BP Bid to Stop Gulf Oil Spill Payments to Get Fast Court Review

BP Plc’s bid to block economic loss payments tied to the 2010 Gulf of Mexico oil spill unless the claims can be directly linked to the disaster won fast-track consideration by an appeals court.

The London-based company said last week that U.S. District Judge Carl Barbier in New Orleans has ignored the appellate court’s earlier decision requiring him to review causation in determining which claims should be paid. The company asked an appeals panel for immediate review while lawyers for spill victims sought a delay.

BP’s request for expedited consideration was granted in an order issued yesterday by U.S. Circuit Judge Edith Brown Clement in New Orleans. She directed spill victims to respond to BP’s motion by Jan. 8 and both sides to file letters that day on the causation issue.

The blowout of BP’s deep-water Macondo well off the Louisiana coast in April 2010 killed 11 people and sent millions of barrels of oil spewing into the Gulf of Mexico. The accident sparked thousands of lawsuits against BP, as well as Transocean Ltd., owner of the rig that burned and sank, and Halliburton Co., which provided cement services for the well.

BP reached a settlement with most private plaintiffs in March 2012, just before a trial on liability for the incident was to begin. BP initially valued the economic-loss settlement at $7.8 billion. It put the cost at $9.2 billion in an Oct. 29 regulatory filing.

Geoff Morrell, BP spokesman, declined to comment on Clement’s order. David Falkenstein, a spokesman for lawyers leading the spill litigation, didn’t immediately respond to a request for comment.

BP has been battling since the beginning of last year with Barbier, lawyers for spill victims and the administrator of the settlement, Patrick Juneau, over an interpretation of the agreement that the company says improperly allows payments to claimants who can’t link losses to the spill.

The company claims Juneau has approved millions of dollars in payments to businesses for “fictitious” economic losses that weren’t related to the worst offshore spill in U.S. history. It appealed Barbier’s decision upholding Juneau’s interpretation and won review by the New Orleans-based appeals court in a divided opinion in October.

Barbier, in a Dec. 24 order, said BP couldn’t tie payments to direct causation under the settlement agreement. BP brought the matter back to the appeals court Dec. 30.

“The district court has definitively refused to enforce the settlement’s causal-nexus requirement and has made clear that it will adhere to its erroneous position on causation unless this court directly tells it otherwise,” the company said in the Dec. 30 filing.

Spill victims’ lawyers have repeatedly said BP is trying to rewrite a deal that is proving more costly than envisioned.

In the settlement, BP agreed businesses in certain geographical regions were presumed to have been harmed by the oil spill if their losses followed a specific pattern, Barbier ruled. As part of the accord, BP agreed these claimants wouldn’t have to prove a link to the spill to recover, the judge said.

Separately, in the first criminal trial over the 2010 Gulf of Mexico oil spill, former BP Plc engineer Kurt Mix yesterday asked a U.S. judge to set aside an obstruction of justice conviction, alleging jurors broke the rules during deliberations.

One juror allegedly tainted deliberations by telling other jurors that he or she had overheard unspecified information in a courthouse elevator that would allow the juror to convict Mix “without losing any sleep,” Joan McPhee, Mix’s lawyer, said in a filing yesterday in federal court in New Orleans.

Instead of reporting this out-of-court contact to the judge, the juror “decided to poison his/her fellow jurors with this fact,” McPhee said, which “directly injected into the jury room the idea that there existed powerful, additional proof of Mr. Mix’s guilt that had not formally been allowed into evidence but that Juror A had come to obtain. It is difficult to imagine a more prejudicial scenario.”

Mix was convicted Dec. 18 of one count of destroying evidence sought by the U.S. in a probe of the BP oil spill. He was acquitted of a second obstruction count.

Justice Department spokesman Peter Carr didn’t immediately respond to a request for comment on Mix’s allegations of juror misconduct.

The settlement is part of In Re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 10- md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans). The criminal case is U.S. v. Mix, 12-cr-00171, U.S. District Court, Eastern District of Louisiana (New Orleans).

(Editors: Peter Blumberg, Fred Strasser)