Federal appeals court says BP must adhere to settlement agreement

[JURIST] The US Court of Appeals for the Fifth Circuit [official website] ruled [opinion, PDF] 2-1 Monday that British Petroleum (BP) [corporate website] must adhere to the terms of its Deepwater Horizon [BBC backgrounder] oil spill settlement agreement with Gulf businesses and pay for damages regardless of whether causation can be proved. BP had argued [NYT report] that the settlement agreement allowed many business to collect payments without having to prove that the damage was caused either by the Deepwater Horizon oil spill or by BP's conduct, saying that the agreement forces BP to pay for damages it did not cause. However, Judge Leslie Southwick, writing for the majority, dismissed that claim, stating that the terms of the agreement do not require claimants to submit evidence establishing a causal relationship. The ruling further stated [Reuters report] that the terms of the agreement were not subject to alteration by BP, that they were the result of agreements between the parties and were approved by the district court, and that BP would have to abide by them. The dissenting judge claimed [Bloomberg report] that enforcing the settlement agreement in this manner improperly allowed parties to collect damages for unrelated claims, and raised significant constitutional issues with respect to the parties' standing.

BP's legal troubles relating to the Deepwater Horizon spill have been continuous [JURIST op-ed] and expensive, as BP has already paid billions of dollars to settle both civil and criminal claims. In January the Fifth Circuit rejected [JURIST report] a previous argument made by BP, that the settlement should be invalidated because the possible inclusion of individuals not injured by BP's conduct rendered class certification improper. The US District Court for the Eastern District of Louisiana ruled [JURIST report] in December that proof of direct causation was not necessary for the settlement agreement and did not require its invalidation. However the Fifth Circuit in October did reverse [JURIST report] and remand a previous district court decision that it said allowed recovery for "artificial and inflated claims."

 

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