This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Appeals Court to Review Approval of BP Settlement (Update 1)

By Michael Kunselman

NEW ORLEANS -- A year ago, lawyers for BP (BP) and Gulf Coast residents and businesses took turns urging a federal judge to approve their settlement for compensating victims of the company's massive 2010 oil spill.

On Monday, however, the onetime allies will be at odds when an appeals court hears objections to the multibillion-dollar deal. That's because several months after U.S. District Judge Carl Barbier approved the settlement, BP started complaining that the judge and court-appointed claims administrator were misinterpreting it. The London-based oil giant is worried it could be forced to pay billions of dollars more for bogus or inflated claims by businesses.

Plaintiffs' attorneys who brokered the deal want the 5th U.S. Circuit Court of Appeals to uphold the class-action settlement.

As of Friday, payments have been made to more than 38,000 people and businesses for an estimated $3.7 billion. Tens of thousands more could file claims in the coming months.

The settlement doesn't have a cap, but BP initially estimated that it would pay roughly $7.8 billion to resolve the claims. Later, as it started to challenge the business payouts, the company said it no longer could give a reliable estimate for how much the deal will cost.

The dispute centers on money for businesses, not individuals. Awards are based on a comparison of revenues and expenses before and after the spill. BP says a "policy decision" that claims administrator Patrick Juneau announced in January has allowed businesses to manipulate those figures in a way that leads to errors in calculating their actual lost profits.

Last month, a different 5th Circuit panel threw out Barbier's rulings on the dispute and ordered him to craft a "narrowly tailored" injunction that modifies the damage calculations.

The lead plaintiffs' attorneys said the panel's decision has no effect on the separate appeal of Barbier's December 2012 approval of the settlement.

"The processing and payment of (business) claims has not in any way affected the fair, reasonable and adequate compensation paid under the Settlement Agreement's transparent and objective criteria to any Objector or any other member of the class," they wrote.

BP wants the court to adopt its interpretation of the settlement terms for businesses. If it does, the "otherwise fatal obstacles" would be eliminated and the entire settlement could be upheld, the company told the 5th Circuit.

BP is not the only one questioning Barbier's December 2012 approval of the settlement. Attorney Brent Coon, of Beaumont, Texas, argued that a rush to "close the deal" resulted in a settlement program "mired in implementation problems." He did not have a role in negotiating the settlement but filed one of several formal objections, seeking revisions to the agreement.

"Too much random guess work was needed to determine whether an individual's claim was eligible for settlement funds or not," he wrote.

Juneau's office began issuing settlement payments on July 31, 2012. As of Friday, tens of thousands of claimants have received settlement offers worth more than $4.9 billion.

BP spokesman Geoff Morrell said the 5th Circuit's ruling last month concluded that Juneau's interpretations of the settlement "do not withstand scrutiny under the law."

"If they are not corrected, the settlement class cannot be certified and the settlement should be set aside, ending what once promised to be an historic effort to benefit those who experienced losses as a result of the spill," he said in a statement.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $128.54 -0.63%
FB $80.90 1.63%
GOOG $573.37 -0.05%
TSLA $202.44 1.44%
YHOO $43.99 3.21%

Markets

DOW 18,096.90 -106.47 -0.58%
S&P 500 2,098.53 -9.25 -0.44%
NASDAQ 4,967.1410 -12.76 -0.26%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs