BP must stick to oil spill settlement, 5th Circuit rules

From Westlaw Journal Environmental: A divided panel of the 5th Circuit has ruled that oil giant BP must pay businesses for losses as a result of the 2010 Deepwater Horizon oil spill without the claimants having to prove their losses were caused by the oil spill.

The 5th U.S. Circuit Court of Appeals affirmed a Dec. 24 trial court ruling that BP is bound by the settlement agreement it signed, and the court vacated an injunction that prohibited payment until the issue was resolved.  The injunction had been in place since the December ruling, but BP filed an emergency motion with the 5th Circuit, seeking to continue it.

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Writing for the 2-1 majority, Judge Leslie H. Southwick said the agreement does not require a claimant to submit evidence that the economic loss was a result of the oil spill, the panel said.

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”Each claimant does attest, though, under penalty of perjury, that the claim in fact was due to the Deepwater Horizon disaster,” she said.

In order to process claims, BP limited factual causation as a contractual concession in the agreement, the panel noted.

Judge Edith Brown Clement dissented, arguing that causation is a “critical part “of the settlement agreement.

”This interpretation that submitting forms that lack colorable causation was acceptable under the agreement was relied upon by attorneys, who urged injured plaintiffs to file claims,” Judge Clement said.

She added that the attorneys were interpreting the agreement in light of the claims administrator’s policy statement that the program would compensate claimants “without regard to whether such losses resulted or may have resulted from a cause other than the Deepwater Horizon oil spill.”

Commenting on the ruling in a March 4 statement, BP said it disagrees with the 5th Circuit’s decision.

”BP believes that today’s decision will improperly allow for the payment of losses with no connection to the spill,” the statement said.

The appeals court said the injunction would not be lifted until the U.S. District Court for the Eastern District of Louisiana issues a mandate on remand.

BP said it may file a petition requesting a full 5th Circuit hearing on the March 3 decision.

BP appeals another ruling

U.S. District Judge Carl Barbier of the Eastern District of Louisiana has overseen the sprawling multidistrict litigation that resulted in a 2012 settlement covering $8.2 billion in economic and property damages.  In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on Apr. 20, 2010, No. 10-02179, 910 F. Supp. 2d 891 (E.D. La. 2012).

Since agreeing to settle, BP has objected that the claims administrator has paid some of the money to businesses that the company says suffered no losses after the oil spill.

BP alleges the administrator has improperly added thousands of businesses that suffered no injury at all to the plaintiff class, including law firms whose lawyers lost their licenses before the catastrophic oil spill and warehouses that burned down before it.

In late January BP asked another three-judge panel of the 5th Circuit to reconsider its Jan. 10 decision affirming Judge Barbier’s certification of a settlement plaintiff class that includes many members who allegedly lack standing to sue.  In re Deepwater Horizon Appeals of the Economic & Property Damage Class Action Settlement, No. 13-30095, petition for reh’g en banc filed (5th Cir. Jan. 21, 2014).   The oil company argued that the panel’s ruling violated Federal Rule of Civil Procedure 23.

The 5th Circuit panel in the Jan. 10 ruling was divided in rejecting the company’s argument that certifying a class with arguably undeserving members violated the U.S. Supreme Court’s holding in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013).  In Comcast, the high court directed lower courts to calculate damages on a class-wide basis.  In re Deepwater Horizon Appeals of the Economic & Property Damage Class Action Settlement, No. 13-30095, 2014 WL 103836 (5th Cir. Jan. 10, 2014).

Dissenting, Judge Emilio M. Garza said the claims administrator misinterpreted the agreement such that the class encompasses individuals or entities who could never establish standing for themselves.  The unharmed claimants defeat Rule 23 commonality, he said.

BP’s Jan. 21 request for rehearing by the full court on the certification issue is pending.

In re Deepwater Horizon, No. 13-30315, 2014 WL 841313 (5th Cir. Mar. 3, 2014).