Court Opinion

ID: 4379111
Source: CourtListenerOpinion
Date Created: 2019-03-21 00:00:21.661193+00
Date Added: 2024-06-11T14:49:39.301240
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                          United States Court of Appeals
                                                                                   Fifth Circuit

                                                                                 FILED
                                      No. 18-30771                         March 12, 2019
                                                                            Lyle W. Cayce
CLAIMANT ID 100241914,                                                           Clerk

              Requesting Party - Appellant

v.

BP EXPLORATION & PRODUCTION, INCORPORATED; BP AMERICA
PRODUCTION COMPANY; BP, P.L.C.,

              Objecting Parties - Appellees

                   Appeal from the United States District Court
                      for the Eastern District of Louisiana
                             USDC No. 2:18-CV-5502

Before WIENER, DENNIS, and OWEN, Circuit Judges.
PER CURIAM:*
       This appeal concerns a Business Economic Loss claim under the
Deepwater Horizon Economic and Property Damages Settlement Agreement
(“Settlement Agreement”). The claimant is Johnston-Tombigbee Furniture
Manufacturing Company, Inc. (“Claimant”), a furniture manufacturer in
Columbus, Mississippi, a location that places it in Zone D, the furthest zone

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
                                     No. 18-30771
from the Gulf of Mexico and the Zone with the most stringent requirements for
establishing causation under the Settlement Agreement.                       The Court
Supervised      Settlement       Program’s      (“Settlement       Program”)      Claims
Administrator denied Claimant’s economic loss claim, finding it could not meet
the heightened causation showing required of Zone D claims. After re-review
and reconsideration were denied, an appeal panel affirmed denial of
Claimant’s economic loss claim, and the district court declined to exercise its
discretionary review over that decision. Because the district court did not
abuse its discretion in denying discretionary review, we AFFIRM.
                                            I
      BP entered the court-supervised Settlement Agreement with a class of
plaintiffs who suffered losses caused by the April 2010 Deepwater Horizon oil
spill in the Gulf of Mexico. 1 The basic process provided by the Settlement
Agreement for claimants to submit claims is as follows: A claimant submits its
claim to the Claims Administrator, who determines its validity.                      That
determination is subject to review by an administrative review panel, as well
as to re-review and reconsideration by the Claims Administrator. A party
unsatisfied with the resolution of a claim may then seek discretionary review
in the federal district court that supervises the Settlement Program. The
district court’s determination is subject to review in this court.
      Exhibit 4B of the Settlement Agreement sets out the causation
requirements for certain claims brought under the Settlement Program.
Claimant is located in Zone D, the furthest zone from the Gulf of Mexico. The
Settlement Agreement provides that Zone D claims are not entitled to a

