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TIMMONS: Halting jackpot justice
BP appeals to end inland claims for coastal spill damage
Question of the Day
BP is heading into a Louisiana courtroom Monday to stop a feeding frenzy. Lawyers for the energy giant are going before a federal appeals court to rectify an egregious misreading of the company's settlement agreement with businesses affected by the 2010 Deepwater Horizon oil spill.
The Gulf Coast has come a long way since the Deep Horizon oil spill three years ago — in large part owing to the swift and overwhelming response by companies involved in that disaster. BP, for example, has paid more than $10 billion to satisfy claims of individuals, businesses and government, and more than $14 billion for cleanup.
Some unscrupulous trial lawyers, though, see a multinational business with deep pockets, and they want a piece of the action. BP's settlement has spawned a cottage industry. Trial lawyers are actively recruiting businesses to make claims against BP even if the injuries they suffered are at best tenuous — or at worst nonexistent — and they're rushing to empty the company's pockets, without regard to the negative consequences their actions can have on the employees of the company.
For example, one rice mill 40 miles from the coast earned more in 2010 — the year of the spill — than it did in the previous years. It received $21 million from the settlement administrator under this absurd interpretation of the agreement.
An alligator farm received almost $17 million, a sum that assumes the company would have tripled its profits.
A car dealer 100 miles from the coast collected $1.45 million. A law office in central Louisiana made more in 2010 than it did in previous years; it still got $3.3 million for its "losses" as a result of the spill.
The list goes on, as BP demonstrates in its lengthy and detailed filings with the court.
What's happening on the Gulf isn't isolated to BP. All manufacturers have a stake, because next time, it may be one of us in trial lawyers' cross hairs.
Just one year ago, Blitz Manufacturing, an Oklahoma maker of portable gas cans, closed its doors after nearly a half-century in business owing to a cascade of lawsuits. Some consumers misused the product — such as by pouring its contents on an open flame — and suffered predictable injuries. Even so, they sued, sometimes winning. Win or lose, the costs of litigation mounted for Blitz and, ultimately, it couldn't afford to stay in business.
Lawsuit abuse takes a toll on manufacturers. It saps resources they could otherwise use to create jobs or grow their business. In fact, liability costs in the United States amount to roughly 2 percent of gross domestic product, making our legal system the world's most costly. Tort costs are a key contributor in the structural cost disadvantage facing manufacturers in the United States. It's 20 percent more expensive to manufacture in this country than it is among our major competitors, according to the Manufacturers Alliance for Productivity and Innovation and the Manufacturing Institute.
Our tort system is designed to ensure victims received just and fair compensation and also to deter future wrongful acts. However, too often these days, the tort system is nothing more than a trial-lawyer bonanza, and that's not fair to individuals seeking redress and no way to encourage investment in manufacturing to create tomorrow's high-paying jobs.
Jay Timmons is president and CEO of the National Association of Manufacturers.
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