BP Trial to Continue


The courtroom clashes stemming from the April 2010 Deepwater Horizon blowout off of the Louisiana coast continue to grind forward more than three years after the incident, with the pace slow more often than not. However, the United States Court of Appeals for the Fifth Circuit added some momentum to the litigation Wednesday, reviving BP’s claims that a formula used in calculating settlement costs for the company may leave the energy giant paying out on bogus claims.

A divided three-judge panel of the Fifth Circuit threw out a ruling of the United States District Court for the Eastern District of Louisiana and remanded the case back to that court for an injunction that would stop payments in order for reconsideration of how settlement claims should be administered. Fifth Circuit Judge Edith Brown Clement agreed with BP’s arguments that the settlement administrator misinterpreted the terms of that agreement, noting the funds were to be used only to compensate for “real economic losses, not artificial losses that appear only from the timing of cash flows.”

Furthermore, Judge Clement noted that substantial weight should be given to consideration of the “potential loss to a company and its public shareholders of hundreds of millions of dollars of unrecoverable awards.” Judge Clement agree with arguments of BP lawyers that the lower court did not have discretion to approve a class settlement where the class included members who did not suffer any losses or suffered losses unrelated to the oil spill.

Geoff Morrell, a spokesman for BP, said the company was “gratified” by the decision because “claimants should not be paid for fictitious or wholly non-existent losses.”

However, all of the Fifth Circuit judges did not agree, with Judge James Dennis saying BP had not done enough to warrant a challenge to the agreed-upon settlement. “BP has not satisfied its heavy burden of showing that a change in circumstances or law warranted the modifications it sought,” Judge Dennis wrote, arguing that the district court decision should have been upheld.

The BP Macondo well explosion killed 11 workers and resulted in millions of gallons of oil pouring into the Gulf of Mexico. As a result, BP was to establish a $20 billion compensation fund, though legal challenges have hampered the payout process.


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