BP Can’t Re-Write Terms of Multi-Billion Dollar Settlement of Gulf Oil Spill Claims

Case:
Bon re Secour v. BP Exploration & Prod., Inc. (In re Deepwater Horizon)
Federal Fifth Circuit Court of Appeals
2014 U.S. App. LEXIS 3967 (5th Cir. Mar. 3, 2014)

In the latest decision arising from the April 2010 Gulf of Mexico Oil Spill, the federal Fifth Circuit Court of Appeals in New Orleans affirmed District Judge Carl Barbier’s December 24, 2013 ruling, denying BP’s attempt to stop businesses from recovering economic damages from the settlement proceeds, even where the claimants could not prove their losses were caused by the spill.

The multi-billion dollar Deepwater Horizon settlement was reached in March 2012 to resolve hundreds of thousands of claims for property damage, economic loss and medical claims resulting from the spill. Under the agreement, the claimants at issue are simply required to attest that their economic losses were caused by the spill under penalty of perjury. BP originally expected the settlement would cost $7.8 billion, but after claims payments were underway, the estimate increased to $9.2 billion. BP thus sought to require the court-appointed claims administrator, Patrick Juneau, to perform a gatekeeping role, and to deny claims by property owners whose losses could not be proven to be linked to the spill. District Judge Barbier had earlier ruled that BP would have to live with its prior interpretation of the settlement agreement, which required only the submission of a Proof of Loss form by the claimant, with the aforementioned attestation. BP argued this would allow businesses to recover for fictitious losses, but the Fifth Circuit rejected its appeal, agreeing with Judge Barbier that BP was stuck with the terms of the settlement it executed. The majority reasoned, “There is nothing fundamentally unreasonable about what BP accepted but now wishes it had not.”

Judge Edith Brown Clement dissented, maintaining the majority had adopted too loose a standard of causation and that the decision wrongly helps claimants whose losses had “absolutely nothing to do with Deepwater Horizon or BP’s conduct.”

On March 17, 2014, BP filed a Motion for Rehearing En Banc, seeking to have the full court hear the case and reverse the three-judge panel’s decision.