Settlement Agreements and Consent Decrees -- 2014



Lake Eugenie Land & Dev., Inc. v. BP Exploration & Prod. Inc.   (5th Circuit)

Validity of settlement agreements

A divided panel of the Fifth Circuit ruled against BP in its effort to seek relief from a Deepwater Horizon settlement agreement under which numerous claims were made even though they may not have arisen from the accident. BP has asked all the judges in that circuit to revisit the case. See our blog post here.

The NAM filed an amicus brief urging the court to recognize that settlement agreements are only possible when the parties can be sure that they will be implemented as written and consistently with governing law. The panel's ruling upends that expectation, making settlement a far riskier and much less desirable option. In this case, the panel disregarded the causation requirement enshrined in the settlement agreement and found that merely attesting to a causal link between the accident and their claimed injury was enough to give them standing. Standing requires more than just attesting to it -- courts must use a searching, evidence-based inquiry to make sure that members of a class action actually had injuries attributable to the accident.

On May 19, 2014, the Fifth Circuit, with 3 judges dissenting, declined to rehear this case en banc. The dissent argued that the case should be reheard because there was no causation between BP’s actions and certain parties’ alleged injuries, which allowed “undeserving non-victims” to recover from BP. Additionally, the dissent wanted to clarify ongoing confusion regarding standing in class action suits.


Related Documents:
NAM brief  (March 24, 2014)