Wednesday, January 17, 2018

BP: Compensation Costs Will Exceed Prediction

BP Expects Higher Charges Related To Deepwater Claims

Law360, New York (January 16, 2018, 1:53 PM EST) -- BP said Tuesday it anticipates a $1.7 billion charge in its 2017 fourth-quarter financial results, reflecting a greater value of settlement claims related to the 2010 Deepwater Horizon spill and the Fifth Circuit’s May rejection of most of the formula the company was using to calculate economic losses from the disaster.

The British oil giant said it now expects to pay about $3 billion in 2018, up from earlier estimates of $2 billion, for charges related to the blowout at the Macondo Prospect well that killed 11 people and caused 4 million barrels of oil to spill into the Gulf of Mexico.

“With the claims facility’s work very nearly done, we now have better visibility into the remaining liability,” BP’s chief financial officer Brian Gilvary said in a statement. “The charge we are taking as a result is fully manageable within our existing financial framework, especially now that we have the company back into balance at $50 per barrel.”

To calculate the settlement owed to a class of Gulf Coast businesses harmed by the disaster, BP had used a formula known as Policy 495, developed by the claims administrator and approved by a Louisiana district court. The formula consisted of five methodologies that divide claimants into two categories, with people engaged in construction, education, agriculture and professional services subject to four industry-specific methodologies and everyone else subject to an annual variable margin methodology.

But the Fifth Circuit in May found that the four industry-specific methodologies were not consistent with the text of the settlement terms, as they infringe on claimants’ right to choose their own compensation period. The court accepted the fifth method, the annual variable margin methodology, finding it to be consistent with the terms of the deal.

BP said Tuesday it will continue to “vigorously appeal” claims it believes don’t deserve compensation.

BP won the right to appeal individual Deepwater claim determinations in its $10.3 billion settlement in May 2015. A three-judge panel said, “where a settlement agreement does not resolve claims itself but instead establishes a mechanism pursuant to which the district court will resolve claims, parties must expressly waive what is otherwise a right to appeal from claim determination decisions by a district court.”

So far, BP has paid about $60.4 billion related to the oil spill, the company said in October. This includes the more than $20 billion settlement reached with the government in 2016 to settle federal and state claims, as well as agreements to end various private claims.

--Additional reporting by Kat Sieniuc. Editing by Kelly Duncan

BP: 5th Circuit rejects BP calculation methods

5th Circ. Rejects Deepwater Settlement Calculations
Law360, New York (May 23, 2017, 7:46 PM EDT) -- The Fifth Circuit on Monday rejected most of the formula BP used to determine the settlement it will pay a class of Gulf Coast businesses harmed by 2010’s Deepwater Horizon disaster, saying the calculation methods don’t match the settlement deal.

In an order reversing four out of the five methodologies included in Policy 495, the policy used to determine the economic losses arising out of the BP oil spill, the panel concluded four “industry-specific methodologies,” or ISMs, were not consistent with the text of the settlement terms, saying the ISMs infringe on claimants’ right to choose their own compensation period by spreading revenue across the crop season.

“The settlement agreement grants each claimant the right to choose his or her compensation period, consisting of three or more consecutive months between May and December 2010. If the claims administrator is permitted to remove revenue from the compensation period, and spread it throughout the noncompensation months, the claimant’s choice no longer matters. June is the same as December, and November is the same as July,” adding that “this is not the agreement that the parties entered into. And we decline to rewrite the settlement agreement under the guise of contractual interpretation.”

The panel noted that “the relevant ISM would … [ensure] that damages are awarded to those who have suffered real losses. This may well be a fairer alternative. But it cannot be implemented, because it is inconsistent with the plain text of the settlement agreement,” the court said.

The court accepted the fifth method, the “annual variable margin methodology,” or AVMM, finding it to be consistent with the terms of the deal.

The formula known as Policy 495, developed by the claims administrator and approved by the lower court, consists of five methodologies that divide claimants into two categories. Those engaged in construction, education, agriculture and professional services are subject to ISMs. Everyone else is subject to an AVMM.

The class in April 2015 appealed the policy, claiming that the method did not match the calculation the class agreed to in the settlement and goes beyond what the Fifth Circuit intended.

