BP’s friends at the Supreme Court: new faces, old arguments

September 8, 2014

It must have been a lot of fun for the lawyers at King & Spalding to write the first couple of sentences in a new amicus brief at the U.S. Supreme Court, supporting BP’s petition for review of two rulings by the 5th U.S. Circuit Court of Appeals. King & Spalding’s client is the British government, which, like BP, believes that the 5th Circuit was wrong to uphold the oil company’s 2012 class action settlement because the deal supposedly permits recoveries even to businesses with no injuries attributable to the 2010 Deepwater Horizon oil spill. By now, that’s a well-worn argument, after BP’s two ultimately unsuccessful appeals at the 5th Circuit and its failed request for an emergency stay from the Supreme Court. But when you represent the Queen of England’s government, here’s how you get to introduce yourself:

“Her Britannic Majesty’s Government of the United Kingdom of Great Britain and Northern Ireland respectfully submits the following brief in this important matter,” the brief begins. “Although Her Majesty’s Government takes no position on any points of interpretation of United States law, it notes that the combination of rulings now before this court has produced an untenable and exceptionally important result.” Soon thereafter, the UK brief cites the 1765 edition of Blackstone’s Commentaries on the Law of England for “the proposition that plaintiffs must prove all of the elements of their claims,” which, according to the brief, is fundamental to “our nations’ shared legal tradition.”

Drafting that paragraph had to be a kick for the American lawyers representing Britain. And I’m sure BP was gratified that The Financial Times gave the UK government’s amicus brief big play on Sunday. Even the class action lawyers who have fought to preserve their multibillion-dollar settlement with BP told me in an email statement that it took “gumption” for BP to persuade “the Queen of England to say that centuries-old English law would frown on BP paying damages.”

The real question, though, is whether the British government’s brief – or any of the other four amicus briefs filed last week in support of BP’s petition for certiorari – will help persuade the Supreme Court to review the case. BP is facing long odds against it. As I’ve reported, the entire court considered BP’s request for an emergency stay last summer, after the 5th Circuit said that payments to class members could resume. Among the four factors the court took into account were whether the oil company was reasonably likely to be granted cert and whether it had a “fair prospect” of winning if it were. A majority of the justices denied BP’s motion. We don’t know precisely how many, but it takes five votes to grant a stay and BP didn’t get them.

Only four justices have to vote to grant cert, so the stay denial didn’t end BP’s prospects for Supreme Court review. But by my read, BP’s cert petition, filed at the beginning of August, and the new briefs by its amici don’t assert arguments that the justices haven’t already seen from the oil company in its stay motion. I doubt, in other words, that the new briefs are going to change any justice’s mind – which means that BP had better hope that one (or more) of the justices who voted against the stay already believes its contention that the case raises constitutional issues on standing and class actions that have divided the federal circuits.

That uncertainty frightens foreign corporations, according to four business organizations from Germany and Britain, which joined the British government in warning that “the specter of potentially unlimited exposure to class action lawsuits by uninjured plaintiffs” will curtail investments in the United States unless the Supreme Court steps in. Perhaps, but the Supreme Court proved immune to similar dire warnings last year by the law firm that represents the foreign business groups, Mayer Brown. Mayer Brown filed two of the most anticipated cert petitions of the last Supreme Court term on behalf of manufacturers and retailers facing certified class actions accusing them of liability for washing machines that developed mold. Despite powerful amicus support for Mayer Brown’s clients – and arguments that certification rulings from the 6th and 7th Circuits violated the standing requirements of Article III of the U.S. Constitution – the Supreme Court denied cert in the moldy washer cases in February. In March, the justices also refused to hear a different case that challenged class certification on Article III grounds by two other Mayer Brown clients.

In all of the class action standing cases the Supreme Court rebuffed last term, federal appeals courts certified classes over opposition from defendants. In the BP case, as you’re doubtless aware, BP reached an agreement with class action lawyers and supported the deal at the trial court. The company began protesting the settlement – which, among other elements, allowed businesses whose revenue dropped after the oil spill to claim damages without proving causation – only after U.S. District Judge Carl Barbier of New Orleans approved an interpretation of the agreement that, according to BP, permitted claims by businesses that had lost money for reasons other than the spill. Two other newly filed amicus briefs supporting BP’s Supreme Court bid – one from the Washington Legal Foundation and the other from U.S. business groups led by the Chamber of Commerce – argue that the 5th Circuit’s endorsement of the BP settlement will dissuade other corporate defendants from settling class actions lest they also be victimized by overly broad judicial interpretations of class membership.

“The decisions below are terribly unfair to defendants in all certified class actions; they now face a Hobson’s choice in which they either proceed to trial and face ruinous liability – or proceed to settlement and have that settlement essentially rewritten to require payouts to thousands of uninjured claimants,” wrote WLF.

The Chamber’s lawyers at Hogan Lovells warned that consumers and judges will be the ultimate victims if corporations are scared away from reaching class action settlements – a rather ironic assertion from a group that routinely litigates at the Supreme Court against class actions. (It’s also worth pointing out that BP’s appeal of its class action settlement centers on supposedly wrongful claims by businesses in the Gulf region, some of which are members of local Chambers of Commerce; in June, when the U.S. Chamber filed an amicus brief at the 5th Circuit backing BP, the Pensacola Bay Area Chamber of Commerce passed a resolution expressing “its strong condemnation of the filing of the United States Chamber.”)

The other amicus brief backing BP’s cert bid is from Kenneth Feinberg, the prolific claims administrator, who argues that claims funds like those he has directed to compensate victims of the Gulf oil spill and the 9/11 disaster will be endangered unless the Supreme Court clarifies that uninjured plaintiffs can’t recover in class actions. “Future funds would either adopt the 5th Circuit’s new standard, thereby threatening to overwhelm the claims process with spurious claims, or continue to require causation, thereby channeling claimants toward litigation where the burden of proof is lower,” Feinberg wrote. His brief noted that the Gulf Coast fund paid out more than $6 billion to about 220,000 claimants who didn’t have to wait for the slow process of litigation; he also pointed out, however, that Judge Barbier found him to be acting as an “agent” of BP in administering the Gulf fund.

The class action lawyers who negotiated the BP settlement don’t seem very concerned that the Supreme Court will be swayed by friend-of-the-court filings backing the oil company’s petition. “When all other options run out, you pull out the Hail Mary’s,” wrote class counsel Steven Herman of Herman Herman & Katz and James Roy of Domengeaux Wright Roy & Edwards in an email passed to me by their representative. “You ask Ken Feinberg, who the district court already found was an agent of BP, to pretend to be a neutral ‘friend of the court’ and bemoan that the people and businesses harmed by the Deepwater Horizon catastrophe were not willing to have it BP’s way. You bring out the Chamber of Commerce (no surprise here), and have them claim that this is horrible for American business, though not mentioning that the claimants here are primarily those same American businesses,” the statement said. “But never would the simple fact be uttered that, as all courts have found, this is the deal that BP entered into, eyes open, because it thought it wanted to limit its exposure. In America at least, a deal is a deal.”

 A BP representative sent an email statement on the amicus filings that said, in part: “These briefs, filed by the UK government, major U.S. and international legal and business advocacy groups, and former Gulf Coast Claims Facility administrator Kenneth R. Feinberg, emphasize the importance of the fair and consistent application of law and underscore that the issues raised here are of vital interest to all businesses that operate in the United States.”

(This story has been updated to add comment from BP.)

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