Court Rules BP Must Honor Terms of $9.2 Billion Oil Spill Settlement

By Laurel Brubaker Calkins and Jef Feeley | March 3, 2014
Oil Spill

BP Plc must abide by terms of a $9.2 billion settlement it reached with victims of the 2010 oil spill, a federal appeals court ruled in rejecting the company’s objections that the deal is being misinterpreted by the claims administrator.

BP must resume paying millions of dollars in business-loss claims that were temporarily halted in December while the company fought to block payments over losses not directly linked to the worst offshore spill in U.S. history, the U.S. Court of Appeals in New Orleans said in today’s ruling.

“In light of our reading of the settlement agreement,” U.S. Circuit Judge Leslie Southwick wrote for the majority of a three-judge panel, “we conclude the settlement agreement does not require a claimant to submit evidence that the claim arose as a result of the oil spill.”

Anyone submitting a claim must attest that the spill caused the damages, which are required to match certain agreed-upon loss patterns defined in the accord, Southwick said. The deal allowed for “suspicious forms” to be investigated for potential fraud, he said.

The April 2010 blowout of BP’s deep-water Macondo well off the coast of Louisiana killed 11 people and sent millions of barrels of oil into the Gulf of Mexico. BP settled with most private plaintiffs in March 2012, just before a trial on liability for the disaster. BP initially valued the economic- loss accord at $7.8 billion. In a regulatory filing last year, it increased that amount to $9.2 billion.

 

 

Appellate Options

 

 

“BP disagrees with today’s decision,” Geoff Morrell, a spokesman for London-based BP, said in an e-mailed statement. “BP had asked the court to prevent payments to business economic loss claimants whose alleged injuries are not traceable to the Deepwater Horizon accident and oil spill. BP believes that such claimants are not proper class members under the terms of the settlement and is considering its appellate options.”

BP has struggled to convince two different three-judge panels of appeals court judges that its settlement was invalid unless the company’s interpretation was enforced by the courts.

A different three-judge appeals court upheld the approval of the settlement on Jan. 10, ruling the accord satisfied all legal requirements for resolving a class action, or group lawsuit.

 

 

Two Losses

 

 

BP failed to convince both appellate panels its settlement wasn’t legally valid unless victims were required to provide evidence their losses were caused by the Gulf of Mexico spill.

“These requirements are not as protective of BP’s present concerns as might have been achievable, but they are the protections that were accepted by the parties and approved by the district court,” Southwick wrote in today’s ruling. “There is nothing fundamentally unreasonable about what BP accepted but now wishes it had not.”

The case is In Re. Deepwater Horizon, 13-30315, U.S. Court of Appeals for the Fifth Circuit (New Orleans). The lower-court case is In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

–With assistance from Harry R. Weber in Houston. Editors: Michael Hytha, Andrew Dunn

 

 

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  • March 4, 2014 at 2:12 pm
    Just Another Underwriter says:
    “In light of our reading of the settlement agreement,” U.S. Circuit Judge Leslie Southwick wrote for the majority of a three-judge panel, “we conclude the settlement agr... read more
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