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Supreme Court Rejects BP's Plea to Block Suspect Macondo Claims

The U.S. Supreme Court on Monday rejected BP plc's plea to allow it to block payments for damage claims that could not clearly be traced to the 2010 Macondo oil spill in the Gulf of Mexico.

BP had petitioned the high court earlier this year to intervene in its battle over business economic loss claims, i.e., what and who gets paid for oil spill damages related to the well blowout (BP Exploration v. Lake Eugenie Land & Development).

The U.S. Court of Appeals for the Fifth Circuit earlier this year approved a settlement class with claimants that BP had argued was not harmed by the spill (see Daily GPIAug. 4May 21).

The Supreme Court's unsigned order requires BP to continue to make payments to the Macondo claimants that are approved by court-appointed claims administrator Patrick Juneau.

BP had asked the high court to require that claimants prove they were eligible to join a class action settlement reached between the company and the Plaintiffs Steering Committee (PSC) in 2012. BP asserts that more than $600 million in illegitimate payments have gone to claimants not affected by the spill. To date, BP has paid more than $4 billion in claims through the settlement program

BP’s lawyers also argued that the PSC agreement has been misinterpreted by Juneau.

The Fifth Circuit in New Orleans ruled that BP had to abide by the PSC agreement that it helped negotiate, which did not require claimants to show proof. The terms in the agreement were "not as protective of BP's present concerns as might have been achievable," said the appeals court. However, "they are protections that were accepted by the parties and approved by the district court...There is nothing fundamentally unreasonable about what BP accepted but now wishes it had not."

"With its order, the Supreme Court held -- as had the lower courts -- that BP must stand by its word and honor its contract," said lead attorneys for the class of affected businesses. The rejection by the high court "is a huge victory...and should finally put to rest BP's two-year attack on its own settlement." Juneau "can get on with the business of processing and paying eligible claims."

A BP spokesman said the company remains concerned that the claims program has made awards to claimants that suffered no injuries from the Macondo spill and "lawyers for these claimants have unjustly profited as a result. On behalf of all our stakeholders, we will therefore continue to advocate for the investigation of suspicious or implausible claims and to fight fraud where it is uncovered."

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