US court upholds BP settlement for Gulf oil spill

Jan 11, 2014 by Olivia Hampton
The National Oil Spill Commission's report of recommendations following the BP Deepwater Horizon Oil Spill in the Gulf of Mexico is seen after a news conference where it was released at the National Press Club in Washington, DC, January 11, 2011

A US federal appeals court upheld a multibillion-dollar settlement between BP and the coastal residents and businesses hit by the company's massive Gulf of Mexico oil spill in 2010.

The British energy giant reached a $7.8 billion in 2012 with thousands of claimants struck by the worst environmental disaster in US history.

But it had been challenging the way Patrick Juneau, a court-appointed administrator of claims, calculates companies' compensation for lost profits.

The 5th US Circuit Court of Appeals ruled that US District Judge Carl Barbier was correct in rejecting a BP bid to require companies to prove that their losses were directly linked to the spill before getting a payout.

The plaintiffs were quick to hail the decision.

"Today's ruling is an enormous victory for the Gulf, and an important step forward in ensuring that every eligible claimant is fully compensated according to the objective, transparent formulas spelled out in the settlement agreement that BP co-authored and agreed to," lawyers Steve Herman and Jim Roy said in a statement.

BP said it would weigh its options to press for clarification from the courts on the minimal requirements for plaintiffs to qualify for loss claims.

"BP will continue to press its position on the proper interpretation of the 's provisions requiring a causal nexus between a claimant's injury and the spill," said BP senior vice president of US communications Geoff Morrell.

"BP is assessing its legal options and the further implications of the Fifth Circuit's decision."

In its 48-page decision, a divided three-judge panel of the appellate court said that it could not agree with arguments raised by BP and other appellants, and affirmed Barbier's initial ruling in 2012.

"We cannot agree with the arguments raised by the objectors or BP," the document read, citing federal rules governing class-action lawsuits.

"Neither class certification nor settlement approval are contrary to Article III in this case," it added, referring to federal law.

One of the judges, Emilio Garza, disagreed.

"Whether a class member was economically injured is immaterial if that loss was not caused by the oil spill," Garza said in a 14-page dissent.

"Absent an actual causation requirement for all class members, Rule 23 is not being used to simply aggregate similar cases and controversies, but rather to impermissibly extend the judicial power of the United States into administering a private handout program."

In December, Barbier said the 2012 settlement negotiated with US authorities and accepted by BP presumed an oil spill link for any losses to businesses within certain geographical zones and in certain sectors.

Several groups of plaintiffs had previously complained after Barbier's final approval of the settlement in which he certified the case as a class-action lawsuit.

On April 20, 2010, an explosion on the Deepwater Horizon rig some 50 miles (80 kilometers) from New Orleans killed 11 workers and spilled oil for 87 days until it was plugged.

The disaster blackened beaches in five states and crippled the region's tourism and fishing industries in a tragedy that riveted the United States.

Explore further: BP wins reprieve over compensation for oil spill

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