The federal judge overseeing BP litigation in New Orleans has struck down BP’s latest effort to freeze payments made to claimants harmed by the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. The court’s decision means the oil giant could be running out of options to suspend payments being made under the terms of the settlement it agreed to last year.
BP had asked Judge Carl Barbier to stop claimant payments while an investigation of two lawyers connected to claims administrator Patrick Juneau is underway. BP alleges that Lionel Sutton and his wife Christine Reitano, who were helping claims administrator Patrick Juneau disburse claimant payments from the court-supervised fund, were receiving kickbacks from some law firms filing claims for oil-spill damages.
Judge Barbier appointed former FBI Director Louis Freeh earlier in July to investigate BP’s allegations of wrongdoing.
The probe is ongoing, but Judge Barbier found it had no bearing on the actual calculation and payment of claims and rejected BP’s request to freeze the payouts. He also sharply rebuked BP and its leadership for “going beyond the line” with its “unfair, inappropriate, personal attacks” on Mr. Juneau.
“The problem I have here is that you all have made a lot of accusations, put out a lot of innuendo, and I want to know what evidence there is to support this,” Judge Barbier told a lawyer representing BP. “I can’t grant an injunction based on suspicion, innuendo, beliefs.”
He also criticized BP’s campaign to publicly smear the claims process, which included placing ads in several national newspapers and putting CEO Bob Dudley on the air to attack Mr. Juneau. Mr. Dudley appeared on CNBC last week, telling interviewers that Mr. Juneau had “hijacked” the claims process with his personal interpretation of the settlement terms, which led to “absurd payments” being made.
“Those are especially offensive and inappropriate words and language coming from, of all things, the CEO of a party to this settlement agreement,” Judge Barbier told BP lawyers on Friday.
BP’s final hope lies in the Fifth Circuit appeals court in New Orleans, but historically it is very rare for an appeals court to overturn a court-approved settlement agreement.
When it helped design the settlement terms and approved them, BP estimated that it would dole out $7.8 billion to resolve outstanding oil-spill claims. That figure has already been surpassed, however, and many analysts predict that BP will pay twice that amount to resolve the claims.
BP has paid out nearly $4 billion in claims to individuals and businesses since 2010, and has spent about $14 billion on responding to and cleaning up the massive oil spill.