NEW ORLEANS — A federal appeals court gave new life Friday to oil giant BP PLC’s claims that a judge’s interpretation of a settlement after the 2010 Gulf of Mexico oil spill could force the company to pay billions of dollars for bogus or inflated claims by businesses.
A ruling Wednesday by a divided three-judge panel of the 5th U.S. Circuit Court of Appeals threw out U.S. District Judge Carl Barbier’s rulings on the dispute between BP and attorneys who brokered the multibillion-dollar settlement in 2012. The panel sent the case back to Barbier with an order that he craft a “narrowly-tailored injunction that allows the time necessary for deliberate reconsideration of these significant issues.”
BP argued that Barbier and court-appointed claims administrator Patrick Juneau misinterpreted terms of the settlement.
Plaintiffs’ lawyers countered that BP undervalued the settlement and underestimated how many claimants would qualify for payments.
The ruling centered on complex accounting issues and arguments on when BP decided something was amiss in the settlement interpretation. Judge Edith Clement wrote the majority opinion.
“The interests of individuals who may be reaping windfall recoveries because of an inappropriate interpretation of the Settlement Agreement and those who could never have recovered in individual suits for failure to show causation are not outweighed by the potential loss to a company and its public shareholders of hundreds of millions of dollars of unrecoverable awards,” Clement wrote.
Judge Leslie Southwick wrote a concurring opinion. Judge James Dennis wrote a partial dissent, largely disagreeing with the other two.
“Because BP has not satisfied its heavy burden of showing that a change in circumstances or law warranted the modifications it sought, the district court correctly affirmed the Administrator’s decision rejecting BP’s argument and actions to modify the agreement,” Dennis wrote.
The April 2010 blowout of BP’s Macondo well off the Louisiana coast triggered an explosion that killed 11 workers on the Deepwater Horizon drilling rig and led to millions of gallons of oil spilling into the Gulf. Shortly after the disaster, BP agreed to create a $20 billion compensation fund that was administered at first by the Gulf Coast Claims Facility, led by attorney Kenneth Feinberg.
After the settlement was announced last year, Barbier appointed Juneau to take over the process of evaluating and paying claims.
The settlement doesn’t have a cap, but BP initially estimated that it would pay $7.8 billion to resolve the private claims. Later, the company said it no longer could give a reliable estimate for how much the deal will cost.
Neither BP nor Juneau immediately commented. Lead plaintiffs’ lawyers Steve Herman and Jim Roy said they were pleased that “the vast majority of class members will continue to be paid in a timely and expeditious manner.
“We look forward to working with the Claims Administrator and the Court to determine the best way to get the affected claims processed and paid as soon as possible,” they said in an emailed statement.