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Court rejects BP bid to require proof of Gulf oil spill losses

[December 27, 2013]  By Jonathan Stempel

(Reuters) — BP Plc has failed to persuade a federal judge to require businesses seeking to recover money over the 2010 Gulf of Mexico oil spill to provide proof that their economic losses were caused by the disaster.

U.S. District Judge Carl Barbier in New Orleans said the British oil company would have to live with its earlier interpretation of a settlement agreement over the spill, in which certain businesses could be presumed to have suffered harm if their losses reflected certain patterns.

Barbier said BP could not now take a new position on causation of damages, and reverse an interpretation that it had once termed "more than fair," even if this resulted in the substantially higher payouts that the oil company feared.

BP's view "is not only clearly inconsistent with its previous position, it directly contradicts what it has told this court," Barbier wrote. "The court further finds that BP's change of position was not inadvertent."

Geoff Morrell, a BP spokesman, said, "Awarding money to claimants with losses that were not caused by the spill is contrary to the language of the settlement and violates established principles of class action law. BP intends to seek appropriate appellate remedies to correct this error."

BP had originally projected that its settlement with businesses and individuals harmed by the spill, would cost $7.8 billion.

As of late October it had boosted this estimate to $9.2 billion, and said this sum could grow "significantly higher."

The company has complained that payments were being inflated by "fictitious" claims, and because court-appointed settlement administrator Patrick Juneau has paid out too much and compensated businesses and individuals who were not harmed.

Earlier this month, the 5th U.S. Circuit Court of Appeals in New Orleans ordered Barbier to take a second look at Juneau's methodology.

In his 38-page decision, the judge concluded that changes were needed.

He directed Juneau to "implement an appropriate protocol or policy for handling business economic loss claims in which the claimant's financial records do not match revenue with corresponding variable expenses."

As of Monday, about $3.81 billion has been paid out to 40,371 spill claimants, according to Juneau's claims website. (http://www.deepwaterhorizoneconomic
settlement.com/docs/statistics.pdf)

The April 20, 2010, explosion of the Deepwater Horizon drilling rig and rupture of BP's Macondo oil well killed 11 people and triggered the largest U.S. offshore oil spill.

Barbier also oversees litigation to allocate blame and financial responsibility for the disaster.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting by Jonathan Stempel in New York; editing by Bob Burgdorfer)

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