BPS Favor: Appeals Court Overrules Lower Court in BP Settlement Dispute
BPS Favor was granted by a federal appeals court as it overruled a lower court’s ruling, agreeing that the original court misinterpreted terms of a BP settlement, according to attorneys at Frenkel & Frenkel.
A federal appeals court overturned a decision by U.S. District Court Judge Carl Barbier, agreeing that the judge misinterpreted the wording of a settlement dispute between BP and businesses affected by the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. BP’s attorneys argued that the lower court ruling could result in the company paying inflated or fraudulent claims.
Lower Court Ruling
Following the Deepwater Horizon disaster, which killed 11 people and spilled millions of gallons of oil, BP agreed to a $20 billion compensation fund administered by the Gulf Coast Claims Facility. Judge Barbier appointed attorney Patrick Juneau to process claims. BP stated that the complex formula for business compensation was designed for those who suffered actual economic losses due to the spill. However, the lower court’s wording could have allowed claims for losses unrelated to the spill.
Appeal Court Decision
In a divided decision, the 5th U.S. Circuit Court of Appeals sided with BP, emphasizing BPS Favor for the company. Judges Edith Brown Clement and Leslie Southwick noted that “windfall recoveries in individual suits for failure to show causation are not outweighed by the potential loss to a company and its shareholders of hundreds of millions of dollars of unrecoverable awards.”
In a partial dissent, Judge James Dennis argued that BP had not fully proven the need to change settlement terms. The appeals court instructed Judge Barbier to draft an injunction allowing direct loss claims to be paid, while claims lacking proof of loss would be held until full adjudication.
Majority of Claimants Still Protected
Although some plaintiffs were disappointed, attorneys highlighted that most businesses and individuals who suffered direct losses due to the oil spill would have their claims processed efficiently. Patrick Juneau, as claims administrator, also expressed satisfaction that the settlement agreement would be implemented according to the law.
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