BP asks appeals court to throw out Deepwater Horizon settlement

03 September 2013 22:19  [Source: ICIS news]

HOUSTON (ICIS)--BP is asking a federal appeals court to throw out a multimillion dollar settlement stemming from the 2010 Deepwater Horizon oil spill if it loses a separate appeal on the interpretation to which the claims programme is determining payouts, a company spokesman confirmed on Tuesday.

Last year, BP agreed to an economic- and property-damage settlement with individuals and businesses that were suing the company, estimating that claims payouts would total $7.8bn (€5.9bn).

In March, BP requested a review of the Court Supervised Settlement Program (CSSP) and the claims administrator’s calculation of “variable profit” for certain business economic losses, which was resulting in the “payment of hundreds of millions of dollars … that the settling parties never intended to see awarded”.

District Court Judge Carl Barbier affirmed the claims administrator’s interpretation, and BP asked the Fifth Circuit Court of Appeals to overturn the lower court’s variable profit decision.

On Friday, BP filed another appeal, asking the court to “uphold the fairness and adequacy of the settlement agreement” if Barbier’s variable profit decision is overturned. Otherwise, if the variable profit decision is affirmed, BP said the appeals court should reverse the December decision to certify the class and approve the settlement.

“Given the misinterpretation, the settlement has been wrenched from reality and no longer resembles the deal to which we have agreed,” said Geoff Morrell, a spokesman at BP. “The claims administrator's misinterpretation systematically pays claimants for inflated or wholly non-existent losses. It thus breaks faith with the core bargain reflected in the agreement – namely, the compensation of claimants for actual lost profits.”

Morrell said awards are currently based on the way claimants maintain their books, even if they contain uncorrected errors, which is resulting in payments to those who did not suffer any actual economic loss and are not members of the class.

“The misinterpretation benefits parties that are not properly members of the class, creates conflicts between them and legitimate class members, and creates conflicts among similarly situated class members whose compensation varies dramatically based on arbitrary and irrelevant factors,” Morrell said. “Federal class-action rules do not permit class-action settlements where such conflicts exist.”

Meanwhile, Barbier has appointed former FBI director Louis Freeh to perform an investigation into possible ethics violations or misconduct within the CSSP, following allegations that one of the staff attorneys was referring claims to a Louisiana law firm in exchange for a share of subsequent settlement payments.

Last week, Barbier denied BP’s third request for a temporary halt on settlement payments while the CSSP was under investigation.

Separately, BP is preparing for the second phase of a federal civil trial, scheduled to begin on 30 September, to determine the oil flow rate and quantification of oil spilled, which will be used to assess a penalty to BP. Barbier has not handed down a decision on the first phase, which is to determine if BP was “grossly negligent” in the events leading up to the explosion and oil spill.

($1 = €0.76)

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By: Tracy Dang
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