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Dec 8, 2014

By: Richard Wolf, USA Today
Published: December 8, 2014

To read at USAToday.com:

WASHINGTON -- The biggest offshore oil spill in U.S. history won't be coming to the Supreme Court anytime soon.

The high court on Monday refused to take up BP's contention that it has been forced to pay hundreds of millions of dollars in claims to businesses whose losses were not caused by the catastrophic Deepwater Horizon explosion in the Gulf of Mexico in 2010.

The justices' refusal to hear the case signaled a defeat for the embattled British oil giant, which has paid some $28 billion to date in claims and cleanup costs. In September, a federal judge found BP grossly negligent in the spill, which could subject the multinational corporation to another $18 billion in civil penalties.

At the center of the case was a class action settlement that BP said was far too generous in paying damages to businesses that were not directly affected by the oil spill, but which claimed that the resulting economic slump caused revenue losses.

The company's brief to the court contended that the claims administrator paid thousands of claimants "whose purported losses were not fairly traceable to the spill ... such as lawyers who lost their law licenses and warehouses that burned down before the spill occurred."

After the Supreme Court refused to intervene Monday, BP senior vice president for communications Geoff Morell said the company would "continue to advocate for the investigation of suspicious or implausible claims and to fight fraud where it is uncovered."

Unless such claims are rejected, the U.S. Chamber of Commerce and other business groups said, "This case risks becoming far more than just a one-off undeserved windfall. It may discourage future defendants from settling cases, portending a spike in costly class litigation as parties opt to forgo the efficiencies of class settlement."

BP isn't the only company involved in the oil spill to pay out huge sums. Claims against oilfield services provider Halliburton resulted in a $1.1 billion settlement in September. Transocean, which owned the drilling rig itself, agreed to pay $1.4 billion in federal civil and criminal charges last year.

Lawyers for the class of claimants, who were victorious at the district and appeals court levels, had urged the high court to deny BP's petition for another hearing. They argued that participation in a class action is not limited only to those certain to qualify for payments; others with lesser claims are free to join.

"This case is about a contract that BP signed but now wishes it hadn't," their brief said. "BP negotiated a comprehensive class settlement to escape liability for the devastation caused by the Deepwater Horizon explosion. Now, however, BP has developed buyer's remorse and wants out of the agreement."

Kenneth Feinberg, the nation's leading administrator of victims' compensation funds, sided with BP in its objections to the court-ordered settlement. Feinberg, who served as "special master" of the 9/11 fund after the 2001 terrorist attacks, was placed in charge of handling Gulf claims for 16 months before the court-supervised program took over. Under his supervision, about $6.2 billion was paid to more than 220,000 claimants.

The lower court decisions upholding the payouts over BP's objections "threaten the continued viability of these much-needed alternatives to conventional litigation," Feinberg argued in his brief to the court.

Not surprisingly, BP also won support from the British government. "An international company that has gone to great lengths to restore the Gulf Coast, and to substantially and swiftly compensate those who were adversely affected by the Deepwater Horizon oil spill, is now being required to pay large sums to others who were not injured by the spill," its brief argued.

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