BP and Oil Spill Victims Both Want Settlement Overturned


For months, BP’s (NYSE:BP) objections to the settlement with oil spill victims a New Orleans district court judge approved last year has been met with staunch opposition from both the legal representation of those individuals and businesses harmed by the disaster and Judge Carl Barbier himself. But just as the oil producer has appealed the settlement, arguing that it unfairly compensates “fictitious” losses, victims have made their own appeal, claiming that the settlement is unfair because it gives uneven or inconsistent compensation to claimants with similar losses. That both sides are disputing the fairness of the deal gives BP an opportunity.

Responding to an appeal made by more than a dozen claimants who said the settlement should compensate victims more, BP filed court documents Friday saying the entire agreement should be thrown out if the dispute could not be resolved in the company’s favor. Due to pressure from the plaintiffs lawyers, Barbier “has adopted an interpretation of the settlement agreement that drastically and improperly expands the definition of the class” of claimants covered by the settlement, the company’s lawyers wrote in the documents obtained by Bloomberg.

Several months ago, when the restitution payments started to overshoot its original estimate by billions, BP began to contest the manner in which restitution payments were awarded, arguing that court-appointed fund administrator Patrick Juneau was compensating “fictitious and inflated losses,” and that he had misinterpreted the settlement. By the end of June, the costs of compensation had hit $9.6 billion, and since then, they have continued to climb. The company has stated that Juneau’s misinterpretation has pushed its claims bill above its March 2012 estimate by almost $2 billion.

But BP’s claims have not gained much traction with any of the other parties involved in the settlement. A consortium of plaintiffs’ lawyers answered the company’s allegations with this one-liner: “buyer’s remorse does not alter the deal that was struck.” As for Barbier, the judge who approved the settlement in 2012, he has not only refused to issue the injunction, but the former plaintiffs’ attorney, born and bred in Louisiana, even told one of the company’s lead outside litigators that the company’s perspective on the case “doesn’t make sense to most people down here.”

Nevertheless, BP has kept on the offensive; as Chief Executive Officer Robert Dudley has said, BP is “digging in” and will “play it long” for the sake of shareholders. Furthermore, now that plaintiffs have appealed the settlement, Brent Coon, the lawyer leading the appeal against the accord, said in a phone interview with Bloomberg that the opposition has “jumped in bed with” BP. “They can’t say they’re dumping the deal, but they’re trying to dump the deal,” he added.

The company’s current argument is that Juneau’s interpretation of the agreement’s terms does not meet the legal requirement that class-action settlements treat all claimants with the same injuries equally, reported Bloomberg. This is also what lawyers for the plaintiffs argued as well. If the current manner in which Juneau awards compensation is “overturned, this court should uphold the fairness and adequacy of the settlement agreement,” BP’s lawyers stated, according to the publication. If his interpretation was “to be affirmed, however, the district court’s decision certifying the settlement class and approving the settlement would have to be reversed.”

Lawyers for the plaintiffs maintain that even if the court overturns Barbier’s approval of the settlement, the company should not be allowed to renege on compensating victims.

“The agreement mandates that BP pay all claims that have been submitted by the time the [New Orleans] Fifth Circuit [court of appeals] rules” on the appeal, Steve Herman, co-head of the committee of lawyers representing spill victims, said in an interview with Bloomberg. “BP could go into contempt and default and simply stop paying claims,” he said. “But I think it is fairly unlikely that a publicly traded company like BP would defy a court order, especially with the Clean Water Act fines and natural resource damages claims still hanging over them.”

“BP’s got the money” to compensate all claimants, Herman added. “They’re just whining and complaining like babies who don’t want to give up their lollipops. Nobody ever heard of a defendant attacking their own settlement.”

As for BP, the company said it supports the settlement if the current interpretation of compensation is reversed.

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Follow Meghan on Twitter @MFoley_WSCS