quacks like a duck and even introduces itself as mr doc it is a doc and the doc in this case is murphy oil usa which the parties both refer to as most and the question before this court is whether mossad is excluded from the deepwater horizon settlement agreement because most of his primarily in gauged in the oil and gas industry as described by the makes code an exhibit and a chain of retail gas stations and as your honor noticed the decision below a signpost next code for quote gas lease and gasoline stations with convenience stores because more than sixty percent of gross revenue a mini repeals i think it sucks fifteen hundred gas stations but i mean that's neither here nor there in the primary nature of the business is still in oil and gas  yeah so the reason why is in just looking at retail revenue the court used the wrong test to determine the primary nature of its business the primary nature of a vertically integrated business like most it is not reflected by the revenue realized at the final point of sale that is when most a sold gas to drivers at the pump rather the retail revenue of a vertical integrated company must be apportioned to those activities that generate the retail revenue otherwise if you don't do that all of the production and wholesale like tiffany's that no question are happening and that generated that retail revenue are treated as if they never happened and just didn't exist and let me to illustrate the point let's think of tesla doesn't make its own car batteries it manufactures his own cars and it sells the cars at retail through tesla storefront retail dealerships for all i know it's fift bases revenue at that retail level when the dealerships sell cars to customers except in the district court's methodology that looks just the retail revenue tesla is exclusively a retail car dealership it engages in no manufacturing business whatsoever zero but everyone knows the primary nature of tesla's business is in the building and design of a unique car tesla is not a fifty billion dollar company because its car dealerships excel at customer service and retail sales and using retail sales to determine mosts primary business rested on the exact same fiction the test grossly understated most as whole selling operations and it grossly overstated retail activities mosts wholesaling operations and i'm not talking about the two oil refineries i'm talking about the wholesale distribution of the twelve terminals these are gargantuan tanks that are just massive and these are massive facilities so this is nothing to do with the oil refineries this is the wholesale operations of the me just be clear on that the whole sailing operations supply both supplied gas to both third parties and murphy are mosts retail gas station and most is own internal business ledgers these are the records show that the wholesaling activities again these days gargantuan terminals generated seven point two billion dollars of revenue in two thousand and ten two point six billion of that revenue is based on the wholesale into third parties and the remaining four point six is based on wholesaling to the retail gas stations that the district court sixty percent figure by just looking at that sixty percent for retail revenue assumes that most it did not engage in a single internal wholesaling transaction whatsoever it just didn't exist and it's even worse than that the sixty percent figure credits all four point six billion of internal wholesaling to retail activities in other words the figure assumes that santa claus magically dropped off four point six billion dollars of gas on these fifteen hundred retail parking lots a one step fiction disappears mosts retail revenue falls to just thirty six percent of its business with the remaining revenue coming from wholesaling and refiners are to put the same point differently most his primary business was not retail but it was in the excludable oil and gas industry the district court also erred in not giving a fact to most is two thousand and ten tax returns and still focusing on most of the  the settlement agreement lists the nakes code appearing on a claimants two thousand and ten federal tax return as the very first factor that determines an entity's characterization most assigned itself an oil and gas mix code for petroleum refineries and this was no accident most assigned itself the exact same excluded oil and gas code both the year before and after two thousand and ten and this was done before next codes relevant under the settlement agreement ignoring most is self identification was both legally erroneous and an abuse of discretion when combined with everything else we know about most of the district court ignored both how most a function and existed as a vertically integrated company and how most are held itself out as an oil and gas company to the entire world most it was not a gas station like racetrack s circle k and that's why most never described itself as such when it named itself murphy oil usa when it filed federal tax returns and it reported to shareholders and investors most say how doubt is a vertically integrated oil and gas company that was involved in all stages of the downstream oil and gas activities in the united states it was only when most of the thought it could collect sixty million dollars under the settlement agreement that it became primarily a gas station business and a convenience store business and the third legal area that we point out in our brief is that the court erred in not giving a fact to section two point two four of the settlement agreement that section requires exclusions to be based on quote the subset of nature of the business not the legal or juridical form of that business and that means the settlement program is required to determine what the entity does for whom and why and the selling agreement makes that determination without regard to artificial legal distinctions and as we discussed most a carried out all of the u s downstream activities in this case for its parent murphy oil corporation which is an international