Supreme Court may be BP’s only recourse in oil spill fight, legal experts say

HOUSTON – In the wake of a courtroom defeat this week, BP’s top brass is still mulling whether to take the company’s legal fight over its multibillion-dollar oil spill settlement to the Supreme Court.

But the high court likely will not take up the case even if the London-based oil company requests its judgment, legal experts said Tuesday.

BP has argued in court for months that an oil spill settlement it reached with plaintiffs’ attorneys two years ago requires business claimants to show the 2010 Gulf of Mexico disaster was connected to their financial damages. The company has argued the claims administrator, Patrick Juneau, misinterpreted the settlement.

But on Monday, the 5th U.S. Circuit Court of Appeals denied BP’s request for a rehearing to make the argument before the entire federal appeals court. Eight federal judges voted to deny BP’s petition, while five voted to rehear the matter.

Taking the matter to the Supreme Court may be BP’s only recourse, legal experts said.

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The Supreme Court likely would want to deal with BP’s case all at once, rather than take on smaller pieces of the larger oil spill civil lawsuit, said Carl Tobias, a law professor at the University of Richmond.

“If the Supreme Court was to hear anything, it would probably like to cover it just once,” said Tobias, who studies federal courts and has followed the legal fallout from the Gulf oil spill. “In fairness, this is not a huge part” of BP’s oil spill trial.

BP spokesman Geoff Morrell said in a written statement late Monday the company is considering its legal options.

Settlement costs rise

Francois Lauras, a senior credit officer with Moody’s Investors Service, said in a written statement Tuesday the appeals court’s ruling likely means BP will be forced to increase the funds it set aside for the 2012 settlement.

It had already boosted its estimate of the settlement value from $7.8 billion to $9.2 billion

The oil major has paid about $12.9 billion in damage claims, settlement payments and other payments related to the spill. It also has spent $14 billion on oil spill cleanup costs.

And BP is waiting for a federal judge in New Orleans to issue rulings on legal issues that could bring environmental fines under the Clean Water Act up to $18 billion.

Blaine LeCesne, a Loyola University law professor who has followed the case, said getting its fight over business claims to the Supreme Court would be “a long shot.”

“The settlement is fairly clear cut,” LeCesne said. “It’s unlikely they will be getting any relief there.”

‘The extra step’

But it’s likely BP will still request a hearing with the Supreme Court, said Edward Sherman, a law professor with Tulane University.

“BP has gone so far with this already that I think it’ll seek a hearing with the Supreme Court,” Sherman said. “I think it’s an uphill battle for BP, but they have so much time and money invested in this, I’m guessing they would go the extra step.”

He added that BP could pin its hopes on U.S. Judge Edith Brown Clement’s dissent to get the high court’s attention.

In her dissent, Clement said the court approved “a class action settlement that permits payments for economic losses ‘without regard to whether such losses resulted or may have resulted from a cause other than the Deepwater Horizon oil spill.’”

That, Clement wrote, violated requirements set out in class action law and “impermissibly extend the judicial power of the United States into administering a private handout program.”