Supreme Court rejects BP appeal of oil spill settlement
CBS/AP / December 8 2014, 2:53 PM
NEW ORLEANS – The Supreme Court is leaving in place BP’s multibillion-dollar settlement with lawyers for businesses and residents over the 2010 oil spill in the Gulf of Mexico.
The justices did not comment Monday in rejecting the London-based oil giant’s arguments that lower courts misinterpreted settlement terms and put BP on the hook to pay inflated and bogus claims by businesses.
The court’s decision makes the economic and property damage settlement final, starting a six-month deadline for filing claims, said plaintiffs’ attorney Joe Rice of Mount Pleasant, South Carolina.
BP PLC wanted the court to consider whether people and businesses seeking payments under the settlement included some who haven’t actually suffered any injury related to the spill.
A district court and an appeals court ruled that, under the settlement BP agreed to, businesses do not have to prove they were directly harmed by the spill to collect money – only that they made less money in the three to eight months after the spill than in a comparable pre-spill period.
BP’s Macondo well blew up on April 20, 2010, killing 11 men. An estimated 103 million to 176 million gallons of oil spewed into the Gulf of Mexico before the mile-deep well was capped July 15, 2010. Lawyers for BP and the government agree that 34 million gallons was captured before it could pollute coastal marshes and fishing grounds.
“Today’s ruling is a huge victory for the Gulf, and should finally put to rest BP’s two-year attack on its own settlement,” lead plaintiffs’ attorneys Stephen J. Herman and James P. Roy said in an emailed statement.
The settlement doesn’t have a cap, but BP initially estimated that it would pay roughly $7.8 billion to resolve the claims. The company said it can no longer give a reliable estimate for total cost. The company, which made separate settlements for medical claims and seafood-related business claims, has paid more than $13 billion in claims by individuals, businesses and government entities and another $14 billion-plus on response and cleanup, according to its oil spill website.
BP remains concerned “that the program has made awards to claimants that suffered no injury from the spill – and that the lawyers for these claimants have unjustly profited as a result,” BP spokesman Goeff Morrell said in an emailed statement.
He added, “We will therefore continue to advocate for the investigation of suspicious or implausible claims and to fight fraud where it is uncovered.”
In an interview with “60 Minutes,” Ken Feinberg, the lawyer hired by BP to sort out who was hurt by the spill and who was not, said: One fellow down in Alabama said to me, when I asked him for proof, he said, ‘Mr. Feinberg we do things with a handshake down here.’ I said, ‘That’s fine, but a handshake won’t get you compensation.'”
Feinberg added that it was important to prevent fraud in this case because there will be future catastrophes.
“What happens the next time, in terms of a company’s willingness to do something similar?” Feinberg asked.
BP Senior Vice President Geoff Morell gave “60 Minutes” examples of what they believed where fraudulent claimants: “We’re talking about a wireless phone company store that burned to the ground and shut down before the spill. An RV park owner that was foreclosed upon before the spill. And I love this one. A Pontiac dealer who could no longer sell Pontiacs because GM had discontinued the line before the spill.”
James Roy, one of the victims’ lawyers, told “60 Minutes” he does not feel sorry for the oil giant.
“BP got a good settlement,” Roy said. “And BP was represented by very, very good lawyers who were worthy adversaries who fought tooth and nail for their client. And it was a hard-fought settlement. Their own lawyer said it was a very generous settlement.”
The 5th U.S. Circuit Court of Appeals did get the method for calculating losses changed after BP argued that claims administrator Patrick Juneau wasn’t correctly matching business’s revenues and expenses. The company has been trying to oust Juneau. U.S. District Judge Carl Barbier rejected its claims but BP went to the 5th U.S. Circuit Court of Appeals.
A third-party audit of the settlement program, made public in November, found that it correctly processed 99.5 percent of claims. Chicago-based McGladrey LLP described the program as “well-designed and appropriate.”