NEW ORLEANS -- Businesses with oil spill claims won a major victory against BP on Monday as a panel of the U.S. 5th Circuit Court of Appeals ruled that claimants will not have to do anything more to prove their losses were caused by the 2010 spill.
The causation issue was a major sticking point as BP tried to challenge the court-appointed claims administrator's interpretation of their multibillion-dollar settlement with private claimants.
BP had explicitly backed a compromise that used mathematical formulas to determine claimants' eligibility, even in front of this same appeals panel. But, emboldened by questions from Judge Edith Clement, the oil giant switched gears last fall and tried to get payments stopped until more was done to prove losses actually stemmed from the oil spill and not some other factor.
Plaintiffs attorneys released a statement saying, 'today's ruling makes clear that BP can't rewrite the deal it agreed to.'
BP disagreed with the ruling in its statement:
'BP disagrees with today's decision by the U.S. Court of Appeals for the Fifth Circuit denying the company's request for a permanent injunction preventing certain payments under the Economic and Property Damages Settlement it reached in 2012. BP had asked the Court to prevent payments to business economic loss (BEL) claimants whose alleged injuries are not traceable to the Deepwater Horizon accident and oil spill. BP believes that such BEL claimants are not proper class members under the terms of the settlement and is considering its appellate options.'
The three-judge panel of Clement, Leslie Southwick and James Dennis had previously opened the door to a possible BP victory on the thorny issue. But Southwick sided with Dennis today, saying BP well knew of the ways claimants would qualify for compensation for losses that didn't come from the spill and backed the settlement anyway.
The majority decision written by Southwick said there was no longer any reason to stop payments, except that BP has already asked for a review by the full 5th Circuit of 14 judges.
Clement dissented, holding to her earlier position that a class settlement could not allow for payments for losses that didn't come from the spill. BP had hoped that she would carry the day because the cost of paying eligible claims has skyrocketed, far exceeding the company's original $7.8 billion estimate and threatening BP's plans to cover all its spill costs with the $42 billion it set aside.
Clement, who is from New Orleans, is a member of a pro-Big Oil think tank that a judicial ethics panel considered a conflict of interest, but she has neither stepped down from the board nor recused herself from ruling on the BP case.
BP has found some success at the 5th Circuit, forcing district Judge Carl Barbier to impose new rules on the claims administrator to make sure claimants' revenues and expenses are matched before losses are calculated.
'BP has already secured a favorable ruling in the courts regarding the matching of revenues and expenses in calculating BEL claims,'the BPstatement reads. 'In December 2013, after ten months of litigation, including two appeals to the Fifth Circuit, the District Court reversed its prior rulings and held that the Claims Administrator must ensure that claimants' reported revenues and expenses are correctly matched for the purposes of determining awards under the settlement.'