Settlement Agreements and Consent Decrees -- 2014



BP Exploration & Prod. Inc. v. Lake Eugenie Land & Dev., Inc.   (U.S. Supreme Court)

Validity of settlement class without Art. III jurisdiction

This is an appeal to the Supreme Court concerning the validity of claims against BP arising from a settlement agreement relating to the oil spill from the Deepwater Horizon in the Gulf of Mexico. The NAM and other business groups filed an amicus brief urging the Court to review the lower court’s ruling because it ignored fundamental principles of constitutional law by certifying a plaintiffs’ class even though a large proportion of the class lacked any valid claims under applicable state law. Our brief warned against certifying either litigation classes or settlement classes without rigorous analysis of the common claims of the class members – and plaintiffs cannot demonstrate that the class members have the same injury, let alone any injury at all caused by the defendants.

The lower court found that class members who suffered no injury at the hands of the defendant could recover from a class action settlement. Yet casting aside an injury requirement violates Rule 23 of the Federal Rules of Civil Procedure. In addition, Article III of the Constitution requires that all plaintiffs in court present a live and true “case or controversy,” and a class action where members of the class have suffered no injury caused by the defendants violates that requirement.

The result of the lower court’s ruling will be to allow improper settlements and distributions, discouraging future settlements, increasing litigation costs, and flooding the courts with complex, time-consuming and expensive cases. We urged the Court to review the decision and reverse it, but on 12/8/2014, it declined to hear the appeal.


Related Documents:
NAM brief  (September 4, 2014)