Final Approval Given to Partial Settlement in Deepwater Horizon Suit

Jan 2013 // ABA Energy Litigation Section: News and Developments

On December 21, 2012, the Eastern District of Louisiana, the court overseeing the multi-district litigation concerning the April 2010 Deepwater Horizon explosion, gave its final approval to a partial settlement between BP and thousands of plaintiffs affected by the ensuing oil spill. The settlement covers property damages and economic losses suffered by people and businesses along the Gulf Coast who suffered real property damages and business losses. BP estimates that the settlement is worth $7.8 billion. However, there is no cap on potential settlement claims other than the $2.3 billion settlement for seafood-related claims for commercial fishermen.

Judge Carl Barbier gave his initial approval in May 2012, which prompted numerous plaintiffs to opt out of the settlement to pursue their claims individually. Many of the objections to the agreement were filed by people or businesses excluded from the agreement or from fishermen who contend they will not be compensated enough for their lost catches. Judge Barbier has not ruled yet on a medical settlement that BP has already reached with the plaintiffs.

The settlement agreement contains a number of reservations and exclusions. It reserves the plaintiffs’ claims against Transocean, the owner of the Deepwater Horizon rig, and Halliburton, the manufacturer of the cement casings on BP’s Macondo well. The agreement excludes the claims of financial institutions, financial funds and vehicles, casinos, insurance entities, the oil and gas industry, real-estate developers, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from the Obama administration’s moratorium on deep-water drilling prompted by the spill. The agreement reserves those claims, along with any claims for bodily loss and derivative claims for BP shareholders. The agreement also does not apply to the federal government’s claims against BP or those of the states of Louisiana and Alabama. The court retained jurisdiction over any matters and disputes arising out of the settlement agreement.

Judge Barbier’s 125-page opinion provides a description of the settlement agreement, including who is eligible, the claims covered, the geographic area and time period covered by the settlement, how the settlement amounts are calculated, the mechanics of filing a claim under the settlement, and an analysis of the fairness of the settlement. Judge Barbier analyzed the settlement under Rule 23 governing class actions. He concluded the plaintiff class satisfied the certification requirements under Rule 23(a); that common factual and legal issues predominated over individuals ones; that a class action was the best way to adjudicate the controversies presented in this matter; and that the settlement was “fair, reasonable, and adequate” under Rule 23(e). Judge Barbier noted that the amount of time the parties spent crafting the settlement, the relatively low number of potential plaintiffs opting out of the settlement, and the fact that litigation would take years to resolve all favored approval of the settlement.

A bench trial is set for late February to determine liability and apportion fault among BP, Transocean, and Halliburton.