Bloomberg News

BP Oil-Spill Settlement Approval Upheld by Appeals Court (1)

January 10, 2014

Approval of BP Plc (BP/)’s $9.2 billion partial settlement of private-party claims from the 2010 Gulf of Mexico oil spill was upheld by a U.S. appeals court.

Objectors said the settlement was unfair and couldn’t be approved because it inconsistently compensated victims with the same types of economic injuries. London-based BP asked the court to delay approval until a dispute over the payment of claims is resolved in the company’s favor.

The U.S. Court of Appeals in New Orleans today upheld U.S. District Judge Carl Barbier’s December 2012 endorsement of the accord.

“We cannot agree with the arguments raised by the objectors or BP,” U.S. Circuit Judge W. Eugene Davis said today in a 2-1 ruling. “Neither class certification nor settlement approval are contrary” to federal law, the court 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.

Loss Claims

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 the economic-loss settlement at $7.8 billion. It later revised that estimate to $9.2 billion, according to an Oct. 29 company regulatory filing.

Barbier gave final approval to the settlement in December 2012, certifying the case as a class action, or group lawsuit. Multiple groups of plaintiffs subsequently appealed, contending it couldn’t be a class action because all victims weren’t treated the same.

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 reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • RIG
    (Transocean Ltd)
    • $40.44 USD
    • 0.10
    • 0.25%
  • HAL
    (Halliburton Co)
    • $68.72 USD
    • -0.27
    • -0.39%
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