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BP Petitions Supreme Court Over Oil Spill Claims

BP plc on Friday asked the U.S. Supreme Court to intervene in its battle over what and who gets paid for oil spill damages related to the 2010 Macondo well blowout in the Gulf of Mexico.

The oil major asked the high court to enforce requirements for claimants to prove they are eligible to join a class action settlement that has sent billions of dollars to some that may not be qualified. BP has asked the high court to reverse split decisions by the U.S. Court of Appeals for the Fifth Circuit that approved a settlement class with claimants BP claims were not harmed by the spill (see Daily GPIMay 21).

In June Supreme Court Justice Antonin Scalia rejected a request by BP plc to suspend payments for Macondo-related claims while the producer separately appealed the original claims settlement agreement (see Daily GPIJune 9).

Interpretations of the claimants settlement by the lower courts contradict class-action law and the Supreme Court's interpretation of a section of the U.S. Constitution that requires a plaintiff to trace its injury to a defendant's action, BP said in the filing Friday. Lower court rulings decided against BP also depart from similar rulings adopted by other appeals courts and deepen a conflict in the lower courts over how class-action members are defined, BP's notice said.

The high court was asked to reverse an order issued by the Fifth Circuit in New Orleans, which required BP to continue making claims payments while it pursued a separate request to review the claims settlement (see Daily GPI, May 29). The Fifth Circuit last month rejected by 8-5 an appeal by BP to block payments while the Supreme Court review continued (see Daily GPI, May 20).

BP in 2012 reached one of the largest class-action settlements in U.S. history by agreeing to resolve claims of economic losses for those that had been impacted on the Gulf Coast. The original $7.8 billion settlement was uncapped, however. BP CEO Bob Dudley said recently that the operator no longer can provide a reasonable estimate of the settlement costs, in part because of lower court rulings.

BP lawyers said in their petition that some Gulf Coast businesses have been allowed windfalls of unwarranted compensation due to a misinterpretation of the settlement, which stated that a claimant need not prove its losses were caused by the spill if it met certain settlement criteria, including geographic proximity to the spill.

The petition said more than $600 million has been provided for "illegitimate" claims for businesses that are not near the Gulf Coast and whose losses could not have been linked to the disaster.

To date, close to $4 billion in payments have been made to about 46,000 claimants, according to claims administrator Patrick Juneau. BP said there are about 130,000 pending claims and more are expected.

"If companies cannot have faith that class-action settlements will be enforced in accordance with these well-established principles of class-action law, then they will be more inclined to litigate than settle, resulting in years of court proceedings and delayed justice for real victims," BP spokesman Geoff Morrell said.

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