Judge rules against BP in settlement dispute

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U.S. District Court Judge Carl Barbier this morning reaffirmed his prior rulings that Pat Juneau, claims administrator for the Deepwater Horizon Economic Settlement, is correctly interpreting how the multi-billion settlement is paid out to business claimants who suffered losses related to the 2010 Gulf Oil Disaster. Barbier dismissed a lawsuit BP filed against Juneau and denying the company's motion for a preliminary injunction on certain types of claim payments.

Today's hearing took place before a courtroom filled to capacity. Court officials opened up an overflow room (where I was) which itself was about half-filled.

The disagreement involves only business economic loss (BEL) claimants. BEL claimants have so far received the largest damage amounts. BP initially anticipated that the entire settlement would cost about $7.8 billion, but its potential exposure on BELs alone — one claim category of 12 — could surpass that.

Yesterday, the company appealed Barbier's earlier ruling siding with Juneau's interpretation.

(More after the jump)

Background from our earlier coverage:

BP's March 15 request for an injunction follows a March 5 decision by U.S. District Court Judge Carl Barbier affirming Juneau's interpretation of the settlement. Barbier acknowledged that some awards might be more than claimants deserve, but said occasional overpayments are "all consequences BP accepted when it decided to buy peace through a global, class-wide resolution."

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The cost of the settlement indeed appears to be much greater than BP anticipated when it agreed to the deal last year. In statements to the press and numerous stockholder filings with the U.S. Securities and Exchange Commission, BP consistently estimated $7.8 billion as the total cost of the settlement. Subtracting the guaranteed $2.3 billion set aside for commercial fishing losses leaves $5.5 billion for each of the 10 remaining claim types, including business economic losses, the category so far receiving the largest settlement offers.

In arguments before the court today, settlement class attorney Steve Herman said BP is now "appealing virtually every [claim]" to the small Deepwater Horizon settlement appeal panel. He showed the court one such appeal, where the company wrote that a claimant was attempting to file a false claim "under penalty of perjury."

"They have a nerve to imply, intimidate, threaten, class members with prosecution for perjury,” Herman said.

Making his ruling, Barbier asserted it was "obvious" that BP was filing request for injunction only as a redundant "belt and suspenders move BP to gain some appellate rights." He said granting an injunction would amount to a ruling against himself.

“My question is, I’m having a real hard time understanding how BP is asking me to enjoin Mr. Juneau from following my order. Basically you’re asking me to enjoin myself,” he said.

As for the suit against Juneau, which alleged a breach of contract, Barbier said allowing it to go forward would set a bad precedent, allowing anyone who disagreed with how he awarded or denied claims to sue as well.

“If you can sue the claims administrator essentially for doing his job ... why can't anyone else?" Barbier said.

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