U.S. District Judge Carl Barbier criticized BP and its lawyers at Gibson, Dunn & Crutcher and Kirkland & Ellis on Friday for a “startling reversal” of their position about the scope of the oil company’s settlement with businesses stemming from the Deepwater Horizon disaster.
In recent court filings, the oil company has asserted that the $9.6 billion settlement by BP Exploration and Production Inc. only covers businesses that can show that their losses are actually caused by the 2010 oil spill. But that position is at odds with the language of the 2012 settlement, Barbier wrote in an 11-page ruling. “If anyone is attempting to rewrite or disregard the unambiguous terms of the settlement agreement, it is counsel for BP,” the judge stated.
Barbier issued his ruling in response to an emergency motion that Gibson Dunn’s Theodore Olson filed with the U.S. Court of Appeals for the Fifth Circuit on Thursday. BP accused Barbier of failing to halt the payment of claims that weren’t caused by the 2010 oil spill. Olson argued that an emergency injunction is needed to prevent the release of hundreds of millions of dollars in undeserved windfall payments.
Barbier stressed in his Friday ruling that the parties had agreed in the settlement that a claimant’s eligibility for payments would be determined on an objective basis under a formula: For claimants who lived in certain zones, no proof of causation is required; for other zones, the claims administrator would apply a mathematical formula that measured revenue before and after the spill and other factors. It wouldn’t be feasible to require every claimant to prove actual, factual causation through individual trials in a class settlement involving tens of thousands of claimants, the judge wrote. He cited several earlier emails and statements from BP and its lawyers to support his position that BP had previously agreed that claimants don’t have to show actual causation.
“Frankly, it is surprising that the same counsel who represented BP during the settlement negotiations, participated in drafting the final settlement agreement, and then strenuously advocated for approval of the settlement before this court, now come to this court and the Fifth Circuit and contradict everything they have previously done or said on this issue,” the judge wrote. “Such actions are deeply disappointing.”
Kirkland & Ellis negotiated the settlement for BP, and was listed as cocounsel on Thursday’s filing. Gibson Dunn has been brought in to take the lead on appellate issues. The company also recently added Williams & Connolly to its Deepwater Horizon legal team. BP, Gibson Dunn and Kirkland declined to comment.
BP and Barbieri have been fighting over the claims process for several months. On Oct. 2, in response to an appeal by BP, the Fifth Circuit ordered Barbier to issue a preliminary injunction to stop payment on claims that weren’t supported by a certain accounting method. The ruling by a divided panel reversed two earlier orders by Barbier upholding the claims process and refusing BP an injunction. One appellate judge also questioned whether a settlement can substitute a mathematical model for proof of actual causation.
On Oct. 18 Barbier issued an order stopping the payment of certain claims. But in its Fifth Circuit emergency motion Thursday, BP argued that Barbier didn’t go far enough. It maintained that the judge still has improperly refused to require potential claimants to show that their claims were caused by the oil spill, asserting that such a showing is required for membership in the class. The plaintiffs lawyers, in a filing Friday, countered that BP is trying to alter the terms of the settlement by now requiring a more subjective individual test of causation.
The plaintiffs team is led by Stephen Herman of New Orleans’ Herman, Herman & Katz and James Parkerson Roy of Domengeaux, Wright, Roy, & Edwards in Lafayette, La. A representative for the plaintiffs lawyers declined to comment.