BP has found an unlikely ally in its fight to cut what it is paying out under last year’s multibillion-dollar class-action Gulf of Mexico oil spill settlement: people who say they aren’t getting enough money.
The British oil giant said in court papers Friday that approval of the entire deal should be junked if the method the claims administrator is using to pay business losses is upheld.
The argument was made in a response to an appeal filed by more than a dozen claimants who say the settlement should be paying more money than it is.
While the underlying principles of BP’s argument and the claimants’ argument run counter to each other, the result would be the same if either is successful in the action before the 5th U.S. Court of Appeals in New Orleans: A lower court’s approval of the settlement would be reversed.
The claimants argue in their appeal filed in July that the terms of the settlement provide uneven or inconsistent compensation to claimants with similar losses.
One example of the alleged disparity is how claimants on the west bank of the Sabine River, which runs along the Texas-Louisiana border, are being treated compared to those on the east bank. While the two areas are separated by only a few miles, claimants on the east bank, in Louisiana, are put to a less stringent test in establishing damages, the appeal argues.
BP disputes that the settlement, as written, sets up an unfair system for compensating claimants in different situations.
But it is disputing the fairness of the settlement based on how it has been interpreted by claims administrator Patrick Juneau.
BP has a separate appeal pending before the 5th Circuit that challenges the method Juneau is using to pay claimants who assert business economic losses from the 2010 disaster off Louisiana. The company argues in that case that businesses that didn’t suffer any losses are getting a big windfall from the settlement. It also argues some losses have been improperly inflated.
In what amounts to a hedging of its bets, BP has inserted itself into the appeal filed by claimants who oppose the settlement itself.
“The presence of a substantial number of uninjured claimants in the same class as injured parties creates an irreconcilable conflict between class members, thus precluding any finding that the class representatives can adequately represent the absent class members,” BP says in the filing. “For each of these reasons, the class certification order — and, thus, the settlement approval itself — would have to be reversed if the variable-profit decision were allowed to stand.”
It’s unclear what would happen if the settlement approval was thrown out by the appeals court.
There is language in the settlement that calls for claims that have already been filed to still be processed and paid if the settlement is terminated. BP could challenge that. It also could seek to move up the window that victims have to file claims.
In a statement, one of the lead plaintiffs’ attorneys involved in the settlement, Steve Herman, said BP’s filing is “tantamount to a giant advertisement urging people to file their claims now.”
“This filing makes clear that BP broke its promise to the Gulf,” Herman said. ” BP may be committed to ‘making things right’ for its stockholders, but despite the millions spent on misleading ads, when forced to to actually be honest about its intentions, BP tells the court that it has no plans to stand by the transparent, objective agreement that it negotiated, signed, and asked the court to approve.”