Mob Bosses in Black Robes III
MDL Judges Artfully Circumvent Strict Liability Statutes
and Engage in Creative Statutory Interpretation
to Maximize Judicial Efficiency
By Brian J. Donovan
Originally published: July 8, 2021
In MBBR I, we explained that the U.S. federal judicial system runs a protection racket for corporations. In MBBR II, we described how an MDL judge maximizes judicial efficiency while running his protection racket. In this article, we explore how an MDL judge artfully circumvents strict liability statutes and engages in creative statutory interpretation to maximize judicial efficiency. Since the BP oil well blowout MDL (“MDL 2179”) is considered to be the gold standard for MDL, it will be used as a case study.
The manner in which the MDL 2179 court circumvented and interpreted the Oil Pollution Act of 1990 is instructive.
The Oil Pollution Act of 1990
I. The Statute
The Oil Pollution Act of 1990 (OPA) is a strict liability statute. In order to recover damages under OPA, a claimant merely needs to show that his or her damages “resulted from” the oil spill.
OPA, in pertinent part, states:
“The responsible party for a vessel or a facility from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon the navigable waters or adjoining shorelines or the exclusive economic zone is liable for the removal costs and damages that result from such incident.” See 33 U.S.C. § 2702(a).
The damages referred to in 33 U.S.C. § 2702(a) include, but are not limited to:
“Damages equal to the loss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, personal property, or natural resources, which shall be recoverable by any claimant.” 33 U.S.C. § 2702(b)(2)(E) (Emphasis added).
OPA further provides:
(a) “Payment or settlement of a claim for interim, short-term damages representing less than the full amount of damages to which the claimant ultimately may be entitled shall not preclude recovery by the claimant for damages not reflected in the paid or settled partial claim.” 33 U.S.C. § 2705(a) (Emphasis added); and
(b) “Payment of such a claim [e.g., payment to a claimant for interim, short-term damages representing less than the full amount of damages to which the claimant ultimately may be entitled] shall not foreclose a claimant’s right to recovery of all damages to which the claimant otherwise is entitled under this Act or under any other law.’’ 33 U.S.C. §§ 2715(b)(1) and (2) (Emphasis added).
“Shall” means shall. The Supreme Court has made clear that when a statute uses the word “shall,” Congress has imposed a mandatory duty upon the subject of the command. See United States v. Monsanto, 491 U.S. 600, 607, 109 S. Ct. 2657, 105 L.Ed.2d 512 (1989).
Use of “shall” and “may” in statutes also mirrors common usage; ordinarily “shall” is mandatory and “may” is permissive. “The mandatory ‘shall’ ……normally creates an obligation impervious to judicial discretion.” Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 35 (1998).
Justice Souter, in delivering the opinion of the Lexecon Court, explained, “If we do our job of reading the statute whole, we have to give effect to this plain command, see Estate of Cowart v. Nicklos Drilling Co., 505 U. S. 469, 476 (1992), even if doing that will reverse the longstanding practice under the statute and the rule, see Metropolitan Stevedore Co. v. Rambo (1995) (“Age is no antidote to clear inconsistency with a statute.” (quoting Brown v. Gardner, 513 U. S 115, 122 (1994))). The language is straightforward, and with a straightforward application ready to hand, statutory interpretation has no business getting metaphysical.”
As the Supreme Court further explained,
“In interpreting a statute a court should always turn first to one, cardinal canon before all others. We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there.” Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253–54 (1992).
II. Legislative History
OPA’s legislative history is shot through with general statements indicative of congressional intent to ensure that all oil spill victims are fully compensated. 135 CONG. REC. H7959 (daily ed. Nov. 2, 1989) (statement of Rep. Tauzin) (“ensure that all victims are fully compensated”); 135 CONG. REC. H7964 (daily ed. Nov. 2, 1989) (statement of Rep. Hammerschmidt) (“ensure that all justified claims for compensation are satisfied”); 135 CONG. REC. H7969 (daily ed. Nov. 2, 1989) (statement of Rep. Dyson) (“assurances that damages arising from spills will be completely compensated”); 136 CONG. REC. H336 (daily ed. Feb. 7, 1990) (statement of Rep. Carper) (“ensure that those people or those businesses that are damaged by these spills are fairly and adequately compensated”); 136 CONG. REC. S7752 (daily ed. June 12, 1990) (statement of Sen. Mitchell) (“ensure the fullest possible compensation of oil spill victims”); S. REP. NO. 101–94, at 12 (1989), reprinted in 1990 U.S.C.C.A.N. 722, 734. (“These provisions are intended to provide compensation for a wide range of injuries and are not so narrowly focused as to prevent victims of an oil spill from receiving reasonable compensation.”); 135 CONG. REC. H7893 (daily ed. Nov. 1, 1989) (statement of Rep. Quillen) (“full, fair, and swift compensation for everyone injured by oil spills.”).
