## Facts

- Following the 2010 Deepwater Horizon explosion and Gulf oil spill, numerous economic-loss and property-damage claims were consolidated in multidistrict litigation in the Eastern District of Louisiana.
- BP negotiated an Economic and Property Damages Class Action Settlement Agreement to resolve covered economic and property claims through a court-supervised, formula-based claims process.
- The district court certified an Economic and Property Damages Settlement Class under Federal Rule of Civil Procedure 23 and approved the settlement in an interlocutory order.
- Various objectors appealed, arguing the class and settlement were improper because (among other reasons) the class allegedly included uninjured members, individualized issues defeated Rule 23(b)(3), and the settlement purportedly altered substantive rights.
- The appeal proceeded as an interlocutory review under Rule 23(f) of class certification and settlement approval.

## Issues

1. Whether the district court abused its discretion in certifying the settlement class under Rule 23(a) and Rule 23(b)(3), including commonality, typicality, adequacy, predominance, and superiority.
2. Whether the class definition and settlement approval violated Article III by including persons allegedly not injured by the spill.
3. Whether the settlement was fair, reasonable, and adequate under Rule 23(e).
4. Whether the settlement violated the Rules Enabling Act by creating or enlarging substantive rights through compensation standards that allegedly permitted recovery without individualized proof of causation.

## Decision

- The Fifth Circuit affirmed the order certifying the settlement class and approving the settlement agreement.
- The court held the Rule 23(a) and Rule 23(b)(3) requirements were satisfied in light of shared core questions arising from a single disaster and the settlement’s claims-administration structure.
- The court rejected the Article III challenge, reasoning that the named plaintiffs had standing and the certification/approval decision was not rendered unconstitutional by the asserted possibility of uninjured absent class members.
- The court upheld the settlement as fair, reasonable, and adequate under Rule 23(e).
- The court concluded the settlement did not violate the Rules Enabling Act because it reflected a negotiated compromise for resolving existing claims rather than a judicial creation of new substantive rights.

## Legal Principles

- Appellate review of class certification and settlement approval under Rule 23 is for abuse of discretion, with deference to a district court’s management of complex aggregate litigation.
- A settlement class may be certified under Rule 23(b)(3) even if individualized issues could complicate litigation, so long as common issues predominate and the settlement mechanism supports superiority.
- Article III standing is satisfied where named class representatives have injury in fact traceable to the defendant and redressable by the court; Rule 23 does not necessarily require proof of individual standing by each absent class member at certification in this context.
- A class settlement may use formulaic eligibility and compensation criteria as part of a negotiated resolution without violating Rule 23(e), so long as the agreement is fair, reasonable, and adequate overall.
- The Rules Enabling Act bars procedural rules from altering substantive rights by judicial decree, but does not prevent parties from settling by agreement on terms that structure proof and payment within existing substantive-law claims.

## Conclusion

The Fifth Circuit affirmed certification of the economic and property-damages settlement class and approval of the BP settlement, holding that Rule 23’s requirements were met, Article III was not violated by the class definition, the settlement satisfied Rule 23(e), and the agreement did not impermissibly change substantive rights under the Rules Enabling Act.


In re Deepwater Horizon, 739 F.3d 790 (5th Cir. 2014)