BP Exploration & Production Inc. asked the appellate panel in September 2015 to end years of wrangling over how to calculate the oil spill’s impact on affected businesses’ bottom line, requesting it accept the very model that the appeals court suggested when it tossed an earlier proposed formula and sent it back to a Louisiana district court, which approved the accrual model in May 2014.

BP claims that the class’ appeal is an implicit request for the court to overturn its own decision on calculating the payments and an attempt to “reintroduce the fictitious, grossly inflated and economically irrational awards that led to that decision in the first place.

The class argues that the final matching policy “exceeds the scope” of the remand order and succeeds in “smoothing” revenues in a way that undercuts the settlement agreement’s intentions.

“Rather than accepting the contemporaneous profit and loss statements that are required under the express terms of the settlement agreement, the final matching policy asks program accountants to apply vague and subjective determinations about when revenues may have been ‘earned’ according to the claimant’s underlying business activities,” the class has said in court documents. “This was never discussed nor agreed to during the settlement negotiations.”

The dispute hinges on the interpretation of the settlement agreement, which BP says sets a policy for a claims administrator to calculate lost profits in part by adding revenues and subtracting “corresponding variable expenses” in time periods before and after the spill in a “business economic loss” framework.

The claims administrator’s initial policy, which the Fifth Circuit rejected, did not fairly account for real-world economic impact because it was based on cash receipts and disbursements whenever they were recorded, BP says.

“That approach created gross disparities among similarly situated claimants who maintained their records according to different accounting principles,” BP said, given that payments could occur in different periods.

“Under this interpretation, the claims administrator issued hundreds of millions of dollars in fictitious, inflated and irrational awards,” BP says, citing one example that resulted in a $3 million reward for a $100,000 loss.

An accrual formula, instead, is based in “economic reality” on the time frame in which revenue is earned and expenses are correlated to the revenue, BP says.

BP won the right to appeal individual Deepwater claim determinations in its $10.3 billion settlement in May 2015.

The parties were not immediately reached for comment.

The plaintiffs are represented by Stephen J. Herman and Soren E. Gisleson of Herman Herman & Katz LLC, James Parkerson Roy of Domengeaux Wright Roy & Edwards LLC and Samuel Issacharoff.

BP is represented by Richard C. Godfrey, Wendy L. Bloom, R. Chris Heck and Jeffrey Bossert Clark of Kirkland & Ellis LLP, Thomas G. Hungar, Theodore B. Olson, Miguel A. Estrada, George H. Brown, Scott P. Martin and Amir Cameron Tayrani of Gibson Dunn & Crutcher LLP, Daniel A. Cantor and Allison B. Rumsey of Arnold & Porter Kaye Scholer LLP, S. Gene Fendler, Don K. Haycraft and R. Keith Jarrett of Liskow & Lewis and Kevin M. Downey and F. Lane Heard III of Williams & Connolly LLP.

The case is In Re: Deepwater Horizon, Lake Eugenie Land & Development Inc. et al. v. BP Exploration & Production Inc. et al., case number 15-30377, in the U.S. Court of Appeals for the Fifth Circuit.

--Editing by Bruce Goldman.

Saturday, December 30, 2017

Conk on Occupational Health and Safety - Torts Prof Blog

Conk on role of occupational health in workers comp and torts  - Torts Prof Blog

Many observers, looking back at the early twentieth century’s creation by states of the workers compensation laws have seen a grand bargain. In this view tort remedies were compromised for the certainty of more modest scheduled statutory benefits. This study argues that the tort laws were a major victory for labor. Workers gained the right to medical treatment, temporary total disability benefits, and permanent disability benefits. The medical benefits and temporary disability were prompt and reliable for all work related accidental injuries. The loss of the tort remedy against the employer was of little significance since compensation via tort was highly uncertain. Further the right to sue third parties in tort was preserved – and enabled to some degree by the workers compensation benefits received.

But occupational diseases were excluded until pressure by labor and pro labor interests achieved reforms. Much of the driving force was the recognition of pneumoconiosis – particularly silicosis. The granite cutters of Vermont spurred studies which demonstrate the limits of the germ theory of disease and identified the deadly granite dust as the cause of lung disease. Many states broadened their definitions of occupational disease.

