Appeals court rejects BP’s bid to rewrite oil spill settlement terms

BP 435x292 Appeals court rejects BP’s bid to rewrite oil spill settlement termsBusinesses seeking compensation for losses caused by BP’s 2010 Deepwater Horizon oil spill do not have to prove they were directly harmed by the disaster to collect payments, the 5th U.S. Circuit Court of Appeals ruled Monday.

BP and its lawyers have been trying to backpedal on the settlement agreement it reached with the Plaintiffs’ Steering Committee (PSC) in March 2012, arguing that oil spill relief money is falling into undeserving hands. BP has sued oil spill fund administrator Patrick Juneau and U.S. District Judge Carl Barbier in an effort to halt claims payments, asserting that payments are being made on exaggerated and fictitious claims.

A vital part of that agreement established a formula for honoring oil spill claims and was designed to expedite payments given the massive scope of the disaster and the sheer number of businesses and individuals it harmed. BP acknowledged that payment to “false positives” would be an “inevitable” symptom of the agreement, but has since asked the courts to make companies prove their losses can be traced to the spill.

BP originally estimated it would pay $7.8 billion to resolve all the outstanding claims, but it became clear within one week of the settlement agreement that costs would exceed BP’s projections.

“Today’s ruling makes clear that BP can’t rewrite the deal it agreed to,” two lawyers on the Plaintiffs’ Steering Committee said in a joint statement.

In Monday’s ruling the 5th Circuit panel wrote that the settlement agreement’s language was in line with U.S. court rules governing class action lawsuit settlements, essentially agreeing with Judge Barbier who said, as the Times-Picayune explained, that “those rules recognize that the purpose of such settlements in large damage cases is in part to reduce the expense and burden that would be involved by holding individual trials for each claimant.” The number of claimants in the BP litigation could swell to 200,000.

BP said it disagreed with the 5th Circuit’s decision and said it is considering additional options to appeal the ruling.