BP to Appeal Oil Spill Claims Settlement to Supreme Court

By | May 22, 2014

BP Plc, seeking to avoid paying what it says would be billions of dollars in unjustified claims, will ask the U.S. Supreme Court to review a court order on a settlement tied to its 2010 Gulf of Mexico oil spill.

“No company would agree to pay for losses that it did not cause, and BP certainly did not when it entered into this settlement,” the company said in a statement announcing its intention to appeal an order forcing it to pay what it calls fictitious claims of spill-related damage.

The company asked the U.S. Court of Appeals in New Orleans yesterday to freeze the disputed payments while an appeal of the claims process is pending. The court yesterday lifted an earlier halt on payments. BP said it could be “irreparably harmed” if payments were made before final resolution of the dispute.

BP settled with most private-party plaintiffs in 2012, initially estimating the cost of the agreement at $7.8 billion. The company contends a flawed interpretation by the claims administrator has raised the price to $9.2 billion or more.

The New Orleans appeals court this week rejected BP’s contention that the claims administrator was paying for economic losses that weren’t caused by the spill.

Lawyers for spill victims contend BP is experiencing “buyers’ remorse,” and the settlement didn’t require businesses to prove a direct link to the spill. Claims payments were based on a formula, primarily depending on distance from the spill, using sample periods before and after the event. Businesses in the areas covered by the settlement were assumed to have suffered because of the spill’s regional economic effects, according to court filings.

The appeal is In Re Deepwater Horizon, 13-30095, 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, 10-md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans).