Appeals Court Upholds $9B BP Oil Spill Class Action Settlement

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The U.S. Court of Appeals on Friday upheld a $9.2 billion class action settlement for businesses affected by the 2010 Deepwater Horizon oil spill, upsetting BP PLC’s attempt to block payments of fictitious claims.

The Jan. 10 ruling marks the latest victory for plaintiffs and private businesses harmed by the environmental disaster, who have been battling to receive payments for economic and property damage from the class action settlement since it was approved in December 2012.

Last month, BP successfully motioned to freeze payments of the Deepwater Horizon settlement amidst concerns that the claims administrator assigned to the case improperly interpreted the settlement’s key terms, allowing “hundreds of millions of dollars” to be “irretrievably scattered to thousands of claimants who are not proper Class Members.”

Objectors to the class action settlement also called the deal unfair, saying it inconsistently compensated Class Members claiming the same types of economic injuries.

In a 2-1 ruling, the Fifth Circuit upheld U.S. District Judge Carl Barbier’s approval of the BP oil spill settlement and certification of the economic and property damages settlement class, saying: “We cannot agree with the arguments raised by the objectors or BP.”

“Neither class certification nor settlement approval are contrary” to federal law, the three-judge panel added.

The panel said the settlement agreement included rules requiring Class Members to “meet the descriptions for one or more” damage categories in order to be paid, and that language ensured that participants met the “causation” requirements of the law.

The panel also dismissed a challenge of the class action settlement by more than 12,000 claimants represented by a single Texas law firm, who argued they were improperly excluded because they didn’t provide written proof of class membership.

The judges pointed out that the law firm submitted a list of the claimants, without the necessary information, the day before the scheduled hearing on the settlement. Therefore, they said, Barbier acted within his discretion to enforce the claim filing deadlines.

In a statement, attorneys for the plaintiffs called the ruling “an enormous victory for the Gulf, and an important step forward in ensuring that every eligible claimant is fully compensated according to the objective, transparent formulas spelled out in the settlement agreement that BP co-authored and agreed to.”

It appears the battle isn’t over yet, though.

BP issued a statement on its website Friday noting that it will “continue to press its position on the proper interpretation of the settlement agreement’s provisions requiring a causal nexus between a claimant’s injury and the spill. BP is assessing its legal options and the further implications of the 5th Circuit’s decision.”

Private businesses still  have until time to file a claim for economic and property damage. The deadline is April 22, 2014 or six months after the Effective Date of the Agreement, which has yet to be determined. More information can be found at www.deepwaterhorizonsettlements.com. Detailed claim filing instructions can be found here in our Open Class Action Settlements section.

The Deepwater Horizon Oil Spill MDL is In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, MDL No. 2179, in the U.S. District Court for the Eastern District of Louisiana.

UPDATE 5/23/14: BP has indicated it will ask the U.S. Supreme Court to review the Deepwater Horizon oil spill settlement and has asked the 5th Circuit to continue the payment freeze until the case is resolved.