BP Seeking Payment Reversals May Reignite Damages FightLaurel Brubaker Calkins
BP Plc is seeking to undo payments to some victims of the 2010 Gulf of Mexico spill in a move opposing lawyers warn could open the floodgates to challenging hundreds of thousands of individual damage-claim awards.
BP, which is struggling to hold down the estimated $9.2 billion cost of its settlement of most private damage claims, is set to argue today before the U.S. Court of Appeals in New Orleans that the administrator of its settlement program misunderstood the deal. As a result, a handful of nonprofit agencies that didn’t suffer any losses from the spill were paid hundreds of thousands of dollars, BP contends.
Victims’ lawyers accuse BP of using the nonprofits as a test for winning appeals court oversight of individual damage awards and rewriting the settlement.
Thousands of people and businesses harmed by the worst offshore spill in U.S. history sued BP and its subcontractors. BP previously set aside $43 billion to cover all costs of the spill and has already paid more than $28 billion in spill response, cleanup costs and damages. Last month, the federal judge overseeing the spill lawsuits ruled that BP acted with gross negligence in causing it, a decision that exposes the company to as much as $18 billion in U.S. pollution fines.
At today’s hearing, BP is challenging the loss-calculation formula for the nonprofits, each of which received fewer grants and donations after the spill than before it. This misinterpretation “will impose sweeping liability on BP for claims that it never agreed to compensate,” the London-based company said in a court filing.
BP has complained it’s being forced to pay hundreds of millions of dollars in claims it never intended to be covered by the settlement.
Almost every court decision since the deal was approved has gone against BP. The company has asked the U.S. Supreme Court to review the settlement to see which interpretation is right. The high court hasn’t said whether it will hear that case.
BP has previously made similar arguments to U.S. District Judge Carl Barbier, who is presiding over the consolidated cases in New Orleans, and to two different three-judge panels of the appeals court. With the exception of a ruling requiring proper matching of claimants’ revenues and expenses for settlement calculation purposes, the courts have told BP it must live with its deal.
The settlement provides an internal appeal process, which lets either side take lingering individual damages disputes to Barbier, who can choose whether to review them. His decision is final under the terms of the agreement, victims’ lawyers contend, and can’t be appealed to a higher court.
BP is trying to subvert the settlement program and appeal “literally thousands of claimant awards directly to this court at its will,” lawyers for one of the nonprofits told the appeals court in a filing. “The possibility of a flood of cases” being appealed directly to the appellate court would undermine “the very purpose behind class settlement agreements,” which are designed to avoid individual litigation, they said.
BP disagrees that Barbier has the final say on individual claims. The company said it can appeal beyond Barbier because the settlement doesn’t specifically say it can’t.
“The settlement agreement contains no provision waiving BP’s right to appeal, and the law is clear that parties to a settlement do not waive their right to appeal unless they clearly and unequivocally abandon that right,” BP’s lawyers said in a filing.
The cases are In Re. Deepwater Horizon, 13-30843, 13-31299, 13-31296 and 13-31302, 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).