Friday, March 14, 2014

BP Loses 5th Circuit Appeal - Class Action Settlement Stands

In a decision issued on March 3, the Fifth Circuit held that BP must stick to the settlement it signed on to, even if it doesn't like any longer the broad approach to compensation it once agreed to.   As Professor and former Soliciter General Charles Fried said, in sum and substance, a contract is a promise.  Here is an excerpt from the Fifth Circuit opinion:

There is nothing fundamentally unreasonable about what BP accepted but now wishes it had not.  One event during negotiations in the fall of 2012 suggests reasons for just requiring a certification [instead of proof of causation]. The claims administrator, in working through how the proposed claims processing would apply in specific situations, submitted a hypothetical to BP and others. It posited three accountants being partners in a small firm located in a relevant geographic region. One of the three partners takes medical leave in the period immediately following the disaster, thus reducing profits in that period because that partner is not performing services for the firm. At least some of the firm's loss, then, would have resulted from the absence of the partner during his medical leave. BP responded that such a claim should be paid.

We raise this not for the purpose of analyzing an issue we conclude is not relevant to our decision, namely, whether BP is estopped from its current arguments. Instead, we mention it in order to identify the practical problem mass processing of claims such as these presents, a problem that supports the logic of the terms of the Settlement Agreement. These are business loss claims. Why businesses fail or, why one year is less or more profitable than another, are questions often rigorously analyzed by highly-paid consultants, who may still reach mistaken conclusions. There may be multiple causes for a loss. ... The difficulties of a claimant's providing evidentiary support and the claims administrator's investigating the existence and degree of nexus between the loss and the disaster in the Gulf could be overwhelming. The inherent limitations in mass claims processing may have suggested substituting certification for evidence, just as proof of loss substituted for proof of causation. ...

In re Deepwater Horizon, --- F.3d ----, 2014 WL 841313, *5 (5th Cir. 2014). 

Readers may also be interested in a Bloomberg News article by Laura Calkins and Jeff Feeley entitled BP Must Live with $9.2 Billion Oil Spill Deal, Court Says.  In other BP news, looks like it can drill in the Gulf of Mexico again, according to the NYTimes

ADL

http://lawprofessors.typepad.com/mass_tort_litigation/2014/03/bp-loses-5th-circuit-appeal-class-action-settlement-stands.html

Class Actions, Environmental Torts, Mass Disasters, Procedure | Permalink

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