this kind of afternoon i stand corrected your honor i'm on the ready let me ask you where this case has been it's been an advance for eleven months what's been happening well in the meantime there have been a certain number of claims processed under policy for ninety five it is not in the record before the court but i can represent that the overwhelming majority of those were processed under the streamline proceedings of paragraph six of the policy fo ninety five which is a simplified method of just smoothing expenses but not touching the revenues which is the crux of our appeal today there have been some private settlements in the meantime there are still a  fallback and our first position is that the remained instruction from this court in deepwater horizon one instructed the district court to take to find parole evidence on what the parties the expenses follow the revenues that run yes what a v m does is the annual variable examination with that does is it smooths effectively smooths the expenses and the costs over the entire year but doesn't attempt to move revenues in any particular way and that would be our fallback position i think that's not your first yours our first choice is just to go back to the policy as the as parties negotiated in the settlement agreement the settlement agreement we think is quite clear this part the court has never had an issue with in four see that the words corresponding invariable apply only to expenses to expenses and to costs and never to revenue and so there's no basis at all for that finding no authority in the parties settlement negotiations for the alteration of expenses and costs and we would say in violation of section four d of the of the settlement agreement which talks about fixed cost as opposed to variable costs all that gets washed out by any adjustment under four ninety five so are you have a problem with a v m your problem is as i get it revenue m also does more adjustments of revenue of expenses and costs than the settlement called for but your honor that's i'm just giving the entire the entire sprach we would be your main beepers with these for specialized industry the four specialize industries are and accentuated form of what's proper what's the matter with policy for ninety five first of all it's not grounded in the language of the agreement at all second it is not objective transparent data driven in the way that was represented to the class as the whole mark of this settlement and it is completely unpredictable and introduces the subjectivity of  accountancy in a way that can't be known ex ante that makes it in effect makes a mockery of the notice given to the class in this case and might raise all sorts of questions about whether the notice was adequate whether people were informed what they were doing when they were giving up their rights to proceed against against b p individually those four are extraordinary and in particular if one looks at the expert submission of b p by d you can see that when he describes the four methodologies the four specialized methodologies he says that that's the accurate way to restate the entire financials of the groups that are under consideration there view that's exactly what this what this settlement was not supposed to do the representations at the time was that records kept in the ordinary course of business would be the basis of claims made in would also be the basis of the actual determination of compensation so that's that's our our core position on this plus it would let me make one other point about this at the time a settlement there was a big issues that what was advantageous here  compared to the gulf coast claims facility was the claimants could pick one set of months for eligibility and a different set of months for the compensation what these methodology is due by the straight line a counting that they're going to be used in agriculture the crop season in education the tuition year in and in construction by the length of the project professional services i have to confess i just don't understand what policy for ninety five says on professional services but but on the wall of these it's straight line which means you don't get the benefit of the bargain you don't get to pick the advantageous months because all months are identical that's the nature of straight played farming there every month would be identical in the crop season that's and that means that there would be no advantage to a claimant of picking november september through november as opposed to june through august or anything of that sort that that benefit would be taken away and that was something that b p made a big deal about in their submissions to the district court that was one of the frequent so frequently asked questions that went out with the notice  originally and that would be worthless and under our view so the question is where does this come from and the district court on remand found that there was no parole evidence that helped elucidate this and we submit to you that the courtroom the wrong legal conclusion from this the reason there was no parole evidence is for such a dramatic recasting of the way business is maintained the f records of the representations made to the class the criticisms that were made of the g c c have for being too subjective this would have required extensive negotiation extensive discussion if there were ever to be any negotiation it would have been all over the record the fact that there is nothing there indicates that this was not before the parties at the time we have in the record the statement from mr godfrey counsel for b remanded from the b court and at the time he told the district court it is b p s position that there is no requirement of accrual accounting as a condition of either eligibility or compensation under the settlement if one looks at the briefing by b p in this matter by my count fifty two times they invoke accrual accounting as the mechanism that has to be used their prayer for relief at the very end of the brief is for an order compelling accrual accounting on all small businesses if there is to be any closure to this case we have to go back we suggest to simple objective tran parent determinations if every one of the remaining seventeen thousand six hundred businesses is going to have their earnings restated by a process that accountancy that is completely not under no not transparent understanding your honor is that it is a step that is consistent with it but it is not a cruel accounting what is the cruel accounting is basically for us who are not accountants is basically smoothing all the processes over the course of the period in which the economic activity took place in fact you have to do