Opinion ID: 4391764
Heading Depth: 1
Heading Rank: 1

Heading: History of Burkhalter’s Claim

Text: Burkhalter filed its claim in November 2012. In Burkhalter’s claim form, it provided the NAICS code 238900 for its business. 2 Burkhalter’s 2010 federal income tax return listed the same code for its business activity. Burkhalter’s claim form stated that it had one- or two-person sales offices in Murfreesboro, Tennessee and Houston, Texas during the months of May to December 2010. Burkhalter denied that these locations met “the definition of ‘Facility’ as found in Exhibit 5 of the settlement agreement [because Burkhalter] did not and does not ‘perform or manage its operations’ at any location other than . . . Columbus, Mississippi.” The Court Supervised Settlement Program (“Program”) requested additional information from the claimant about the nature of its business and 2 “‘NAICS’ is an initialism for ‘North American Industry Classification System.’ NAICS consists of numeric codes that federal statistical agencies use to classify business establishments in order to collect, analyze, and publish data related to the U.S. economy.” Claimant ID 100153748 v. BP Expl. & Prod., Inc., 708 F. App’x 812, 815 n.1 (5th Cir. 2017) (per curiam) (citation omitted). While our unpublished opinions are not controlling precedent, they may be persuasive authority. See Ballard v. Burton, 444 F.3d 391, 401 & n.7 (5th Cir. 2006) (citation omitted). The United States Department of Labor’s Bureau of Labor Statistics website defines code 238900 as “Other Specialty Trade Contractors.” 2 Case: 18-30786 Document: 00514933383 Page: 3 Date Filed: 04/29/2019 No. 18-30786 its various office locations. In response, the claimant stated that it offered rigging, lifting, and transport services; it did not have any other Facilities where it performed or managed its operations in 2010; its most recent Houston office opened in 2013; and its most recent sales offices opened in 2014 (Mobile, Alabama) and 2016 (San Francisco, California). The Program also requested and obtained supporting documentation for revenues during the months of May to November in 2009, 2010, and 2011, which included the names of some of Burkhalter’s customers. On August 2, 2017, the Claims Administrator issued an Eligibility Notice stating that the claimant was eligible for an award of approximately $9 million. 3 The Program noted the existence of multiple office locations when it reviewed the claimant’s website, but the claimant’s counsel’s responses to the Program’s inquiries apparently satisfied the Program that the claimant did not have any office locations constituting “Facilities” in 2010, other than its headquarters in Columbus. The Program’s calculation notes did not discuss its determination of the claimant’s appropriate NAICS code. On August 22, 2017, BP appealed the award to an administrative appeal panel. BP challenged the Program’s classification of the claimant under the NAICS code 238990 (All Other Specialty Trade Contractors) and argued that the claimant’s proper NAICS code was 237120 (Oil and Gas Pipeline and Related Structures Construction). BP argued that the customers listed in the claimant’s revenue documentation showed that its primary business was providing specialty construction services to the oil and gas industry. BP further argued that the claimant’s provision of incomplete information to the 3 The Benchmark (pre-spill) and Compensation (post-spill) Periods for Burkhalter’s claim were May to November 2009 and 2010, respectively. 3 Case: 18-30786 Document: 00514933383 Page: 4 Date Filed: 04/29/2019 No. 18-30786 Program about its sales offices outside the Gulf Coast Areas prevented the Program from fully evaluating whether those offices constituted “Facilities.” In response, the claimant submitted an affidavit from its CEO stating: I have reviewed [Burkhalter]’s financial documents. Approximately 90% of [Burkhalter]’s revenues in 2009 and 2010 were for clients unrelated to the oil and gas industry. These clients were primarily in the industrial and manufacturing industries. . . . [Burkhalter] did not, does not, and cannot identify its revenues and job-related expenses associated with any sales office (including the sales offices in Murfreesboro, Tennessee and Houston, Texas) separately from the Columbus, MS office. On February 26, 2018, the administrative appeal panel issued its decision, which upheld the award to Burkhalter. The appeal panel noted that the exclusion issue turned on the claimant’s proper NAICS code, which was based on its primary business activity. It referenced the parties’ citations to the claimant’s website, the portion of the claimant’s work (based on the revenue documentation in the record) associated with customers in the oil and gas industry, and the claimant’s CEO’s affidavit. The appeal panel then stated that its “de novo review of the record shows that, while Claimant is certainly a specialty trade contractor, there’s no support for BP’s contention that Claimant [sic] activities are ‘primarily related to oil and gas pipeline and related structures construction.’” The panel upheld the Program’s code assignment. As to the facilities issue, the appeal panel cited the claimant’s arguments that it disclosed the sales offices’ existence and that the Program inquired about those offices and found that they did not constitute “Facilities.” The panel also referenced the CEO’s affidavit. The panel concluded: “A de novo review of the record does not support BP’s contention, nor does this Panel find it necessary to remand this matter for further inquiry.” 4 Case: 18-30786 Document: 00514933383 Page: 5 Date Filed: 04/29/2019 No. 18-30786 BP requested discretionary review by the federal district court supervising the Program, which the district court denied. BP timely filed this appeal challenging that judgment.