Settlement Disaster Relief Funds
Written By: Rheingold, Giuffra, Ruffo & Plotkin LLP
A recent trend in the settlement of claims arising out of disasters has been to set up a fund directly from a responsible party, seeking to make direct payments. This tends to cut out the bar, which may have geared up to litigate and of course is seeking fees.
BP Oil Spill Claims
A primary example of this approach is the BP $20 billion plan to pay claims arising out the catastrophic Deepwater Horizon well explosion April 20, 2010. This plan was established in 2010, and primarily covers business losses due to the oil spill. If a claimant settled his claim through a payment from this plan, then he was precluded from suing. Since the plaintiffs bar had geared up for oil spill litigation, including the creation of an MDL assigned to Judge Barbier, tension arose as to whether somehow improperly the resolution plan was undermining the right of parties to litigate. Added to this was the accusation relating to ethics issues perceived as cutting out the litigation and the impartiality of the administrator of the plan. Unlike an impartial administrator as found in most claims resolution plans, here the services of the administrator are paid for by one party-BP.
See excellent discussion by a well-regarded professor, Light, Designing the Gulf Coast Claims Facility in the Shadow of the Law: A Template for the Superfund sec. 301(F) Report, 40 Envtl. L. Rep. News & Analysis 11121 (Nov. 2010).