By most accounts, BP Plc appears to be well on its way to concluding an estimated $7.8 billion settlement to resolve most of its civil liability from the Gulf of Mexico oil spill.  But a potential landmine lurks in the settlement.  Under certain circumstances, the company can invoke a little-noticed provision that allows it to walk away from the deal.

The trigger is opt-outs.  In a settlement of a class action, class members can reject the deal and decide to go it alone.  Defendants have to be prepared for the possibility that a high volume of opt-out litigation will undermine the goal of global resolution.  BP certainly is prepared: Its settlement agreement with plaintiffs claiming economic and property damages includes a provision that gives BP the right to terminate the deal if the total of opt-outs “exceeds a number agreed to by the parties.” Continue reading “BP settlement has blow-out provision”