Opponents of BP Plc (BP/)’s $9.2 billion partial settlement of private-party claims from the 2010 Gulf of Mexico oil spill asked a U.S. appeals court to reverse a judge’s approval of the agreement.
The deal can’t be approved because it inconsistently compensates victims with the same types of economic injuries, opponents of the settlement told the U.S. Court of Appeals in New Orleans today. The settlement should be more fairly distributed, attorney Brent Coon told the panel.
“It’s not just the amount of money that’s paid, it’s money that should have been paid,” he said. Coon and lawyers for other objectors are seeking a reversal of U.S. District Judge Carl Barbier’s December approval of the accord.
BP asked the court to delay any decision until after the resolution of a dispute over how claims are paid.
“It’s a fair, adequate and reasonable settlement provided those issues are resolved,” Theodore Olson, a BP lawyer, told the appellate court today.
The company won review last month of the claims administrator’s interpretation of the settlement, which London-based BP said was causing the approval of millions of dollars in “fictitious” payments to businesses for economic losses. A final ruling on the payments hasn’t been made.
“What BP agreed to was a process,” Olson said. The payments changed under the formula used by the claims administrator, he said. “Black became white.”
Judge W. Eugene Davis said BP lawyers appeared to have “several months” to dispute the methods for calculating business economic loss payments during BP negotiations with the plaintiffs’ lawyers.
“I don’t understand how you can come in after all that time and say you didn’t know what was going on,” he said at today’s hearing.
“We did object,” Olson said.
The April 2010 Macondo well blowout and the explosion that followed killed 11 workers and set off the worst offshore oil spill in U.S. history. The sinking of Transocean Ltd. (RIG:US)’s Deepwater Horizon drilling rig and the spill led to hundreds of lawsuits against BP and its partners and contractors.
The company settled with most private plaintiffs in March 2012, just before a non-jury trial was to begin on liability for the incident and on whether BP or its contractors, Halliburton Co. (HAL:US) and Transocean, acted with gross negligence.
Barbier conducted that trial this year in New Orleans. A second phase of the trial, over the size of the spill and the efforts to contain it, finished last month. Barbier hasn’t made decisions on either phase.
The accord resolved economic-loss claims for multiple classes of businesses and property owners in Louisiana, Alabama and Mississippi and in parts of Texas and Florida. It excluded claims of financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from the Obama administration’s moratorium on deep-water drilling prompted by the spill. It also didn’t cover claims by governments.
BP initially valued its economic-loss settlement at $7.8 billion. It now puts the cost at $9.2 billion, according to an Oct. 29 company regulatory filing.
Barbier gave final approval to the settlement in December. Barbier approved the settlement as a class action, or group lawsuit. Multiple groups of plaintiffs subsequently appealed, contending the case couldn’t be certified as a class action because victims weren’t treated the same.
The standard of commonality required for a class action to be approved isn’t met in the BP settlement, Coon, who represents thousands of victims, said in his appeal of the approval.
“The settlement class is not cohesive, but a large and unwieldy aggregation of several distinct groups of individuals and entities whose situations could possibly be described as similar, but whose only common characteristic, across groups, is that they happened to live or work or own property or operate somewhere in the Gulf region in 2010,” he said in a Sept. 20 filing.
Lawyers for the Plaintiffs’ Steering Committee, who negotiated the agreement, said the settlement was fair and complied with legal standards.
The class certified in the settlement meets the requirement of “commonality,” Samuel Issacharoff, a lawyer representing the PSC, told the panel today.
The claimants in the Deepwater Horizon case, “hundreds of thousands of them,” all have at least one thing in common, he said. “They all suffered as the result of the oil spill.”
BP, which supported the settlement when it was approved last year, contends the class can’t be certified unless it gets a reinterpretation of which claims will be paid.
The interpretation by claims administrator Patrick Juneau “creates an irreconcilable conflict among members of the class, which now includes both injured claimants seeking recovery for actual losses and uninjured businesses seeking utterly unjustifiable windfalls,” BP told the appeals court in August.
BP appealed Barbier’s affirmation of Juneau’s interpretation and a separate panel of the appeals court ordered a review last month. The judges told Barbier to stop some payments under the settlement until he can sort out who has legitimate claims.
Barbier has asked both sides to submit filings on their positions on how to comply with the concerns of the appeals court. He has to report back to the appellate panel by Dec. 2.
“And if it doesn’t go your way, you’ll be back up here again,” Judge Emilio Garza told BP’s lawyer Olson today.
The case is In Re Deepwater Horizon-Appeals of the Economic and Property Damage Class Action Settlement, 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, 10-md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans).
To contact the reporters on this story: Margaret Cronin Fisk in Detroit at firstname.lastname@example.org; Allen Johnson Jr. in the federal appeals court in New Orleans at email@example.com
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org