very substantial investigation of the nature of the activities in question the what the a v m does is it only smoots the expenses and costs and if that were part of crew accounting did no i think it also it also smoothes the revenues because if you look for example to support for specialty frameworks which are full of cruel accounting style  applications what you see there is that they take all the revenues they examine the economic activity over a longer period of time whether it's the whole of the the planting to harvest in agriculture or whether it's entire academic year in educational institutions and they smooth the revenue over that period as well and then they use those two against each other you are going smoothly the revenue would not recognize by ga well smoothing the revenue may be recognised by gap under certain circumstances but under the industries in particular that are dealt with here there is no smoothing when there's uncertainty about the economic returns at the time of the original look to your honor i'm not going to i don't stand here to defend the accounting profession i e it's i'm learning this stuff also as we go along but our position on this is that whatever the definitions under gap might be whatever the definitions might be under any accounting protocols and of course we have experts who say all kinds of things on both sides here what's clear is that this was not the deal this was not what was  representations at the time were that you could take your financial records in the ordinary course of business the law privileges ordinary course of business and as a matter of the federal rules of evidence as a matter of presumptions in the tax code and we were building on that and saying that would be the basis for your eligibility in your compensation and what's more you've got to mix and match because we wanted to give preferences to the claims of  classroom doors but the parties agreeing that gap standards would not control that's correct so your argument that the variable expenses should be smooth how can you not slow them if they come in  entirely different time than the revenues well your honor that's the way course counting works you just do it when it comes in and you book it by the month you have your profit and loss statements by the month and there is a it is a more primitive form of accounting don't always match and probably they probably usually don't that may very well be honored but the key point is that everybody knew this it was not us at the time we were negotiating  it is not a surprise that we just learned in the application of the settlement that there is both a planting season and a harvesting season in agriculture this has been well known for a very long time it's been four and a half years god now we raise this issue right from the beginning and what an r and what happened here on earth is that for the first six months or so this was being paid in this fashion and it was being paid prior to class settlement final horizon disaster it was based upon records kept in the ordinary course of business this is a new construct that was superimposed on the settlement in response to this court's opinion in deepwater horizon know that's six months but then we have the other four years and then as policy for ninety five something you just decided oh no we we we took the appeal but realistically we pushed back the appeal to see what the application would be that's not in the record anywhere but we waited to see what the application was it turned out that for most of the cases in four ninety under four ninety five review as i said to judge davis a second ago the the a v m methodology didn't require extraordinary efforts and those have been resolved now we're at the cases that could not be resolved under that methodology your honor if i could say one word about recognized what was the anomaly in this case if you will and the anomaly is that cash businesses rise and fall all over the place and that if you took the the claims of b p seriously that economic reality meant that you had to rewrite everything you would on wind the settlement in its broad strokes and so this court in deepwater horizon one unanimously rejected the application of this same kind of methodology to four b to the causation issue and this court said that even though there is a problem with what this court termed an even cash flows and to to quote from this court  the settlement aim of compensation without any complex analysis of what type of business activities took place within those months is what must prevail and we submit that that same analysis applies here also on the revenue side because there is no warrant under the express language of four c for the smoothing of revenues in a way that we do in today under the claim of accrual accounting what was rejected in if people were trying to game the system after the settlement goes into effect and that's why part of the e mail of the big pinion deepwater horizon one was to remain and precisely to make sure that nobody was  based books into cash based accounting so as to profit unseen in the unseemly way to use your terminology from the settlement here our claim is that everybody should rely on their books as they kept them at the time nobody is gaming the system everyone is acting in conformity with the representations made this was known it was known that crops are booked at different times it's known that tuition comes in at different times it was known to the nonprofit panel that extraordinary contributions to nonprofits don't come in on a smooth cyclical basis they come in every so often and yet the nonprofit panel held that that could be the basis for for both the eligibility under for b and the compensation or for c so argument is nobody's gaming the system here we're just using our books in the way that they were kept to conform to what it was agreed to and we have these these two jet ski shops which have now risen to mythical proportions in this case there are no two jet ski shops anywhere in the record that maintain their books on a different basis there's not a i would i would without knowing at all what i'm speaking about i would nonetheless submit to to the courts should have been completed before the settlement was entered into right to that and everybody knows how jet ski and how jets these small shops maintain their books judge bar b a made a finding about that in the record in this case he said these are small businesses they all maintain all the information we have is that they all maintain their records on a cash basis this is not new this was all known during the what i'm hearing is my opponent really arguing the case that was decided not to over of two thousand and