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The Fifth Circuit Court of Appeals has granted BP PLC’s request to stop further Deepwater Horizon class action settlement payments to businesses and individuals who claimed they suffered property and economic loss from the oil spill, finding that the federal judge overseeing the multidistrict litigation (MDL) needs to investigate the issue of causation.
Last month, BP filed an emergency motion seeking an injunction to stop further payments under the class action settlement. The company sought an injunction that “prevents hundreds of millions of dollars from being irretrievably scattered to thousands of claimants who are not proper Class Members.” In the emergency motion, BP argued that claims administrator Patrick Juneau improperly interpreted the settlement agreement’s key terms when he defined “revenue” and “expenses” strictly by recorded cash expenditures and cash receipts in a given period.
On Monday, a divided panel of judges ultimately decided to grant BP’s emergency motion to suspend payments under the class action settlement, finding that the “district court erred by not considering the arguments on causation.” The Fifth Circuit judges reiterated their earlier decision, stating that “the issue of causation is again remanded for expeditious consideration and resolution in crafting ‘(a) stay tailored so that those who experienced actual injury traceable to loss from the Deepwater Horizon accident continue to receive recovery but those who did not do not receive their payments until this case is fully heard and decided through the judicial process. …”
The Deepwater Horizon class action settlement was preliminarily approved in May 2012. Under the terms of the oil spill settlement, BP agreed to compensate those who suffered economic or property damage or had medical bills associated with the April 2010 oil spill.
On Oct. 5, the Fifth Circuit struck down claims Juneau’s interpretation of the class action settlement terms that defined expenses and revenue only by cash expenditures and receipts recorded within a certain period, finding that this interpretation could result in rewarding fictitious legal claims. Subsequently, Judge Barbier ordered a payment freeze for certain economic loss claims associated with the $7.8 billion oil spill settlement. However he allowed other legal claims to proceed, rejecting new criteria proposed by BP.
Judge Barbier ordered both sides to submit proposed preliminary injunctions, but rejected both after finding the “proposal by class counsel was under-inclusive, and that submitted by BP was over-inclusive.” He extended the payment freeze, giving Juneau a week to come up with acceptable criteria for determining whether claims were adequately supported by “sufficiently matched, accrual-based accounting.”
In response to BP’s emergency motion for an injunction, the Fifth Circuit agreed to enjoin further payments to the business economic loss claimants whose injuries are not traceable to the spill, pending final disposition of the MDL.
Class Members are represented by Stephen J. Herman of Herman Herman & Katz LLC, James P. Roy of Domengeaux Wright Roy & Edwards LLC, Brian H. Barr of Levin Papantonio Thomas Mitchell Rafferty & Proctor PA, Matthew E. Lundy of Lundy Lundy Soileau & South LLP and Robin L. Greenwald of Weitz & Luxenberg PC, among others.
The Deepwater Horizon Oil Spill Class Action Lawsuit is In re: Deepwater Horizon, Case No. 13-30315, in the U.S. Court of Appeals for the Fifth Circuit. 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, Case No. 2:10-md-02179, in the U.S. District Court for the Eastern District of Louisiana.
UPDATE: On Jan. 10, 2014, the U.S. Appeals Court upheld approval of the Deepwater Horizon class action settlement, rejecting BP’s and objector’s arguments that the deal is unfair or that claims are being improperly paid.
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.
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One thought on Court Grants BP’s Appeal to Suspend Further Deepwater Horizon Payments
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. http://topclassactions.com/lawsuit-settlements/lawsuit-news/28196-bp-takes-oil-spill-class-action-settlement-fight-supreme-court/