BP Settlement Upheld, BP Continues to Fight - U.S. Fifth Circuit
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BP Settlement Upheld, BP Continues to Fight

BP is a company that cares about the "small people," but its representatives seemed somewhat put off by the Fifth Circuit's decision to uphold the details of the multi-billion dollar Gulf settlement.

This latest blow in what has been a long battle for BP affirmed that when you settle with the "small people" and their businesses, you end up having to pay the "small people" what you promised.

Does BP have a legal leg to stand on?

Settlement OK'd Despite 'Fictional Losses'

BP had approved the settlement agreement in 2012 that promised to compensate five states' worth of businesses along the Gulf who were affected by the Deepwater Horizon spill. But, after learning that BP would have to shell out around $9.6 billion to these plaintiffs, the British corporation wanted the legal equivalent of takesies-backsies.

The oil company complained that the settlement claims administrator, Patrick Juneau, had misconstrued the language of the settlement agreement to allow businesses who were not injured by the spill to recover billions in settlement funds. BP won that argument, with the Fifth Circuit ordering settlements temporarily enjoined to allow the claims criteria to be sorted out.

And Juneau did submit new rules to the district court based on the October ruling, but BP still pushed for another appeal based on the settlement being "overbroad." The result may have surprised BP, as the Fifth Circuit essentially blessed the class settlement agreement.

Class Can Include Those Not Injured

The thrust of the Rule 23 argument made by BP is essentially that a class certification is not proper when it contains plaintiffs who were not actually injured -- or more specifically, cannot prove injury.

Turns out, that's not the case. Judge Davis reminded BP of his opinion in Mims v. Stewart Title Guar. Co. stating that "[c]lass certification is not precluded simply because a class may include persons who have not been injured by the defendant's conduct. The court has a right to be a bit pedantic here; BP was completely in agreement with class certification before the settlement claims started rolling in.

It's an issue of motivation which BP's corporate counsel will continue to battle, as the company is poised to continue fighting for "a casual nexus between a claimant's injury and the spill," reports Bloomberg. And another Fifth Circuit panel is reviewing a separate argument by BP that the implementation of the settlement agreement (again on Mr. Juneau) is fundamentally flawed.

Bottom Line

For the moment, it appears that BP will have to pay under the settlement agreement that they deemed good enough for themselves and the plaintiffs in 2012. Part of settling a case is accepting the possibility that the other settling party may not have prevailed at trial, so BP may need to come to terms with certain less-than-affected Gulf businesses getting a share.

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