All-Writs Act, 28 U.S.C. § 1651(a), a court considering whether to preliminarily approve a
settlement has the far-reaching power to enjoin any overlapping or parallel actions to allow the court to effectively
and expeditiously administer the proposed settlement agreement. See In re Diet Drugs Prods. Liab. Litig., 282 F.3d
220, 236 (3d Cir. 2002) (“The threat to the federal court’s jurisdiction [over a preliminary settlement] posed by
parallel state actions is particularly significant . . . .”); In re Napster, 2007 WL 2907892, at *2 (“Upon the Court’s
entry of this Order, all further proceedings in this lawsuit (including, but not limited to, any existing discovery
obligations) shall be stayed pending Final Settlement Approval or termination of the Settlement Agreement,
whichever occurs earlier, except for those matters necessary to obtain and/or effectuate the Final Settlement
Approval.”); see also Carlough v. Amchem Prods., Inc., 10 F.3d 189, 203-04 (3d Cir. 1993) (district court’s
preliminary injunction enjoining absent members of purported federal class in an asbestos related tort action from
prosecuting state claims was necessary in aid of its jurisdiction because prospect of settlement was imminent after
years of pretrial negotiations in a complex matter).
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 60 of 77
51
and BP to settle the Economic Class claims.
IV. REQUESTED PROCEDURES AND TIMETABLE
As demonstrated above, preliminarily approving a class action settlement necessitates
compliance with various procedural requirements. MCL 4TH § 21.632. Accordingly, BP and the
PSC jointly request that the Court now (1) make a preliminary determination that the Agreement
is fair, reasonable, and adequate; (2) approve the notice program so that notice may issue; and (3)
at BP’s request (without objection from the PSC) adjourn and stay the Limitation and Liability
trial pending a fairness hearing. To effectuate final approval of the settlement, the parties further
ask that the Court (4) set a date by which objections to the settlement are due; (5) set a date by
which members of the class must opt out of the settlement class; (6) set a date for reply
submissions responding to any objections; and (7) set a date for a fairness hearing, at which time
the parties will request that the Court issue final approval of the settlement and enter a final
judgment.
The parties respectfully propose the following timetable, which is reflected in the
attached proposed form of order:
• Notice to be sent out by May 3, 2012
• Motion papers in support of settlement to be filed by August 13, 2012
• Objections to be filed by August 31, 2012
• Opt-Out period to be closed by October 1, 2012
• Reply submissions to be filed by October 22, 2012
• Fairness hearing to be set and commenced on or about November 8, 2012
CONCLUSION
The Agreement that has been reached by the parties is fair, adequate, and reasonable. It
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 61 of 77
52
makes the plaintiff class entirely whole (and more), while sparing class members years of
litigation with no guarantee of a recovery rising to the generous levels provided for in the
agreement. The PSC and BP respectfully request that their joint motion be granted, to enable the
settlement approval process, including class notice, to commence and advance towards a formal
fairness hearing under Rule 23(e).
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 62 of 77
April 18, 2012
__/s/ Stephen J. Herman_______________
Stephen J. Herman, La. Bar No. 23129
HERMAN HERMAN KATZ & COTLAR
LLP
820 O’Keefe Avenue
New Orleans, Louisiana 70113
Telephone: (504) 581-4892
Fax No. (504) 569-6024
Interim Class Counsel/Plaintiffs Liaison
Counsel
MDL 2179
Respectfully submitted,
___/s/ James Parkerson Roy________________
James Parkerson Roy, La. Bar No. 11511
DOMENGEAUX WRIGHT ROY & EDWARDS
LLC
556 Jefferson Street, Suite 500
Lafayette, Louisiana 70501
Telephone: (337) 233-3033
Fax No. (337) 233-2796
Interim Class Counsel/Plaintiffs Liaison Counsel
MDL 2179
PLAINTIFFS’ STEERING COMMITTEE
___________________________________________________
Joseph F. Rice
MOTLEY RICE LLC
28 Bridgeside Blvd.
Mount Pleasant, SC 29464
Office: (843) 216-9159
Telefax: (843) 216-9290
Conrad S.P. “Duke” Williams
WILLIAMS LAW GROUP
435 Corporate Drive, Suite 101
Maison Grand Caillou
Houma, LA 70360
Office: (985) 876-7595
Telefax: (985) 876-7594
Brian H. Barr
LEVIN, PAPANTONIO, THOMAS,
MITCHELL, ECHSNER & PROCTOR, PA
316 South Baylen St., Suite 600
Pensacola, FL 32502-5996
Office: (850) 435-7045
Telefax: (850) 436-6187
Robin L. Greenwald
WEITZ & LUXENBERG, PC
700 Broadway
New York, NY 10003
Office: (212) 558-5802
Telefax: (212) 344-5461
Jeffrey A. Breit
BREIT DRESCHER IMPREVENTO &
WALKER, P.C.
