Settlement Dispute Ruling Overruled in BP’s Favor
A federal appeals court overturned a decision by U.S. District Court Judge Carl Barbier, agreeing that the judge misinterpreted the wording of a settlement dispute between BP and businesses affected by the 2010 oil-rig explosion that resulted in a massive oil spill into the Gulf of Mexico. Attorneys for the oil company claimed that the lower court ruling could result in the company paying inflated or fraudulent claims.
Lower Court Ruling
Shortly after the Deepwater Horizon drilling rig exploded, killing 11 people and spilling millions of gallons of oil in the Gulf of Mexico, BP agreed to a $20 billion compensation fund that was to be administered by the Gulf Coast Claims Facility. At the time of the settlement announcement, Judge Barbier appointed attorney Patrick Juneau to evaluate and process claims. BP claimed that the complex formula for business compensation was designed specifically for those who suffered actual economic losses due to the spill. However, the wording used by Judge Barbier would allow those who sustained losses unrelated to the spill, or who suffered no losses, to receive claim payments.
Appeal Court Decision
In a divided ruling, the three judge panel of the 5th U.S. Circuit Court of Appeals agreed with BP. Judge Edith Brown Clement and Judge Leslie Southwick stated that individuals may reap "windfall recoveries in individual suits for failure to show causation are not outweighed by the potential loss to a company and its public shareholders of hundreds of millions of dollars of unrecoverable awards." However, in a partial dissenting opinion, Judge James Dennis stated that BP had not satisfied the burden of proof that the settlement terms needed changing. The appeals court ordered Judge Barbier to draft an injunction that would allow direct loss claims to be paid, while those who could not prove direct loss be held until the case was fully adjudicated.
Vast Majority of Claimants to Be Paid
Although the plaintiff's were disappointed in the decision, attorneys say that they are pleased that the majority of those who suffered direct losses due to the oil spill will have their claims processed in a timely manner. Juneau says that he is also pleased at the decision and that his job as the claims administrator is to implement the settlement agreement under the law.
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