British oil giant BP will have to continue paying claims from its multibillion-dollar oil spill settlement while it tries to convince the U.S. Supreme Court to tighten the rules governing which businesses can get money.
BP had asked the nation’s highest court to issue a stay on those claims while it pursued its appeal of a lower court ruling. But the court declined that request on Monday without comment.
That, by the company’s own reckoning, means sums totaling hundreds of millions of dollars may continue to flow over the next few months to businesses claiming a loss of income after the 2010 spill.
And it doesn’t bode well for the company’s argument overall, according to some legal experts. If the court thought BP had a decent case, the thinking goes, it would have issued the stay, knowing that it would be difficult to recoup the money after it has already been paid out.
“This certainly doesn’t suggest that this is a compelling case for the court to hear full argument on,” said David Logan, dean of the law school at Roger Williams University in Rhode Island.
Money from BP claims already is flowing after a brief delay. The settlement’s administrator, Lafayette lawyer Patrick Juneau, began processing business claims again last week, days after U.S. District Court Judge Carl Barbier, who is overseeing the oil spill litigation, lifted a temporary injunction against payments of certain business claims. Barbier had issued the injunction in December at the direction of the 5th U.S. Circuit Court of Appeals.
The class-action settlement was intended to avoid piecemeal litigation by resolving hundreds of thousands of claims for economic damage from what is generally considered the worst environmental disaster in U.S. history. To simplify things, it called for treating all claimants who live in a certain area along the Gulf Coast the same if they could show a loss of income after the disaster, regardless of the reason for that loss.
BP now argues that businesses should have to show that any loss of income was in some way tied to the oil spill.
In an email on Monday, BP spokesman Geoff Morrell said the company disagreed with the Supreme Court’s order, its latest legal setback in the four-year litigation.
“BP looks forward to pursuing review by the U.S. Supreme Court of the 5th Circuit’s decisions relating to the compensation of claims with no apparent connection to the spill,” Morrell said. “The company continues to believe that the lifting of the injunction suspending the payment of business economic loss claims will allow hundreds of millions of dollars to be irretrievably scattered to claimants whose losses were not plausibly caused by the Deepwater Horizon accident.”
Last month, the full 5th Circuit panel of judges decided by an 8-5 vote not to reconsider an earlier 2-1 decision upholding Barbier’s ruling, which held that unharmed plaintiffs could receive money and that BP knew as much when it agreed to the deal.
The full appeals court’s ruling apparently consolidated two issues before it: the validity of the entire settlement and whether businesses must show the spill caused their losses. The court voted against rehearing either issue, and BP has asked the Supreme Court to review both decisions.
Lawyers for BP had argued in a 48-page application asking for the stay 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.”
The company believes its chances of success are “a significant possibility” and noted that its request for a rehearing by the full appeals court was supported by five judges, the filing stated.
Still, legal experts said BP faces long odds in getting the Supreme Court to hear the case. The high court receives about 10,000 such appeals each year, hearing arguments in only about 80 cases.
While Monday’s order isn’t necessarily a slam-dunk that the high court won’t eventually rule in the company’s favor, it “certainly doesn’t bode well for BP,” said Edward Sherman, a Tulane University law professor who specializes in complex litigation.
“They’re not necessarily linked, but I think it’s an indication of a pretty weak petition for writ of certiorari,” he said.
Since it opened in June 2012, the settlement program’s claims facility has processed almost 288,000 claim forms, federal court documents show. As of April 30, the program had issued eligibility notices affirming the validity of more than 65,700 claims, with payment offers totaling almost $5 billion.
More than 58,600 claims had been paid, adding up to almost $3.9 billion.
Louisiana residents accounted for 26 percent of the overall damage claims, second to Florida.
The $3.9 billion is in addition to $400 million that was in the pipeline when Juneau took over from Kenneth Feinberg, whose earlier claims facility paid out $6.1 billion to more than 221,000 claimants.
Eleven men died when the Deepwater Horizon drilling rig caught fire and exploded April 20, 2010, about 50 miles off the Louisiana coast. Millions of barrels of oil poured into the Gulf of Mexico, into wetlands and onto the beaches of the Gulf Coast.
Follow Richard Thompson on Twitter, @rthompsonMSY.