oil and gas company the district court completely ignored that reality didn't even mention it and instead myopically looked at murphy as most as retail outlets divorced from their broader and only purpose to serve the parents oil and gas business a mercy oil corporations two thousand and ten and a report on this is at the record two ninety three says that the corporation is quote an international oil and gas company that conducts its business through various operating subsidiaries murphy oil pump or a corporation tellingly chose a picture of an offshore oil rig to put on the cover of its annual report the report continues the corporation owns oil and gas but scuse me the corporation produces oil and gas owns two petroleum refineries two ethanol production facilities in the us and operates a growing retail marketing gasoline station chain and again i don't think that matters how many gas stations they own the other side gives no meaning to section two point two four they haven't once defined in the briefs or below what that section means they've treated that last clause is just doesn't exist but a fundamental canon of contract interpretation is that courts give effect to all provisions of an agreement and what the decision below does is it precludes the settlement program from looking beyond corporate form to determine an entity's true subset of nature this case illustrates the point all oil and gas companies that it would be excluded under the agreement have operations that if they were separately incorporated would be compensable under the settlement agreement take human resources or the cafeteria now we agree that the distinction between the division of a company and a wholly owned subsidiary is obviously legally relevant and even dispositive in many context but here are the parties contracted to allow the settlement program to disregard legal form when the legal form hides the true substantive nature of the business  effectively operate as a single unit section two point two four incorporates this principle it captures a wholly owned subsidiary that may engage in compensable services or activities under the agreement such as the cafeteria services but the wholly owned subsidiary i hear the cafeteria is an extremely intertwined with its parent and they act together as a single unit because i have some time on left on the clock i wanted to out address the other side on the issue about the apportionment the sixty percent figure grossly just pretending like the wholesaling activities didn't exist and the retail activities being inflated says that this issue was waived because b p did not mention this issue in its three page brief below before the district court waiver makes absolutely no sense and i would say would be absurd to apply it in the context where this streamline process and most the tellingly doesn't claim any prejudice nor explains why any reason that's ever been given for a waiver rule justify applying it here judge barbier didn't consider that argument that's right and that's why yes so i'm not asking this court to open up the ledgers we said in the brief in which we think is this just gets remitted so the court this court would not address  doesn't have to address the tax code issue i mentioned or the section two point two four looking at murphy murphy the u s a s relationship to its parent because it this issue was extensively briefed before the appeals panel about  where the retail revenue was coming from the appeals panel had no occasion to decide it because the appeals panel said most is carrying out all the operations of an excluded corporation and it acknowledged that b p made the argument and then the district court there are three you have a three page limit and the settlement agreement provides this discretionary review process is not like ordinary litigation and this court is more familiar with it than i am but it basically says you you have three pages to justify why the court should look at whether the appeals panel properly was in compliance with the settlement agreement so b p appropriately devoted its three pages to addressing the appeals panel decision while acknowledging it was preserving all of the arguments it made before the appeal panel in the exclusion in support of the exclusion and so to apply waiver here would be b p did not have either a full or fair opportunity to do it and i also i hasten to say if you find waiver here you would very much defeat the entire purpose and the thrust of this three page streamline process because parties would be crazy in every case not to say i can't make all my arguments in three pages this argument about the whole selling operations in the seven point two billion figure took up ten pages a briefing just by b p a thirteen page affidavit by an expert with exhibits so the notion that you would stick that in a three page brief or even that would have made a difference with a single footnote doesn't seem like a very good reason to find waiver storage both petroleum storage but there and it will port conclusively shows that these terminals are not in storage but are in the excludable code on exhibit seventeen for both terminals and stations very i think what they did was it was not very credible and not very nice but they they they they used takes they seized on the notion that it says both petroleum storage to get away from the fact that they were a bulk petroleum terminal which is wholesale an operation in for i counted fourteen times in their annual port they described their terminals not like a storage not like pulling merchandise from the warehouse but part of a wholesale distribution network and marketing operations and they just read a quote murphy oil owns a network of twelve company zero terminals and two lease terminals that supply feel not store fuel to retail and wholesale in stations in twenty six states and various asphalt and marine field customers and not once mentions t may please the court i gather with my colleague jeff willis on behalf of murphy oil usa which i would refer to as moussa at all