Appeals court rules for BP – allows claims process to be revisited

NEW ORLEANS – Despite U.S. District Judge Carl Barbier saying BP had no right to revisit a settlement reached with the plaintiffs’ steering committee last year over the 2010 BP oil spill, an appeals court has ruled that Barbier’s court must do just that.

A three judge panel for the Fifth Circuit split 2-1 on forcing the court to reconsider the settlement agreement. Judge Edith Brown Clement wrote the opinion with Judge Leslie Southwick concurring. Judge James Dennis dissented.

Clement wrote that there is evidence that a temporary stay should be enacted by Barbier and that the court should revisit the agreement to ensure the correct amounts were paid out to the correct claimants.

“The balance of equities favors a tailored stay,” Clement wrote. “The interests of individuals who may be reaping windfall recoveries because of an inappropriate interpretation of the Settlement Agreement and those who could never have recovered in individual suits for failure to show causation are not outweighed by the potential loss to a company and its public shareholders of hundreds of millions of dollars of unrecoverable awards.”

In his dissent, Southwick said the court lacked proper jurisdiction to force the court to reexamine the settlement and take on expanded duties in identifying which claims were proper or improper under the agreement.

“[I]t would be clear legal error for this court to assume that it has jurisdiction and authority to impose on the Administrator the requirement that, in addition to identifying a claimant as eligible and entitled to compensation for business economic loss under the consent decree encompassing the parties’ settlement agreement,” Southwick wrote.

In the appeals hearing held this July, BP argued that claims administrator Patrick Juneau was misinterpreting the settlement agreement, which resulted in inflated claims being awarded to businesses residing in Gulf Coast states who could provide little or no evidence of negative effects from the what is thought to be largest oil spill in history.

The plaintiffs’ steering committee, who represented the class action plaintiffs in the suit, used an argument provided by oil rig owner Transocean, which declined to participate in the settlement citing the inclusion of claimants who could not show direct impacts from the oil spill.

For plaintiffs, Samuel Issacharoff, a New York University School of Law professor, used an isolated northern Mississippi county as an example of what Transocean offered and of which BP was fully aware of.

“Benton County has no tourism industry, no seafood industry that I am aware of and says if you map this settlement on too, Benton County would qualify even though it is far from the Gulf, even though it is on the Tennessee border,” he said. “And BP said ‘that is the settlement we want.’”

BP argued that businesses were erroneously reporting expenses during the oil spill time period so as to be eligible for increased damages under the claims process that amounted to hundreds of millions of dollars.

The appeals court ruling comes as Barbier’s court is in its first week hearing the second phase of the oil spill trial.