Settlement Agreement Included Presumptions about Economic Loss
The Deepwater Horizon incident prompted a number of legal actions, including multidistrict litigation surrounding private economic and property damage claims and medical claims stemming from the accident and oil spill. In 2012, BP reached a settlement with the Plaintiffs’ Steering Committee (PSC), which acts on behalf of individual and business plaintiffs in the multi-district litigation proceedings. BP initially joined with the plaintiffs in proposing a class action settlement stipulating payments of billions of dollars to anyone who fell within certain parameters presumed to have incurred loss as a result of the oil spill.

 

Under the settlement agreement, which was approved by the U.S. District Court for the Eastern District of Louisiana, proximity to certain geographic areas and participation in certain industries were deemed sufficient indicia to justify a presumption of loss and thus a recovery of damages. When the neutral claims administrator began awarding claims based on such presumptions, however, BP argued that actual proof of loss causation was required. This argument was rejected by the claims administrator and the trial court, prompting BP to appeal to the Fifth Circuit, which remanded the matter to the trial court. Among the questions on remand were (1) whether the settlement agreement actually provided that payments could be made by satisfaction of the criteria in the settlement agreement without further proof of loss causation, and (2) whether approval of the settlement violated Article III standing requirements, as the settlement could bind parties who lacked standing because they had no colorable claim to injury. The district court rejected BP’s arguments on both points.

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Tags: claims administrator, class action settlement, property damage claims, Steering Committee