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Fifth Circuit Deals Major Blow to BP’s Efforts to Renege on Settlement Agreement

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 The following is an opinion piece reposted with permission from attorney Jere Beasley, a member of the BP Deepwater Horizon Plaintiff Steering Committee firm Beasley, Allen, Crow, Methvin, Portis & Miles, P.C.

BP’s unprecedented efforts to torpedo the settlement it negotiated, agreed to and defended in open court hit a major snag last month in the Fifth Circuit Court of Appeals. After a Fifth Circuit panel of three judges rejected BP’s arguments to create a new causation standard in the business economic loss settlement, the oil giant sought en banc review by the entire Fifth Circuit with the hope that someone on the court would listen to and be influenced by its intense media campaign. But in an 8-5 decision, the Fifth Circuit rejected BP’s causation arguments and upheld the previous panel ruling by the court. The en banc order – a major blow – sets up a potential showdown in the United States Supreme Court between thousands of businesses and the oil titan.

In the Fifth Circuit order, Judge Leslie Southwick wrote that a 2012 policy statement, issued by the court-appointed claims administrator and developed with “input and assent from BP,” spelled out the criteria for business claims. Judge Southwick wrote further:

Instead of direct evidence of a causal connection between the Deepwater Horizon disaster and the claimant’s business losses, the Exhibit described four geographic zones, several types of businesses, formulae for presenting economic losses, and various presumptions regarding causation that apply to specific combinations of those criteria.

Judge Southwick was absolutely correct when he wrote that all parties agreed to the criteria prior to final court approval of the 2012 settlement. The majority of the Fifth Circuit said the causation formula “was the compromise reached by the parties on how an extremely difficult part of the claims process was to be handled.” The majority ruling stated further that Claim Administrator Pat Juneau’s interpretation “simply states that the compromise still controls even when its accuracy as a substitute for direct evidence of causation as to a particular claim is questionable.”

The Fifth Circuit’s ruling is another in a long line of defeats for BP. But the company’s efforts to rewrite the settlement agreement is a masterful public relations effort designed to save the company money. How BP can take the position it’s now taking is impossible to justify when you consider the following:

• BP emphatically supported the business loss framework in its briefing before Judge Barbier during the preliminary and final class certification approval stages;

• BP’s lawyers supported the business framework in oral argument before Judge Barbier, and noted that the settlement would be generous to businesses;

• When questioned by the Claims Administrator as to whether a business need only meet the causation formulas in the settlement to establish causation, counsel for BP agreed;

• When questioned by Judge Barbier in open court as to whether a business need only meet the causation formulas to establish causation in the settlement, again counsel for BP agreed;

• When questioned during oral argument before the Fifth Circuit about the causation framework, BP lawyer Ted Olson admitted that the causation framework was “part of a compromise,” as any settlement is. His statements supported testimony from a BP expert that such “false positives” should be paid;

• When confronted by BP’s reversal of its position, Judge Barbier stated “when it talks about causation, if anyone is attempting to rewrite or disregard the unambiguous terms of the Settlement Agreement, it is counsel for BP.”

• BP has never, to my knowledge, been able to state what the causation standard they now so eagerly want actually is and how it would be defined or implemented.

In reality, before the settlement was reached, BP desperately wanted a release of civil punitive liability from private claimants and a resolution of the criminal charges it was facing. With the economic settlement in place in 2012, BP had a master release of private punitive liability and a key negotiating tool to then work toward resolving the federal criminal charges against it. Now, with the private punitive damages and criminal issues under control, the company is going on the offensive to completely torpedo the settlement it agreed to or, at the very least, delay its implementation as long as possible.

The company has spent millions upon millions on lawyers fighting what the company itself agreed to and on ads in the media contradicting its own statements in court. In the coming months, we should expect many more millions going to the BP lawyers and ad companies instead of businesses along the coast – many of which have waited months, if not years, to be compensated. Shame on BP!

The Fifth Circuit refused BP’s request to keep the current injunction on claim determinations and payments in effect, and as this article was going to print, Judge Barbier had just entered an order formally lifting the injunction on claim payments. Claims with signed releases on hand were to start being paid by the Claims Administrator again on June 2. But BP has filed an emergency motion with the Supreme Court of the United States to enjoin any further payments pending certiorari review. Hopefully, that motion will be denied. Claims (some of which have been waiting for 1 ½ years) can finally be paid unless the Supreme Court places yet another hold on payments. While BP promptly filed its petition for writ of certiorari on May 21, I do not believe the High Court should accept this case based on the record in both the trial court and the Fifth Circuit. But we will have to wait to see what happens there.

3 Comments

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  1. Glenn Howard says:
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    I don’t know what is worse, the spill or the way BP is handling the recovery payments. These are truly two disasters. One possibly an error in
    equipment the other, on purpose. Why would any one or any country want to do business with BP knowing now how they disrespect their obligations.

  2. Will says:
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    I second that… policy 495 is a complete re-write. Nothing in it was ever contemplated by either party. The precedent scares me — we are ok with sliding 80 pages into a contract two years after it was drawn up and executed…. anyone have any knowlegde to how Barbier signed off on this? Typically, he does his homework but I’m not so sure he didn’t just rubber stamp this one… perhaps relying on PWC and P&N & Juneau entirely too much with this policy. Wondering what are the chances of this policy (at least the most drastic changes within it) gets thrown out?

  3. Eyeswideopen says:
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    It’s my understanding that you and your firm Beasley Allen worked on the devolvement and negotiated the compensation modules along with the variety of causation mathematical test “V Trend”& “Mix Test “currently in use today. With the resent settlement stats did your team foresee this many causation denials and do you believe policy 495 directly conflicts with the concessions made my BP in exchange for the benefits they received.

    The limiting of the losses to 2010 only knowing that the true amount of oil released was concealed. Plus capturing of all entities in the entire states of Louisiana, Mississippi and Alabama by making them class members that bar them from litigation if they didn’t OPT-OUT this alone was worth any compromise.

    It is now common knowledge that BP went in with the captured data from GCCF just wondering if you can elaborate or confirm that the data was used in the modeling program. Because it appears that BP went into negotiations knowing full well what the overall cost would be if these test were implemented along with the mapping of the zone system and RTP’s. (But they took a crazy U Turn on us and are now spinning the truth).

    If policy 495 is left intact they have truly rewriting the terms and conceded nothing in return to the class.
    As a class counsel we are expecting you to fulfill your fiduciary duty to the class members and FIGHT 495

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