BP’s latest attempt to revisit settlement agreement shot down by appeals court

By Louisiana Record reports | Jan 13, 2014

NEW ORLEANS – BP has suffered another blow in its bid to restructure a settlement agreement after an appeals court decided that the district court had no duty to revisit the agreement between the oil giant and those who have filed for economic loss claims stemming from the 2010 Deepwater Horizon oil spill.

BP argued that the settlement agreement had been misinterpreted by Claims Administrator Patrick Juneau and allowed businesses to receive inflated claims or claims that need not show a direct link between a decrease in profits and the oil spill.

Currently, BP has paid out more than $9 billion to claimants. The company estimated it would spend $7.8 billion on all settlement claims.

The U.S. Fifth Circuit Court of Appeals’ 2-1 majority opinion was authored by Judge W. Eugene Davis with Judge James L. Dennis concurring.  The opinion upheld U.S. District Judge Carl Barbier’s stance that because BP helped broker the initial agreement so it could not come back and overhaul it afterward.

“[A]fter a class action has been settled, by definition the litigation has been resolved and the questions have been answered,” the appeals court ruling reads.

The appeals court also found BP had never properly introduced an argument to the court concerning the controversial claims process.

“BP makes no attempt to identify a standard that we should apply to determine whether these elements are satisfied in this case,” the ruling states.

The appeals court also found that if the class contained members who admitted that they received claims without proof of causation related to the oil spill then the settlement could possibly be revisited, but this has not occurred.

The ruling found that through the settlement BP has the ability to challenge individual claims based on their merit, which could result in questionable claims being thrown out.

The majority opinion was critical of a previous ruling by another panel of appeals court judges that directed the district court to revisit the settlement and indicated that the previous panel had not properly applied relative tests governing class action certification.

Judge Emilio Garza, who sat on the previous panel and agreed with the majority opinion requesting the case be revisited, dissented from the majority opinion noting that the Claims Administrator has a duty to more closely monitor causality in the claims process.

“While the three elements of Article III standing – injury, causation, and redressability – remain constant throughout the litigation, the standard of proof necessary to demonstrate these elements becomes progressively more demanding,” he wrote.

BP issued a statement indicating a possibility for further action on the issue.

“The panel deciding the fairness appeal has left open for the Fifth Circuit panel hearing the business economic loss issues the question of how the settlement agreement's threshold causal-nexus requirement should be interpreted,” the statement reads. “BP will continue to press its position on the proper interpretation of the settlement agreement's provisions requiring a causal nexus between a claimant's injury and the spill.  BP is assessing its legal options and the further implications of the Fifth Circuit's decision.

Case no. 13-30095.

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