4 reasons BP's Supreme Court settlement appeal faces an uphill battle
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4 reasons BP's Supreme Court settlement appeal faces an uphill battle

By Jennifer Larino, NOLA.com | The Times-Picayune

BP has spent much of this year working to convince federal courts in New Orleans that a flawed interpretation of its Gulf of Mexico oil spill settlement deal has allowed millions of dollars in payments to go to what it says are undeserving businesses. It's been an uphill battle for the British oil giant, which has lost several rulings on the matter.

Legal experts say BP's climb in the courts is about to get a lot steeper.

BP on Friday (Aug. 1) asked the U.S. Supreme Court to hear its case, which they argue could forever change the way large settlement deals are hammered out in the future.

BP said in May that it intended to file the appeal after the U.S. 5th Circuit Court of Appeals denied its request that the full court rehear the issue.

According to its petition, BP says the court-appointed settlement administrator Patrick Juneau has paid $76 million to business "whose entire losses unquestionably had nothing to do with the spill."

Another $546 million has been paid to claimants living far from the Gulf Coast and in industries that have "no logical connection" to the spill, the company says.

Previous rulings run against court precedent and could discourage future class action settlements, BP spokesman Geoff Morrell said in a statement released Saturday (Aug. 2).

But legal experts say the reality is that the Supreme Court chooses to consider less than 1 percent of the more than 10,000 petitions sent to it each year.

Despite the high profile of the case, the experts say, the chances BP's appeal is among the few selected are slim.

Here are four reasons why.

1. The Supreme Court denied BP's request to block settlement payments.

The Supreme Court declined a request from BP in June to freeze business payments while it appealed the settlement, upholding a previous 5th Circuit ruling. BP argued that allowing payments would scatter hundreds of millions of dollars to claimants not injured by the spill, money the company would be unable to recover if the settlement is overturned.

Blaine LeCesne, a Loyola University law professor, said the Supreme Court would have granted the injunction if it saw merit in BP's appeal.

LeCesne, who has provided commentary on the claims litigation for local, national and international media outlets, has been critical of BP's handling of the payment of settlement claims.

The Louisiana Record reported in July LeCesne serves as vice president and general counsel at Nolmar Corp., a New Orleans janitorial and construction company that has a claim pending against BP, and has contacted the claims administrator on behalf of the company. LeCesne says he has done nothing improper and that his analysis of the claims litigation remains impartial.

LeCesne echoed law experts from around the country who said the Supreme Court's refusal to stay business payments indicates BP's petition may not be granted.

In denying the request, the court said "at least implicitly, that BP is not going to have its case heard," LeCesne said.

2. The lower courts have generally agreed with each other on class action law.

In its petition, BP calls on the Supreme Court to resolve what it says are conflicting decisions from the lower court.

The company cites decisions from the 2nd, 7th, 8th and District of Columbia circuit courts that have rejected classes of plaintiffs with a large number of members who were not harmed by the defendant. It also points to two court decisions, including the 5th Circuit rulings, that have upheld classes in such instances.

David Logan, a law professor at Roger Williams University in Rhode Island, said the Supreme Court certainly looks to resolve conflict within the lower courts.

But Logan said the decisions BP highlights don't appear to reflect a true split in the courts.

He noted each decision was made within the context of the specific class action case it was reviewing.

But he said none appear to deal with the same questions posed in the BP case, namely, whether a class definition reached in a settlement agreement between parties can be altered.

"The lower courts come at the class action certification and the problems of how it works in the settlement context from a different perspective, but that doesn't mean there is a split," Logan said.

He added there has been little disagreement over BP's appeal in district and appeals courts in New Orleans, which have ruled consistently to uphold the settlement deal.

3. BP's appeal isn't compelling enough to urge quick action.

Logan said the Supreme Court will often hear cases where there is a compelling need for an early resolution, for example, a case determining whether the use of certain chemicals on convicts sentenced to the death penalty.

"What hangs in the balance there is the potential for an unconstitutional death to occur," Logan said. "That's not the same thing as a damage award, let alone a settlement civil action, no matter how big it is."

But BP argues that its case could have a big impact on whether businesses agree to large settlements in the future.

"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," Morrell said.

4. The Supreme Court is waiting to weigh in on future BP appeals.

This is the first appeal related to oil spill litigation BP has presented to the Supreme Court, but it's not likely to be the last.

Carl Tobias, a law professor at the University of Richmond and expert in constitutional law, said dozens of appeals are likely to come from ongoing oil spill litigation, including the federal civil trial of BP, which will enter its third and final phase in January 2015.

Tobias said BP could contest everything from Clean Water Act fines to how the court determines gross negligence in the disaster.

Those are much more thorny issues and are more likely to interest the Supreme Court, he said.

The settlement appeal "is not a big enough piece of" the litigation, Tobias said.

"I don't think it will peak the court's interest," he said.

It will be several months before the Supreme Court makes a decision on whether to hear BP's appeal.

According to information provided by the court, it takes six weeks on average for the Supreme Court act on a petition once it has been filed.

Once a petition is filed, the other party has 30 days to submit a response. When the court receives the response, the case is circulated to the justices for consideration and is placed in the queue of cases awaiting review at one of the justice's private Friday conferences.

The Supreme Court is on summer recess and will begin hearing cases again on Oct. 6.

This article was updated at 10:50 a.m. to include information on Blaine LeCesne's involvement with the Nolmar Corp. claim.

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