999 Waterside Drive, Suite 1000
Norfolk, VA 23510
Office: (757) 670-3888
Telefax: (757) 670-3895
Rhon E. Jones
BEASLEY, ALLEN, CROW, METHVIN,
PORTIS & MILES, P. C.
218 Commerce St., P.O. Box 4160
Montgomery, AL 36104
Office: (334) 269-2343
Telefax: (334) 954-7555
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 63 of 77
Elizabeth J. Cabraser
LIEFF, CABRASER, HEIMANN &
BERNSTEIN, LLP
275 Battery Street, 29th Floor
San Francisco, CA 94111-3339
Office: (415) 956-1000
Telefax: (415) 956-1008
Matthew E. Lundy
LUNDY, LUNDY, SOILEAU & SOUTH,
LLP
501 Broad Street
Lake Charles, LA 70601
Office: (337) 439-0707
Telefax: (337) 439-1029
Philip F. Cossich, Jr.
COSSICH, SUMICH, PARSIOLA &
TAYLOR
8397 Highway 23, Suite 100
Belle Chasse, LA 70037
Office: (504) 394-9000
Telefax: (504) 394-9110
Michael C. Palmintier
deGRAVELLES, PALMINTIER,
HOLTHAUS & FRUGÉ
618 Main Street
Baton Rouge, LA 70801-1910
Office: (225) 344-3735
Telefax: (225) 344-0522
Robert T. Cunningham
CUNNINGHAM BOUNDS, LLC
1601 Dauphin Street, P. O. Box 66705
Mobile, AL 36660
Office: (251) 471-6191
Telefax: (251) 479-1031
Paul M. Sterbcow
LEWIS, KULLMAN, STERBCOW &
ABRAMSON
601 Poydras Street, Suite 2615
New Orleans, LA 70130
Office: (504) 588-1500
Telefax: (504) 588-1514
Alphonso Michael “Mike” Espy
MORGAN & MORGAN, P.A.
188 East Capitol Street, Suite 777
Jackson, MS 39201
Office: (601) 949-3388
Telefax: (601) 949-3399
Scott Summy
BARON & BUDD, P.C.
3102 Oak Lawn Avenue, Suite 1100
Dallas, TX 75219
Office: (214) 521-3605
Telefax: (214) 599-1172
Calvin C. Fayard, Jr.
FAYARD & HONEYCUTT
519 Florida Avenue, SW
Denham Springs, LA 70726
Office: (225) 664-4193
Telefax: (225) 664-6925
Mikal C. Watts (PSC)
WATTS GUERRA CRAFT, LLP
Four Dominion Drive, Building 3, Suite 100
San Antonio, TX 78257
Office: (210) 447-0500
Telefax: (210) 447-0501
Ervin A. Gonzalez
COLSON HICKS EIDSON
255 Alhambra Circle, Penthouse
Coral Gables, FL 33134
Office: (305) 476-7400
Telefax: (305) 476-7444
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 64 of 77
James J. Neath
Mark Holstein
BP AMERICA INC.
501 Westlake Park Boulevard
Houston, TX 77079
Telephone: (281) 366-2000
Telefax: (312) 862-2200
Daniel A. Cantor
Andrew T. Karron
Ellen K. Reisman
ARNOLD & PORTER LLP
555 Twelfth Street, NW
Washington, DC 20004
Telephone: (202) 942-5000
Telefax: (202) 942-5999
Jeffrey Lennard
Keith Moskowitz
SNR DENTON
233 South Wacker Drive
Suite 7800
Chicago, IL 60606
Telephone: (312) 876-8000
Telefax: (312) 876-7934
OF COUNSEL
___/s/ Richard C. Godfrey, P.C._________________
Richard C. Godfrey, P.C.
J. Andrew Langan, P.C.
Andrew B. Bloomer, P.C.