relevant times mao so was it downstream oil company whose primary business activity was the sale of gasoline and merchandise at over a thousand retail stations with convenience stores based on his review of the record and aided by his vast experience with the settlement program judged barbie and made specific factual findings including that  mouse's appropriate industry classification code was the one for gas stations with convenience stores claimants with that code are expressly included in the class under exhibit two they are not excluded under exhibit seventeen those factual findings by the district court are absolutely correct and more importantly given the court standard of review they are certainly plausible in light of the record most of what you heard from b p just now was an alternative presentation of facts that was a by judge bar b a and he reached an alternative conclusion that is equally if not more plausible given the competing facts that are in the record there can't be clearer by definition among other things just to mention briefly the record contains contemporaneous accounting records that report the specific quote unquote retail sales revenue that we used to calculate the sixty percent figure there's a myth in b p s briefing that mousa has reengineered its accounting documents which is simply not accurate the trial balance has a contemporaneous information with the date stamp at the top of it it refers to revenues it then has an item for retail sales and it lists eight point six billion dollars worth of retail sales in the year two thousand and ten of petroleum there is also a separate line item for about two billion dollars worth of sales at convenience stores the sixty percent figure is adding those two numbers up and dividing them by the total amount of revenue reported on those same documents that's where the at least sixty percent figure comes from it's b p not miles so that attempts to reengineer those accounting documents by bringing in an expert who is trying to say that retail revenue wasn't actually retail revenue even though the money was all received when a payment was made at the pump for gasoline the record also includes  affidavit from robert harris who is a distinguished accounting expert and the former chair of the american institute of c p a s who said that our revenue calculations are quote unquestionably consistent with the contemporaneous financial statements and that b peace effort to reallocate is fundamentally flawed for several reasons that i'll get into those materials mean that there is ample support for judge bar peers findings and that there is certainly no clear error that has been proven  before responding to some of the specific arguments that ms platt made i'd like to go back to the framework for the court's analysis because there's an admission by b p both parties are on the same page that whether mouse is excluded from the class is based on a determination of the entities nakes code and whether that code is listed on exhibit seventeen they they acknowledge that in their reply brief that page ten and that of oil and gas it's the determination of which code it was so it's was that list on exhibit seventeen for oil and gas or was it listed on a as we contend exhibit two as a gas station with convenience store misapplied sentiments on the twenty can capture turn i can address the tax return issue now if you wish or you're talking about the code i'm just trying to figure out what position you're taking on that oh well our position throughout litigation has been that the appropriate next code is the one for gas stations with convenience stores and let me jump right into the tax issue if that concerns you your honor that's different than what you said it which acknowledges the reality that nakes codes listed on tax returns are often or at least not uncommonly incorrect that the reason for that by the way is because that code has absolutely no effect on the tax liability of the company and it had none here for mousa so  there is a policy in place which says that the code list on the tax return is not determinative and as we pointed out in our brief that that's language that b p pushed for to have an official claims of mr policy that says you can look at that code but the real question is is the code correct or is it not correct and that determinations based on the tally of the circumstances judged bar b i did consider that there's a claim by b p that he ignored it that's not accurate the the order that judges are being issued express quotes from section four four seven one of the settlement agreement which is the provision that says the evidence to be considered includes the next code as well as business licenses and other evidence so that was part of the mix of facts that he continued to that  evaluated also took to provide some context on the tax code what happened there is not to carry over from previous years where maussa had been using the same code for many years going back to long before the company had as many as a thousand gas stations because it one point it was true that in the mid ninety's it was primarily a petroleum refinery before it had an explosion of the number of stations that it had and i'll point out there's some illustrated with evidence of this because even in and eleven which was a year during which a mouse was sold to the refinery is so at the end of the year did not own the refineries at all the twenty eleven tax reform which is in the record at three two seven eight four still used to the refinery tax code which is pretty good evidence that the company was not reevaluating that code on an annual basis and performing new calculations that it was carried over and this is not in the record but i can represent to the court that mouse's twenty twelve tax returns continued to list the same code so i full year after moussa had completely disposed of the refineries it was still putting the refinery code on its tax returns which the only reason explanation is that it's an error which i think is exactly what george viewed it to