IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 13-30095

IN RE: DEEPWATER HORIZON – APPEALS OF THE ECONOMIC AND 

PROPERTY DAMAGE CLASS ACTION SETTLEMENT

Appeals from the United States District Court

for the Eastern District of Louisiana

ON PETITION FOR REHEARING EN BANC

Before DAVIS, GARZA, and DENNIS, Circuit Judges.

ORDER:

The court having been polled at the request of one of its members, and a 

majority of the judges who are in regular active service and not disqualified 

not having voted in favor (Fed. R. App. P. 35 and 5TH Cir. R. 35), the petition 

for rehearing en banc is DENIED.∗

In the en banc poll, five judges voted in favor of rehearing (Judges Jolly, 

Jones, Clement, Owen and Elrod) and eight judges voted against rehearing 

(Chief Judge Stewart and Judges Davis, Dennis, Prado, Southwick, Haynes, 

Graves and Higginson).

ENTERED FOR THE COURT:

/s/ W. Eugene Davis s 

United States Circuit Judge

∗ Judge Smith is recused and did not participate in the consideration of the petition 

for rehearing en banc.

United States Court of Appeals

Fifth Circuit

FILED

May 19, 2014

Lyle W. Cayce

Clerk

 
No. 13-30095 

EDITH BROWN CLEMENT, Circuit Judge, dissenting from Denial of 

Rehearing En Banc, joined by JOLLY and JONES, Circuit Judges:1

Today the court approves a class action settlement agreement that 

permits payment for economic losses “without regard to whether such losses 

resulted or may have resulted from a cause other than the Deepwater Horizon 

oil spill.” This violates the fundamental Article III requirement that “there 

must be a causal connection between the injury and the conduct complained 

of,” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992), and the principle 

that Rule 23 “must be interpreted in keeping with Article III,” Amchem 

Products, Inc., v. Windsor, 521 U.S. 591, 613 (1997). In this class settlement, 

Rule 23 is not being used to aggregate similar constitutional cases and 

controversies, but to impermissibly extend the judicial power of the United 

States into administering a private handout program. We dissent from denial 

of rehearing en banc.2

I

The Claims Administrator’s policy interpretation, permitting payment 

“without regard” to whether an injury was caused by the oil spill, creates the 

principal defect in this case.3 The interpretation yields an irreconcilable 

conflict with Section 1.3.1.2 of the Class Definition (which appears identically 

in the Settlement Agreement and Complaint), requiring that Business 

1 Judge Garza would join this dissent if he had been able to vote as an active member 

of the en banc panel.

2 Here, the focus is on the Article III standing deficiency resulting from the Claims 

Administrator’s interpretation. Judge Garza’s initial dissent for this, the certification panel,

identifies several additional problems with the court’s treatment of Rule 23(a) and the Rules 

Enabling Act. These remain significant issues in this case, and are incorporated by reference. 

See In re Deepwater Horizon, 739 F.3d 790, 821–29 (5th Cir. 2014) (Garza, J., dissenting).

3 This Claims Administrator issued the interpretation on October 10, 2012. On April 

9, 2013, the district court formally adopted the interpretation. See Order of April 9, 2013, 

2:10-MD-2179, ECF No. 9232.

 
No. 13-30095

Economic Loss class members suffered injuries “as a result of the Deepwater 

Horizon incident.” (emphasis added). Moreover, it creates an irreconcilable 

conflict with Article III. The federal courts are not limited by the parties’ 

contentions when acting on Article III jurisdiction. Steel Co. v. Citizens for a 

Better Env’t, 523 U.S. 83, 94 (1998) (“On every writ of error or appeal, the first 

and fundamental question is that of jurisdiction, first, of this court, and then 

of the court from which the record comes. This question the court is bound to 

ask and answer for itself, even when not otherwise suggested, and without 

respect to the relation of the parties to it.”) (emphasis added). Accordingly, 

whether BP previously supported the Claims Administrator’s interpretation, 

or whether it previously believed Article III standing to be satisfied, is not 

germane. To maintain the role of the courts in our system of divided powers, 

we have the independent duty to enforce the limitations of Article III.

