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BP is Heading to the Supreme Court


June 2, 2014
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BP has announced it will take the battle over its multibillion-dollar Gulf of Mexico oil spill settlement to the U.S. Supreme Court. In the meantime, BP has asked the U.S. Court of Appeals in New Orleans to keep the payment of some claims on hold while it appeals the claims process, arguing it could be irreparably harmed if forced to pay before the dispute is resolved.

BP

By a 2-1 vote, a panel of the 5th U.S. Circuit Court of Appeals on March 3rd upheld the U.S. District Court ruling that the settlement’s terms meant even unharmed plaintiffs could receive money. The Courts believed BP knew as much when it agreed to the deal in order to avoid having to litigate each case individually.

After that ruling, BP requested a rehearing by the full appeals court on whether parties must show the spill caused their losses. BP is seeking to avoid paying what it claims would be billions of dollars in unjustified claims. The Fifth Circuit court voted 8-5 against the rehearing. The Court reasoned that the settlement agreement provides the payment of claims is based on a formula, primarily depending on the claimant’s distance from the spill, and BP assented to the terms of the agreement.

BP released a statement announcing its intention to appeal the court order which would result in the company paying claims with no connection to the spill. “No company would agree to pay for losses that it did not cause, and BP certainly did not when it entered into this settlement,” BP said.

In 2012, BP settled with most of the private-party plaintiffs. The initial estimate of the cost of the agreement was $7.8 billion. BP is alleging the claims administrator has improperly interpreted the settlement which has raised the settlement price to $9.2 billion or more.

The appeal is In Re Deepwater Horizon, 13-30095, 13-30315, 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).

If you have any questions about the issues discussed above or would like to discuss other business law matters, please contact me or the Scarinci Hollenbeck attorney with whom you work.