      1  We have previously described the origins of the Settlement Program and Settlement
Agreement, and we need not repeat the details here. See, e.g., In re Oil Spill by Oil Rig
“Deepwater Horizon” in Gulf of Mex., on Apr. 20, 2010, 910 F. Supp. 2d 891 (E.D. La. 2012),
aff’d sub nom. In re Deepwater Horizon, 739 F.3d 790 (5th Cir. 2014).
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presumption of causation, and Zone D claimants must instead demonstrate
causation through one of several avenues.       Here, Claimant pursued the
“Decline-Only Revenue Pattern.” The third prong of the Decline-Only Revenue
Pattern is the “Customer Mix Test,” which Exhibit 4B specifies requires
detailed documentation to show a decline in business from customers located
closer to the Gulf of Mexico or otherwise “non-local customers.” The Claims
Administrator’s Policy 345 provides additional guidance on how the Customer
Mix Test applies.
      We recently described the exacting standards set out for Zone D
claimants in the Decline-Only Revenue Pattern, the Customer Mix Test, and
Policy 345, as follows:
            Under [the Decline-Only Revenue Pattern], claimants
            must satisfy three requirements: 1) a decline of an
            aggregate of fifteen percent or more in total revenues
            over a period of three consecutive months in 2010,
            after the spill, compared to the same months in the
            pre-spill period selected by the claimant; 2) specific
            documentation identifying factors outside the
            claimant’s control that prevented the recovery of
            revenues in 2011, such as the entry of a competitor;
            and 3) the Customer Mix Test, the requirement at
            issue in this appeal.
            Under the Customer Mix Test, claimants located in a
            Zone some distance from the Gulf can show causation
            by the oil spill if they can show they lost a specified
            amount of revenue from customers located near the
            Gulf. The test requires that claimants demonstrate
            proof of a decline of ten percent in the share of total
            revenue generated by either non-local customers or
            customers located in Zones A, B, or C, which are
            located closer to the Gulf of Mexico. The decline must
            occur over the same time period used for analyzing
            total revenue decline: the three-month period in 2010,
            after the spill, compared to the three-month period in
            2009, before the spill. The claimant must submit
            business     documentation     reflecting   customers’
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                                 No. 18-30771
            locations   and sales associated       with those
            customers, and the Claims Administrator uses
            mapping software to verify each customer’s Economic
            Loss Zone and distance from the claimant.
            The Claims Administrator’s Approved Policy 345
            governs the application of the Customer Mix Test. It
            provides that Exhibit 4B places the burden on the
            claimant to demonstrate that it has satisfied the
            requirements of the test. The policy states that,
            though it may be difficult or even impossible for some
            claimants to satisfy this test, “the Claims
            Administrator interprets the Settlement Agreement’s
            documentation requirements as mandatory,” and the
            policy further notes that “[t]he Settlement Agreement
            does not grant the Claims Administrator discretion to
            waive these document requirements.”
            Policy 345 also provides that if customer addresses
            cannot be verified by the Settlement Program, the
            Zone of such customers, and their distance from the
            claimant, will be considered “unknown.” The revenue
            generated from those “unknown” customers weighs
            against a claimant attempting to show the post-spill
            revenue decline required for the Customer Mix Test.
            More particularly, revenue from those customers is
            excluded from the revenue during the pre-spill period
            and included in the revenue during the post-spill
            period. The district court supervising the Settlement
            Program has explained that the purpose of this
            unfavorable treatment is to prevent “claimants from
            benefitting from their failure to provide complete
            customer mix data.”
Claimant Id 100261758 v. BP Expl. & Prod., Inc., No. 18-30173, 2019 WL
507588, at *2–3 (5th Cir. Feb. 8, 2019) (citations omitted).
      Also relevant to this appeal is Policy 218. Policy 218 provides for the
reallocation of a business’s revenues from “13-period revenue and expense
statements into a twelve month year by allocating each period’s revenue and
expense items into their respective months.”