be in light of the rest of the evidence well and just to restate i mean i think the point is under two point two point four point five point just barb a wizard wired to look at to review which makes code was used on a tax return but that's one of several factors that he's supposed to consider but he he's free to determine what the appropriate makes absolute respective what the code is on that tax return is that correct yes your honor and what he determined based on the facts was that are sixty percent of revenue calculation based on the contemporaneous financial data was correct he credited that including the affidavit evidence that was submitted from robert harris saying that it was correct and if you credit that evidence which i think the court has to do given its deferential review then it is certainly reasonable for him to conclude that the code on the tax return was not accurate and in light of the policy that even b p advocated the correct annex code as the one for gas stations with convenience stores in terms of the legal framework there's there's also one other basic point i'd like to emphasize which is that the next code determination requires the choice between nakes codes it's either refineries or wholesale distribution or retail sales as as relevant to this case those are the basic choices b p appears to acknowledge that they can't really defend the refinery code in they planted a flag in their opening brief in the ground and they said the only possible choice is from refineries then presented facts in our response brief that say well know that the revenue data shows that right that is wrong the volume data shows that stronger fineries produced their output was about fifth of what was sold by the rest of the company and even earnings and margins show that's wrong the unit margin for the refineries was twenty three cents a barrel the unit margin for the retail sales was over four dollars a barrel so if the retail stations are selling a lot more than the refineries are producing and they're doing so at much greater volume then by definition they are generating more revenue and more profits in light of that b p retreats in their reply brief and they say something which ms black repeated and that is that the primary nature of the business is oil and gas that it's refineries and wholesale that's improper under the settlement they're trying to combine two nakes codes which is impermissible the plain language in section four four seven which says the settlement program shall the term in the in the singular the appropriate makes code and this court in louisiana tax which was the case we cited in our supplemental authority just recently explained that the appropriate mix code is the one that most accurately describes the primary business forced to choose what judge bar b a had to do is essentially put these codes in rank order and say what's the best code you can't combine codes he can't make a new hybrid code he has to pick one and the evidence supported the finding that the one correct outright finding of waiver given the limited briefing below i think one conclusion is is eminently sensible and that is b p should not be entitled to a remain and in order to get judge bar b a to give a more detailed answer to an argument that they never specifically made to him in that sense the waiver principles are quite strong so when when b p stands up and says well we want him to give a more detailed order what they're really asking for is an opportunity to rebury for the issue and then they're criticizing him for not spending a substantial amount of ink in responding to the argument that was never presented to him we think i did pass upon the issue his order says that he reviewed the record it also says that i had persuasively argued that the sixty percent figure is correct and i'll add that the briefing we submitted the three page brief we mention the sixty percent figure and defended it we also specifically  cited to the harris declaration that i've mentioned several times it was incumbent upon b p if they had a response to that to put it in their three page brief in it this wasn't even simultaneous briefing they had two weeks to respond and they made a decision and that decision was to emphasize the argument that persuaded the appeal connel rather than this other argument that they had other lost on or that didn't persuade the appeal panel in the first instance they the only way they presented the argument even arguably was a footnote that says we purport to incorporate by reference all of our previous briefing well that's not adequate the three page briefing it is by design it's because there's a crushing workload in light of the b p litigation which th certainly familiar with judge barbie a we were informed by the claims administrator that as of this summer judge barbie had received twenty five hundred requests for a discretionary review he's granted reviewing over four hundred cases he's written decisions in over one hundred unique cases if this court were to require him to have a ten page order in every case that answers the arguments made in briefing that were explained in the three page brief we think that would set a terrible precedent that would undermine the ability of the claims process to resolve itself i also add that the argument b p made that this was really not an issue before judge barbie is incorrect rule thirty one of the discretionary court rules says that judge know of the appeal panel decision so if there's an argument in defense of the appeal panel judgment b p was in fact required to present that argument to judge barbie and they can't come back after the fact either to raise the argument that had been waived and certainly not to ask for a remained so that they have another shot to present the argument in the first instance as for the accounting issues that tesla example comes up in their reply brief for the first time and also today  as a preliminary matter there's no evidence in the record about tesla what its revenue recognition policies are what the facts of the