Asbestos related disease – particularly the form of pneumoconiosis known as asbestosis advanced the science of pulmonary disease. The landmark studies by Irving Selikoff of morbidity and mortality of insulation workers created a body of evidence that supported the massive wave of third party asbestos litigation. The asbestos epidemic litigation advanced the doctrines of strict product liability law, drove courts to advance management of “mass torts” via multi-district litigation, and increased the competence of courts to deal with epidemiological and other forms of scientific evidence of disease causation.

Thursday, December 14, 2017

Judge Alex Kozinski made us all victims and accomplices.

Dahlia Lithwick is a brilliant lawyer-journalist who writes for Slate.  In this shocking confessional piece she describes how women acquiesced in the shameful and humiliating behaviour of a brilliant, powerful, and - now we all know- nefarious judge.

It's a must read. - gwc

Judge Alex Kozinski made us all victims and accomplices.

by Dahlia Lithwick

The first time I met Alex Kozinski was in 1996. I was clerking for the chief judge of the 9th U.S. Circuit Court of Appeals, and there was an orientation for new clerks in San Francisco. One of my co-clerks and I were introduced to the already legendary, lifetime-tenured young judge at a reception, and we talked for a while. I cannot recall what we talked about. I remember only feeling quite small and very dirty. Without my prompting, my former co-clerk described this interaction in an email to me this week. “He completely ignored me and appeared to be undressing you with his eyes,” he wrote. “I had never seen anyone ogle another person like that and still have not seen anything like it. Was so uncomfortable to watch, and I wasn’t even the subject of the stare.”***

Wednesday, December 13, 2017

OTHERWISE: Roy Reed, Times Reporter Who Covered the Civil Rights Era, Dies at 87 - The New York Times

Jim Dwyer writes

"‪Roy Reed, reporter, was near Meredith when he got shot, at the Selma jailhouse when King walked out, at the Pettus Bridge when blacks were bull whipped and clubbed. He would’ve been called fake news but he was the real deal. Don’t miss the John Schwartz obit "
When Dwyer, himself the "real deal",  uses the honorific "reporter" it reminds us of the heroics of the men and women, writers and photographers,  who bring us the stories of life and death, suffering and beauty around the world.

OTHERWISE: Roy Reed, Times Reporter Who Covered the Civil Rights Era, Dies at 87 - The New York Times

Wednesday, November 29, 2017

Seven Critical Truths About North Korea - The New York Times

Seven Critical Truths About North Korea - The New York Times

by Max Fisher

North Korea’s latest intercontinental ballistic missile test has provoked understandable alarm, particularly among Americans worried about the threat.
But many analysts reacted with something closer to grizzled stoicism, greeting the launch as dispiriting but unsurprising confirmation of North Korea’s capabilities and intentions. For them, news of the test, like the missile program itself, is unwelcome and concerning but not too terrifying.
It’s worth reviewing, then, some of the fundamentals that guide those experts’ views of North Korea and its weapons.
(1) It’s over. North Korea is a nuclear power now.
Policymakers will debate for years the precise moment at which the door closed to preventing or rolling back North Korea’s nuclear and missile programs. But that door is most likely now closed.
The North Koreans have little reason to give up their weapons programs, which bring them security against their otherwise vastly superior adversaries, and we have no way to make them.
Continue reading 

Thursday, November 16, 2017

$247 million verdict in J&J hip implant trial

BREAKING: J&J Slammed With $247M Verdict In Texas Hip Bellwether
Share us on: By Jess Krochtengel
Law360, Dallas (November 16, 2017, 12:34 PM EST) -- A Texas federal jury on Thursday hit Johnson & Johnson and its DePuy Orthopaedics Inc. unit with a combined $247 million verdict in a bellwether trial over DePuy’s Pinnacle line of metal-on-metal hip implants, delivering the third consecutive nine-figure verdict in the multidistrict litigation.

The unanimous jury found J&J and DePuy liable for a series of design and manufacturing defects, fraud and deceptive business practices, and found the companies had acted with wanton, reckless or malicious conduct. They awarded $90 million in punitive damages against J&J and $78 million in punitive damages against DePuy.

For the six individual plaintiffs, each of whom is from New York, the jury awarded more than $77 million in past and future medical expenses and pain and suffering, including each plaintiffs’ actual past medical expenses, the amounts of which were stipulated to by the parties. Four of the plaintiffs’ spouses were awarded loss of consortium damages totaling $1.7 million.