                                       4
                                  No. 18-30771
      Claimant submitted documentation that it maintains entitled it to pass
the Customer Mix Test.        Claimant’s submission included two key sets of
documents: (1) Claimant’s profit and loss statements (“P&L”) over the course
of several years, and (2) documentation, including customer lists and sales logs
(“Customer Mix Data”), aimed specifically at passing the Customer Mix Test.
The P&Ls were financial statements generated in the ordinary course of
business and therefore followed the financial accounting method of Claimant’s
choosing—the “4-4-5” method.         The 4-4-5 financials submitted do not
correspond exactly with calendar months because such a financial accounting
method divides a year into four quarters, each of which is then divided into two
four-week periods and one five-week period.
      The Claims Administrator denied Claimant’s economic loss claim based
on a finding that it had “not provided documents sufficient to establish that
[its] lost revenue occurred as a result of the Spill, in accordance with Exhibit
4B of the Settlement Agreement.” Claimant then sought re-review of its claim,
which was denied. Finally, Claimant requested reconsideration, submitting
updated Customer Mix Data, including documentation that corrected various
incomplete addresses that had been treated as “unknown” under Policy 345.
The Claims Administrator denied reconsideration.            After these three
successive denials, Claimant sought review by the Appeal Panel, contending
that it had submitted enough documentation to pass the Customer Mix Test
and alleging the Claims Administrator made several mistakes in processing
its claim, including improperly applying Policy 218 and incorrectly mapping
several customer locations.
      In light of Claimant’s arguments, the Appeal Panel submitted a “Request
for Information / Summary of Review” to the Claims Administrator, seeking
clarification of the basis for the determination.    In response, the Claims
Administrator explained that, although certain mapping mistakes had been
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                                  No. 18-30771
made, “[u]pon updating the Customer Mix Test and applying Policy 345 v.3,
the Claimant still does not meet the requirements of the Customer Mix Test,
and the claim would still result in a Causation Denial.” Moreover, the Claims
Administrator explained that “after utilizing the updated information, large
variances remained between the total monthly revenue amounts reportered
per the P&Ls and the Customer Mix Test data, which were treated as
‘unknown’ pursuant to Policy 345 v.3.” Finally, the Claims Administrator
conceded that Policy 218 should have been applied from the outset but was not
applied until reconsideration review.         However, according to the Claims
Administrator, “Policy 218 is applicable to all non-calendar month basis P&Ls
in order to fairly evaluate a claim consistent with the terms of the Settlement
Agreement,” and was applied in this case because “Claimant’s 12-Period P&Ls
were prepared using a 4-4-5 account method, i.e. a non-calendar month basis.”
      After   receiving   this   additional     explanation   from   the   Claims
Administrator, the Appeal Panel affirmed, finding that Policy 218 was
correctly applied to Claimant’s documentation, and that “[t]he results [were]
not the result of applying Policy 218,” and instead reflected the fact that
“Claimant has not provided a complete listing of all customer transactions.”
Thus, the Appeal Panel determined that “[t]here is no basis to disturb the
Settlement Program’s application of the Customer Mix Test.”
      The district court declined to exercise discretionary review over this
determination, and Claimant appeals that decision.
                                       II
      We review the district court’s denial of discretionary review for abuse of
discretion. See Claimant ID 100212278 v. BP Expl. & Prod. Inc., 848 F.3d 407,
410 (5th Cir. 2017) (citation omitted).       “We generally assess whether the
district court abused its discretion by looking to ‘whether the decision not
reviewed by the district court actually contradicted or misapplied the
                                       6
                                  No. 18-30771
Settlement Agreement, or had the clear potential to contradict or misapply the
Settlement Agreement.’” Id. (quoting Holmes Motors, Inc. v. BP Expl. & Prod.,
829 F.3d 313, 315 (5th Cir. 2016)). Nonetheless, the district court need not
“grant review of all claims that raise a question about the proper interpretation
of the Settlement Agreement,” as “[i]t is not an abuse of discretion to deny a
request for review that involves no pressing question of how the Settlement
Agreement should be interpreted or implemented, but simply raises the
correctness of a discretionary administrative decision in the facts of a single
claimant’s case.” Id. (cleaned up). One indicator of abuse of discretion is
whether “a request for review . . . raises a recurring issue on which the Appeal
Panels are split if the resolution of the question will substantially impact the
administration of the [Settlement] Agreement.” Id. (cleaned up).
                                       III
      Claimant argues on appeal that the Claims Administrator misapplied
Policy 345 to its claim, that the way Claimant’s administrative proceedings
were handled violated its due process rights, and that the Claims
Administrator should not have applied Policy 218. We take each argument in
turn and conclude that Claimant’s contentions raise, at most, issues regarding
“the correctness of a discretionary administrative decision in the fact of a single
. . . case.” Claimant ID 100212278, 848 F.3d at 410 (cleaned up). Thus,
Claimant has not shown the district court abused its discretion in denying
review.
                                        A
      Claimant’s contention that the Claims Administrator misapplied Policy
345 does not challenge the Claims Administrator’s interpretation of that policy
or the Settlement Agreement, and instead is a conclusory challenge to the
result in this case. In fact, it is not clear exactly how Claimant contends the
Claims Administrator misapplied the policy.              Although the Claims
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                                  No. 18-30771
Administrator initially incorrectly mapped several customer locations, that
error was corrected in the response to the request for information from the
Appeal Panel, at which point the Claims Administrator concluded that “[u]pon
updating the Customer Mix Analysis and applying Policy 345 v.3, the Claimant
still does not meet the requirements of the Customer Mix Test, and the claim
would still result in a Causation Denial.” Claimant does not challenge this
determination other than to point out the fact that the Claims Administrator
erred in its earlier calculation and to argue that its change of rationale at this
stage was unfair. Setting aside the procedural argument, which we analyze
infra in Section III.B, we fail to see any basis for a finding that the district
court abused its discretion, because Claimant’s arguments appear to “merely
challenge[] ‘the correctness of a discretionary administrative decision in the
facts of a single claimant’s case.’” Claimant ID 100028922 v. BP Expl. & Prod.,
Inc., 710 F. App’x 184, 187 (5th Cir. 2017) (quoting Claimant ID 100212278,
848 F.3d at 410).
                                        B
      Claimant’s second argument—that its due process rights were violated
because the Appeal Panel sought and received additional information,
including an updated Customer Mix analysis from the Claims Administrator
on appeal—similarly fails. Rule 13(f) of the Rules Governing the Appeals
Process allows the Appeal Panel to request a Summary of Review from the
Claims Administrator, which ordinarily provides the Appeal Panel with “the
basis for the determination(s) made by the Claims Administrator.” Rules
Governing the Appeals Process rule 13(f). 2 Claimant principally takes issue
with the Appeal Panel’s failure to remand in light of the mistakes the Claims