Wendy L. Bloom
R. Chris Heck
Christopher J. Esbrook
KIRKLAND & ELLIS LLP
300 North LaSalle Street
Chicago, IL 60654
Telephone: (312) 862-2000
Telefax: (312) 862-2200
Jeffrey Bossert Clark
KIRKLAND & ELLIS LLP
655 Fifteenth Street, N.W.
Washington, D.C. 20005
Telephone: (202) 879-5000
Telefax: (202) 879-5200
/s/ Don K. Haycraft
Don K. Haycraft (Bar #14361)
R. Keith Jarrett (Bar #16984)
LISKOW & LEWIS
701 Poydras Street, Suite 5000
New Orleans, Louisiana 70139
Telephone: (504) 581-7979
Telefax: (504) 556-4108
Robert C. “Mike” Brock
COVINGTON & BURLING LLP
1201 Pennsylvania Avenue, NW
Washington, DC 20004
Telephone: (202) 662-5985
Telefax: (202) 662-6291
ATTORNEYS FOR BP EXPLORATION & PRODUCTION INC.
AND BP AMERICA PRODUCTION COMPANY
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 65 of 77
A-1
APPENDIX A: PROPOSED CLASS DEFINITION*
Economic and Property Damages Settlement Class shall mean the NATURAL PERSONS and
ENTITIES defined in this Section 1, subject to the EXCLUSIONS in Section 2 below. If a
person or entity is included within the geographical descriptions in Section 1.1 or Section 1.2,
and their claims meet the descriptions of one or more of the Damage Categories described in
Section 1.3, that person or entity is a member of the Economic and Property Damages Settlement
Class, unless the person or entity is excluded under Section 2:
1.1. Individuals. Unless otherwise specified, all Natural Persons residing in the
United States who, at any time between April 20, 2010 and April 16, 2012, lived in,
worked in, were offered and accepted work in, owned or leased real or personal property
located within, or owned or leased or worked on a vessel harbored or HOME PORTED in
the States of Louisiana, Mississippi, or Alabama, the counties of Chambers, Galveston,
Jefferson and Orange in the State of Texas, or the counties of Bay, Calhoun, Charlotte,
Citrus, Collier, Dixie, Escambia, Franklin, Gadsden, Gulf, Hernando, Hillsborough,
Holmes, Jackson, Jefferson, Lee, Leon, Levy, Liberty, Manatee, Monroe, Okaloosa,
Pasco, Pinellas, Santa Rosa, Sarasota, Taylor, Wakulla, Walton and Washington in the
State of Florida, including all adjacent Gulf waters, bays, estuaries, straits, and other tidal
or brackish waters within the States of Louisiana, Mississippi, Alabama, or those
described counties of Texas or Florida (the “GULF COAST AREAS”) (Exhibit 22), or
the U.S. waters of the Gulf of Mexico and all adjacent bays, estuaries, straits, and other
tidal or brackish waters within the Gulf Coast Areas, as specifically shown and described
in Exhibit 23 (“SPECIFIED GULF WATERS”), or worked on a vessel in Specified Gulf
Waters after April 20, 2009. With respect to SEAFOOD CREW Claims, persons must
have worked on a vessel that landed SEAFOOD in the Gulf Coast Areas after April 20,
2009.
and
1.2. Entities. All Entities doing business or operating in the Gulf Coast Areas or
Specified Gulf Waters that:
1.2.1. at any time from April 20, 2010 to April 16, 2012, owned, operated, or
leased a physical facility in the Gulf Coast Areas or Specified Gulf Waters and
(A) sold products in the Gulf Coast Areas or Specified Gulf Waters (1) directly to
CONSUMERS or END USERS of those products or (2) to another Entity that
sold those products directly to Consumers or End Users of those products, or (B)
regularly purchased Seafood harvested from Specified Gulf Waters in order to
produce goods for resale;
* The Class Definition includes certain capitalized defined terms, the meaning of which is given in the Deepwater
Horizon Economic and Property Damages Settlement Agreement. Exhibits referenced in the above definition are
included as exhibits to the Settlement Agreement. Exhibits 22 and 23 are also reproduced as Appendixes B and C,
respectively, to this memorandum.