company are what next could it used or any of that there's there was nothing presented to judge barbie or this court about how the code should be calculated or otherwise and the assumption that everyone knows they're a manufacturing company we dispute if it were true that the margins they would obtain from a retail markup was greater than the margin they might obtain from manufacturing just as an example then they would not be primarily a manufacturer and there it would be certainly that would be assisted by evidence that was never put in the record by b p secondly the their own example proves what i mean arguments that we have with respect to the accounting issue and that is when tesla ships an automobile from its manufacturing facility and then has a description network that delivers them to their their dealerships no one thinks of that as quote unquote wholesale distribution no one would say well they have a distribution network so we're going to call them a wholesaler which is the same argument that we've made and specifically supported by mr harris that when mousa has gasoline at its terminals and then supplies it to its retail outlets which is the word that was quoted from the ten k that supply function is not a wholesale activity you don't wholesale a product yourself and that's not a technical issue as b p claims in their brief you're talking about the truck terminals now yes so the terminals you're on are did conduct wholesale activity when they made a sale to a third party and that revenue is part of the sixty percent calculation that's part of the forty percent that was not retail we have evidence in the record that's really not disputed in any specific way that when the terminals supplied product internally which they did and there's no dispute about that that internal products supply function is not wholesale because there's no wholesale transaction there's no third party inventory is not reduced there's no tax that's incurred there's no revenue that's receipt if this is what mr harris says this undermines the fundamental assumption of their whole effort to rio reallocate revenue because what they're a proportion expert mr gaspard does is he just takes retail revenue and calls it wholesale and he has to do that because in order to recalculate what they're trying to put the retail revenue into is a bucket for merchant wholesale distribution it's not just terminal activities the language of the next code which is part of exhibit seventeen is merchant wholesale distribution so if it's not so so distribution then they don't get to move it back into that category and you know we've argued consistently that there mr gasparo their expert he uses the word wholesale twenty times is declaration he never even attempts to defend why that's accurate we then put in a declaration that says that's fundamentally wrong not as a technical matter but as a basic principle of accounting an economic reality you know wholesale tears self they have no response to that in the record there's there's no counter definition of wholesale there's no citation to anything by p except for there it's c dixit that shouldn't be considered wholesale and certainly judged bar b i wasn't titled to credit the evidence that we put into the record to say that the most appropriate nics code was not whole selectivity because this internal product supply function was not actually wholesale another argument that b p makes is about the substantive nature of the business which i'll address briefly i think most of this issue is resolved by the louisiana tax decision that the court issued recently it is an unpublished decision but it's of maximum persuasive value because it addresses the precise argument that b p is making he about the very same settlement agreement what the court said in that case was it clarified what this substantive nature language does not mean and it said expressly that the directive is not an order to disregard legal distinctions between entities section two to four does not require the settlement program to consider related but legally distinct entities for the purposes of determining exclusions that basically guts the argument that b p is making which i think is why they didn't lead with it now because the question the relevant question is what is the subsidy nature of mousa as business not what is the substance nature of its parent company the parent company murphy oil corporation is not the claimant whether or not they were integrated company or did exploration and extraction activities is wholly irrelevant particularly when b p acknowledges that the claimant here mousa did not perform any of those exploration and production activities there were there was integration in the sense that the parent company had subsidiaries throughout the oil supply chain but that's a far cry from integration in an operational sense where we the the claimant here would have actually been performing the excluded activities of the parent there's no dispute that moussa performed downstream oil activities primarily there is a dispute about what the primary aspect of that is but the record supports judge barbee is conclusion that the primary form of those downstream activities was not excluded and the only the relevance therefore of the connection to the parent company would be if b p could attribute some of the other activities of the parent company over to mousa they could say well somehow mousa should be called an oil extractor for but that's simply that the record is actually quite clear that the parent company operated two separate and distinct lines of business one was exploration the upstream activities one was downstream that's what moussa did mousa did not perform the upstream activities it didn't contribute to them ninety seven percent of the oil extracted by the upstream subsidiaries was sold to third parties there was a very small fraction that was sold to mousa so there's no dependence of one side on the other so when when the court evaluates subsume nature of the business it needs to keep in mind this is a question