By John Kemp
LONDON Aug 20 BP's increasingly bad-tempered
spat with the U.S. federal court, claims administrators and
legal community in New Orleans over oil-spill compensation
payments suggests the company has given up trying to win the
Instead, BP seems to be focused on getting it before
a regional or national tribunal as quickly as possible in the
hope of a more sympathetic hearing.
Opinion is divided on whether the original settlement was
poorly drafted by BP's lawyers, or whether local lawyers are
pushing an expansive interpretation of the deal which was never
My colleague Alison Frankel has described it as a bad case
of "buyer's remorse." [ID: nL1N0FH2DX]
But whatever the legal merits of the dispute, the verbal
brawl has spilled beyond the court room.
"We are going back to the 1814 attack on New Orleans by the
British," complained Joe Rice, one of the lawyers who negotiated
the settlement on behalf of the victims, in an interview with
"They are attacking our entire judicial system. They're
attacking the judge. They're attacking the claims administrator
they helped appoint. They're attacking the lawyers for
"In our view, BP views us as a colony that they own and can
exploit. It's outrageous," Rice said. "I think they've made a
vast strategic error by fighting and shifting this whole battle
to an attack on the people of the Gulf ... Any goodwill they
built on trying to the right thing, they have destroyed."
In response, BP insisted it was defending its rights. "To
hear Mr Rice's xenophobic name-calling and hyperbolic
characterisations, you'd think the War of 1812 was still
raging," a spokesman for the company told Reuters.
"While we are willing to pay legitimate claims, we did not
agree to pay for fictitious losses, or for claims that are based
on fraud or tainted by corruption," BP said.
Normally the lawyers in a case are careful to treat the
court process with utmost respect and deference, even when they
are losing, in the hope of preserving at least some influence
over the outcome.
In this case, however, BP appears to have given up on trying
to win in the local court system and is preparing to push the
case up the appellate ladder, even to the U.S. Supreme Court, in
the hope a different court sitting in a different location will
look on its arguments with more sympathy.
A MATTER OF LOCAL JUSTICE
Venue matters, which is why prosecutors as well as
plaintiffs' and defendants' lawyers spend so much time trying to
influence the location where cases are heard in the hope of
finding the most favourable court, judges and juries.
The quality of law practised in state courts is variable.
State courts and juries are notorious for favouring local
plaintiffs, especially against out of state defendants.
In this case, however, the compensation claims are being
dealt with the U.S. District Court for the Eastern District of
Louisiana. Federal courts have a much better reputation for
quality and even-handedness.
Still, the District Court sits in New Orleans, near the
centre of the area most affected by the oil spill, where
passions about the disaster run high.
BP clearly hopes it might get a different and perhaps more
sympathetic hearing once the case moves up the hierarchy away
from the affected region. Past experience suggests it may be
In March 1989, the tanker "Exxon Valdez" ran aground in
Alaska, spilling an estimated 37,000 tonnes of oil. Compensation
claims were heard by a judge and jury in the U.S. District Court
for the District of Alaska. In 1995, the jury awarded $287
million in compensatory damages and a record $5 billion in
punitive damages against Exxon.
Exxon lodged multiple appeals with the U.S. Court of Appeals
for the Ninth Circuit, sitting outside Alaska, which ultimately
reduced the punitive damages to $2.5 billion.
In 2007/08, Exxon appealed again to the U.S. Supreme Court,
sitting in Washington DC, which in a landmark ruling, held the
punitive damages award against Exxon was excessive as a matter
of common law. It stipulated punitive damages against Exxon
should be limited to no more than $507 million ("Exxon Shipping
Co versus Baker" No 07-219).
No one will ever know whether the original $5 billion
punitive award was influenced by the fact the court was sitting
in Alaska, the state most affected by the spill, and composed of
Alaskans. But it is certainly true the further away from Alaska
the case moved, and the more time elapsed between the spill and
legal decisions, the more favourable the outcome became to
BP must hope appealing and shifting the venue away from New
Orleans and the Gulf will produce a similar improvement in its
Unfortunately for BP, the U.S. Court of Appeals for the
Fifth Circuit, to which its first appeal lies, also sits in New
Orleans. But the Fifth Circuit draws judges from across a much
wider region. BP's appeal in June was heard before judges from
Mississippi, Louisiana and Texas.
CALLING BALLS AND STRIKES
Judges matter too.
In 2005, U.S. Chief Justice John Roberts told his Senate
confirmation hearing: "Judges are like umpires. Umpires don't
make the rules; they apply them. The role of an umpire and a
judge is critical. They make sure everybody plays by the rules.
But it is a limited role. Nobody ever went to a ball game to see
the umpire... I will remember that it's my job to call balls and
strikes and not to pitch or bat."
It's a nice fiction, but far from the truth. "Judicial
mentality would be of little interest if judges did nothing more
than apply clear rules of law ... to the facts that judges and
juries determined without bias or preconceptions," Richard
Posner wrote in a famous 2008 book on "How Judges Think".
Posner is a judge on the U.S. Court of Appeals for the
Seventh Circuit, the most cited jurist of the 20th century, and
a formidable legal scholar.
If this was really all judges did "judges would be well on
the road to being superseded by digitised artificial
intelligence programs," he wrote.
"But even legal thinkers who believe passionately that
judges should be rule appliers and unbiased fact finders and
nothing more do not believe that's how all or even most American
judges behave all the time. Our judges have and exercise
In many areas, the law is simply not clear. "Legal
uncertainty ... creates the 'open area' in which the orthodox
(the legalist) methods of analysis yield unsatisfactory and
sometimes no conclusions, thereby allowing or even dictating
that emotion, personality, policy intuitions, ideology,
politics, background, and experience will determine a judge's
decision," Posner concluded.
GIVING UP ON DISTRICT COURT
BP seems to have decided it has already lost any influence
with the U.S. judge in New Orleans hearing its case at trial.
The company has little to gain by playing nice and little to
lose from a more critical and confrontational approach.
BP may want to get the case as quickly as possible into the
Fifth Circuit Court of Appeals and from there possibly to the
U.S. Supreme Court in the hope of finding judges with different
ideas and a different approach.
Alienating the trial judge and pinning hopes on the appeals
process is a risky strategy. The Fifth Circuit's attitude
remains uncertain; the Supreme Court takes fewer than 100
appeals each year.
Nonetheless, the Supreme Court has shown scepticism about
large damages awards in the past decade, and has moved in an
even more pro-business direction since Exxon was decided.
BP seems to be gambling the Fifth Circuit cannot be any more
hostile than the U.S. District Court in New Orleans, and even
after that it has a good shot at persuading at least four of the
nine justices at the Supreme Court to take the case eventually.