Gulf oil spill settlement back in court as BP contests interpretation of business claims

BP’s logo is seen on one of its corporate sponsor pavilions in the Olympic park, in Stratford, east London, July 19, 2012. (Andrew Winning/Reuters)
November 3, 2013

A year ago, lawyers for BP and Gulf Coast residents and businesses took turns urging a federal judge to approve their settlement for compensating victims of the company’s massive 2010 oil spill.

On Monday, however, the one-time allies will be at odds when an appeals court hears objections to the multibillion-dollar deal. That’s because several months after U.S. District Judge Carl Barbier approved the settlement, BP started complaining that the judge and court-appointed claims administrator were misinterpreting it. The London-based oil giant is worried that it could be forced to pay billions of dollars more for bogus or inflated claims by businesses.

Plaintiffs’ attorneys who brokered the deal want the U.S. Court of Appeals for the 5th Circuit to uphold the class-action settlement.

As of Friday, an estimated $3.7 billion had been paid to more than 38,000 people and businesses. Tens of thousands more could file claims in the coming months.

The settlement doesn’t have a cap, but BP initially estimated that it would pay about $7.8 billion to resolve the claims. Later, as it started to challenge the business payouts, the company said it no longer could give a reliable estimate for how much the deal would cost.

The dispute centers on money for businesses, not individuals. Awards are based on a comparison of revenue and expenses before and after the spill. BP says a “policy decision” that claims administrator Patrick Juneau announced in January has allowed businesses to manipulate those figures in a way that leads to errors in calculating their actual lost profits.

Last month, a different 5th Circuit panel threw out Barbier’s rulings on the dispute and ordered him to craft a “narrowly-tailored” injunction that modifies the damage calculations.

BP is not satisfied and wants the court to adopt its interpretation of the settlement terms for businesses. If it does, the “otherwise fatal obstacles” would be eliminated and the entire settlement could be upheld, the company told the 5th Circuit.

BP is not the only one questioning Barbier’s December 2012 approval of the settlement. Brent Coon, a Beaumont, Texas, lawyer, argued that a rush to “close the deal” resulted in a settlement “mired in implementation problems.” Coon did not have a role in negotiating the settlement, but he filed one of several formal objections, seeking revisions to the agreement.

“Too much random guesswork was needed to determine whether an individual’s claim was eligible for settlement funds or not,” he wrote.

Juneau’s office began issuing settlement payments on July 31, 2012.

BP spokesman Geoff Morrell said the 5th Circuit’s ruling last month concluded that Juneau’s interpretations of the settlement “do not withstand scrutiny under the law.”

“If they are not corrected, the settlement class cannot be certified and the settlement should be set aside, ending what once promised to be an historic effort to benefit those who experienced losses as a result of the spill,” he said in a statement.

— Associated Press

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