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 66 of 77
A-2
1.2.2. are service businesses with one or more full-time employees (including
owner-operators) who performed their full-time services while physically present
in the Gulf Coast Areas or Specified Gulf Waters at any time from April 20, 2010
to April 16, 2012; or
1.2.3. owned, operated, or leased a vessel that (1) was Home Ported in the Gulf
Coast Areas at any time from April 20, 2010 to April 16, 2012, or (2) landed
Seafood in the Gulf Coast Areas at any time from April 20, 2009 to April 16,
2012; or
1.2.4. owned or leased REAL PROPERTY in the Gulf Coast Areas at any time
from April 20, 2010 to April 16, 2012;
1.3. Individuals and Entities who meet the geographical descriptions of Sections 1.1 or
1.2 above are included in the Economic Class only if their Claims meet the descriptions
of one or more of the Damage Categories described below.
1.3.1. The following are summaries of the Damage Categories, which are fully
described in the attached Exhibits 1A-15:
1.3.1.1. Seafood Compensation Program. Damages suffered by a
COMMERCIAL FISHERMAN, Seafood Crew, or SEAFOOD VESSEL
OWNER that owned, operated, leased or worked on a vessel that (1) was
Home Ported in the Gulf Coast Areas at any time from April 20, 2010 to
April 16, 2012, or (2) Landed Seafood in the Gulf Coast Areas at any time
from April 20, 2009 to April 16, 2012; and damages suffered by, inter alia,
OYSTER LEASEHOLDERS and IFQ Owners. (Exhibit 10). Claims for
Economic Damage arising from the fishing, processing, selling, catching,
or harvesting of menhaden (or “pogy”) fish are excluded from the Seafood
Compensation Program and other Economic Damage Claims under this
Agreement.
1.3.1.2. Economic Damage Category. Loss of income, earnings or profits
suffered by Natural Persons or Entities as a result of the DEEPWATER
HORIZON INCIDENT, subject to certain Exclusions. (Exhibits 16-19)
1.3.1.3. Subsistence Damage Category. Damages suffered by Natural
Persons who fish or hunt to harvest, catch, barter, consume or trade Gulf
of Mexico natural resources, including Seafood and GAME, in a
traditional or customary manner, to sustain their basic or family dietary,
economic security, shelter, tool or clothing needs, and who relied upon
subsistence resources that were diminished or restricted in the geographic
region used by the CLAIMANT due to or resulting from the Deepwater
Horizon Incident. (Exhibit 9)
1.3.1.4. VoO Charter Payment Category. Damages suffered by Natural
Persons or Entities who registered to participate in BP’s Vessels of
Opportunity (“VoO”) program and executed a VoO MASTER VESSEL
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 67 of 77
A-3
CHARTER AGREEMENT with BP, Lawson, USMS, USES, DRC, or
any other BP subcontractor as CHARTERER, and completed the initial
VoO training program.
1.3.1.5. Vessel Physical Damage Category. Physical damage that was
sustained by an eligible Claimant’s eligible vessel due to or resulting from
the Deepwater Horizon Incident or the Deepwater Horizon Incident
response cleanup operations, including the Vessels of Opportunity
Program. (Exhibit 14)
1.3.1.6. Coastal Real Property Damage Category. Damages alleged by a
Coastal Real Property Claimant that meet the requirements set forth in the
Coastal Real Property Claim Framework.
1.3.1.7. Wetlands Real Property Damage Category. Damages alleged by
a Wetlands Real Property Damage Claimant that meet the requirements set
forth in the Wetlands Real Property Claim Framework.
1.3.1.8. Real Property Sales Damage Category. Damages alleged by a
Real Property Sales Claimant that meet the requirements set forth in the
Real Property Sales Framework.
1.3.1.9. Individuals/Employees in Otherwise Excluded Oil and Gas,
Gaming, Banking, Insurance, Funds, Defense Contractors, Developers
Industries, and any Entity selling or marketing BP-branded fuel (including
jobbers and branded dealers): As more fully described in Exhibit 16 and
Section 5.10 below, individuals and employees of businesses and
employers in these otherwise excluded industries described in Section 2
may submit Claims for Economic Damage outside of these excluded
industries, and may pursue all other recovery permitted under other
aspects of the Settlement.
1.3.1.10. Individuals/Employees in Support Services to Oil and Gas
Industry: As more fully described in Exhibit 16 and Section 5.10 below,
individuals and employees of businesses/employers in the SUPPORT
SERVICES TO OIL AND GAS INDUSTRY, described in Exhibit 16 may
submit Claims for Economic Damage incurred as a result of their
employment in the Support Services to Oil and Gas Industry for (i) nonmoratoria
business interruption from Support Services to Oil and Gas
Industry activities and (ii) non oil and gas industry Economic Damages
due to or resulting from the Deepwater Horizon Incident, except for
moratoria claims. As is also more fully described in Exhibit 16, these
individuals and employees may also pursue Claims for other Economic
Damage outside the Support Service to Oil and Gas Industry, and may
pursue all other recovery permitted under other aspects of the Settlement.
