Infignos Media - BP has only Supreme Court option in oil spill settlement dispute

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BP has only Supreme Court option in oil spill settlement dispute

Monday, June 9, 2014

Many local businesses filed claims for “economic loss” damages. Although several have been paid, many payments have been delayed due to BP’s legal actions. On May 21, the U.S. 5th Circuit Court of Appeals refused BP’s claim that payments needed to be the result of actual damages. A week later the court ordered the Claims Administrator to resume payments. And, they refused a stay request from BP that would have further delayed payments.

BP has been claiming for weeks that it intended to take their case to the U.S. Supreme Court. So far they have not. When a lower court refused to throw out the economic loss formula and later when the partial Appeals Court also ruled against them, they promptly filed appeals. Two New Orleans law school professors and a panel of plaintiff’s attorneys both said the it is very unlikely that the Supreme Court will hear the case. For Court to hear BP’s complaint there either needs to be a federal question, such as constitutionality, or a need to clarify inconsistent lower court rulings. Legal authorities agree that there are no federal questions in this case. And, the lower court rulings have been consistent.

BP is also currently facing a stockholder class action suit. A group of stockholders are claiming that BP misled them to the company’s financial liability regarding the oil spill. Most recently, BP was challenging the plaintiff’s class action status.

Judge Carl Barbier of the federal district court in New Orleans, who originally heard the settlement case and remains the presiding judge over this matter, stated that BP’s attorneys had helped write the economic loss formula and supported it by providing numerous expert witnesses, who claimed that the formula was more fair than an actual loss one even though it opened the door for businesses, which were not directly affected by the oil spill to receive compensation. BP claims that payments to that later group have vastly inflated their payments. BP set aside a $20 billion trust fund to cover these losses. Some believe that their legal action is merely designed to delay payments so that they can earn interest on the yet unpaid funds.

Despite the fact that payments should be resuming shortly, another wrinkle that may delay them is a recent ruling by Judge Barbier regarding matching certain expenses and income for claimants, which used the cash accounting method. He stated that this will apply to all unpaid and future claims.

Our readers may recall that until around last December, there were numerous advertisements on TV and even by direct mail encouraging local businesses to file a claim. A few local accountants were very active in promoting claim filing. We have heard of some businesses receiving checks up to $30,000.

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Keywords: BP, Oil Settlement, Supreme Court

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