James Gill: BP’s money drowns integrity

Nobody denies that BP is paying hundreds of millions, or more, to settle claims brought by businesses that suffered no losses whatsoever from the Deepwater Horizon leak in 2010.

Attorneys advertise for clients with promises of instant free money. This must be the most indecorous scramble since the Gold Rush. The big difference is that anyone staking a claim today is highly unlikely to come up empty-handed.

BP says it has so far paid out $42 billion in compensation for the spill, and still faces the prospect of hefty fines. Business losses, covered in a settlement signed last year, were originally projected to cost $7.8 billion, but BP now puts that price tag at $9.6 billion.

No, this is not an invitation to feel sorry for BP. If BP is feeling the pinch, and its executives say they fear a takeover, it couldn’t happen to a nicer multinational corporation. After an explosion that killed 11 men, and repeated lies about the scale of the environmental disaster, BP could never pay enough to mollify Louisiana.

Certainly it has been forced to pay what it calls “fictitious” and extravagant claims for business losses, but that may be its own fault. The settlement to which it agreed placed no limit on liability and opened the door for businesses unaffected by the spill to tap into the bonanza.

BP keeps trying to wriggle out of the settlement, and, in its latest motion before the federal appeals court in New Orleans, trots out more or less the same arguments that have cut no ice so far.

U.S. District Judge Carl Barbier, rejecting the allegation that claims administrator Patrick Juneau was misinterpreting the settlement to pay undeserving claimants a few months back, put the blame squarely on BP. “Absurd results” were inevitable under the terms of the settlement BP concocted “to buy peace through a global, class-wide resolution,” Barbier ruled.

A federal appeals court hearing BP’s appeal seemed strongly inclined to agree with Barbier, but has not yet handed down its decision. Unless the court rules that Juneau is misinterpreting the settlement, BP’s motion asks that it be nullified.

Juneau “systematically pays claimants for inflated or wholly nonexistent losses,” according to a BP vice president, and “thus breaks faith with the core bargain reflected in the agreement, namely the compensation of claimants for actual lost profits.”

It evidently isn’t reflected clearly enough to avoid long and costly disputes about what the terms mean. An agreement that unambiguously provided only for “actual lost profits” would rule out all the crazy payouts BP cites in court filings. Among the businesses boosted by the spill in the Gulf was a rice mill 40 miles inland that had a banner year in 2010 but still copped $21 million from BP.

The appeals court is unlikely to offer BP much succor, to judge from the questions asked at the panel hearing. Judge James Dennis, for example, pointed out that BP had neglected “several chances” to clarify what constituted lost profit when negotiating the settlement. “So how can we go beyond the four corners of the agreement?”

The court may find it even harder to trash the entire caboodle. Any litigant seeking to undo his own handiwork will always be up against it, and this one does not have the advantage of friendly territory. Badmouthing BP is one of Gov. Bobby Jindal’s favorite pastimes.

Chances are that the easy money will continue to flow. So long as the agreement is in place, there is no fraud in claims for imaginary losses, and attorneys who push them do not qualify as shysters. Any setup that takes money from BP for circulation in the Louisiana economy will be seen hereabout as serving justice, moreover.

The whole exercise does partake of the quality of a sharp practice, though. A business owner accepting compensation to which he has no legitimate claim must value moolah more than integrity. The numbers suggest that is not an uncommon preference.

James Gill’s email address is jgill@theadvocate.com.