On Monday, December 2nd, 2013, a 5th Circuit Court of Appeals panel issued another opinion opening the door to examining claimant causation under the 2012 Deepwater Horizon class action settlement, and possibly scuttling the entire agreement. Below are recaps of the decisions two 5th Circuit panels have made over the past two months.

On October 2, a 5th Circuit panel consisting of Judges Dennis, Clement, and Southwick reached a 2-1 decision on BP’s assertion that the Business Economic Loss (BEL) claims for claimants who kept their financial records on a cash-basis were improperly calculated by the administrator of the settlement.  In a decision authored by Judge Clement – to which Judge Dennis dissented—the panel aligned with BP, and remanded the case to the District Court for further action on the proper formula regarding these claims. In an interesting twist, Judge Clement went “off the reservation” in Part II of the opinion, on an issue that was never argued by BP, nor briefed by the parties: whether the entire settlement agreement should have been approved by the District Court.  In Judge Clement’s opinion, no party can agree to a contractual standing for those claimants who did not have a “colorable claim.” Therefore, the District Court should not have approved a settlement which used an objective mathematical causation formula to establish standing to sue and, by extension, to collect from the settlement fund.

In his concurring opinion, Judge Southwick agreed with the part of the decision regarding loss calculations, but took exception to Part II of the Judge Clement’s opinion referring to causation.  He states in relevant part, “I am concerned that those observations imply—though they may well not be intended to go that far—an invalidity to the Settlement Agreement’s causation framework, which no one challenges.  I would not make the pronouncements that appear in Part II.”  One would think that this ended the discussion on causation – the District Court certainly thought in similar terms, having ordered on three occasions (October 18, November 15, and November 22) that the parties present their thoughts on calculating the damages of claimants who kept their financial records on a cash-basis, but refusing to consider ‘justifying causation’ as an issue.  After all, the District Court carefully reviewed the panel opinion and saw that: (1) the issue of causation never came up by the parties, and (2) that a majority of the panel would not have invalidated the causation framework of the agreement.

BP appealed that decision and the same 5th Circuit panel in a 2-1 decision (with Judge Southwick now joining Judge Clement) ruled that: “…the issue of causation is again remanded for expeditious consideration and resolution in crafting ‘a stay tailored so that those who experienced actual injury traceable to loss from the Deepwater Horizon accident continue to receive recovery but those who did not do not receive their payments until this case is fully heard and decided through the judicial process,’ including by any other panel of this court that resolves these issues.

It is interesting to note that in an unpublished opinion issued by a separate panel of the 5th Circuit on November 11, 2013, the Court – in a case involving standing to sue– implied that the settlement agreement in question was proper and enforceable.  So, what do the 5th Circuit Judges think about the issues raised by Judge Clement?  Hard to say; but in Judge Southwick’s words which opened the door to a remand on the issue of causation, “… I would defer the issue and allow the parties on remand to give it the attention it deserves.”

We’re in for a long legal battle on an issue that BP attorneys didn’t even think existed prior to the October 2 opinion of the 5th Circuit Court of Appeals.  Let’s hope that claimants affected will still be in business after the years it may take to resolve this matter through our judicial process.  Reading between the lines from the latest 5th Circuit opinion, only what BP determines is “actual injury traceable to loss from the Deepwater Horizon accident” will be paid in the interim.