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BP Handed Serious Defeat By Fifth Circuit

On Behalf of | Apr 7, 2014 | Oil Spill Litigation

In an important victory for plaintiffs across the Gulf Coast, the Fifth Circuit Court of Appeals delivered a serious blow to BP last month when the court rejected BP’s attempt to block settlement payments to large numbers of victims.

Specifically, BP had tried to prevent businesses from claiming a share of settlement funds unless they could clearly trace their losses back to the 2010 Deepwater Horizon disaster. The Fifth Circuit chose to reject BP’s argument that the claims administrator, Patrick Juneau, had misinterpreted the terms of the carefully agreed upon settlement.

The defeat was a surprise to BP’s lawyers who have engaged in an aggressive campaign to cast victims of the oil spill as undeserving thieves. BP has taken out newspaper ads, run commercials on TV and generally gone after companies that it felt did not deserve a share of settlement funds. BP argued that businesses across the Gulf Coast were filing false claims and receiving compensation despite the fact that their losses had no connection to the oil spill.

A panel of judges from the Fifth Circuit apparently put little stock in BP’s claims, instead voting 2-1 that the claims administrator had simply been following the rules BP agreed to when it signed the settlement agreement with plaintiffs back in 2012. The Court said that the settlement agreement was necessarily full of a variety of compromises and that the somewhat simplistic means of connecting financial loss to the oil spill was among those compromises.

BP argued that Juneau and his office should be instructed to first identify a link between the oil spill and the claims for damages before approving any payouts. However, the Court said that nowhere in the settlement agreement does it require Juneau to perform that gatekeeping function.

Leading plaintiffs’ lawyers rejoiced at the decision saying that ruling showed that BP would not be allowed to rewrite history and force a new deal on victims in the Gulf Coast. For months now, BP has threatened to ignore its obligations under the settlement agreement if it did not gets its way, something the Fifth Circuit was not swayed by.

BP’s lawyers must now try and find other ways to control the ballooning costs of the settlement. Initially, BP said it thought the deal it reached with private plaintiffs would cost the company around $7.8 billion. Now, given the unexpected number of claims being filed, the price tag is expected to reach at least $9.2 billion. Though the money may be more than expected, plaintiffs’ lawyers point out that BP’s lawyers spent years hammering out the terms of the agreement and should not be allowed to weasel out from under it just because they made a mistake estimating the price.

If you’ve been impacted by this or any other oil spill, please don’t hesitate to contact the Mississippi, Alabama and Louisiana BP Deepwater Horizon oil spill attorneys at Kilpatrick & Philley at toll free 601-707-4669.

Source: “Court rejects BP appeal over gulf oil spill payouts,” by Steven Mufson, published at WashingtonPost.com.

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