III. Artful Circumvention of OPA
“OPA applies of its own force, because that act governs, inter alia, private claims for property damage and economic loss resulting from a discharge of oil in navigable waters. See 33 U.S.C. § 2702(a), (b)(2)(B), (b)(2)(C), (b)(2)(E).”
The Honorable Carl J. Barbier, In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010 (Rec. Doc. 3830 at 11, August 26, 2011).
The MDL judge read the statute. Regrettably he chose to circumvent, rather than apply, OPA.
A strict liability statute, like OPA, poses a problem for the MDL 2179 parties (e.g., the MDL judge, the PSC attorneys, and BP).
Since the objective of MDL 2179 is to maximize judicial efficiency via a victims’ compensation fund and a subsequent settlement class action, it is of paramount importance to limit BP’s liability in order to induce BP to settle as quickly as possible. A strict liability statute does just the opposite. Liability attaches without regard to the reasonableness or blameworthiness of BP’s conduct. Although liability under OPA is subject to a monetary cap of $75,000,000 for each incident by each responsible party, there is no limit to liability if the damage was proximately caused by “gross negligence or willful misconduct.” It is important to note that BP, the responsible party, waived the monetary cap of $75,000,000 for the BP oil well blowout incident in the Gulf of Mexico on April 20, 2010 and the MDL 2179 court found the damage to be proximately caused by “gross negligence or willful misconduct.” Accordingly, in theory, there is no limit to BP’s liability. MDL 2179 reality is so very different.
Allegedly, in order to efficiently manage MDL 2179, the Court consolidated and organized the various types of claims into several “pleading bundles” for the purpose of the filing of complaints, answers, and any Rule 12 motions. The “B1” pleading bundle includes all claims for private or “non-governmental” economic loss and property damages.
On January 12, 2011, the MDL 2179 Court issued PTO No. 25, in order to clarify “the scope and effect” of the “B1” Master Complaint. The Court held that any individual plaintiff who is a named plaintiff in a case that falls within pleading bundle “B1” is deemed to be a plaintiff in the “B1” Master Complaint. Also, “the allegations, claims, theories of recovery and/or prayers for relief contained within the pre-existing petition or complaint are deemed to be amended, restated, and superseded by the allegations, claims, theories of recovery, and/or prayers for relief in the respective “B1” Master Complaint(s) in which the defendant is named.”
Rather than allege claims under OPA and the Outer Continental Shelf Lands Act (“OCSLA”) (which governs the MDL 2179 personal injury and wrongful death actions and borrows the law of the adjacent state as surrogate federal law), the “cooperative” PSC attorneys made the unfathomable decision to allege claims under a hodgepodge of statutes. In the “B1” Master Complaint, Lead Counsel states, “The claims presented herein are admiralty or maritime claims within the meaning of Rule 9(h) of the Federal Rules of Civil Procedure. Plaintiffs hereby designate this case as an admiralty or maritime case, and request a non-jury trial, pursuant to Rule 9(h).”
The MDL judge and PSC attorneys were concerned that a jury may not be “cooperative.”
Filing of the “B1” Master Complaint as an admiralty or maritime case artfully circumvented OPA. By doing so, the PSC assisted the MDL judge in expeditiously being able to erroneously and incomprehensibly find, “….that nothing prohibits Defendants from settling claims for economic loss. While OPA does not specifically address the use of waivers and releases by Responsible Parties, the statute also does not clearly prohibit it. In fact, as the Court has recognized, one of the goals of OPA was to allow for speedy and efficient recovery by victims of an oil spill.”
As a result of this finding by the MDL judge, approximately 220,000 victims who or that executed a “Release and Covenant Not to Sue” in exchange for a one-time final payment ($5,000 for individuals and $25,000 for businesses) were excluded from the settlement class action. There is no evidence that these amounts even remotely represent adequate consideration to compensate claimants for the damages that claimants did or will suffer as a result of the BP oil well blowout.
