July 1, 2010
You won’t have to look far for help if you think your restaurant has taken a financial hit due to British Petroleum’s Deepwater Horizon explosion. An entire specialty practice within the legal industry has sprung up overnight to help you get your share of the $20 billion compensation fund BP has put in escrow. Many restaurants have legitimate claims. Can collecting on them be as easy as the class action lawsuit wranglers make it out to be?
Law firms from throughout the country, and particularly those located in the Gulf Coast region, are licking their chops at the prospect of lucrative settlements that will accrue from the BP oil spill. They know the oil giant has little choice but to reach a settlement on virtually every claim made against it. If any dispute goes to trial, BP knows juries will not just walk, but will run to the jury room in their haste to award massive damage verdicts to those affected by the spill.
Which is one reason restaurant operators from throughout the Gulf Coast region now have their pick of law firms to handle claims against BP. Restaurants have rights for “attenuated” claims (i.e., indirect losses) under the 1990 Oil Spill Pollution Act. That means they can seek to be compensated for “loss of profits or impairment of earning capacity.”
That’s exactly the angle being pursued in the 250-plus federal lawsuits that have been filed in New Orleans so far. Some of them bear the names of well-known restaurant operators.
Susan Spicer, chef owner of Bayona in New Orleans, is a lead complainant in one. Her court papers say that a reduction in tourism and convention business, fears of contaminated seafood and higher seafood prices because of the spill have combined to deliver a financial blow to her restaurant.
“Much of the plaintiff’s business is based on the unique quality of Louisiana seafood, as well as the chain of delivery of that resource from the initial harvester (be it fisherman, oyster grower or shrimper),” the suit says. “Because this chain of delivery cannot be maintained, plaintiff’s business has been, and continues to be materially damaged.”
Spicer’s going for both compensatory and punitive damages. So are, in another class action suit, fellow high-profile New Orleans restaurants, K-Paul’s and Brigtsen’s. Their suit is joined by a number of other restaurant plaintiffs from Louisiana, Texas, Arkansas and Florida.
But operators don’t necessarily have to join a class action lawsuit to make a claim against BP. They can do so directly. You can read about how to do so and the documentation that’s required here: www.bp.com/sectiongenericarticle.do?categoryId=9033791&contentId=7062345. Then head to www.bp.com/claims if you wish make one.
BP promises snappy customer service if you do. The company says the average wait time for those who call to make a claim is six seconds, and the average “claim to paid” turnaround time for those who qualify is eight days.
The company will pay out money in two phases.
In phase one, which covers the period while the oil is still leaking from the underwater well, a restaurant owner would get a lump-sum payment to cover the first few months of losses. Taking this money would not preclude participating in a subsequent lawsuit.
Once the well is no longer leaking, a second payment will be offered to cover the restaurant’s future losses. Accepting it means that the claimant will waive the right to make other claims against BP.
So should you file a claim directly, or sign on to one of the class action suits and let the attorneys do it for you?
There are several issues to think about here. But consider the advice of Kenneth Feinberg, appointed by President Obama to administer BP’s $20 billion ICP (Independent Claims Facility) fund. He’s the guy who oversaw the September 11th Victim Compensation Fund and was the compensation czar who called the shots on executive pay at financial firms who received government bailouts during the recent financial crisis. He’s on nobody’s side, but has this advice for those seeking relief: Do it yourself.
“I make the same argument I do with all of these claims facilities,” he told PBS. “You will get money quicker. You will get money with a certainty. You don't have to give 40 percent to your lawyer. Come in and get a check.
“Right now, these emergency payments for small businesses, individuals, you don't have to relinquish your right to sue. Take this money, and, later on, file a claim with the fund that will give you a choice. Take the liquidated amount or litigate. And you will make that choice only after you know how much you will receive from the fund.”
So which restaurants qualify? They’re still working on that.
“First of all, fraudulent claims are illegitimate. They have to be valid claims.
“Secondly, we have got to decide how we’re going to make decisions on attenuated claims, the ripple effect.”
He gave a hypothetical case like this one as an example.
“‘You know, Mr. Feinberg, I have a restaurant in Las Vegas. I can’t get shrimp from the Gulf. It’s hurting my business. I want to file a claim.’”
Would this operator get money? Feinberg’s not tipping his hand.
“We have got to come up with a formula that decides what claims are causally connected to the spill and what claims are simply too far removed to be eligible for compensation,” he says.
Whether you’re inclined to participate in a class action suit or prefer the DIY route, keep Feinberg’s bottom line advice in mind: “I can’t help you if you don’t file a claim.”
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