Judge rules against BP’s efforts to stem payments

HOUSTON – A federal judge on Tuesday denied BP’s most recent effort to stem settlement payments to oil spill claimants it says were not harmed by the 2010 Gulf of Mexico disaster.

In recent months, the British oil giant has argued in court it has been paying hundreds of millions to business claimants who could not prove their revenue and profit losses were caused by the oil spill, and that such payments violate the terms of the multi-billion dollar settlement it agreed to last year. Last month, the London-based producer said it has paid $540 million to more than 1,100 claimants located more than 100 miles from the Gulf, for instance.

On Tuesday, U.S. District Judge Carl Barbier sided with attorneys of spill claimants in his ruling that BP could not take a position that contradicts a stance taken in the settlement and other court documents, and that it could not argue the settlement contains — implicitly or explicitly — a requirement that claimants to prove damages were caused by the spill.

In court documents filed Tuesday, Barbier cited a BP motion filed in August that said once a business meets certain requirements in the settlement, revenue and profit declines are “presumed to be caused by the spill, with no analysis required to determine whether the declines might have been due, at least in part, to other causes.”
BP said Tuesday it disagrees with the court’s decision that settlement rules for claimants don’t require them to prove damages were caused by the spill, and will likely appeal the ruling.

Barbier had denied all of BP’s motions for a preliminary injunction against business economic loss payments until October, when a federal appeals court in New Orleans reversed the lower court’s decision. The three-judge panel ordered Barbier to revisit his interpretation of the settlement.

That month, Barbier ordered claims administrator Patrick Juneau to stop payments to claimants in a small category of “business-economic loss” claimants for which matching revenues to expenses “is an issue.” Those claimants, a small slice of the businesses that say they lost money because of the oil spill, use a cash-based accounting methodology. Barbier said the court would craft a “narrowly tailored” injunction.

In November, BP had argued that the preliminary injunction should be amended to include claimants that could not prove they had suffered economic loss caused by the spill. Barbier initially denied the motion, but the appellate court ruled this month ruled that the judge had erred in not examining BP’s arguments about causation.
After Tuesday’s ruling, the preliminary injunction – last amended on Dec. 5 – went unchanged.

“Awarding money to claimants with losses that were not caused by the spill is contrary to the language of the settlement and violates established principles of class action law,” said BP spokesman Geoff Morrell in an emailed statement Tuesday.

Morrell said the claims administrator has also failed to adhere to the settlement’s definition of class membership, which has “raised legal and Constitutional problems that, unless corrected, render the agreement unlawful.”

On Tuesday, Barbier maintained that the settlement was not defective.

“It sounds like he’s saying this is my interpretation and I’m sticking to it. There’s no other way to look at it without re-writting the agreement,” said Blaine LeCesne, a Loyola University law professor who has followed the case now on trial in New Orleans. The settlement “was an attempt to provide broad social and economic remediation over a five state region that was devastated by the spill.”

BP has made $3.8 billion in settlement payments since July 2012, according to claims administrator Juneau.

“Business owners across the Gulf should be pleased that Judge Barbier once again rejected BP’s efforts to rewrite history and the settlement,” said plaintiffs attorneys Steve Harman and Jim Roy in an emailed statement Tuesday. “The Court reaffirmed that the transparent, objective formulas spelled out in the agreement are the only way to determine a claimant’s eligibility and causation.”