This week, Halliburton Co. agreed to a $1.1 billion settlement of claims by the commercial fishing industry and others affected by the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. Last year, BP Exploration and Production Inc. and BP America Production Co. (“BP”) sought a court ruling that its own agreement to pay claims to injured parties should be limited to those who were actually affected, directly or indirectly, by the spill.
This is an obvious argument. It is a bedrock principle of Article III of the U.S. Constitution that courts are to resolve actual cases or controversies, which means that plaintiffs must have some injury and defendants must be the ones responsible for it. BP has already acknowledged responsibility for its share of the damages from the spill, and in order for courts to have jurisdiction, the plaintiffs must show that they were injured by the spill.
Unfortunately, the Fifth Circuit ruled in May, with 3 judges dissenting, not to review a ruling that allowed claims without having to submit evidence that the claims arose as a result of the spill. See our blog post here. This failure has serious implications because it allows courts to certify classes of claimants for settlement purposes that could never have been certified to sue in court. Manufacturers of all kinds could face huge liabilities to parties never affected by their products.
BP has appealed to the Supreme Court of the United States. The NAM’s Manufacturers’ Center for Legal Action filed an amicus brief today urging the Court to take the case and reverse the lower court. We warned that the lower court’s ruling will allow improper settlements and distributions, discouraging future settlements, increasing litigation costs, and flooding the courts with complex, time-consuming and expensive cases. It also makes the courts complicit in an unsettling expansion of their power.
Quentin Riegel is Vice President and General Counsel for the National Association of Manufacturers.