thirteen that is what i hear this courtly man did to the district court to conduct a factual inquiry to that decision i think it's on page three thirty two what the court and you can't separate out the revenue with from the expenses when you're attempting to determine whether someone lost money as time now what this court specifically decided and it was as clear as a b i would think that matching you have when you're matching your matching expenses and revenue or revenue and explain a b m seems to do that it  does but the spec these for specialize industries say we're going to smooth out the revenues to the if you happen to get a big contingency fee in one month well we're going to spread it out over the time of the what work what the court did the district court did in the claims administrator did was follow the guidance of this court which was about in deepwater horizon one anticipates separate accounting methods for separate industries well that if the entire decision of the case in a way was briefed and the facts that were before the court is that everybody can compares their does their accounting records in a slightly different way you could knowledge that in deepwater horizon one it isn't all the same some in fact some of the of cool based systems you specifically pointed out aren't necessarily exactly the same and what this does those for industry specific categories and all that was a challenge here in the end as it is articulated in the issue presented for review on page  romans eleven of the brief was the existence of those categories and what those are judged cost that is an attempt to apply the framework that you described in the deepwater horizon one the a cruel based framework to certain industries agriculture education and so forth that keep their books in a certain way agriculture of the funds come in and when the crops are sold and education the money is paid for tuition before the student takes the classes and it's an effort to do what you describe as an accounting for where the revenue really of was the product of the economic activity that produced the revenue in the first place so that's moving moving  documentation that was required and what it is is attempting to account for that revenue and account for those expenses to account for the revenue in connection with the economic activity that caused that revenue to exist and as deducted from from that it would have to deduct the expenses that produced that revenue in each case the a v m and these specific categories are an attempt faced boy to do that in the context of what you describe because it all comes down to matching when wet and not smoothing this is sort of a misleading term and not much of an accounting term but you pointed out in your first opinion that this concept of matching is based upon the a cool framework and the cruel framework it tamps accurately to depict what period of time produced the activity that caused the revenue come in and what expenses were necessary to produce that the months doesn't matter because it gave the claimant the opportunity to select a period it was going to compare you specifically address the point about comparable monson you said you have to compare and that's part d which isn't challenged here in this  in this particular proceeding at all of the claimant gets to pick the comparable months with the same name beat the made the argument that it should be comparable activity during a comparable period we lost that we accept that pardon me ok on the revenue the focus is on of the focus yes your honor the focus is on the revenue here but is specifically your focus in the previous case too because when you talk about matching what do you matching you can't match something with nothing it's the poll purpose of the matching is to determine how much revenue was attributable to this period of time versus this period of time when the debt when expenses attributable to producing that revenue you have to do you have to look at the realities are many look at the realities of the expenses yes you do revenues they might not be the same months or might be a different period of time and with these but these are the four industries that are being complained about that required more documentation correct they were they may require different documentation and what administrator was attempting to do is say that agriculture is a different type of a business than running a law firm was contingent fees and the work is done in a certain way and the income comes in and there's a certain way the revenue comes in  certain way slightly differently with respect to that industry the agriculture industry education industry and so forth so let's create a framework this is a perfectly sensible coparent way of attempting to inconsistent results artificially inflated and entirely fictitious losses those are your words but when you attempt to do the process and the towns are doing this in the way that they best can in with respect to different industries and and how they how that how that accounting and how those records all worked out what you said was if we do it this way a cruel based accounting it is amply supported by the language of exhibit c e its more consistent with general accounting and economic norms it gives meaning to the words in the agreement corresponding invariable and it results in numbers that could fairly represent words you used in your previous opinion and it is what is is attempting to place that revenue in the context of what economic activity what planting what furrowing what weighting whatever takes place with respect to that opinion matching the revenue with the economic activity that produced the revenue that is a realistic coherent and consistent way of doing it and it results given a different way the books are kept now my opponent keeps arguing about going back to the cash basis system that that is what was briefed what was argued and what was decided and what you said chris is inconsistent in c or your stop owners or your investors or somebody with respect to the results for a particular financial period there are certain rules that cover that the purpose of this isn't that isn't contemporaneous financial accounting reporting purposes and you acknowledge that in deepwater horizon one what what we're trying to do here is retroactively look the look at the window for one period of time and then compare it with another period of time  what i would say in response to that question is that the accounting principles which you called the general accounting and economic norms on page three thirty seven of your opinion you specifically said that the cruel framework applied to a different business and a different industry will