Unsettling Business: The BP Settlement Agreement

• DOI: http://doi.org/10.1002/jcaf.22018
• Author: Holly R. Rudolph,Leigh Redd Johnson
• Date: 01 January 2015
• Published date: 01 January 2015

41

© 2015 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.22018

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Leigh Redd Johnson

and Holly R. Rudolph

Two years since the settlement agreement

between BP and plaintiffs of the Deepwater

Horizon oil spill, myriad challenges to the agree-

ment by BP related to the calculation of business

economic loss payments and causation have been

filed. While BP has been successful in its efforts

to revise the rules for calculation of payments, it

has been less successful on the causation issue.

This article reviews the history of the settlement

agreement, summarizes the status of business

economic loss payment claims, and discusses the

impact of BP challenges on claimants at all stages

of the claims process, including businesses that

have previously received payments.

© 2015 Wiley Periodicals, Inc.

U nsettling Business: The BP Settlement

Agreement

In the aftermath

of the Deepwater

Horizon oil spill,

BP faced lawsuits for

economic and property

damage from hundreds

of thousands of indi-

viduals and businesses.

In what some call an

attempt to gain “global

peace,”

1 BP executed a

settlement agreement

in 2012 with many of

these plaintiffs whose

claims had been con-

solidated as part of a

multidistrict litigation

in the U.S. District

Court for the Eastern

District of Louisiana (the Dis-

trict Court).

2

Shortly after the settle-

ment agreement was approved

and implemented, BP began

challenging various aspects of

the contract, asserting that the

claims administrator miscalcu-

lated certain business economic

loss payments and that parties

with losses not caused by the

oil spill incorrectly received

claim compensation. While BP’s

appeals to the U.S. Court of

Appeals for the Fifth Circuit

(the Fifth Circuit) have been

largely unsuccessful on the

causation issue, they have led

to revised rules regarding pay-

ment calculations for business

economic losses under the settle-

ment agreement. These rules will

not only impact claimants cur-

rently in the settlement process,

but could also potentially affect

previously paid claims since

BP recently asked the District

Court to require prior recipients

of business economic loss pay-

ments to return amounts that

they would not have

received under the

revised rules.

This article

examines the history

of the settlement

agreement and BP’s

challenges to its

implementation. It

also reviews the cur-

rent status of and

statistics related to

business economic

loss payments made

pursuant to the

settlement agree-

ment. Finally, it

discusses the impact

of BP’s challenges

to the settlement agreement for

claims at various stages in the

settlement process, including an

analysis of the effect of the new

payment calculation rules and

BP’s request to “clawback” cer-

tain business economic loss pay-

ments to corporate cash.

THE SETTLEMENT AGREEMENT

AND BUSINESS ECONOMIC

LOSS CLAIMS

In March 2012, BP and

representatives for the plaintiffs