Analysis: Contentious oil spill claims set up BP for long legal battle

Thu Jul 11, 2013 6:03pm EDT
 
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By Mica Rosenberg

NEW YORK (Reuters) - Faced with hundreds of damage claims it says are fictitious and inflated, BP must decide whether to dive into a protracted legal battle it had sought to avoid when it settled a class action over the 2010 Gulf of Mexico oil spill.

The British oil giant asked the Fifth U.S. Circuit of Appeals in New Orleans this week to halt the claims. Should its challenge before the three-judge panel fail, BP will face a choice: ask for a hearing by all the court's judges, appeal to the U.S. Supreme Court, or try picking off individual cases one by one, legal experts say.

BP declined to comment on what its strategy would be.

At issue is how to interpret a 1,000-page settlement document BP negotiated with a committee of lawyers working on behalf of thousands of individuals and businesses affected by the Deepwater Horizon rig explosion. The blast killed 11 men and dumped millions of barrels of oil into the Gulf in one of the country's worst environmental disasters.

BP estimated the settlement, approved by a U.S. District Court in Louisiana in 2012, would cost $7.8 billion, but the payouts may end up ballooning to billions more.

The company has already paid more than $2 billion toward the 198,021 claims filed under the agreement. Overall it says it handed out over $10 billion to those affected by the spill and around $14 billion in cleanup and response costs.

Several lawyers not involved in the case said BP should have known it might be on the hook for more money and erred by agreeing to a deal that had no payout cap.

BP said it stands by the settlement but insists the problem is the person appointed by the court to dole out the money, former Louisiana plaintiffs lawyer Patrick Juneau. The tussle is over how the administrator is calculating the amount of business losses due to the spill a claimant can be compensated for. BP takes issue with the time frame and the accounting methods Juneau is using.   Continued...

 
Fire boat response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon, off Louisiana, in this April 21, 2010 file handout image. REUTERS/U.S. Coast Guard/Files/Handout