By alleging claims under general maritime law rather than under OPA (a strict liability statute) and OCSLA in the “B1” First Amended Master Complaint, the PSC assisted the MDL judge in expeditiously being able to:
(a) Erroneously find, “The Deepwater Horizon was at all material times a vessel in navigation.”
(b) Erroneously find, “Admiralty jurisdiction is present because the alleged tort occurred upon navigable waters of the Gulf of Mexico, disrupted maritime commerce, and the operations of the vessel bore a substantial relationship to traditional maritime activity. With admiralty jurisdiction comes the application of substantive maritime law.”
(c) Erroneously find, “State law, both statutory and common, is preempted by maritime law, notwithstanding OPA’s savings provisions. All claims brought under state law are dismissed.”
(d) Erroneously find, “General maritime law claims that do not allege physical damage to a proprietary interest are dismissed under the Robins Dry Dock rule, unless the claim falls into the commercial fishermen exception.”
Moreover, the maritime rule in the Fifth Circuit is that operational recklessness or willful disregard is generally insufficient to visit punitive damages upon the employer. Rather, the conduct must emanate from corporate policy or that a corporate official with policy-making authority participated in, approved of, or subsequently ratified the egregious conduct.
Accordingly, the MDL judge concluded that BP cannot be held liable for punitive damages under general maritime law. The MDL judge further noted that, even if BP were liable for punitive damages, only commercial fishermen or those who could satisfy the “physical injury” threshold of the Robins Dry Dock rule would be entitled to such an award.
Since the PSC attorneys requested a non-jury trial pursuant to Rule 9(h) and alleged claims under general maritime law, rather than OPA and OCSLA, the PSC attorneys and the MDL judge formulated a trial plan that dispensed with trial by jury and instead conducted a bench trial applying general maritime law.
Circumventing OPA also allowed the PSC/BP settlement to limit a claimant’s recovery of damages by geographic bounds, pertain solely to certain business activities, and require a heightened and vague proof of causation between his or her damages and the BP oil well blowout incident.
IV. U.S. Supreme Court Decisions (Admiralty/Maritime Law vs. OPA)
The U.S. Supreme Court has quoted testimony by an admiralty expert who stated “maritime law in the strict sense has never had to deal with the resources in the ground beneath the sea, and its whole tenor is ill adapted for that purpose.” The Court then added that “since the Act [OCSLA] treats seabed, subsoil, and artificial islands the same, dropping any reference to special treatment for presumptive vessels, the most sensible interpretation of Congress’ reaction to this testimony is that admiralty treatment was eschewed altogether….” The U.S. Supreme Court additionally stuns with its unqualified statement that it “has specifically held that drilling platforms are not within admiralty jurisdiction.” (Emphasis added)
The U.S. Supreme Court has reaffirmed as a basis for an admiralty tort that the wrong must bear a substantial relation to a traditional maritime activity in Foremost Insurance Co. v. Richardson, Sisson v. Ruby, Grubart, and, most recently, Herb's Welding. If the MDL 2179 Court were to apply this requirement in the BP oil well blowout litigation, the claim of admiralty jurisdiction for the BP oil well blowout - the epitome of an oil and gas drilling operation - would have proven difficult, if not impossible, to sustain.
OCSLA’s role as an essential component of the BP oil well blowout cannot be ignored. OCSLA, the U.S. Supreme Court has declared, “defines a body of law applicable to the seabed, the subsoil and the…structures…on the Outer Continental Shelf.” OPA is no less essential to the tort, of course, because, as the MDL 2179 Court itself acknowledges, the statute “governs….private claims for property damage and economic loss resulting from a discharge of oil in navigable waters.” The BP oil well blowout, in sum, inextricably engages both statutes in this unique configuration. OCSLA, the U.S. Supreme Court declared in 1969 in Rodrigue v. Aetna Casualty & Surety Company, was intended to “define a body of law applicable to the seabed, the subsoil and the….structures….on the Outer Continental Shelf.”
OCSLA’s legislative history, as carefully evaluated by Rodrigue, disdains admiralty law as OCS governing law. Congress refashioned OCSLA in 1978 as a “new statutory regime” designed to “prevent or minimize the likelihood of blowouts, loss of well control, fires….or other occurrences which may cause damage to the environment or to property, or endanger life or health.” Congress could not have spoken more directly to BP oil well blowout’s core issue and corresponding remedial program, particularly as OCSLA was subsequently refined and expanded by OPA.
