Saturday, January 11, 2014

Circuit Court upholds approval of BP oil spill settlement

BP oil rig fire
Deepwater Horizon rig burning
The Fifth Circuit U.S. Court of Appeals has upheld (2-1) Judge Carl Barbier's approval of the class action settlement in the BP oil spill cases.  Although it had supported the agreement which it negotiated, BP later intervened to urge decertification of the class.  It secured the vote of Judge Emilio Garza who dissented saying that the broad terms of the agreement permitted compensation of people who had in fact suffered no loss, depriving them of Article III standing (case and controversy) .  The majority, however rejected that view, saying that it is enough for Rule 23 purposes that the agreement was non-collusive and that the plaintiffs "seek recovery for an economic harm they allege they have suffered".

The decision - despite its bizarre procedural posture as BP repudiates an agreement it negotiated - will doubtless be presented to the Circuit Court en banc.  That court and the U.S. Supreme Court at a later stage, could well find that the deference shown to the parties at class certification stage is insufficient  to support a judgment approving a class action settlement. 
I think that is a very close call that Judge Garza made.  I am sympathetic to an aggressive role for MDL judges - to assure fairness, etc.  This is a class action, of course, but the public character of the cases removes them from the purely private wrongdoer-victim model that my eminent colleague Ben Zipursky and his collaborator John Goldberg preach.  But a mega-deal by a giant like BP - which has political risk and market positioning objectives - may not be the best case to explore the limits of judicial power. 
- gwc

OTHERWISE: Court upholds approval of BP oil spill settlement - Government - The News Herald:

by The Associated Press
NEW ORLEANS (AP) — Over BP's objections, a federal appeals court on Friday upheld a judge's approval of the company's multibillion-dollar settlement with lawyers for businesses and residents who claim the massive 2010 oil spill in the Gulf of Mexico cost them money.BP has argued that U.S. District Judge Carl Barbier and court-appointed claims administrator Patrick Juneau have misinterpreted settlement terms in ways that would force the London-based oil giant to pay for billions of dollars in inflated or bogus claims by businesses.During a hearing in November before a three-judge panel of the 5th U.S. Circuit Court of Appeals, a BP lawyer argued that Barbier's December 2012 approval of the deal shouldn't stand unless the company ultimately prevails in its ongoing dispute over business payments.But the divided panel ruled Friday that Barbier did not err by failing to determine more than a year ago whether the class of eligible claimants included individuals who haven't actually suffered any injury related to the spill.

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