BP asks appeals court to decertify Deepwater Horizon class action

NEW ORLEANS – BP argued before the U.S. Court of Appeals for the Fifth Circuit for the second time this year asking that a settlement agreement reached with the plaintiffs’ steering committee last year not be upheld unless procedures involving certain payments to businesses are altered.

Earlier this year BP raised concerns over how the settlement program was being handled by administrator Patrick Juneau. BP told the court that some businesses were receiving claims payments even though they could not show damages resulting from the 2010 Deepwater Horizon oil spill and still others were receiving inflated payments provided through the Court Supervised Settlement Program (CSSP).

Under the program BP has already paid out over $9 billion to individual claimants - while the company predicted it would be liable for just over $7 billion when it entered into the agreement.

BP's earlier appeal received a favorable opinion from the appeals court which remanded a section of the case back to U.S. District Judge Carl Barbier, who is overseeing the overall BP trial of which the second phase recently wrapped up.

Much of the hearing held Monday was centered on the issue of commonality in the class.

On behalf of BP, Washington, D.C-based attorney Ted Olson repeated a previous appeals' argument, stating that when BP agreed to the class action settlement the company believed it would be interpreted differently by the court.

Appeals Court Judge Eugene Davis said it if all classes were allowed to go back and change the terms of settlement then all class action settlements would be endangered.

“If you only looked at the issues that existed after the settlement you would never have a settlement because it would undermine your class,” Davis said.

Davis added that BP signed the settlement as it is currently worded.

“As I understand it, at the baseline until those exhibits were introduced this was a perfectly good settlement. There is no standing problem,” he said.

Olson countered saying that the interpretation of the settlement was the real problem and was separate from BP’s original intent.

“We have supported the settlement and support the settlement again," Olson said. "That is correct. Until the claims administrator with the support of district court unmoored the settlement process from the specific terms of the agreement by reading causation and modification of actual loss out of the settlement agreement. When that happened all of those things disappeared."

Judge Emilio Garza questioned what the difference was between BP’s previous appeals hearing and Monday's proceeding and why BP did not question the settlement in the months immediately after it was enacted.

Olson answered that as soon as the problems began arising in the settlement process, BP began to petition the court.

“BP objected to that process as soon as it became aware of facts that showed that it was being distorted and that issue was being considered by the other panel, and the other panel specifically said that BP raised objections as soon as it could as soon as it was aware of the problems,” he said.

“So BP didn’t sit by and watch something happen. In fact it did object.”

Samuel Issacharoff, a New York University School of Law professor, served as counsel for the class action plaintiffs at the hearing.

“Every class member alleges that he/she /it was injured as a result of the Deepwater Horizon spill that caused a decline in their revenues, their incomes, during the resulting period and that they want redress for their damages,” he said.

Garza asked Issacharoff to respond to the complaints raised by BP.

“There has been numerous allegations from the objectors and even BP that the interpretation of the agreement has somehow been changed and that damages have somehow been substituted for causation and that you have individuals who have suffered losses but not from the spill and that some people have suffered losses but have been given an excessive amount of damages,’ he said,

Issacharoff said inclusion in a class is not dependent solely on being able to prove damages.

“Proof of damages is not a perquisite to the certification of the litigation class,” he said.

In addition, Issacharoff was adamant that decertifying such a class would set a precedent.

“I would submit that this is an extraordinary situation in which this court has never, never overturned a settlement class in conditions where the right to opt out was maintained and where there were not personal injuries that would make everything so wildly disparate so the indivisuals could not be effectively corralled into one proceeding. Never,” he said.

Garza said he would agree, but for the issue of liability in declines in revenue where there did not appear to be any culpability on BP’s behalf.

“That to me is a major problem,” he said.