BP must resume payments of long-stalled business claims from its 2012 multibillion-dollar oil spill settlement, a federal judge in New Orleans ordered Wednesday in a widely anticipated decision that the British oil giant almost immediately asked once again be put on hold while it appeals the whole issue to the U.S. Supreme Court.
U.S. District Court Judge Carl Barbier, who is overseeing the litigation stemming from the 2010 Gulf of Mexico oil spill, on Wednesday lifted a temporary injunction against payments of certain business claims from the class-action settlement, which aimed to avoid piecemeal litigation by resolving hundreds of thousands of claims for economic damages from what is generally considered the worst environmental disaster in U.S. history.
Barbier issued the injunction in December at the direction of the U.S. 5th Circuit Court of Appeals. The appeals court decided last week by an 8-5 vote not to reconsider an earlier 2-1 decision upholding Barbier’s ruling that the settlement’s terms meant even unharmed plaintiffs could receive money and that BP knew as much when it agreed to the deal.
The settlement called for treating all claimants who live in a certain area along the Gulf Coast the same way if they could show a loss of income after the 2010 Deepwater Horizon disaster, regardless of the reason for that loss. However, BP over the past year has contested this interpretation of the settlement, arguing in court filings and ads that businesses should not be paid unless they can show the oil spill actually caused their losses.
Barbier had said the settlement — which is being administered by Lafayette lawyer Patrick Juneau — was not intended to undertake a “claim-by-claim analysis” and that BP’s current position on causation is “clearly inconsistent with its previous position.”
Appeals Court Judge Leslie Southwick wrote in last week’s decision that the settlement’s policy for issuing payments was put together “with input and assent from BP.”
Southwick wrote that the policy, which served as a substitute for requiring direct evidence of a claimant’s connection to the spill and the cause of losses, “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.”
Two days later, BP said it would ask the U.S. Supreme Court to require businesses prove the oil spill caused their financial losses in order to collect from the settlement. Lawyers for the company also asked the 5th Circuit not to execute its decision until the nation’s highest court can consider its appeal, meaning no business claims would be paid in the interim.
By a 2-1 vote, a panel of the 5th Circuit denied that request this week. Southwick and Judge James Dennis made up the majority. Judge Edith Brown Clement dissented, as she did last week and when the 5th Circuit upheld an earlier ruling by Barbier in March. No reasons were given in the brief judgment.
On Wednesday, Barbier ordered the injunction against paying the claims dissolved.
BP then filed an application to stay the mandate while it asks the Supreme Court to review the ruling. In its 48-page filing, BP contended that “unless the mandate is recalled and stayed, countless awards totaling potentially hundreds of millions of dollars will be irretrievably scattered to claimants that suffered no injury traceable to BP’s conduct.”
BP’s lawyers said the stay is needed because otherwise, even if the Supreme Court eventually rules in its favor, “BP may have no practical way to recoup may of these wrongly paid awards.”
The company also contended that its odds of success are “a significant possibility” and noted that its request for a rehearing by the full appeals court was supported by five judges.
Still, legal experts say BP faces long odds in getting the Supreme Court to hear the case. The high court receives about 10,000 petitions for a writ of certiorari each year, granting and hearing oral arguments in only about 80 cases.
The full appeals court last week also refused to reconsider an appeal challenging the validity of the entire settlement, a decision that BP also plans to ask the Supreme Court to review.
BP initially estimated the settlement would cost it about $7.8 billion. The company has since adjusted that figure, saying in regulatory filings that it is expected to hit $9.2 billion.
Follow Richard Thompson on Twitter, @rthompsonMSY.