The Settlement Agreement operates through a series of interconnected 

legal documents, one of which is Exhibit 4B—“Causation Requirements for 

Business Economic Loss Claims.” Section I of Exhibit 4B establishes that 

certain individuals and entities, based solely on their geographical location or 

the nature of their enterprise, “are not required to provide any evidence of 

causation.”4 This subset of claimants is entitled to a presumption of causation. 

Standing alone, geographical proximity, or the nature of one’s enterprise, is 

insufficient to satisfy Article III causation, which requires a “causal connection 

between the injury and the conduct complained of.” Lujan, 504 U.S. at 560. 

However, but for the Claims Administrator’s interpretation, Exhibit 4B’s 

relationship to the Class Definition would have kept causation as an element 

4 For example, Section I.1 states, “If you are a business in Zone A, you are not required 

to provide any evidence of causation unless you fall into one of the exceptions agreed to by the 

parties, and listed in footnote (1).” Section I.5 states, “If you are in Zone A, B, or C, and you 

meet the ‘Charter Fishing Definition’ you are not required to provide any evidence of 

causation.” (emphases added).

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No. 13-30095

of class members’ claims—claimants would have been required to have 

suffered injury “as a result of” the oil spill.

The Claims Administrator’s interpretation fundamentally changed this 

balance, establishing that he would:

“compensate eligible Business Economic Loss and Individual 

Economic Loss claimants for all losses payable under the terms of 

the Economic Loss frameworks in the Settlement Agreement, 

without regard to whether such losses resulted or may have resulted 

from a cause other than the Deepwater Horizon oil spill provided 

such claimants have satisfied the specific causation requirements 

set out in the Settlement Agreement.” (emphasis added).

This decision effectively negates the requirement that injuries be “as a result 

of” the oil spill. These two positions—that injury must be “as a result of” the 

oil spill, and that compensation is available “without regard to whether such 

losses resulted” from the oil spill—are plainly irreconcilable. Thus, the Claims 

Administrator’s interpretation renders Section 1.3.1.2’s causation language 

nugatory—all that remains are the terms of Exhibit 4B. The district court 

confirmed this understanding. On December 24, 2013, responding to a remand 

order in No. 13-30315, the district court established “that whether a business 

economic loss is ‘as a result of’ the Deepwater Horizon incident for purposes of 

the Settlement is determined exclusively and conclusively by Exhibit 4B.”5

Beyond geographical proximity or the nature of a claimant’s enterprise, 

Exhibit 4B provides no specific causation requirements for a subset of the 

class.6 Because the Claims Administrator will pay claims to this subset 

“without regard” to whether their injuries were caused by the oil spill, the class 

includes members for which there is absolutely no requirement of causation. 

5 See Order and Reasons [Responding to Remand of Business Economic Loss issues], 

2:10–MD2179, ECF No. 12055, at 18.”).

6 In fact, the section header in Exhibit 4B for this group of claimants makes plain that, 

“There is No Causation Requirement.”

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No. 13-30095

Consequently, this settlement class may include individuals or entities who 

could never truthfully allege or establish an injury “fairly traceable to the 

challenged action of the defendant, and not the result of the independent action 

of some third party not before the court.” Lujan, 504 U.S at 660 (internal 

quotations and alterations omitted).7

The Claims Administrator’s interpretation of the Settlement’s causation 

requirement is essential to determining whether this class certification is “in 

keeping with Article III.” Amchem, 521 U.S. at 613. Notwithstanding this 

significance, the certification panel majority did not address the interpretation 

in concluding that Article III is satisfied.8 This position is untenable. 