The verdict followed a two-month trial, the fourth bellwether in multidistrict litigation that includes more than 9,000 cases alleging design defects in DePuy’s Pinnacle Ultamet line of metal-on-metal hip implants. In 2016, Texas juries found in favor of two groups of plaintiffs from Texas and California, awarding them $502 million and more than $1 billion in damages respectively, though those verdicts were later reduced to $150 million and $543 million. In the first bellwether trial involving the Pinnacle Ultamet, a jury sided with J&J against a sole plaintiff from Montana.

The jury specifically found J&J and DePuy liable for design defect, negligent design, inadequate warning, manufacturing defect, negligent manufacture, negligent misrepresentation, intentional misrepresentation to the surgeons who performed the initial hip implant surgeries on the plaintiffs, fraudulent concealment from the plaintiffs and from the surgeons and deceptive business practices as to the plaintiffs and the surgeons. The jury also found J&J liable for negligent undertaking of a duty to provide services to DePuy and for aiding and abetting DePuy in its tortious conduct. The jury did not find J&J or DePuy liable for intentional misrepresentation to the plaintiffs.

During the trial, the six plaintiffs told jurors they’d suffered a range of injuries, including severe tissue damage that caused permanent muscle loss, intense pain, loss of hip movement and walking with a permanent limp. They say the Pinnacle product shed microscopic metal ions into their bodies, causing side effects that J&J and DePuy didn’t warn surgeons about and that could have been avoided with a safer design.

The plaintiffs alleged J&J and DePuy valued marketing above research and development and rushed the Pinnacle product into production without any testing in humans out of a desire to capture a greater market share. They claimed the companies pushed the Pinnacle product with an incorrect statistic that it was 99 percent successful and that they’d used cheaper, less safe alternatives in the manufacturing process to keep costs down, and said the alleged defects in the product turned people’s hips into “ticking time bombs.”

In his closing statement, plaintiffs' counsel Mark Lanier of The Lanier Law Firm asked the jury to punish J&J "for being indifferent to our health” through a large punitive damages award that would capture the attention of company executives who didn’t attend the trial.

J&J and DePuy made the case during the trial that metal-on-metal was a viable, reasonable option for hip implants and that its Pinnacle Ultamet product was offered to help doctors choose the device that best fit their patients. The companies said the metal-on-metal implant was developed to solve a bone degradation problem with an existing polyethylene hip implant on the market and denied putting profits above patient safety and long-term results.

In a closing statement, defense counsel Steve Quattlebaum of Quattlebaum Grooms & Tull PLLC said the plaintiffs had made an emotional appeal and told a good story but that their allegations were not backed up by evidence or science. Quattlebaum said there’s no evidence the surgeons who treated the six plaintiffs relied on or even saw the 99 percent statistic when choosing which kind of implant to use and said there’s no evidence the plaintiffs’ injuries were caused by the product specifications the plaintiffs had complained about during the trial.

The plaintiffs are represented by Mark Lanier of The Lanier Law Firm, Jayne Conroy of Simmons Hanly Conroy, Richard Arsenault ofNeblett Beard & Arsenault and Wayne Fisher of Fisher Boyd Johnson & Huguenard LLP

The defendants are represented by John H. Beisner, Stephen J. Harburg and Jessica Davidson Miller of Skadden Arps Slate Meagher & Flom LLP, Steven W. Quattlebaum of Quattlebaum Grooms & Tull PLLC and Tracie J. Renfroe of King & Spalding LLP.

The consolidated cases are Alicea et al. v. DePuy Orthopaedics Inc. et al., case number 3:15-cv-03489; Barzel v. DePuy et al., case number 3:16-cv-01245; Kirschner v. DePuy et al., case number 3:16-cv-01526; Miura v. DePuy et al., case number 3:13-cv-04119; Stevens v. DePuy et al., case number 3:14-cv-01776; and Stevens v. DePuy et al., case number 3:14-cv-02341, in the U.S. District Court for the Northern District of Texas

Wednesday, November 15, 2017

The Latest Ploy GOP Considers to Avoid a Roy Moore Senate Problem Likely Violates the 17th Amendment | Election Law Blog

The Latest Ploy GOP Considers to Avoid a Roy Moore Senate Problem Likely Violates the 17th Amendment | Election Law Blog

by Prof. Richard L. Hasen (UCLA Law School)

"I spent a good part of my Saturday afternoon tweeting and blogging in conversations with Hugh Hewitt about ways Republicans could deal with the Roy Moore mess.