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1.3.1.11. Businesses/Employers in Otherwise Excluded Gaming,
Banking, Insurance, Funds, Defense Contractors and Developers
Industries: As more fully described in Exhibit 16 and Section 5.10 below,
businesses and employers in these otherwise excluded industries described
in Section 2 may submit Claims only for Coastal Real Property Damage
and Wetlands Real Property Damage, but are not entitled to recover under
any other aspect of the Settlement.
1.3.1.12. Businesses/Employers in Support Services to Oil and Gas
Industry: As more fully described in Exhibit 16 and Section 5.10 below,
businesses and employers in the “Support Services to Oil and Gas
Industry,” described in Exhibit 16, may submit Claims for (i) nonmoratoria
business interruption from Support Services to Oil and Gas
Industry activities and (ii) non-oil and gas industry Economic Damages
arising out of, due to, resulting from, or relating in any way to, directly or
indirectly, the Deepwater Horizon Incident, except for moratoria claims,
and may pursue all other recovery permitted under other aspects of the
Settlement.
Exclusions from the Economic and Property Damages Settlement Class Definition
2.1. Notwithstanding the above, the following individuals and Entities,
including any and all of their past and present predecessors, successors, personal
representatives, agents, trustees, insurers, reinsurers, indemnitors, subrogees,
assigns, and any other Natural Person, legal or juridical person or Entity entitled
to assert any Claim on behalf of or in respect of any such individual or Entity in
their respective capacities as such are excluded from the Economic Class.
2.2. Excluded Individuals or Entities:
2.2.1. Any Economic Class Member who or which timely elects to be
excluded from the Economic Class under the deadlines and procedures to
be set forth in the ECONOMIC AND PROPERTY DAMAGES
SETTLEMENT CLASS ACTION SETTLEMENT NOTICE.
2.2.2. Defendants in MDL 2179, and individuals who are current
employees, or who were employees during the CLASS PERIOD, of BP or
other defendants in MDL 2179.
2.2.3. The Court, including any sitting judges on the United States
District Court for the Eastern District of Louisiana, their law clerks
serving during the pendency of the MDL, and members of any such
judge’s or current law clerk’s immediate family.
2.2.4. The following exclusions are based on the substantive nature of the
business, not the legal or juridical form of that business. Any of the
following types of Entity, or any Natural Person to the extent he or she
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 69 of 77
A-5
alleges Economic Damage based on their employment by such an Entity,
during the Class Period are excluded:
2.2.4.1. Financial Institutions as identified in the NAICS codes
listed on Exhibit 18, which include, by way of example,
commercial banks; savings institutions; credit card issuers; credit
insurers; factors or other sales finance entities; financial or
investment advisers or portfolio managers; fund managers;
investment banking entities; lending institutions; real estate
mortgage or lending entities; brokers or dealers of securities,
commodities, commodity contracts or loans; securities or
commodities exchanges; entities serving as custodians, fiduciaries
or trustees of securities or other financial assets; or entities
engaged in other financial transaction intermediation, processing,
reserve or clearinghouse activities, provided, that the following
shall not be excluded solely pursuant to this Section 2.2.4.1 unless
they are subject to a different exclusion: stand-alone ATMs, credit
unions, pawn shops, businesses engaged predominantly in making
payday loans or paycheck advances and businesses that sell goods
and services and offer financing on these purchases to their
customers.
2.2.4.2. Funds, Financial Trusts, and Other Financial Vehicles, as
identified in the NAICS codes listed on Exhibit 18, after giving
effect to the bracketed exceptions contained in NAICS Codes
525920 and 523991, which include by way of example, publicopen
end investment funds; investment funds; real estate
investment trusts; REMICS; mutual funds; money market funds;
derivatives; health and welfare funds; insurance funds; pension
funds; financial trusts; and special purpose financial vehicles
provided, that successions, estates, testamentary trusts, trusts of
Natural Persons, bankruptcy estates, limited liability companies,
corporations, Sub-Chapter “S” corporations, partnerships, limited
partnerships, joint ventures, and any other businesses or juridical
Entities, shall not be excluded pursuant to this Section 2.2.4.2
solely by reason of their form of legal or juridical structure or
organization, except to the extent they are excluded pursuant to
another exclusion in Section 2.2 of this Agreement.
