2010 BP Oil Spill

On May 19, the 5th Circuit Court of Appeals denied BP’s request for an en banc hearing of the issue of causation. This lets stand the earlier decisions of the 5th Circuit panels confirming both the Settlement’s quantitative method of determining causation and its practical application by the Settlement Administrator. BP’s only option now is an appeal to the US Supreme Court. With billions of dollars on line, BP has nothing to lose but to file an appeal.

Earlier this week the 5th Circuit Court of Appeals panel which opened discussion as to whether the Deepwater Horizon Settlement Agreement required those submitting claims for certain business losses to provide evidence of causation ruled on the issue. In a 2-1 decision, to which Judge Clement was the dissenting vote, the Court ruled that the Settlement Agreement did not require additional evidence of causation aside from the purely mathematical formula previously decided upon by the parties. Thus, the Settlement Administrator’s implementation of the Settlement Agreement was correct. As to the legal validity of the settlement, this panel deferred to the certification panel of the 5th Circuit who has already ruled that the settlement is legally valid.

On Monday, December 9th, 2013, a 5th Circuit Court of Appeals panel issued another opinion opening the door to examining claimant causation under the 2012 Deepwater Horizon class action settlement, and possibly scuttling the entire agreement. Below are recaps of the decisions two 5th Circuit panels have made over the past two months.

On Monday, December 2, Judge Barbier is scheduled to hear arguments on whether the parties to the Deepwater Horizon settlement agreement had discussed the intended meaning of Exhibit 4C (Compensation Framework for Business Economic Loss Claims) as it applies to the use of cash versus accrual basis accounting to calculate claimants’ loss of variable profits. Briefs have been submitted, and the issue has been joined for a hearing.

Approximately two weeks ago, the 5th Circuit Court of Appeals reversed the District Court’s decision affecting the Deepwater Horizon Settlement Agreement. The new ruling affects business economic loss claimants who kept their financial records on a cash basis.

The 5th Circuit panel in a 2-1 decision concluded that variable expenses as identified in the Settlement Agreement should always be matched to the revenue they generated or are associated with, regardless of when they were paid out.