Putative federal class awaits criminal restitution for oil spill

SANTA BARBARA -- Putative class members suing Plains All American Pipeline LP in a federal class action arising from a massive 2015 oil spill in Santa Barbara are closely watching the follow-up to a state criminal trial, in which a judge is expected to determine restitution awards to victims of the spill as part of the company's felony conviction.

The restitution award will have a major impact on any class action, which is presumably why Lawrence J. Conlan of Cappello & Noël LLP, who is representing platform oil workers, fishers, and property owners in federal court, was present Monday during the hearing before Santa Barbara County Superior Court Judge James E. Herman.

"I can tell you candidly, your honor, they are feeling beaten down right now," Conlan said. "We believe when the claims for restitution of this initial group are heard and if the court determines restitution is appropriate, additional workers will be prepared to submit claims."

Herman said he expected state and county government prosecutors to request "a significant amount." However, prosecutors did not make a request. Herman set an additional hearing for February to further discuss the issues, including the prosecution's claim that defense counsel provided inadequate documentation relating to victims' claims,

Defense counsel Gary Lincenberg of Bird Marella Boxer Wolpert Nessim Drooks Lincenberg & Rhow PC said the Capello firm already requested Plains pay $445 million in restitution.

However, before discussing the details concerning the award, Lincenberg asked Herman if he thought he could be impartial during the restitution hearings, despite the judge having previously worked as an attorney with Capello.

Herman responded he worked at Capello firm from 1984 to 1989.

"You can rest assured that the fact the Capello firm is involved in this case will not have any impact on how I rule," Herman said.

The road to class certification in the federal case has been a bumpy one, including numerous certification challenges made by Plains' defense team from Bird Marella and Munger Tolles & Olson LLP.

Despite being convicted in September 2018 of one felony and eight misdemeanors relating to the oil spill, Plains has for the most part avoided major litigation payouts as a consequence of either the criminal or federal civil case.

After Plains was convicted, state and federal prosecutors asked that the company be fined $1.25 billion and forced to comply with a seven-year probation program, which included close operations monitoring by regulators. People v. Plains All American Pipeline LP, 1495091 (Santa Barbara Super. Ct., filed May 16, 2016).

However, after noting state law gives a convicted criminal the choice of jail time or probation, Plains was able to side step any of the probation terms because the company can't be physically jailed.

After Plains was sentenced to pay the maximum fine of $3.35 million, an amount Herman likens to a traffic ticket for the $2 billion company, Santa Barbara County District Attorney Joyce Dudley said she would support legislation that would give states the ability to enforce probation on corporations criminally convicted.

Class members include fishermen, property owners, and oil workers allegedly affected by the spill. Depending on how Herman rules on the victim restitution award in the criminal case, class members may or may not be able to further pursue damages in the class action.

In July, after Plains appealed U.S. District Judge Philip S. Gutierrez's order granting class certification to the oil workers who say their livelihood was affected by the closing of the pipeline, a panel of the 9th U.S. Circuit Court of Appeals decertified the class.

It found the district court, "abused its discretion by concluding that common issues predominate over individual questions for the class."

The decision came in the wake of a ruling by a 2nd District Court of Appeal panel in the 2017 Southern California gas leak litigation, which said the utility was not responsible for reimbursing economic damages suffered by area business related to the 2015 leak at Aliso Canyon.

The SoCal Gas ruling was referenced multiple times during oral arguments to decertify the oil worker class in the Plains case. Class counsel plans to file a motion to reconsider decertification this month, according to those familiar with the case.

At the last hearing in federal court, Gutierrez made clear his intentions to set a 2020 trial date in the federal civil case.