2.2.4.3. Gaming, as identified in the NAICS codes listed on
Exhibit 18, which includes, by way of example, casinos; casino
hotels; off-track betting parlors; racetracks and other gambling
establishments provided, that the following shall not be excluded
solely pursuant to this Section 2.2.4.3 unless they are subject to a
different exclusion: (a) bingo parlors, and (b) video gaming at bars,
bingo parlors, hotels, off-track betting parlors, racetracks,
restaurants and truck stops.
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A-6
2.2.4.4. Insurance Entities, as identified in the NAICS codes listed
on Exhibit 18, which include, by way of example, insurance
carriers issuing disability, health, life, medical, property and
casualty, title or other insurance; reinsurers; insurance agencies
and brokerages; underwriting agencies or organizations; claims
adjusters and processors; third-party insurance or fund
administrators; or other insurance-related businesses.
2.2.4.5. Oil and Gas Industry, as identified in the NAICS codes
listed on Exhibit 17, which includes by way of example, firms
engaged in: extracting crude petroleum, natural gas or other
hydrocarbons; drilling wells; preparing, maintaining or
constructing petroleum or natural gas well-sites or other mineral
extraction sites; mining; maintaining or constructing petroleum or
natural gas pipeline or distribution facilities; pipeline distribution
of crude petroleum, refined petroleum, oil or natural gas;
petroleum or natural gas refining or other mineral refining and/or
manufacturing; manufacturing petroleum lubricating oil and
grease, petrochemical products, or other petroleum and coal
products or chemical products derived from extracted minerals;
merchant wholesaling of construction and mining (except oil well)
machinery and equipment; wholesale distribution of oil well
machinery, equipment and supplies; wholesale distribution of
petroleum, petroleum products, other extracted minerals, chemical
products produced from extracted or refined minerals, petroleum
bulk stations and terminals, petroleum and petroleum products
merchant wholesalers.
2.2.4.6. Defense Contractors/Subcontractors, including firms
which derive in excess of at least 50% of their annual revenue from
contracts with the United States Department of Defense and
Individuals whose employer qualifies as a Defense Contractor.
2.2.4.7. Real Estate Developers, including any Natural Person or
Entity that develops commercial, residential or industrial
properties. This includes, but is not limited to, any Entity
developing an entire subdivision (as defined by the law of the state
in which the parcel is located) of Real Property, including
condominiums with multiple residential units and/or a residential
subdivision with contiguous home sites and homes, provided,
however, that Real Estate Developers shall be eligible to assert
Coastal Real Property Claims under Section 5.7 and Real Property
Sales Damage Claims under Section 5.9
2.2.4.8. Any Entity selling or marketing BP-branded fuel,
including jobbers and branded dealers.
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A-7
2.2.5. GOVERNMENTAL ORGANIZATIONS, as defined in this
Agreement, provided that Native American tribal Entities may consent to
participate in the Settlement as to otherwise eligible Claims.
2.2.6. Any Natural Person or Entity who or that made a claim to the
GCCF, was paid and executed a GCCF RELEASE AND COVENANT
NOT TO SUE, provided, however, that the execution of a GCCF Release
and Covenant Not to Sue shall not prevent a Natural Person or Entity from
making a VoO Charter Payment Claim or a Vessel Damage Claim, nor
shall a release covering only bodily injury prevent a Natural Person from
making Claims under this Agreement.
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 72 of 77
B-1
Appendix B (Settlement Agreement Ex. 22)
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 73 of 77
C-1
Appendix C (Settlement Agreement Ex. 23)
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C-2
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 75 of 77
C-3
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 76 of 77
CERTIFICATE OF SERVICE
I hereby certify that the above and foregoing pleading has been served on All Counsel by
electronically uploading the same to Lexis Nexis File & Serve in accordance with Pretrial Order
No. 12, and that the foregoing was electronically filed with the Clerk of Court of the United
States District Court for the Eastern District of Louisiana by using the CM/ECF System, which
will send a notice of electronic filing in accordance with the procedures established in MDL
2179, on this 18th day of April 2012.
/s/ Don K. Haycraft
Don K. Haycraft
Case 2:10-md-02179-CJB-SS Document 6266-1 Filed 04/18/12 Page 77 of 77

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