In Re: Deepwater Horizon
739 F.3d 790
| 5th Cir. | 2014Background
- The litigation arises from the 2010 Deepwater Horizon explosion and oil spill; plaintiffs and many claimants sought class-wide recovery under a proposed Settlement Agreement supervised by the Eastern District of Louisiana.
- The district court appointed Patrick Juneau as Claims Administrator and preliminarily approved a Settlement providing an court‑administered claims process (Exhibits 4B and 4C govern causation and business economic-loss measurement).
- The district court certified the settlement class and granted final approval on December 21, 2012; numerous objectors (Allpar, Cobb, BCA) appealed and BP later challenged aspects of certification and settlement implementation.
- BP later criticized two Claims Administrator Policy Announcements (endorsed by the court) as effectively eliminating or changing causation and accounting rules in Exhibits 4B/4C, arguing that they (1) include uninjured claimants and (2) thereby violate Article III, Rule 23, and the Rules Enabling Act.
- The Fifth Circuit majority reviewed Article III standing and Rule 23 issues (abuse of discretion standard for certification and settlement approval) and affirmed the district court, rejecting BP’s and objectors’ challenges; Judge Garza filed a dissent focused on Article III causation and Rule 23 defects.
Issues
| Issue | Plaintiffs' Argument | BP / Objectors' Argument | Held |
|---|---|---|---|
| Article III standing for settlement class | Class representatives alleged injury traceable to spill; assuming merits at certification suffices. | Inclusion of claimants who lack injury or causation (per Claims Admin policies) destroys Article III jurisdiction. | Affirmed: standing satisfied under both "named-plaintiff" (Kohen) and "class-definition" (Denney) approaches; court cannot consider new evidence submitted after district court; class definition and complaint allege causation. |
| Rule 23(a)(2) — commonality | Common questions about BP’s conduct support commonality even if damages vary. | Diverse injuries or uninjured members preclude commonality under Wal‑Mart. | Affirmed: common contentions about BP’s liability suffice; Wal‑Mart does not require identical damages. |
| Rule 23(a)(4) — adequacy / intraclass conflict | Named plaintiffs sufficiently represent all categories; settlement provides "uncapped" compensation so members aren’t pitted against each other. | Allowing uninjured claimants creates fundamental conflicts disadvantaging injured members. | Affirmed: district court did not abuse discretion; potential for some uninjured members does not defeat adequacy absent a fundamental conflict; BCA objectors forfeited by failing to prove class membership. |
| Rule 23(b)(3) — predominance / damages | Liability issues are common and predominate; damages can be adjudicated individually (bifurcation/phased proceedings). | Comcast requires a classwide damages methodology; without it, predominance fails—also payments to uninjured persons undermine Comcast. | Affirmed: Comcast inapplicable where liability is tried classwide and damages are individualized; predominance met because common liability issues predominate. |
| Rule 23(c)(2)(B) — notice adequacy | Notice described class and claims neutrally; no need to include adversarial positions. | Notice should have warned members that uninjured persons might participate. | Affirmed: notice need not list every material fact or adversarial contention; district court’s notice was adequate and neutral. |
| Ascertainability & Rule 23(e) fairness | Settlement and class definition are ascertainable; Reed factors and fairness review were satisfied after detailed analysis. | Policies changing exhibit interpretation make class unascertainable and settlement not a fair approximation of entitlements. | Affirmed: class ascertainable; Reed fairness factors satisfied; settlement approval not invalidated by challenged policies at certification stage. |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires injury, causation, redressability)
- Lewis v. Casey, 518 U.S. 343 (standing evidence must tighten through litigation stages)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (settlement-class certification requires Rule 23 compliance consistent with Article III)
- Wal‑Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (commonality requires a common contention apt to drive resolution)
- Comcast Corp. v. Behrend, 133 S. Ct. 1426 (damages model must measure damages attributable to the liability theory)
- Denney v. Deutsche Bank AG, 443 F.3d 253 (settlement class must be defined so that anyone within it would have Article III standing)
- Kohen v. Pac. Inv. Mgmt. Co., 571 F.3d 672 (Article III may be satisfied by named plaintiffs’ standing at certification)
- Cole v. Gen. Motors Corp., 484 F.3d 717 (at certification assume arguendo the merits of named plaintiffs’ claims for standing)
- In re Deepwater Horizon, 732 F.3d 326 (Fifth Circuit panel addressing interpretation issues of Exhibits 4B/4C)
- Reed v. Gen. Motors Corp., 703 F.2d 170 (factors for evaluating fairness of class settlements)