Reuters | Mar 11, 2012, 08.58PM IST
VENICE (LOUISIANA): The phone at Joan Strohmeyer’s fishing lodge has been ringing steadily since 2010, but not many of the calls are from customers who want to go fishing. Mainly, they are from lawyers who want her to sue British oil company BP Plc.
The tidy, 62-room Lighthouse Lodge is perched near the Gulf of Mexico on Highway 23, in the marshlands between Breton Sound to the east and Bataria Bay to the west, an easy jumping off point for what used to be some of America’s most prized commercial and sport fishing waters.
That was before an explosion on April 20, 2010, on the Deepwater Horizon drilling rig, which killed 11 workers and spewed oil for 87 straight days. It soaked hundreds of miles of Gulf Coast shoreline in caramel-colored oil and sent Strohmeyer’s clients fleeing to less troubled waters.
Now, Strohmeyer faces a dilemma. She can sign onto a $7.8 billion settlement struck between BP and lawyers representing people who, like her, have lost money because of the worst oil spill in U.S. history. Or she can take her chances and try to strike a better deal on her own.
All along the Gulf Coast, in a tight-knit community that stakes its reputation on the size of the catch, business owners are wrestling with questions of compensation. Some have accepted a settlement and wonder whether they should have held out for more. Some are angling for an offer. And some, like Strohmeyer, are still pondering their options.
At 80 years old, she has already been through one disaster — Hurricane Katrina flattened her lodge in 2005, forcing her to rebuild it.
She said she has avoided filing a claim so far in part because her lodge got a boost in the weeks after the spill, when cleanup workers filled the guest rooms and slept on the couches in the lobby.
“I’ve never sued anybody in my life,” she said. “I hate to start now.”
But, since the beginning of the spill, even before she lost any money, lawyers have been urging her to file a claim.
“Even before the cleanup workers started coming, hell, I had lawyers from Houston calling me,” Strohmeyer said. “I have been told that I really ought to file a claim, and I’m looking at it.”
Not “chump change”
Down the road, in Venice, Louisiana, Raymond Schmitt wonders if he got short-changed.
Schmitt is co-owner of Saltgrass Lodge, a three-story, eight-room, antebellum-style lodge. He and his partners settled last year with the Gulf Coast Claims Facility, a $20 billion trust set aside by BP in the weeks following the spill and overseen by Washington lawyer Kenneth Feinberg.
“My partners wanted to settle, and so we did,” said Schmitt, a longtime charter fishing boat captain. “I don’t know if we settled for enough or not.”
Schmitt declined to disclose the amount of the payment, and said it covered roughly two years of lost revenue. “It was not a great amount of money but it wasn’t chump change either,” he said.
Feinberg’s fund paid out $6.1 billion on about 225,000 claims, an average of about $27,000 per claim.
Schmitt summed up the dilemma he faced like this: “Do we take this now and survive the next two years and try to keep going, or do we try to fight ’em and go bankrupt in the meantime?”
Schmitt and his partners filed their claim without the help of a lawyer, to avoid potential fees. “We felt if we did get an attorney and had to fight them, it would take a year and we’d probably end up with the same amount after the lawyers got everything else,” he said.
Pressure to keep the business afloat helped the partners make up their minds. “We took the money and we’ve got our fingers crossed,” said Schmitt, who has been spending heavily on advertising to draw bookings for the spring fishing season.
A lot of talking
In Boothville, just north of Venice, Brooke Andry is still waiting for a deal, as her business sags.
“When the fishing industry bottoms out, the lodging business is gone,” said Andry, who owns the Kingfish Lodges and Venice Palms Lodge. Andry said she filed claims with Feinberg, but has seen no action.
“I think Feinberg and his group did a lot of talking and not a lot of action,” Andry said. When she met with Feinberg’s representatives, she was required to bring extensive documentation of her losses, but Feinberg’s team was never prepared. “They’d just put us off and say ‘We’ll see you in another 30 days,'” she said.
A spokeswoman for Feinberg declined to comment for this story. “I believe the GCCF has successfully fulfilled its mandate,” Feinberg said in a statement on March 2.
Andry said she will decide whether to sign onto the $7.8 billion settlement with BP after looking over the details with her brother, an attorney who has advised her so far. She said she hasn’t decided whether to resubmit her claim or pursue a lawsuit on her own.
“People come from all over the world to come fishing,” Andry said. “But if they’re only going to catch two fish instead of ten, they figure they might as well go to Destin,” a beach resort in Florida.
For now, Andry is stuck in limbo between the old claims processing regime run by Feinberg and a new one to be established under the settlement between BP and plaintiffs’ lawyers, which won’t be operational for several weeks.
The new claims facility, which still must be approved by U.S. District Judge Carl Barbier in New Orleans, will offer settlements to business owners who lost profits from the spill, as well as home owners and individuals, based on set formulas for lost revenues.
BP estimated the total cost of settling with plaintiffs at $7.8 billion, but the amount could rise and is not subject to a cap, plaintiffs’ lawyers say. BP and the plaintiffs’ group have declined to estimate the number of potential claimants.
Both the old and the new claims methods have their detractors. Feinberg has been criticized for slow-walking the claims process and applying over-rigid terms that excluded some legitimate claims.
Critics of the new fund, primarily lawyers who represented clients before Feinberg’s fund, warn that it could allow lawyers representing clients who haven’t settled yet to collect exorbitant fees.
Houston lawyer Tony Buzbee, one such lawyer, said big fees to the plaintiffs’ group, called the Plaintiffs’ Steering Committee, could eat up funds that should go to individuals and businesses.
For plaintiff lawyers, potential fees are enticing. If the settlement is worth $7.8 billion, as BP claims, that could yield $468 million in legal fees, calculated at 6 percent. BP declined to comment on the claims process for this story.
Robert Wiygul, an attorney in Ocean Springs, Mississippi, who represents about 1,000 clients who had been seeking payment from Feinberg’s GCCF, said he was optimistic that the new settlement process would resolve his clients’ concerns.
“The amount that’s available looks like it’s going to be something that’s going to protect people adequately from the future risks of this oil spill,” said Wiygul, an environmental attorney who represents a wide range of clients from shrimpers and crabbers to other business owners.
Another option for victims is also on the table: opting out of the settlement and suing BP directly.
Opting out could yield the highest potential payout, because it could include punitive damages if Barbier rules in a coming trial that there was gross negligence on the part of BP or its well partners, said Blaine LeCesne, a law professor at Loyola University in New Orleans. BP vigorously contests any claim to gross negligence.
LeCesne said plaintiffs who sign onto the settlement could leave billions of dollars on the table in potential future punitive damages. Those who opt out “will have extraordinary leverage in negotiating a very generous settlement that will include anticipated punitive damages,” he said.
For the plaintiffs, the choice is uncertain: Accept a quick payment now, or opt out of the settlement and hope for a better deal in the future.
But for some, time and money are running short. At the Lighthouse Lodge, Strohmeyer said she had to give employees a raise to keep them from being lured away by shoreline cleanup contractors. She’s losing money, she said. “I’ve been doing without for some time now,” she said.
Meanwhile, the lawyers keep calling.