In a move bound to upset powerful lobbyist, the Supreme Court dismissed a motion by oil giant BP to block further payments related to the 2010 oil spill in the Gulf of Mexico.
As is often customary, the Supreme Court didn’t offer details as to why BP’s review was denied. But the decision on Monday dealt a serious blow to the oil giant’s very public efforts to discredit a settlement it agreed to in 2012.
The US Chamber of Commerce warned in a friend of the court brief that this decision could make all future class action settlements “considerably less likely.”
On a website BP created to tell “the whole story” about the disaster, the company said it was being forced to pay fraudulent claims. It alleged that the agreement is forcing it to pay “more than half a billion dollars to people for losses they claimed but that BP contends are fictitious, exaggerated or not connected to the accident. “One of those settlements the company highlighted was an $8 million deal paid out to celebrity chef Emeril Lagasse, for damages to his restaurant company.
At the time BP agreed to the settlement, it anticipated paying $7.8 billions in claims, and agreed in many instances to “presume causation,” when people claimed damages. Since then, the projected settlement costs have increased to over $9 billion.
The unexpected sum has seen BP move to have the settlement voided and the administrator in charge of reviewing claims to be canned. But in March, a New Orleans appeals court rejected company claims and ruled that settlement payments had been doled out properly in accordance with the 2012 settlement agreement.
“The Settlement Agreement contained many compromises. One of them was to provide in only a limited way for connecting the claim to the cause,” the court ruled.
Monday’s decision by the Supreme Court upholds that decision.
In an amicus brief filed in favor of BP, the US Chamber of Commerce and the American Petroleum Institute claimed that in allowing “unwarranted settlements,” the court “may discourage future defendants from settling cases, portending a spike in costly class litigation as parties opt to forgo the efficiencies of class settlement.”
The businesses go on to claim “consumers will also be harmed, since they will ultimately bear the burden of paying increased costs to fund the litigation of class actions.”
Despite the concerns, the Chamber of Commerce has previously supported denying class actions suits. In the 2011 AT&T Mobility v. Concepcion decision, the court deferred to a pro-business ruling that future class-action lawsuits could be prevented through carefully crafted arbitration contracts.
A Public Citizen report released one year after the AT&T decision concluded “consumers who allege wrongdoing by businesses face an increasingly treacherous legal landscape.”
BP, meanwhile, is now forced to attempt to combat fraudulent gulf oil spill settlements on a case-by-case basis.
