NEW ORLEANS, La. – According to an article from Courthouse News, BP told their shareholders that a new court order could force them to make “substantially higher” payments than the initially projected $7.8 billions.
Barbier’s order on “Matching of Revenue and Expenses” concerns a dispute between BP and plaintiff counsel about how BP must interpret and pay oil spill claims under their “Economic and Property Damages” settlement.
BP previously estimated the settlement payments all told would come to roughly $7.8 billion, but the actual amount is uncapped.
Barbier’s six-page ruling upholds the claims administrator’s interpretation of the settlement agreement and says that, “notably,” this is “the exact interpretation BP advocated while the parties negotiated the settlement agreement.”
Barbier wrote in his ruling when he created the settlement agreement, “the parties agreed to give claimants flexibility in choosing the most favorable compensation and benchmark periods.”
“Indeed, the settlement agreement provides that if a claimant fails to select the period that generates the greatest recovery, the program will choose the period for him,” he added. “Objective formulas, the possibility of ‘false positives,’ and giving claimants flexibility to choose the most favorable time periods are all consequences BP accepted when it decided to buy peace through a global, class-wide resolution. In light of this, to the extent that the claims administrator’s interpretation produced ‘false positives,’ or, as BP claims, ‘absurd’ results, it appears that the settlement agreement anticipates that such results would sometimes occur.
“The overarching theme of the settlement is a transparent, uniform application of an objective quantitative data-based test which can be fairly and efficiently administered by the claims administrator. Notably, the settlement agreement itself defines those businesses that lost profits, income, and/or earnings ‘as a result of’ the spill as those businesses that meet the objective causation requirements.
“Once the settlement’s causation formula is met, then all losses calculated under exhibit 4C are presumed to be attributable to the oil spill. BP’s interpretation injects a subjective notion of alternative causation and a degree of complexity that are contrary to the settlement’s terms.”
BP in statement to investors last week said, “Business economic loss claims received by the DHCSSP [Deepwater Horizon Claims Supervised Settlement Program] to date are being paid at a significantly higher average amount than previously assumed by BP in formulating the original estimate of the cost of the PSC settlement.”
“Further, the settlement agreement has been interpreted by the claims administrator in a way that BP believes is incorrect resulting in a higher number and amount of claims being determined.”
BP said it “strongly disagrees with the ruling of 5 March 2013 and the current implementation of the agreement by the claims administrator. BP intends to pursue all available legal options including rights of appeal, to challenge this ruling.”
This trial will apportion responsibility for the disaster and determine its cause. The United States and five Gulf states are seeking billions of dollars for Clean Water Act violations and damages to natural resources.
The Wall Street Journal reported that the Department of Justice was prepared to offer BP a $16 billion settlement as the trial began. It is unclear whether that settlement was offered.
Source: Courthouse News
Blog post by Louisiana maritime lawyer, Gordon, Elias & Seely.