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 The British oil giant has pushed for multiple reviews by the 5th
Circuit Court of Appeals, complaining the claims system approved by
the U.S. District Judge Carl Barbier is overpaying for damages from
the country's worst offshore disaster.
BP's challenges directly question decisions by Barbier, who presided
over the settlement and then himself approved claim terms. Barbier
is also handling a separate government case against BP and has wide
latitude to assess fines for violations of the Clean Water Act.
BP expects the settlement with Gulf residents to cost about $9.6
billion, well above the $7.8 billion it initially estimated.
Altogether the oil producer has provisioned some $42 billion to pay
for cleanup and other costs since the explosion of the Deepwater
Horizon rig, which killed 11 workers in 2010 and spewed millions of
barrels of oil into the Gulf of Mexico.
Federal penalties could add to that bill. Maximum fines might top
$17 billion, while BP has only set aside about $3.5 billion for
them.
"They are alienating in a very profound way the very judge that is
going to determine their liability," said Blaine LeCesne, a law
professor at Loyola University in New Orleans. "I'm not sure that's
a wise decision."
Barbier has called BP's efforts to try and contradict many of his
rulings with appeals to the 5th Circuit "deeply disappointing" and
has said BP is trying to "rewrite or disregard the unambiguous terms
of the Settlement Agreement."
While the company has won some important victories at the appeals
court, a ruling on Friday upheld the foundation of the settlement
deal.
BP is continuing its fight.
"The litigation seeking to rectify the misinterpretations of the
settlement that have led to inflated, exaggerated or wholly
fictitious claims ... will continue unabated," BP spokesman Geoff
Morrell said.
BP had no comment when asked if clashes with Barbier could prove
risky.
BACK AND FORTH
The 1,000-page settlement deal, approved by Barbier in 2012, was
negotiated by BP and a committee of plaintiffs lawyers to avoid
individual lawsuits by compensating a wide class of businesses and
individuals in one swoop.
The administrator of the deal, Louisiana lawyer Patrick Juneau, has
so far paid $3.8 billion to more than 40,000 claimants along the
Gulf coast, according to the settlement program's website.
BP disputes how Juneau is calculating payments, successfully arguing
in one 5th Circuit case that he was applying incorrect accounting
standards to determine business losses.
On Friday, though, BP was on the losing side of a second case in the
same appeals court where the company had voiced support for a group
of plaintiffs who wanted the settlement thrown out.
BP now wants the appeals court to permanently halt all payments to
people who cannot prove their losses were directly caused by the
spill.
The company says it should only pay for what it agreed to when the
settlement was signed. But Judge Barbier says BP is contradicting
its own earlier positions when it originally drafted the settlement
terms.
"The question of interpretation only arises in this case because of
an ambiguity," said Joseph Lavitt, a professor at the University of
California, Berkeley School of Law.
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FRAUD CLAIMS
A volley of appeals is not necessarily uncommon in a long,
complicated case like this one, said Edward Sherman from Tulane
University Law School.
"One would hope that a judge would not take offence to the fact that
he has been appealed up on numerous issues, judges are pretty
familiar with that kind of thing," Sherman said. "There is a certain
risk involved in it but BP obviously thinks that they have an
important issue."
The settlement process has certainly had flaws.
An investigation — ordered by Barbier and carried out by former FBI
Director Louis Freeh — found some of Juneau's employees engaged in
"improper" conduct, like taking "referral fees" to pass claims to
other lawyers.
In December, BP filed a lawsuit in federal court to halt some of the
$2.3 billion it set aside for a deal to compensate commercial
seafood industry alleging that some fishermen clients of lawyer
Mikal Watts did not exist.
And this month, BP ran full-page newspaper ads in The New York Times
and The Washington Post saying top officials working for the claims
administrator frequented a strip club that received a $550,000
damage award.
It did not name the officials and stopped short of accusing them of
corruption. Juneau said two officials quit their posts to pursue
"other business opportunities."
Some plaintiffs' lawyers say BP has focused too much on picking
apart the settlement, instead of on the bigger battle.
Under the Clean Water Act, negligence can be punished with a maximum
fine of $1,100 for each barrel of oil spilled. A verdict of gross
negligence would carry a potential fine of up to $4,300 per barrel.
U.S. officials and BP dispute how much oil was spilled overall but
if the court uses the government estimate minus the oil that was
recovered — or 4.09 million barrels — the price of a gross
negligence finding could run to $17.6 billion.
Barbier has broad discretion to assign penalties that could be
handed down this year after an ongoing trial.
"Remember, this is the same judge who is overseeing the Clean Water
Act claims," said Thomas Young, a Florida-based plaintiffs' lawyer
who represents hundreds of clients claiming damages from the BP
spill. "The real question here is: "Why is BP poking the hornet's
nest?"
(Reporting by Mica Rosenberg in New
York; editing by Terry Wade, Peter Henderson and Marguerita Choy)
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