October 27, 2020

Supreme Court rejects BP’s appeal of oil spill settlement


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Joseph-RiceBy Marcia Coyle,

The U.S. Supreme Court on Monday eliminated what could have been a major roadblock in the multibillion-dollar settlement reached in the oil spill four years ago.

In Production & Development v. Lake Eugenie Land & Development, the justices, without comment, declined to review BP PLC’s claims that the settlement violated the Constitution and federal class action rules because it provided damages to parties who were not injured.

The high court’s denial is “very gratifying,” said Joseph Rice of Motley Rice, a lead negotiator of the 2012 settlement. BP told the U.S. Court of Appeals for the from the outset, he said, that it did not dispute causation. “So this was purely BP’s attempt to rewrite the settlement agreement,” he said. “It had no business being in the Supreme Court.”

Geoff Morrell, BP’s senior vice president for U.S. communications and external affairs, said in a written statement that the company had been successful in the Fifth Circuit in correcting “matching” accounting rules fashioned by the claims program, “and we are hopeful that the new policies will improve the program’s compliance with the terms of the settlement agreement. Unfortunately, however, the Supreme Court has declined to review the lower court decisions relating to causation.”

The company continues to be concerned about no-injury awards, Morrell said. “On behalf of all our stakeholders, we will therefore continue to advocate for the investigation of suspicious or implausible claims and to fight fraud where it is uncovered. In doing so, we hope to prevent further exploitation of our commitment to compensating all those legitimately harmed by the spill.

An explosion on the Deepwater Horizon oil-drilling rig occurred on April 20, 2010, leading to the spill of an estimated 200 million gallons of petroleum into the Gulf of Mexico. Two years later, BP and attorneys for a putative class of injured Gulf Coast residents and businesses reached a proposed class settlement of claims arising from the spill.

In the Supreme Court, BP, represented by Theodore Olson of Gibson, Dunn & Crutcher, claimed that the settlement class included “vast numbers” of members who had not suffered any injury caused by the oil spill.

The Fifth Circuit’s decision approving the settlement class, Olson argued, conflicted with decisions by four other circuit courts, which held that classes with noninjured members did not satisfy Federal Rule of Civil Procedure 23 and Article III of the Constitution.

BP had drawn supporting amicus briefs from the U.S. Chamber of Commerce, the United Kingdom, the Federation of German Industries, the Washington Legal Foundation and Kenneth Feinberg, administrator of the Gulf Coast Claims Facility, a compensation plan created by BP.

Lake Eugenie, represented by Samuel Issacharoff of New York University School of Law, countered in a brief opposing high court review, “This case is about a contract that BP signed but now wishes it hadn’t. BP negotiated a comprehensive class settlement to escape liability for the devastation caused by the Deepwater Horizon explosion. Now, however, BP has developed buyer’s remorse and wants out of the agreement it entered into.”

Gulf Coast area chambers of commerce broke with the national chamber to support the settlement agreement.

That agreement is now final, Rice said.

“Implementation has to continue,” he said. “In the implementation process, there are limited rights to appeal. I’m sure BP is going to attempt to exercise every right to appeal and delay they can. The settlement will be processed; it may take more time and be more expensive, but these claimants ultimately will be paid.”

Rice said that “several million” businesses and individuals comprise the settlement class, “and there are millions of businesses that have yet to file their claims.” The latter have a six-month deadline to file, which should fall sometime in June, he said.

The economic and property damages Rule 23 class action settlement is estimated to be worth between $7.8 billion and $18 billion to class members, according to Rice. A separate $1.028 billion settlement was reached between the plaintiffs’ steering committee and Halliburton Energy Services Inc., for Halliburton’s role in the disaster.

IMAGE: Joseph F. Rice of Motley Rice

For more on this story go to: http://www.nationallawjournal.com/id=1202678363544/Supreme-Court-Rejects-BPs-Appeal-of-Oil-Spill-Settlement?back=SCB#ixzz3LPluRonb


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