Largest Settlement in the History of the United States

On Wednesday June 5, 2013, Luther Strange, Attorney General of Alabama toured the northern half of the State with Pat Juneau, claims administrator for the Deepwater Horizon Economic Settlement. The purpose of the trip, as stated by Atty. Gen. Strange, was to inform the citizens of Alabama of their rights pursuant to the terms of the Settlement.

The target audience of this informational tour was business owners in the cities of Cullman, AL; Huntsville, AL; and Birmingham, AL. Many residents have a hard time believing that if they owned an eligible business anywhere in the State of Alabama, and they suffered a loss of revenue during the applicable period, they may be eligible for a significant payment under the settlement. The implications of this settlement are huge, not only for the business owners but also the entire State of Alabama.

If a business is found to meet the requirements for a recovery under the settlement, it is entitled to a recovery of the amount of its lost revenue plus an additional amount, known as the risk transfer premium or RTP, of up 2.5 times the amount of lost revenue. For example, if a business is determined to have lost $100,000.00 in revenue and is located in Zone A which has an RTP of 2.5, the total amount of recovery for that business would be $350,000.00. But that is just the tip of the oil rig.

For each business that recovers under the settlement, every employee of such business is automatically eligible to recover any lost earnings. An employee may recover for lost hours, cutbacks in overtime, decreased bonuses, salary reductions, even termination due the business closing or no longer having work for that employee. The employees, like the businesses, are also entitled to recover their actual lost earnings plus the applicable RTP. For example, let’s assume that an employee of the hypothetical business in the preceding paragraph was terminated after the oil spill due to a decline in business lost $30,000.00 in wages. This employee would be eligible for $30,000.00 in lost wages plus an RTP of 2.5 or $75,000.00 for a total payment of $105,000.00. With such significant results possible under the terms of the settlement, you would think the individual claims would equal or outnumber the business claims; however, this is not the case.

For example, according to numbers presented at the recent informational presentation in Birmingham, AL, there have been over 200 businesses in Jefferson County, AL that have been determined eligible for over $95,000,000.00 in settlement payments. Conversely, only one individual economic loss or employee claim has been found eligible for a payment of less than $5,000.00. The reason for this disparity, however, is not necessarily due to a more rigorous test for individuals, but rather to a significant lower number of claim submissions by employees. It boggles the mind to think that out of the 220 Jefferson County businesses that were determined to have suffered $95,000,000.00 in lost revenue, only one employee was impacted economically.

As Mr. Juneau stated, with over $7.5 billion set aside and no cap on potential claims, this settlement is the largest settlement in the history of the United States. But it is rightly so: the full impact of the damage to the Gulf of Mexico and the economies of the surrounding states will not be known for many years to come. Every dollar lost by a business is taxable income lost to the state; every job lost is not only lost tax dollars but money out of the employee’s home state’s coffers to pay for unemployment benefits, Medicaid, food stamps, and other government need based programs.

Not only is it the right of every business owner in the State of Alabama who suffered a loss as a result of the Deepwater Horizon Oil Spill to file a claim, a strong argument could be made that it is their duty to both their employees and, most importantly, their customers: the residents of the State of Alabama.