BP Wants To Have Its Cake And Eat It Too

On Monday, July 8, 2013, before the United States Fifth Circuit Court of Appeals, lawyers for BP vehemently argued that the class action Settlement Agreement designed to compensate Gulf Coast residents and business affected by the BP oil spill is not being interpreted the way the company believes it should be.  This is the same Settlement Agreement that BP negotiated for two years and asked the district court judge to approve in December.

Theodore Olson, attorney for BP, admitted that before reaching a final agreement during the settlement negotiations, BP had been warned repeatedly that language in the settlement could increase the pool of qualified claimants. It is, of course, an undisputed fact that BP agreed to the precise terms of the settlement. Moreover, it is also undisputed that BP was adamant about the language used, even after being warned by accountants and the District Court Judge Carl Barbier. Nevertheless, BP now argues that the companythought the agreed-upon terms would be construed differently. Olson maintained that Patrick Juneau, the court-appointed Claims Administrator for the Settlement Agreement, has “misinterpreted” certain terms of the Settlement Agreement, which has resulted in payouts to unaffected business and larger payouts then BP had initially estimated.

The Settlement Agreement removes the traditional burdens of proving causation. Rather, to establish eligibility for a claim, residents and businesses of the Gulf Coast region need only show a decrease in revenue during the months of the spill as compared to months before and after the spill. Here, causation is proven by virtue of where the claimant is located and by showing a pattern of lost profits, as provided by various lengthy mathematical formulas in the Settlement Agreement. The crux of BP’s dispute is over how to define “lost profit.” BP alleges it did not anticipate that gross cash receipts and expenditures would be used to calculate lost profits, rather than revenue and expenses.  Since June 23, 2013, Juneau’s office has provided settlement payouts to over 8,600 Gulf Coast businesses, to the tune of more than $2.2 billion.

During the hearing, Judge Dennis appeared unconvinced by BP’s argument, asking Olson, “Aren’t you just taking individual words out of this settlement and constructing a purpose and a scheme that you would like based on that? This is an agreement between the parties, and the parties have opposing interests and … have given up things in order to get things.” Judge Dennis probed further, “It seems to me that … the agreement defines what is a lost profit in a particular way and you had a chance to not agree to that, several chances.” “So how can we go beyond the four corners of the agreement?”

Meanwhile, Judge Edith Brown Clement questioned lawyers for Juneau’s office regarding their position on whether all claims filed under the settlement agreement, regardless of how meritorious, should be paid out. “Our position, Judge, is that we will do whatever the courts tell us to do – we’re just the Claims Administrator – we did not negotiate this deal, we have really no stake in the deal, other than to execute it as efficiently as possible.”

Moving forward, it will be interesting to see how the judges rule on this issue. Will the Court hold BP to the terms of the Agreement it negotiated for two years, or will they let BP avoid what was likely be one of the largest judgments in history, with a Settlement Agreement that perhaps they never intended to honor? Will they let BP have its cake and eat it too?

How Does This Affect Me?

The decision from the Fifth Circuit will most likely affect businesses with Economic Loss Claims across the Gulf Coast region. It is not likely that individual claimants will be affected.  If your business was affected by the oil spill and you are wondering whether you should file a claim, do not wait. It is likely that the current Settlement Agreement terms and interpretation will be your best chance at recovering damages for the harm your business suffered.  Don’t wait any longer, call our office today and let us help you get the compensation you deserve!