While the interpretation does not directly reference Section 1.3.1.2’s 

requirement that class members suffer losses “as a result of” the oil spill, it has

the clear effect of rendering that language void. The interpretation addresses 

the requirements of Exhibit 4B, which is incorporated into the Class 

Definition—a key portion of the Complaint.9 Moreover, Exhibit 4B begins by 

noting that it does not apply to “Entities, Individuals or Claims not included 

within the Economic Class definition.”10 So, when the Claims Administrator 

interprets the Settlement Agreement to allow compensation “without regard to 

whether such losses resulted . . . from a cause other than the Deepwater Horizon 

7 Because the class definition can include those without allegations of causation 

sufficient to satisfy Article III, it cannot be certified under the test for Article III standing at 

the settlement class certification stage established in Denney v. Deutsche Bank AG, 443 F.3d 

253, 263–64 (2d Cir. 2006). Deepwater Horizon, 739 F.3d at 822–26 (Garza, J., dissenting) 

(citing Lujan, 504 U.S. at 560). See infra Part II.

8 In re Deepwater Horizon, 739 F.3d at 808 (“[T]he evidentiary standard to be applied 

by the Claims Administrator . . . is not a matter of Article III standing,” but rather “a question 

of interpreting the Settlement Agreement and applying it to each individual claim . . . .”).

9 Section 1.3.1 of the Class Definition states: “The following are summaries of the 

Damage Categories, which are fully described in the attached Exhibits 1A-15.”

10 Footnote 1 of Exhibit 4B states: “This Causation Requirements for Business 

Economic Loss Claims does not apply to (1) Start-up Businesses; (ii) Failed Businesses; (iii) 

Entities, Individuals or Claims not included within the Economic Class definition; and (iv) 

Claims covered under the Seafood Program.”

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No. 13-30095

oil spill,” its application is no longer limited to those within the class 

definition—that is, to those with injury “as a result of” the oil spill. To the 

contrary, claimants can participate “without regard” to the cause of their 

claimed injuries. This defies the Article III requirement there must be an 

injury “fairly traceable to the challenged action of the defendant.” Lujan, 504 

U.S. at 560.

II

The Claims Administrator’s interpretation yields a settlement class that 

may include individuals and entities without any ability to allege or establish 

an injury fairly traceable to the oil spill. Whether this violates Article III 

standing turns on the “manner and degree of evidence required at [this] stage 

of the litigation.” Id. at 561. The elements of Article III standing, including 

causation, “are not mere pleading requirements but rather an indispensable 

part of the plaintiff’s case, [which] must be supported in the same way as any 

other matter on which the plaintiff bears the burden of proof.” Id. In Lujan, 

the Supreme Court identified three “stages of litigation” during which the 

standing elements must be supported: pleading, summary judgment, and trial. 

Id. Lujan does not identify the requisite standards for establishing standing 

during a Rule 23 class certification, and the Courts of Appeals have now 

adopted conflicting approaches on this important matter.11

In Denney v. Deutsche Bank AG, 443 F.3d 253 (2d Cir. 2006), the district 

court certified a settlement class and approved a settlement agreement 

resolving claims arising from the defendant’s allegedly fraudulent marketing 

of foreign currency options. In considering whether the certification satisfied 

Article III standing, the Second Circuit held that “no class may be certified that 

11 See In re Deepwater Horizon, 739 F.3d at 799–802 (describing “two analytical 

approaches” for evaluating Article III standing for the purposes of class certification under 

Rule 23).

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No. 13-30095

contains members lacking Article III standing,” and that Article III requires 

the class to “be defined in such a way that anyone within it would have 

standing.” Denney, 443 F.3d at 264. Denney requires courts to ensure that the 

composition of the proposed class includes only those with claims that would

satisfy the standing elements—injury, causation, and redressability. 

In Kohen v. Pacific Investment Management Co., 571 F.3d 672 (7th Cir. 

2009), the Seventh Circuit adopted a different approach. The district court had 

certified a pre-trial class to pursue claims alleging the defendant-investment 

firm violated the Commodity Exchange Act by cornering a futures market for 

Treasury Notes. The Seventh Circuit evaluated Article III standing by 

analyzing the status of the named plaintiffs alone. Id. at 676. The Kohen test 

evaluates Article III standing for a pre-trial class certification by looking only 

at the status of the named plaintiffs.12

Here, the panel opinion did not adopt either of these approaches, holding 

that the settlement class certification satisfies Article III under either test. See

In re Deepwater Horizon, 739 F.3d at 802. There is no dispute that the named 

plaintiffs have sufficiently alleged standing, and that the certification could 

pass muster under Kohen. However, because the Claims Administrator’s 

interpretation expands the class beyond those with plausible allegations of 

causation, the certification fails the Denney test—the class now “contains 

members lacking Article III standing.” Denney, 443 F.3d at 264. Because the 

relevant stage of litigation in this case is the certification of a settlement class, 

Denney provides the correct test.

