Schexnaydre Law Firm, LLC

Claimants Win on Causation Issue; Injunction Lifted

By David Schexnaydre, Esq.

On March 3, 2014, the 5th Circuit Court of Appeals issued an opinion favorable to the claimants when it rejected BP's argument that claimants must offer additional proof that any decline in profit in the latter part of 2010 was caused by the BP spill.  

In my opinion, this is what the Settlement Agreement said in the first place.  My reading of the Settlement Agreement is that if a claimant showed a certain percentage decline in lost profit (as calculated by the provisions of the Settlement Agreement) in the latter part of 2010, as compared to 2009, 2008 and 2009, or 2007-2009, and there was then an increase in profit by a certain percentage in 2011 (for non-Zone A claimants), then the loss was automatically presumed to be caused by the oil spill with no further requirement for proof of connection to the spill. So, BP was successful in delaying the implementation of the Settlement Agreement as it was originally written.

Additionally, the court ruled that the injunction, which stayed the claims administration process for about six months, "should be dissolved, but the injunction remains in place until the mandate of the court is issued."  According to the text order of the court, the mandate is scheduled to be issued on March 24, 2014.  This gives the parties time to file for rehearing and/or a Motion to Stay. In light of the fact that the court ruled against BP and BP requested rehearing en banc in the companion "certification panel," it is likely BP will request a rehearing en banc related to the March 3, 2014 ruling. It will also likely request another stay of the proceedings in the trial court, including any activity by the Claims Administrator. 

We are hopeful that any such Motion to Stay will be denied and that the Claims Administrator will begin issuing Eligibility Notices, as well as payments, to certain Business Economic Loss claimants after March 24, 2014, and that claims in the appeals process can continue along the path to being paid.

Understand, though, that the "matching of revenue and expenses" issue is still pending and will still cause significant delays in processing of claims that (a) are based on the cash basis method of accounting (which includes most small businesses), or (b) have sufficient items in the accrual basis of accounting that need to be "matched," like year-end depreciation and year-end bad debt write-offs, for example. As a result, if the Claims Administrator does begin issuing Eligibility Notices and payments, they will likely only be for claims that do not involve "matching" issues.

My sense is that claims involving "matching" issues are still a good six months away from getting back on track.


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