produce something that's consistent with general accounting and economic norms that some of that is important to doubt but it's specifically applied here in a way to make sense of and what the real man is for this court and these four specialized methods depending on the industry how is that system consistent with the settlement agreement saying that the criteria and compensation amount provisions will apply equally to all claimants doesn't that invision one method for the treats whether you're a restaurant or a farmer a lawyer the same in  context yes that's the method the cruel framework that you articulated and required to be applied unless there was evidence to the contrary the the climate see what we call prior to this decision in october of two thousand and thirteen said there are thoroughly evidence that suggest that we intended that the people who kept their records on a cash accounting basis those were the with the records that would apply or you said we can't believe that the priest would agree to such an incoherent irrational process where if you have evidence something you have an opportunity to prove it you call their bluff they went back to the district judge and they had no such evidence the district court specifically found there was no such evidence for that argument and therefore there was no such evidence no evidence that would support anything other than an hour of cruel type framework to the application but then the question becomes what type of a cruel framework and it doesn't have to be this one that spreads the farmers crops meaning it could just accrue in december and you match expenses when the harvest is you have to match all the expenses  spread the revenues over the entire period the crops are grown and looking at the settlement agreements a whole how would someone expect that it just seems to create a much more streamlined pursuit based on the what stay on cement is the alternative consistent with what you were requiring the accrual based framework that would allocate revenue to the to be a period of time where the effort caused it to be generated so that's a realistic way of applying those systems accrual based accounting is intended to be as realistic as possible with the aca to actual economics those of the same words or in your previous opinion with respect to what we have to have a system that treats people consistently and produces consistent results with respect to the best we can do given we have all kinds of different industries with keep books on a different basis in the educational world before the tuition money comes in before the student takes his classes in the agriculture department and it's not always the same but this is generally the same that was what the claims have been a straight or was attempting to do to rationalize different industries a few books and have received have expenses and received revenues in slightly different ways so let's try to generalize let's create a transparent consistent process otherwise you're going to have a one of the time with what everybody seems to agree is that there should be similarly situated claimants should be treated similarly and when you say the uk the agriculture business generally receives funds after the crops are produced and the expenses are occurred before the crops are put in the ground and what add they're being developed so let's apply that accrual based system in a way that's consistent with economic reality which is what you were stressing in your in your earlier opinion on the other hand of the other industry the the in the construction industry the money may come in at the end and so each of these four frameworks were intended to be transparent don't know the evidence that would necessarily allow me to answer that question but it allowed the flexibility to the claimant to pick a representative economic period and then compare it with our pri prior period the period that was affected by the oil spill but but there was a lot of flexibility and a lot of choices there and a lot of bending in the direction of the claimants but the one thing that was required is that they pick that period of time and pick compare it with the with the other period of time and then use realistic this is all through your opinion in the in the earlier case of a method of comparing the actual economic situation with what really happened and with consistency and as you put it the only realistic chance of compensating for real losses those are the exact words in your opinion on page three thirty eight so that the be what what is attempting what you were attempting to articulate them in salmon in the record is that we have to have a paper process an accounting process that realistic that takes into account the effort that produces the in the home the time when that effort took place or the costs that are associated with that and do so in a consistent way the options in the free market have anything to do the requirement and you put in the crops in january or february or march whenever it is and the revenue comes in and then you're paid after that it gave the claimants the opportunity to select a certain period of time compare apples to apples oranges to oranges which is what you specifically said in the the part of your opinion that that dealt with this is that this gave the opportunity to do that but there has to be a consistent accounting mechanism and what was done here and what clearly articulated in your previous opinion on that this is consistent with the documentation requirements it treats similarly situated up claimants with similar economic losses in a similar way the other key consideration is what revenue was earned not necessarily want it was received so what you were doing is articulating and but the only consistent system that would accurately reflect in different industries with different circumstances we're talking about thousands of thousands of claimants in a consistent way with consistent economic and accounting principles that would give you the best and verifiable result because  you rendered as a result of the case that came down four five years ago with respect to the reality of the way books are kept and the economic reality of where the activity that produced that revenue reality to trying to figure out what is the revenue right what is the profit that's exactly do you get for your settlement you can't figure it out if you don't actually find the corresponding expenses and a doctor from them and that's that's correct and that and that is a very coherent system now remember we're talking of the tens of thousands of claimants that are individually the poor left pardon me those in council was asked at the beginning you know how many