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J.R. Whaley
J.R. Whaley
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BP Settlement – Some Reasons Why SCOTUS May Deny Cert.

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After losing its effort to have the entire United States Fifth Circuit Court of Appeals undo the legal agreement it made, BP lost no time in declaring it would ask the United States Supreme Court to do so.  On top of that, by early Thursday afternoon, BP had formally asked that the United States Fifth Circuit “stay” the “mandate” — or to prevent that court’s Monday ruling from having any effect until BP’s request to the United States Supreme Court is decided.  So, long story short, BP wants more delays.

BP’s attempt at further delay is despite the fact that BP’s arguments have been considered and rejected by: (1.) the court-appointed and BP-proposed claims administrator; (2.) the federal district judge overseeing the class action settlement; (3.) a majority of the three judge “BEL Panel” of the United States Fifth Circuit Court of Appeals (2-1); (4.) a majority of the three judge “Merits Panel” of the United States Fifth Circuit Court of Appeals (2-1); and (5.) a majority of every active judge of the United States Fifth Circuit Court of Appeals (8-5).  For those scoring at home, that is 0-5 for BP.  Regardless, BP intends to ask that the United States Supreme Court review this matter.

Getting the United States Supreme Court to review a case is called petitioning for a writ of certiorari.  Rule 10 of the Supreme Court’s Rules lists the considerations that may lead the Court to grant cert.  Generally, the Supreme Court agrees to hear an appeal when there is a significant issue present in the underlying case that is in dispute nationwide and resolution of that issue in that case can have some general applicability.  “Granting cert” does not mean the Supreme Court will actually overturn the lower court’s decision — only that the Supreme Court will consider the case.

Putting aside the merits of BP’s underlying complaints, it is worth asking — What are the actual chances that the United States Supreme Court will consider BP’s appeal to overturn the agreement that BP once agreed-to and praised?

When mere mortals ask the United States Supreme Court to grant cert, chances run around 1% – 5%.  BP’s lawyers recently bragged, however, that it is successful 30% of the time it seeks Supreme Court review of its clients’ cases.  So let’s spot BP a couple of points and give it a little less than 50-50 chance of getting the United States Supreme Court to even consider its arguments.  What are some of the arguments against the Supreme Court even entertaining BP’s arguments and granting cert?  These are some I can think of.

1.  This is just a contract.  Boiled down, BP’s arguments center on a dispute about how to interpret the 1.200 page class action settlement agreement that it negotiated over several months.  BP argues it should be interpreted one way.  The PSC argues it should be interpreted another way.  Really, that’s what this lengthy and expensive fight is all about.  Indeed, BP’s lawyer said this exact thing at oral arguments at the United States Fifth Circuit Court of Appeals.  He said, “This appeal presents a straight forward question of contract interpretation.”

This contract, and its disputed interpretations, will never be replicated.  Ever.  It is, as fancy lawyers say, sui generis. Whatever is ultimately decided about how the contract should be interpreted will have little, if any, lasting impact on other agreements — class action or otherwise.  It doesn’t present the kind of case that the Supreme Court can use to delineate law that would have any impact going forward.

2.  This does not involve an important constitutional issue.  Think about Brown v. Board of Education (“separate but equal” is not okay), Gideon v. Wainwright (Americans charged with a crime are entitled to legal representation), Miranda v. Arizona (“You have the right to remain silent . . .”), Loving v. Virginia (states cannot outlaw interracial marriages), Windsor v. United States (Defense of Marriage Act deprives gay couples equal protection when those couples are married under a state’s laws allowing gay marriage), Citizens United v. FEC (corporations cannot be limited when making campaign contributions).  Admittedly, there are more mundane decisions that the Supreme Court hands down that most of us don’t know about or pay attention to.  But all of the Court’s decisions typically involve some overarching constitutional issue, worthy of review by the United States Supreme Court, not some contractual dispute.  That is what is missing here.

3.  Substantively, BP is wrong.  BP attempts to make this issue all about Article III standing.  It argues that the class action it agreed to cannot settle claims not caused by the spill. There are two problems with BP’s argument.

One is an opinion by Justice Scalia from last term where he stated that “Proximate causation is not a requirement of Article III standing.” Lexmark Int’l v. Static Control Components, Inc.  Footnote 6.  This also does not take into consideration that the Oil Pollution Act allows for a wider range of claimants and recovery than typical tort cases.

Judge Southwick of the United States Fifth Circuit also dealt with BP’s “causation” argument when he ruled that BP and the PSC agreed that “causation is established by certain factors set out in Exhibit 4B that the parties agreed were a sufficient indirect way to satisfy the goal of connecting a claim to BP’s conduct in the Gulf. The parties did not reject the need to establish a connection. Instead, they agreed to a means for doing so that sufficiently satisfied each party’s litigation interests.”  Judge Southwick continued that “Exhibit 4B can be analogized to a stipulation at trial. If parties stipulate to an element of a claim, no proof at trial will be needed. Here, they stipulated to the form of the proof that would demonstrate causation.”

4.  Finally, the wrong message would be sent to corporate ne’er do wells by granting cert.  BP was represented by some of the most sophisticated and well-educated lawyers in the country during its negotiations.  It negotiated and sought judicial approval of the agreement — long after being informed of how the settlement agreement was being interpretted and applied.  It has had its day in court.  From a policy perspective, should the United States Supreme Court continue to let BP delay implementation of its agreement?  Would doing so invite other parties to class action agreements to try to crawfish from its agreements when things pan out differently than what they initially hoped?

BP has tried with all of its might to re-write its agreement.  It has failed five out of five times.  This case does not involve any important, constitutional issue worthy of Supreme Court interpretation.  It is time for BP to honor its commitments and quit the delay.  The people of the Gulf have waited long enough.

8 Comments

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    […] this case involves no issues of any real constitutional importance and no split among the lower courts, the Supreme Court should act swiftly to deny BP this relief and order the immediate resumption of […]

  2. J.R. Whaley says:
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    Thanks, Brent. The issue articulated in the Business Week article boils down to this:

    “Will the Supreme Court take the case? Maybe, but probably not.
    The intricate, highly specific nature of what boils down to a contract dispute would ordinarily discourage the justices from using this case as a vehicle for straightening out the standards for a class action settlement.” We shall see. In the meantime, the people of the Gulf continue to wait.

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    http://buswk.co/1h6kDGA

    Bloomberg Businessweek consistently pro-BP in this controversy weighs in and concludes that SCOTUS granting cert is unlikely.

    http://buswk.co/1h6kDGA

  4. J.R. Whaley says:
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    Jay – I know a lot of bright legal minds are considering that.

  5. J.R. Whaley says:
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    Dennis – The general timeline is this: BP has 90 days to seek cert from Monday’s ruling. That puts us at end of August for the deadli ne for them to seek cert. I don’t believe there is any timeline that requires the justices to decide whether to grant cert. I suspect we are now looking at the late Fall before we know whether the USSC grants cert. The bigger question is whether the mandate from the USCA5 is stayed in the interim. Let’s hope not and that the businesses of the Gulf do not have to continue to wait.

  6. Dennis P. says:
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    Best guess, how long will it take the SC to decide if they are going to hear this appeal?

  7. Jay Brown says:
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    Is there any further class action legal measures that could be implemented against BP, such as Breach of Contract or some other measure to extract interest on claims that are ultimately paid after an intentional delay of time by BP? It seems wrong that legitimate claims are suffering with no offensive avenue to pursue while BP keeps striking with indefinite delays.

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    Good analysis. I look forward to the day when we can get going and rap these claims up.