BP Litigation Status Update – January 2014

There has been continued litigation between BP and the Plaintiffs' Steering Committee regarding the interpretation of the Settlement Agreement and its effect on the claims process. With the exception of seafood compensation fund claims, coastal real property claims, and individual claims, all of the business economic loss claims have been stayed pending the outcome of the issues before the Fifth Circuit Court of Appeals. This means that although the Settlement Program is still processing claims by continuing to ask us questions about specific claims and to require additional documentation supporting claims, no eligibility notices regarding claims nor appeal determinations will be issued until the Court has resolved the issues raised by BP. Levin Papantonio is responding to all requests as they come in and working with the staff of the Settlement Program to make sure that our claims are complete, which hopefully will enable them to be quickly finalized and paid once we have all legal rulings from the Fifth Circuit.

There are currently three (3) major issues that have been raised by BP. The first, which dealt with the accounting methodology to compute the claim amounts, has resulted in the Fifth Circuit Court of Appeals Opinion last October requiring the matching of expenses to revenue in all claim calculations. In response to the Fifth Circuit's Opinion, Judge Barbier, the Trial Court Judge, has directed Patrick Juneau, the Settlement Administrator, to develop the methodology to accomplish this matching. Judge Barbier entered the Order in this regard on December 23, 2013, so we are hopeful that we will hear from the Settlement Administrator soon. Once the Administrator issues his policy, it will go back to Judge Barbier for approval and then to the Fifth Circuit Court of Appeals if BP requests appellate review again.

The second issue becomes more complicated. As you may know, in lieu of a claimant having to prove that its losses were actually caused by the oil spill, the Settlement Agreement provides an economic test for causation. Some months ago, BP began arguing that in addition to the economic test, it wanted a determination made on each claim filed that the business losses were actually caused by the oil spill. This would be a difficult standard to deal with because, as you know, the oil spill occurred during the midst of the recession, so that sorting through the various possible causes of a given business' losses would be complicated and difficult indeed. This is the reason we negotiated the economic causation test contained in the Settlement Agreement, and BP agreed. Now, however, BP has changed its position and wants to require that both tests be used.

In his Order of December 23, 2013, Judge Barbier rejected BP's argument stating that BP was and is bound by its agreement as contained in the Settlement Agreement, and, therefore, BP is judicially stopped or prohibited from taking this position concerning an additional causation test. BP, unhappy with Judge Barbier's decision, immediately appealed to the Fifth Circuit Court of Appeals and requested that the Appellate Court expedite its review. The Fifth Circuit Court of Appeals granted the request to expedite, and the legal paperwork required for the Court to decide has been filed by the parties.

Regarding the third issue, in November, 2012, Judge Barbier approved the settlement and certified a Settlement Class. There were some objections to the class certification and the objectors appealed the certification to the Fifth Circuit Court. BP, who supported the class certification, argued that unless it got its way concerning the first two (2) issues, it could no longer support the class.

On January 10, 2014, the Fifth Circuit Court of Appeals ruled to uphold the class certification and settlement, which is a huge victory for us but, unfortunately, does not put an end to all of the controversy. Attorneys for the Claimants will argue that this means that the Court is satisfied with the causation requirements of the Settlement Agreement and should require nothing additional. BP is seeking a review by the entire Fifth Circuit Court of Appeals, called an En Banc proceeding. We are waiting to see if and when that request will be granted.

As it stands today, the stay remains in effect for Business Economic Loss claims, and no determinations will be issued until the Fifth Circuit Court of Appeals concludes its full Court review. Until the stay is lifted, no eligibility notices will be issued, and no payments will be made.

With regard to the claims that were either opted out of the settlement process or excluded from the Settlement, these claims remain stayed and will not move for a significant time. As a general matter, we believe that this delay in the movement of the settlement payments will undoubtedly delay these cases ultimately getting to trial. We continue to believe that these cases will not be tried for several years.

The lawyers of Levin Papantonio, as leaders of the Plaintiff’s Steering Committee and as counsel to many business claimants is still working every day to have all of our filed claims ready for payment and to make BP live up to its commitments in the Settlement Agreement

 
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