Lawyers ask Scalia to throw out BP’s bid to stall spill payments

HOUSTON – Plaintiffs’ attorneys on Monday called BP’s latest attempt to suspend some oil spill payments “buyer’s remorse” for its multibillion-dollar settlement and argued the oil company’s claims of fraud are bogus.

In a court filing on Monday, Louisiana attorneys asked Supreme Court Justice Antonin Scalia to throw out the oil company’s request to restore a freeze on payments to thousands of businesses that  say the 2010 Gulf of Mexico disaster wrecked the coastal economy and inflicted financial harm on them.

Last week, BP had petitioned the high court justice to reinstate an order that had frozen oil spill payments to business economic-loss claimants since December.

BP’s goal: Stem payments while the Supreme Court decides whether to take up a broader dispute over the settlement. Legal experts say a favorable ruling could buy BP at least another six months to avoid oil spill payouts.

Scalia has jurisdiction over certain petitions coming from the 5th U.S. Circuit Court of Appeals, but he can also hand the issue to the entire Supreme Court for review.

A district court dissolved the order putting payments on hold after the 5th Circuit ruled BP had to keep paying oil spill claimants while the Supreme Court weighed whether to take the case.

BP has argued for months it could be paying hundreds of millions of dollars to businesses that weren’t affected by the oil spill. In seeking to suspend some payments, BP said it believes the Supreme Court will take the case because it raises constitutional questions over a district judge’s authority to approve a settlement that includes claimants who suffered no damages.

But Louisiana plaintiffs’ attorneys James Roy and Stephen Herman said in court documents Monday the issue comes down to the interpretation of just one provision, one simple contract dispute, in a massive settlement that BP  agreed to in 2012.

The settlement set up geographic zones that BP agreed would “be used to establish causation ‘for settlement purposes,’” and did not require proving a direct link to the spill, the attorneys wrote.

Before the final accord, BP’s economic experts had “testified that the causation and compensation frameworks” of the geographic zones provisions “were consistent with economic reality,” they said in court documents.

“BP’s repeatedly voiced claim that uninjured parties are being compensated is without any factual support in the record,” the plaintiffs’ attorneys wrote. “No court has ever made a factual finding that any claim without a traceable injury was deemed eligible for payment.”

The settlement claims administrator, Louisiana lawyer Patrick Juneau, reported Monday BP has made $3.88 billion in oil spill payments to more than 44,000 claimants so far. About $2.07 billion of that amount came from business economic-loss payments, which the Deepwater Horizon Claim Center is slated to begin processing again today.

BP said late last year it had paid $540 million to claimants located more 100 miles away from the Gulf. But after BP set aside $42.7 billion for oil spill costs, possible losses of hundreds of millions of dollars aren’t a very big concern to the company’s investors.

“In the big picture, it’s really not that meaningful,” said Brian Youngberg, a senior equity analyst at Edward Jones. “They want to be treated fairly. They feel they’ve been taken advantage of. But in the big picture, it’s a relatively small amount.”

At this point, he said, BP shareholders are more concerned about uncertainties surrounding the company’s business in Russia. As tension surrounding Russia’s aggression in Ukraine has escalated, international sanctions have targeted the leader of state-owned oil giant Rosneft, in which BP holds a 20 percent stake. BP CEO Bob Dudley has a seat at the board of directors’ table with Rosneft CEO Igor Sechin.

“Right now, it’s not impacting results, but could it down the road? Yes,” Youngberg said. “Investors are focusing on Russia.”

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