The Donovan v. Barbier, et al. civil RICO complaint further explains that following the Exxon Valdez disaster in 1989, Congress unanimously adopted OPA, which the Senate Public Works and Environmental Committee portrayed as a “single Federal law providing cleanup authority, penalties, and liability from oil pollution.” Consolidated and harmonized within this single act were major elements of four existing oil pollution statutes, including OCSLA’s title III.
The comprehensiveness of the displacement of general maritime law by the two non-admiralty statutes, OCSLA and OPA, is evident on two fronts. The first is Congress’s reformulation of general maritime law’s episodic, conflicting, and, at best, embryonic treatment of the tort. The second is Congress’s own undertaking in OPA to comprehensively incorporate and reformulate in a single federal statute its own work in the four prior statutes. This extraordinarily extensive undertaking leaves negligible space for the credibility of any claim that these efforts fall short of Congress’s effective occupation of a field coextensive with the boundaries delineated in the BP oil well blowout.
In Herb’s Welding, the U.S. Supreme Court excoriated as “untenable” the Fifth Circuit’s view that “offshore drilling is maritime commerce.” Herb’s Welding’s explicit confirmation of and reference to the U.S. Supreme Court’s assessment in Rodrigue that OCSLA’s legislative history “at the very least forecloses the Court of Appeals’ holding that offshore drilling is a maritime activity….” would seem to leave precious little space for Defendants’ position.
In Rodrigue, the U.S. Supreme Court clashed with the Fifth Circuit’s Snipes v. Pure Oil Company decision, which, in another manifestation of the Fifth Circuit’s reflexive admiralty-centrism, defined as “maritime” a tortious injury suffered by an OCS stationary platform worker at this OCSLA site. In Rodrigue, the U.S. Supreme Court held that admiralty law does not apply to torts originating on OCSLA situses unless Congress affirmatively expresses its “intent” favoring this override. The U.S. Supreme Court’s language favoring this conclusion could not be more forthright: “Even if the admiralty law would have applied to the deaths occurring in these cases under traditional principles, OCSLA’s legislative history shows that Congress did not intend that result. First, Congress assumed that the admiralty law would not apply to an OCSLA situs unless Congress made it apply, and then Congress decided not to make it apply.” Earlier discussion disclosed Congress’s 1978 institution of its “new OCSLA statutory regime.” The Conference Committee explained that the former clarified that federal law is to be applicable to all activities on all devices in contact with the seabed for exploration, development, and production. The committee intends that federal law is, therefore, to be applicable to activities on drilling ships, semi-submersible drilling rigs, and other watercraft, when they are connected to the seabed by drill string, pipes, or other appurtenances, on the OCS for exploration, development, or production purposes. Ships and vessels are specifically not covered only when they are being used for the purpose of transporting OCS mineral resources.
The House described title III’s function as providing the “procedures to be followed in the event of an oil spill and compensation for cleanup costs and damages resulting from such a spill.” The title limits the definition of “vessels” to watercraft operating in OCS or territorial waters and which transport “oil directly from an offshore facility.” An “offshore facility,” it stated, is “any oil refinery, or drilling structure,….which is used to drill for, produce,….or transport oil produced from the Outer Continental Shelf…..” These definitions exclude semisubmersibles as “vessels” by including them under “any drilling structure.” The term “vessel” is restricted to any watercraft used exclusively to “transport oil directly from an offshore facility.” Hence the statement of the conferees: “Once a drilling ship or other watercraft is attached to the seabed for exploration, development or production, it is to be considered an ‘offshore facility’ rather than a vessel, for purposes of applying the differing requirements for a facility as compared to a vessel.”
In fact, OCSLA’s section 1333(a), its title III OCS economic-and property-loss cause of action, and the latter’s refinement and expansion in OPA are not creatures of admiralty at all. They are instead independently grounded in the Constitution’s Property and Interstate and Foreign Commerce clauses, respectively.
