BP to ask Supreme Court to review spill settlement

Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon in this April 2010 file photo. (AP Photo/US Coast Guard, File)
Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon in this April 2010 file photo. (AP Photo/US Coast Guard, File)

British oil giant BP plans to ask the U.S. Supreme Court to require that businesses prove the Gulf of Mexico oil spill caused them financial losses before they can collect money from a multibillion-dollar settlement of private claims resulting from the 2010 Deepwater Horizon disaster.

The class-action settlement, preliminarily approved by U.S. District Judge Carl Barbier in May 2012, sought to avoid piecemeal litigation by resolving hundreds of thousands of claims for economic damages from what is generally considered the worst environmental disaster in U.S. history.

Six months later, BP and the Plaintiffs’ Steering Committee, the group of lawyers who reached the deal, jointly heaped praise on the settlement during a fairness hearing, urging Barbier to approve it.

The latest challenge in the four-year legal battle comes after the full 5th U.S. Circuit Court of Appeals on Monday refused to reconsider a three-judge panel’s ruling upholding Barbier’s decision that the terms of the 2012 settlement meant that even plaintiffs not harmed by the oil spill could receive money, and that BP knew as much when it agreed to the deal in order to avoid having to litigate each case individually.

Lawyers for BP on Wednesday asked the 5th Circuit not to issue a mandate to execute its decision until the Supreme Court considers its appeal, which would prevent some business claims from being paid in the interim.

“This court should stay its mandate because there is a reasonable probability that the Supreme Court will grant certiorari and a significant possibility that it will reverse this panel’s decision and because BP will be irreparably harmed if the mandate is not stayed,” BP said in a court filing Wednesday.

The settlement, which BP initially said would cost about $7.8 billion, treats all claimants who live in a certain area along the Gulf Coast the same if they can show a loss of income after the disaster, regardless of the reason for that loss.

BP over the past year has vigorously contested this interpretation of the settlement, arguing in court filings and ads in national newspapers that businesses should not be paid unless they can show the oil spill caused their losses.

By a 2-1 vote, a panel of the 5th Circuit on March 3 upheld an earlier ruling by Barbier, who is overseeing the Gulf oil-spill litigation. Barbier said the settlement was not intended to undertake a “claim-by-claim analysis” and contended that BP’s current position on causation is “clearly inconsistent with its previous position” and “directly contradicts what it has told” the court regarding causation.

After that ruling, BP requested a rehearing by the full appeals court on whether businesses should have to show the spill caused their losses. The court voted 8-5 against the rehearing Monday.

The full appeals court on Monday also refused to reconsider an appeal challenging the validity of the entire settlement.

Last year, BP asked the 5th Circuit to throw out the deal it once had lauded, arguing in court filings that the “settlement can be salvaged if ‘properly construed and implemented.’ ” In January, a separate three-judge appellate panel upheld Barbier’s approval of the settlement.

The company plans to appeal that approval to the Supreme Court as well.

“BP’s decision to seek Supreme Court review comes after a sharply divided 5th Circuit denied BP’s request for rehearing,” the company said in a statement Wednesday. “The dissenting opinions emphasize that the issues raised by BP ‘present questions of exceptional importance,’ reflect a deep divide in approaches among the federal appellate courts and merit Supreme Court review. The Constitution and established class action law preclude certification of a class that includes substantial numbers of claimants who were not harmed by the spill and thus lack standing to bring suit.”

Appeals Court Judge Leslie Southwick, appointed to the court by former President George W. Bush, wrote in Monday’s decision that the settlement’s policy for issuing payments was put together “with input and assent from BP.”

Judge Edith Brown Clement, also appointed by former President Bush, dissented, as she did when the 5th Circuit upheld an earlier ruling by Barbier in March. Clement wrote that the court’s decision means “the class of people who will recover from this settlement continues to include significant numbers of people whose losses, if any, were not caused by BP.”

Experts say BP faces long odds in getting the Supreme Court to hear the case. The high court receives about 10,000 petitions for a writ of certiorari each year, granting and hearing oral arguments in only about 80 cases.

On its surface, the case also does not include conflicting decisions by various circuit courts, experts say, an aspect that the Supreme Court considers when deciding whether to hear an appeal.

Still, BP is ready for a fight. “If the 5th Circuit’s erroneous ruling were allowed to stand, it would fundamentally redefine the prerequisites for class membership,” the company said in its statement. “That, in turn, will surely alter the calculus for companies in determining whether to enter into class action settlements or engage in protracted litigation that would delay compensation for true victims.”

Follow Richard Thompson on Twitter, @rthompsonMSY.