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Appellate Panel Holds BP to its Agreement in Gulf Oil Spill Case – Glass & Goldberg | Financing, Property & Bankruptcy Law
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Appellate Panel Holds BP to its Agreement in Gulf Oil Spill Case

The Fifth Circuit Court of Appeals ruled that BP must honor the terms of the agreement it reached in December 2012 with attorneys for a class of claimants of businesses and individuals asserting economic losses from the 2010 Gulf oil spill. BP challenged the manner in which the agreement was being interpreted by the fund administrator in charge of determining how much particular claimants may receive in compensation under the deal.  Specifically, they object to the lack of any obligation on the plaintiffs’ part to have to prove the spill hurt their business or damaged their property.

The attorneys who represented the plaintiffs in the two-year negotiation culminating in the agreement point out that BP acknowledged at that time that while the settlement formula might produce some questionable results, it was valuable as an “objective quantitative data-based test.” They also note that BP’s counsel applauded the deal as fair when they signed it. BP’s particular complaint about the manner in which the formula upwardly distorts the size of a claimant’s award was rebuffed by the three-judge panel which concluded that the large oil company knew what it was agreeing to when it negotiated the use of that method to determine award amounts.

In essence, this dispute only differs in scale from many challenges that occur in courts frequently where one party to a civil action seeks to enforce the terms of an agreement it has reached with another. In non-contractual tort cases, such as personal injury actions, a plaintiff must show that the negligence of the at-fault party caused the damage the plaintiff sustained. Had BP not made a deal with the class of claimants which relieved the plaintiffs from having to meet that burden of proof, it is very likely BP could validly demand each claimant prove their case to the required standard. Under the agreement, however, each claimant need only attest to the fact they were damaged by the spill.

BP may have a further opportunity for some relief, however. It has the option of asking that a panel of all of the judges on that circuit court consider the matter. But as only a small percentage of the 1200 to 2000 cases per year considered in some fashion by this appellate court usually receive for en banc (full panel) review, the likelihood that BP can obtain relief from the terms of the settlement is remote.

The attorneys at Glass & Goldberg in California provide high quality, cost-effective legal services and advice for clients in all aspects of commercial compliance, business litigation and transactional law.  Call us at (818) 888-2220, send an email inquiry to info@glassgoldberg.com or visit us online at www.glassgoldberg.com to learn more about the firm and to sign up for future newsletters.

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