Historically, the U.S. Supreme Court has objected to “fortuitous,” “perverse” or “absurd” results that may result from pinning the admiralty tail on disputes for which admiralty can claim no expertise. The U.S. Supreme Court undertook to discourage this practice in Executive Jet Aviation Company v. City of Cleveland by requiring a “substantial relationship” connecting the matter in question “to traditional maritime activity.” “In determining whether there is admiralty jurisdiction over a particular tort or class of torts,” the Court stated, “reliance on the relationship of the wrong to traditional maritime activity is often more sensible and more consonant with the purposes of maritime law than a purely mechanical application of the locality test.”
General maritime law’s judge-made principles do not enjoy a presumption against displacement by a federal statute. Despite idealized assertions of admiralty’s capacity to resolve complex social or economic issues, the reality, as Justice Holmes counseled, is that general maritime law is not a “corpus juris,” but “a very limited body of customs and ordinances of the sea.”
V. Creative Statutory Interpretation
On July 2, 2020, based on little more than empty air, the MDL 2179 judge held that OPA does not impose a duty on the responsible party to settle plaintiffs’ claims.
In his Order and Reasons, the MDL 2179 judge held: “Plaintiffs urge that OPA imposed on the GCCF a duty to settle the Donovan Plaintiffs’ claims. OPA contains no such duty. OPA is intended “to promote settlement and avoid litigation.” How does it do this? As mentioned, OPA’s presentment procedure requires a claimant to give the responsible party the opportunity (90 days) to settle her claim before she may sue in court. OPA also provides that interest typically begins to accrue following the 30th day after the claim is presented, which incentivizes early settlement. But there is a wide chasm between a process that “promotes” settlement (what Congress enacted) and one that “requires” settlements (what the Donovan Plaintiffs apparently wish Congress enacted)….OPA provides no private cause of action to a claimant for the mere fact that the responsible party (or a third party engaged to fulfill the responsible party’s obligations, as occurred here) failed to settle a claim.”
Although the durability of the MDL 2179 judge’s artful circumvention of OPA and creative statutory interpretation of OPA is questionable, the precedent established is clear:
(a) A "Responsible Party" under OPA may now enter into a contract with a politically well-connected third party "Fund Administrator." This third party "Administrator / Straw Person," directly and excessively compensated by the party responsible for the oil well blowout incident, may totally disregard OPA, operate the claims process of the responsible party as fraudulently and negligently as it desires for the sole purpose of limiting the liability of, and providing closure to, the responsible party, and the third party “Administrator / Straw Person” shall never be held accountable for its tortious acts; and
(b) The offshore oil and gas industry will never be held strictly liable for damages resulting from an oil well blowout in the Gulf of Mexico.
As alleged in Donovan v. Barbier, et al., the MDL 2179 judge’s orders and reasoning are “contrary to U.S. Congressional intent, the OCSLA, OPA and U.S. Supreme Court decisions. The only logical conclusion is that they are the product of Defendants acting individually and/or in collusion with each other and the ‘MDL 2179 Enterprise’ in order to knowingly limit BP’s liability and thereby maximize judicial efficiency and/or their compensation.”
Efficiency is not the only touchstone of justice. A substantial body of opinion and a respect for jurisdictional principles suggest that a plaintiff ordinarily has a right to a trial in the forum of his or her choosing. See, e.g., Koster v. (Am.) Lumbermens Mut. Cas. Co., 330 U.S. 518, 524 (1947) (noting that a plaintiff ordinarily should not be denied the advantages of his chosen jurisdiction). Aggregation of cases for the purpose of facilitating settlement is a byproduct of §1407, but is not its central statutory purpose. See In re Patenaude, 210 F.3d 135, 144 (3d Cir. 2000).
Judicial economy is undoubtedly well-served by MDL consolidation when scores of similar cases are pending in the courts. Nevertheless, the excessive delay and marginalization of juror fact finding (e.g., dearth of jury trials) associated with traditional MDL practice are developments that cannot be defended. Delaventura v. Columbia Acorn Trust, 417 F. Supp. 2d at 153 (D. Mass. 2006). The appropriate focus for fund resolution of mass claims should be justice for the claimants, not merely judicial economy and closure for the corporate misfeasor.
It’s time for MDL judges to focus on justice for the plaintiffs rather than merely judicial efficiency. “MDL Judges” should not be perceived as “Mob Bosses.”
For further reading:
COLLUSION: Judicial Discretion vs. Judicial Deception - The Impending Meltdown of the United States Federal Judicial System by Brian J. Donovan
Publication date: 04/20/2018