about nick's codes what's the appropriate code b p can't possibly say that it's extraction and exploration given mousa doesn't do any of that the only relevant question is is it refining or wholesale or retail the relationship with its parent company really doesn't affect that at all whether or not the parent company was an integrated oil and gas company has nothing it doesn't make mousa more or less of a refinery more or less of a wholesaler or more or less of a retail company the the facts support judge barbie's conclusion that the primary business activity was retail sales that is supported by the contemporaneous data it's consistent with the settlement agreement particularly as it was  interpreted in louisiana tax and while b p may stand up and have an alternative presentation of the facts judge barbier was entitle to assess all of the evidence in light of his expertise and to make a factual finding that the most appropriate next code is the one for retail sales and therefore mouses not excluded and they're entitled to the award given by the claims minister thank you  thank you may place the court i'm just going to try to take this and a straightforward sort of bullet order on the factual finding saying that the standard of review here is the district court made a factual finding which is clearly correct if a court uses the wrong test the court may say the light was green that but if the court said i determine that by looking at this morning's horoscope that's legally erroneous you don't refer to it in terms of the test the argument the court didn't even consider the argument because it wasn't briefed that's why they're saying we waived it so it seems farcical at the same time to say you waived it the court considered it and rejected it they can't have that both ways of course the court didn't consider it because it had no occasion to it wasn't briefed and if this court was going to argue say that we waived it you are opening up a can of worms in terms of that three page three page limit i didn't hear them mention prejudice that's usually what people say when they argue waiver i didn't hear them explain there's a lot of just talking but there was no explanation on why you would encourage parties in a three page brief to try to argue every single argument that was made before the appeals panel which would have an unlimited page number we could have filed ten thousand pages and they say all that should have been a three page brief tesla let's go back to tesla we agree if you look at tesla and the numbers show that the customer service is really jamming at tesla and it's not really a manufacturing department great are only point which he never disputed is that just looking at retail revenues absolutely invariably is structurally inevitably distorts what the company is doing because it pretends that no manufacturing happened their rule would say we don't even look at anything but tussle because all of their revenue came from retail so no manufacturing occurred but i'll give you another that another example a farmer who sweats all year with one hundred employees and he sells his apples at the at a roadside stand under their view all the money came in from the roadside stand he's not a farmer could have a winery the direct sales to customers just looking at retail revenue suggests that there's no manufacturing now on remain and if they want to say let's talk about the numbers let's do that and then we can talk about the numbers on this one they say that there was a lot in there about refinery just a tiny percent on the refinery there's no question on the math if you take away the fiction that all of the wholesaling was attributed to retail the retail drops to thirty six percent and they say well that doesn't you only get one makes code exhibit seventeen actually says business entities within the next description set forth below are excluded and so there are sixteen of those their view is if you have one sixteenth in each excludable next code to bad i mean that's absurd or even half of refinery and wholesale together made up sixty four percent and if they want to argue i remember the math was done incorrectly now they did talk about the yeah but we reported this correctly this was we had an affidavit that this is standard accounting no one disputes that exactly what it did was proper for how reported its revenue no one disputes that tesla obviously correctly has a financial statement showing its revenue but most is own records we didn't make this up their own records at page it's on the record at five sixty and five sixty four is their own ledger saying we had a seven point two billion dollars in revenue they say that we didn't make that up and they divided it four point six two internal wholesaling and two point six two internal and two two holes in the third parties they equate them so that that's that's how that that record that's how that number comes from if i could talk about the tax cut issue we agree judge graves that the court it's it gives you three factors it says and or and so yeah you can have the tax return and great may have been a mistake our point is the district court just said i have three things to look at and then went straight to the sixty percent retail figure it didn't even mention the two thousand and ten tax return they could've argued it was a mistake of the district court to make findings that they didn't mance hear about one of your  statements that they underestimated wholesale mr bieber said that you don't hold so to yourself so that would eliminate four point six billion right and that's what the affidavit said what i'm saying their own records say was that seven point two billion four point six billion of that was reflected as revenue and then it got all credited to their retail sales so whether or not i don't know what he means by you don't wholesale yourself for what purpose i'm asking i don't i mean i don't know why he's talking about that they can try to argue this on remand all of these arguments i'd say ninety nine percent of what we've been talking