BP oil spill lawsuit in U.S. wins class-action status by Jonathan Stempel, Reuters, May 21, 2014, The Globe and Mail
A U.S. judge has allowed a group of BP Plc shareholders to pursue a class-action lawsuit accusing the company of misleading them by understating the severity of the 2010 Gulf of Mexico oil spill.
Tuesday’s decision by U.S. District Judge Keith Ellison in Houston could add to BP’s clean-up and litigation costs for the spill, which followed the April 20, 2010 explosion of the Deepwater Horizon drilling rig. The London-based company said this week it has already taken a $42.7-billion (25.3 billion pounds) pre-tax charge.
Ellison said investors who bought BP’s American depository shares soon after the explosion may pursue claims as a group that BP publicly “lowballed” the oil flow rate, and that the share price “did not reflect the magnitude of the disaster facing the company.” It can be easier for investors to recover more money at lower cost by suing as a group. The judge denied class certification to a second group of shareholders that claimed BP had overstated its ability to manage safety issues prior to the explosion. He said this denial was because it was too hard to calculate class-wide damages.
BP had no immediate comment. The lead plaintiffs are New York State Comptroller Thomas DiNapoli, who oversees that state’s Common Retirement Fund, and the Ohio Public Employees’ Retirement System. Neither was immediately available to comment.
Ellison ruled one day after the 5th U.S. Circuit Court of Appeals in New Orleans let stand a March decision forcing BP to pay some businesses for economic damages, without the businesses having to prove the spill caused their losses. BP has said paying such claims could push the estimated $9.2-billion cost of a settlement with those businesses much higher. The company may still appeal to the U.S. Supreme Court.
In the shareholder case, BP claimed that class certification could unfairly reward investors because the spill was hard to contain, not because it made misleading statements, and because its corrective disclosures addressed a variety of other issues. Ellison said he shared concerns about this “apparent disconnect,” but that the plaintiffs had presented a “legally viable, internally consistent, and truly class-wide approach to calculating damages. Whether plaintiffs have properly executed under the approach is a question for a different day.” [Emphasis added]
BP to appeal Gulf oil spill payment ruling to U.S. Supreme Court by Jonathan Stempel in New York; Additional reporting by Nate Raymond; Editing by Bernadette Baum, May 21, 2014, Reuters
BP Plc, seeking to limit costs related to the 2010 Gulf of Mexico oil spill, said it would ask the U.S. Supreme Court to review whether it must pay some businesses for economic damages without proof that the spill caused such losses.
The British oil company will appeal Monday’s decision by the 5th U.S. Circuit Court of Appeals in New Orleans not to disturb a divided three-judge panel’s March ruling over the payments. It will also ask the 5th Circuit not to require that it pay businesses for economic losses during the appeal.
BP has complained that the settlement it negotiated to cover business loss claims is being interpreted incorrectly by the businesses’ lawyers and claims administrator Patrick Juneau. It said making payments unrelated to the spill could push the settlement’s estimated $9.2 billion cost significantly higher. “No company would agree to pay for losses that it did not cause, and BP certainly did not when it entered into this settlement,” BP said.
A spokesman for Stephen Herman and James Roy, lawyers representing the businesses, had no immediate comment.
Dissenting from the 5th Circuit’s 8-5 decision to let the panel ruling stand, Circuit Judge Edith Brown Clement said the holdings “funnel BP’s cash into the pockets of undeserving non-victims … Another court surely must resolve this.”
BP’s appeal was announced one day after U.S. District Judge Keith Ellison in Houston let a group of shareholders pursue a class-action lawsuit accusing the company of understating the spill’s severity.
Ellison said investors who bought BP’s American depository shares between April 26 and May 28, 2010 may pursue claims that BP publicly “lowballed” the oil flow rate, and that the share price “did not reflect the magnitude of the disaster.”
BP said it will appeal the grant of class certification, but called the dismissal of the safety claims, covering investors over 2-1/2 years predating the spill, a “significant victory.”
BP asked Ellison to delay a trial until after U.S. District Judge Carl Barbier in New Orleans finishes the third phase of a trial, likely in early 2015, to apportion blame for the spill and award damages, including to federal and state governments. [Emphasis added]
Appeals court won’t rehear BP settlement issue by AP, May 20, 2014. Economic Times
NEW ORLEANS: A federal appeals court on Monday refused to reconsider its previous ruling that businesses don’t have to prove they were directly harmed by BP’s 2010 Gulf Of Mexico oil spill to collect settlement payments. The decision by the 5th US Circuit Court of Appeals in New Orleans could be a step toward resuming a claims process that was suspended after a district court ruling in December. However, BP spokesman Geoff Morrell said in an emailed statement Monday night that the British oil company is considering its legal options. BP had asked the full 5th Circuit Court of Appeals in New Orleans to rehear the case after a three-judge panel’s March ruling. The court voted 8-5 against a rehearing. The action preserves US District Judge Carl Barbier’s ruling that BP had agreed in a 2012 settlement to pay claims without requiring proof that losses were directly caused by the spill resulting from the explosion of the Deepwater Horizon oil rig, which killed 11 workers.
Judge Leslie Southwick wrote in Monday’s order that a 2012 policy statement, issued by the court-appointed claims administrator and developed with “input and assent from BP,” spelled out the criteria for business claims.
“Instead of direct evidence of a causal connection between the Deepwater Horizon disaster and the claimant’s business losses, the Exhibit described four geographic zones, several types of businesses, formulae for presenting economic losses, and various presumptions regarding causation that apply to specific combinations of those criteria.” Southwick said all parties agreed to the criteria prior to final court approval of the 2012 settlement.
Judge Edith Brown Clement dissented. “Our courts’ decisions would allow payments to `victims’ such as a wireless phone company store that burned down and a RV (recreational vehicle) park owner that was foreclosed on before the spill,” she wrote. “Left intact, our holdings funnel BP’s cash into the pockets of undeserving non-victims.” She said the ruling made the court “party to this fraud” and said judges in the majority were trying to “shift the blame for these absurdities to BP’s lawyers.”
Monday’s ruling consolidated multiple appeals in the case and appears to settle what BP said were conflicts between two earlier panel decisions related to the settlement. It is the latest development in a complicated legal back-and-forth over to whom BP owes money following the largest oil spil in US history. A three-judge panel ruled in December that Barbier had to consider BP’s arguments. But Barbier ruled against the company.
“BP is disappointed that the full Fifth Circuit will not be considering the divided panel decisions relating to the compensation of claims for losses that have no apparent connection to the spill,” Morrell’s statement said.
Attorneys Steve Herman and Jim Roy, lead lawyers for the steering committee of plaintiffs in the case, applauded the court’s decision. “We are pleased that the Court of Appeals agreed that BP must honor its contract,” they said in an email. [Emphasis added]
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