There are sound reasons to evaluate Article III standing differently for 

pre-trial and settlement class certifications under Rule 23. Primarily, the 

12 Showing further division among the Circuits, in In re Prudential Ins. Co. Am. Sales 

Practice Litig. Agent Actions, 148 F.3d 283, 306-07 (3d Cir. 1998), the Third Circuit evaluated 

Article III standing for a settlement class by looking to the status of named plaintiffs alone.

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No. 13-30095

settlement certification stage is more advanced in the life cycle of a class action 

than the pre-trial certification stage. When a settlement class is certified, all 

is resolved at the point of certification. However, in a pre-trial certification, the 

class must reach additional waypoints in the litigation—summary judgment, 

trial on the merits, or ultimately a settlement—to resolve the dispute. 

Accordingly, Lujan’s graduated approach for demonstrating the standing 

elements compels holding settlement class certifications to a higher standard 

than pre-trial certifications—the settlement certification stage has progressed 

further into the “successive stages of the litigation.” Lujan, 504 U.S. at 561.

On its facts, Denney addresses Article III standing for a settlement class, 

whereas Kohen concerns a pre-trial class. Furthermore, the nature of the test 

adopted in each case reflects a distinction between these stages. At the pretrial certification stage, Kohen focuses exclusively on the status of named 

plaintiffs, and explicitly assumes the standing elements will be held to greater 

scrutiny at subsequent stages of the litigation. Kohen, 571 F.3d at 677 (“If the

case goes to trial, this plaintiff may fail to prove [Article III] injury.”). But 

Denney checks compliance with Article III by looking to the entire composition 

of the proposed class. In this, Denney requires the certifying court to carefully 

scrutinize the class definition and project its potential makeup to determine 

whether it could contain members without injury fairly traceable to the 

defendant’s conduct. It is entirely appropriate that the two tests have different 

focal points. This difference in focus shows judicial recognition that there are

no additional opportunities to address standing after a settlement class is 

certified—settlement fully resolves the legal proceedings, leaving only 

administrative processing. The Denney approach appreciates that Article III 

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No. 13-30095

standing is a central component of a federal court’s power and, accordingly, 

provides a more robust test for the conclusive settlement certification stage.13

Accordingly, determining whether this Settlement Agreement complies 

with the tenets of Article III standing required the panel to adopt the Denney

approach. It did not do so. And, to the extent it purported to apply Denney in 

the alternative, it failed to evaluate the class definition as actually 

implemented pursuant to the Claims Administrator’s interpretation. The en 

banc court has refused to correct these jurisdictional errors.

III

The Claims Administrator and the District Court have established that 

Exhibit 4B provides the sole methodology for determining which claimants are 

eligible to recover. So long as the Settlement is interpreted to permit 

compensation “without regard” to the cause of a claimant’s injuries, it is 

insufficient to ensure that all members of the proposed class have adequately 

alleged constitutional standing, a necessary component of our jurisdiction. See 

Lujan, 504 U.S. at 560 (“[S]tanding is an essential and unchanging part of the 

case-or-controversy requirement of Article III.”). Causation has been entirely 

eliminated for a broad swath of Business Economic Loss claimants. The en 

banc court could have easily corrected this error by decertifying the offending 

segment of the Business Economic Loss class, or reversing the Claims 

Administrator’s interpretation. However, it has eschewed both courses of 

action. We respectfully dissent.

13 Denney and Kohen provided different tests for Article III standing under Rule 23. 

The conflict between these approaches can be patently resolved by applying them to different 

stages of a class action litigation—settlement class certification and pre-trial certification. 

However, no court has yet harmonized the cases in this way, and they remain in clear conflict.

9