BP Plc (BP/) told an appeals court that its $9.6 billion settlement of economic damages from the 2010 oil spill can’t be approved if a dispute over claim payments isn’t resolved in the company’s favor.
U.S. District Judge Carl Barbier in New Orleans, at the urging of lawyers representing victims of the Gulf of Mexico oil spill, “has adopted an interpretation of the settlement agreement that drastically and improperly expands the definition of the class” of claimants covered by the agreement, BP’s lawyers said today in a filing in New Orleans appellate court.
London-based BP has repeatedly sought to rein in the court-appointed claims administrator, Patrick Juneau, over an interpretation of the settlement that the company claims is rewarding Gulf Coast businesses that weren’t harmed by the spill.
This “misinterpretation,” BP argues, has already swollen the estimated cost of the settlement by almost $2 billion since the deal was announced in March 2012.
If Juneau’s interpretation “is overturned, this court should uphold the fairness and adequacy of the settlement agreement,” BP’s lawyers said in the filing. If Juneau’s interpretation “were to be affirmed, however, the district court’s decision certifying the settlement class and approving the settlement would have to be reversed.”
Barbier has repeatedly denied BP’s requests to force Juneau to adopt an interpretation of the settlement that the company favors or to suspend payments until the dispute is resolved.
BP’s filing today says Juneau’s interpretation undermines the legal requirement that class-action, or group, settlements treat all claimants with the same injuries equally.
The filing was made in an appeal lodged by thousands of victims who object to the fairness of the settlement and who also contend the deal treats similar victims differently.
BP’s agreement with the committee of lawyers managing the spill litigation requires the company to publicly defend its settlement, Brent Coon, the lawyer leading the appeal against the accord, said in a phone interview.
“But they’ve jumped in bed with us,” Coon said of today’s filing. “They can’t say they’re dumping the deal, but they’re trying to dump the deal.”
Spill victims’ lawyers oppose BP’s attempt to reinterpret the agreement. They say the company can’t walk away from the settlement, even if the court overturns Barbier’s approval.
“The agreement mandates that BP pay all claims that have been submitted by the time the Fifth Circuit rules” on the appeal, Steve Herman, co-head of the committee of lawyers representing spill victims, said in an interview, referring to the New Orleans appeals court.
“BP could go into contempt and default and simply stop paying claims,” he said. “But I think it is fairly unlikely that a publicly traded company like BP would defy a court order, especially with the Clean Water Act fines and natural resource damages claims still hanging over them.”
“BP’s got the money” to pay all the claims, Herman said. “They’re just whining and complaining like babies who don’t want to give up their lollipops. Nobody ever heard of a defendant attacking their own settlement.”
BP said it still supports the settlement if the current interpretation of claims is reversed.
“Given the misinterpretation of the business economic loss framework, the settlement has been wrenched from reality and no longer resembles the deal to which we agreed,” Geoff Morrell, a BP spokesman, said in an e-mailed statement responding to a question on whether the company would walk away from the deal.
“If that misinterpretation is not corrected on appeal, then, as a matter of law -- simply as a function of the rules regarding class action settlements -- the settlement could not be sustained,” he said. “If, however, the settlement agreement is properly interpreted, the agreement should be deemed fair and adequate.”
Businesses in five Southern states have received hundreds of millions of dollars in payments for what BP contends are “fictitious” losses unrelated to the worst offshore oil spill in U.S. history, according to BP court filings.
As of July 28, BP had paid $4.2 billion in total compensation under the economic settlement, according to court records. In July, the Deepwater Horizon Claims Center paid an average of $119 million a week for all kinds of claims, including the disputed business-loss claims.
BP has appealed Barbier’s order limiting the company’s right to challenge specific economic-damages awards. The judge has also repeatedly denied the company’s requests to suspend payments until a probe into potential misconduct at the claims administration is completed or the interpretation dispute is resolved.
BP initially valued its economic-loss settlement at $7.8 billion. The company recently increased its estimate to $9.6 billion in regulatory filings.
The accord doesn’t cover loss claims by state and local governments, financial institutions, casinos or companies harmed by the deep-water drilling moratorium imposed by the Obama administration after the April 2010 spill.
The case is In Re Deepwater Horizon, 13-30095, 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).
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