At first Hewitt suggested cancelling the election altogether, and letting Strange just complete the term. I protested that cancelling an election already underway (military and other absentee  voter have already voted) is profoundly undemocratic and dangerous. It also appears to violate the 17th Amendment, which requires that an appointment of a temporary Senator be temporary, and that the state schedule a replacement vote.
Eventually Hewitt relented on this point (not because he thought it was undemocratic—indeed he seemed to believe Republicans are somehow entitled to Alabama’s two Senate seats without an election), but because he thought it would violate the 17th Amendment.
So he hit on another idea, and according to Politico it is an idea Republican leaders nationally are now weighing:  get Luther Strange, the temporary Senator appointed to replace Jeff Sessions, to resign, and then with the new vacancy, declare this election void and start over.
I’ll talk about the political implications in a bit, but first the constitutional issue.  Here’s what the 17th Amendment says, in pertinent part:
When vacancies happen in the representation of any State in the Senate, the executive authority of such State shall issue writs of election to fill such vacancies: Provided, That the legislature of any State may empower the executive thereof to make temporary appointments until the people fill the vacancies by election as the legislature may direct.
When Jeff Sessions resigned, that created a vacancy. Alabama law allowed the governor to fill that vacancy and to set the date for a special election. The governor (actually the predecessor) appointed Luther Strange and purported to set the date of the replacement election. (There’s some controversy about whether he had the authority to do this). The new governor reset (or properly set) the replacement election. We’ve had the primary, and now we are in the general election.
The governor was mandated to issue a writ of election. Because the writ of election has been already issued to fill a vacancy, the election goes forward under the language of the 17th Amendment. Temporary vacancies filled by the governor don’t change that. That’s a separate part of the 17th amendment and separate from the duty to issue the writ of election when there is the vacancy of an elected Senator."

New Jersey School Segregation Persists

'APARTHEID SCHOOLS' - "Segregation of N.J. schools 'has gone largely unchecked,' study finds," by POLITICO's Linh Tat: "Many black and Hispanic students in New Jersey continue to attend highly segregated schools - a situation that often starts in pre-K and could worsen as charter schools grow, according to a study released Wednesday. More than a quarter of the state's black students attend so-called 'apartheid schools' - where less than 1 percent of students are white - while the number of Hispanic students in such schools has doubled since 1989 and is increasing, according to the UCLA Civil Rights Project. Moreover, the vast majority of black and Latino students are enrolled in schools considered doubly segregated by race and income, the researchers said." Read the report

Sunday, October 29, 2017

James Madison’s Lessons in Racism - The New York Times

The historian Noah Feldman - author of the forthcoming Three Lives of James Madison - Genius, Partisan, President - has a very interesting take on Madison. Apt for our age he espoused freedom for slaves, but compromised due to economic pressures, including his own. - gwc
James Madison’s Lessons in Racism - The New York Times

by Noah Feldman

When we think about the framers of the Constitution and how they handled the issue of race, we conjure up the extremes: the hypocrites and the heroes. At one end is Thomas Jefferson, who wrote that “all men are created equal” but believed Africans were inferior and fathered children with an enslaved woman. At the other end is Alexander Hamilton, who, at least as depicted by admirers like the biographer Ron Chernow and the playwright Lin-Manuel Miranda, was an ardent abolitionist.
This framing, however, is simplistic and misleading. It is simplistic because it overlooks harder-to-categorize positions like that of James Madison, the lead drafter of the Constitution, who genuinely rejected the idea of racial inferiority yet still failed to put his beliefs in equality and liberty into practice. And it is misleading because it implies that as long as we avoid having racist attitudes, we can succeed in avoiding racist policies. We think that if we’re not Jefferson, we must be Hamilton. But this is not the case.
In this respect, Madison is the founding father who can teach Americans the most about our present contradictions on race. Madison insisted that enslaved Africans were entitled to a right to liberty and proposed that Congress purchase all the slaves in the United States and set them free. Yet not only did he hold slaves on his plantation in Virginia and fail to free them upon his death, but he also originated the notorious three-fifths compromise in the Constitution, which counted a slave as three-fifths of a person for purposes of legislative representation.