claims are still unprocessed i understand i don't know the exact number but i understand that about ninety percent have been resolved now i'm a my colleague will correct me if i'm wrong but that's i asked that question when i was preparing for this argument that there are still a number out there  but but and some of them are waiting for the decision here what what b p going to apply this policy if it's about held backwards to people who've got money under the cash basis to claw back or those are the cases there are over over or and every effort was is being made here to apply a consistent coherent system of can you use the phrase in your previous opinion on page three three six economic thirty eight and amounts on page three thirty eight three thirty nine of your opinion amounts completely disconnected from any reasonable understanding of calculation of damages those of the land that's the exact language if you look at page the pages that we're referring to here that discuss this subject what you were prescribing and i'm surprised that we're here several years later arguing about the same thing this is this this was a system that you articulated that was consistent with accounting regularity reality and would produce consistent results of and those of us the same language more consistent on this is on page three thirty seven of your opinion more consistent with the general accounting of economic norms and gives meaning to the words corresponding and variable which is a part of the agreement and results in numbers that could fairly represent actual economic losses or last variable profits that's on page three thirty six and that economic value during the period that's also in your opinion three thirty six three three seven i read these words over and over anticipation of this argument and it seems to me what you were doing conscientiously is to say we have these are lots thousands of businesses that keep their books in various different ways we have to look at realistic a cow any mechanisms to take into consideration the impact of this event and apply fair and consistent and reasonable and uniform standards as best as we can given the way different people produce different records and keep their accounting records in the same way so what we've what we're talking about here is something that most closely approximates the best you can do with thousands and thousands of cases with people keeping their books thousands and thousands of different ways and then i know them completely imperfect but this is your effort as you prescribe it then to approach reality and consistency and uniformity and accuracy and that's the outcome that we believe is the only result that's both reasonable and fair and consistent with your little i don't know the answer to how many i don't handle the individuals in class council doesn't handle the individual appeals so i don't have that information at the rate i'm sorry i think it is striking that mr olson not quoted from the settlement agreement not once refer to any provision in the settlement agreement not once referred to even exhibit four c and to its actual provisions and i think that instead what we heard was a claim that this court in deepwater horizon one remained it to the district court to start on a blank slate and figure out what was the best accounting mechanism that could be used in this circumstance one that would perhaps get the best picture of economic reality as determined by the district court i think that is ever on two different levels first of all we are interpret ing a settlement we are not trying to start from scratch to determine what are the best mechanisms of compensating losses here this was something that was negotiated between the parties under the supreme court's decisions in evidence versus jeff t and the corresponding cases from this court that's an authority the district court doesn't have it cannot rewrite the settlement but i think perhaps more central in this court is that misstates the holding of this court in deepwater horizon one in deepwater horizon one the court said two things that are absolutely critical number one that there was ambiguity in the terms corresponding invariable as applied to the word expenses and the second thing it said was that it would remain in to the district court to take parole evidence that would clarify what corresponding invariable meant with regard to expenses and this court gives a hypothetical of how to rewrite the language of the of the opinion of the of four c in a way that would take out corresponding  invariable from expenses and says that's improper because those words are there and under maritime law we give words their be their full meaning we must give meaning to every word in a contract that we in turkey well here all of a sudden the word expenses is being taken out and revenue is being substituted in and it's noteworthy for as many times as the term variable is used in exhibit four c and in forty it is never applied to revenue and it makes no sense to apply it to revenue that way because it means that it would be in violation of how every single participant in farming and in these other activities understands their normal economic activ take place so the only the only basis for mr olson is argument about in defense of particularly the four specialty areas is that it was mandated by this court's opinion there is nothing in deepwater horizon one which mandates different treatment from kinds of construction from agriculture it is this is this is a fiction this is a settlement agreement that we interpret in here and that this court is obligated to give enforcement to and there is nothing in the southern to agreement that anticipates this again i go back to the representations made when we were sent back to the district court in two thousand and thirteen from this court's first opinion deepwater horizon one and mr godfrey says quite clearly to the court accrual accounting is not required by the agreement you're on and there's two pieces of that that are critical one is that accrual accounting is not required second that at the time b p understood as mr olson himself said to this court several times that it is a settlement that's being interpreted and one had to give of effect to the language of the settlement itself the argument that's being made today is identical except for the relies on deepwater horizon one is identical to what was made in deepwater horizon three with regard to four b and it lost their it is identical to the argument that b p made with regard to the non profits and it lost their this argument rewrites the settlement agreement and that's just not a powered the court that the court should have or could have and the