      2   A copy of the Rules Governing the Appeals Process is available at
http://www.deepwaterhorizoneconomicsettlement.com/docs/Rules_Governing_the_Appeals_
Process_-_Final.pdf.
                                        8
                                No. 18-30771
Administrator had made earlier in the process because a remand “would have
permitted the Claimant to respond to the Claims Administrator’s issues.”
However, Claimant was given the opportunity to respond to the Summary of
Review under Rule 13(f), and in fact submitted a response arguing the Claims
Administrator was wrong. Because Claimant was given a full opportunity to
respond to the Claims Administrator’s updated analysis, we do not believe
Claimant’s concerns about the process it was afforded justify another layer of
review in this court. Cf. Claimant Id 100261758, 2019 WL 507588, at *5
(affirming denial of review despite argument that claimant should have been
given additional opportunities to provide compliant data).
                                      C
      Claimant’s final argument centers around the application of Policy 218.
Claimant first contends that the policy should not apply to its claim because,
on its face, the policy only applies to 13-period accounting methodologies,
whereas Claimant utilizes a “4-4-5” method, which is a type of 12-period
method.   Second, Claimant argues that Policy 218 cannot apply to the
Customer Mix Test because “it was not created nor intended for use in applying
the Customer Mix Test” and because it constitutes impermissible “moving and
smoothing” of revenues. Finally, Claimant argues that use of Policy 218 is
especially egregious here given that, according to Claimant, it would pass the
Customer Mix Test but for the reallocation of its revenues into calendar
months.
      We recently approved the use of Policy 218 to convert 4-4-5 financials
into calendar-month financials for proof of causation under Exhibit 4B of the
Settlement Agreement. In BP Expl. & Prod., Inc. v. Claimant ID 100262795,
No. 18-30273, 2019 WL 113684, at *2–3 (5th Cir. Jan. 4, 2019), we held that
Policy 218 applied to a showing of causation under the V-Shaped Revenue
Pattern, another test available to Zone D claimants under Exhibit 4B. We
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                                No. 18-30771
reasoned that conversion to calendar-month financials was required by the
Settlement Agreement, as “the Settlement Agreement as a whole indicates
that ‘month,’ when referred to in the V-test, unambiguously means calendar
month,” because the V-test explicitly references specific months. Id. at *2.
Because a claimant under the V-test must “submit ‘monthly and annual profit
and loss statements . . . or alternate source documents establishing monthly
revenues and expenses,” conversion to calendar months was necessary for
analyzing the V-test. Id. This reasoning applies equally to the Customer Mix
Test at issue here because Exhibit 4B uses the same specific month identifiers
(referencing submission of documents for “May-December 2010 as selected by
the claimant”) as in the V-test and describes documents in terms of month-to-
month revenues. The Settlement Agreement therefore clearly contemplates
that any non-calendar-month financials be converted before application of the
Customer Mix Test.
      We also recently endorsed the denial of a claim under the Customer Mix
Test based on a comparison of P&L statements and Customer Mix Data. In
Claimant ID 100187576 v. BP Expl. & Prod., Inc., No. 18-30491, 2019 WL
476080, at *2–3 (5th Cir. Feb. 6, 2019), the “Settlement Program accountants
noted that [claimant’s] customer mix data could not be completely reconciled
with its P & L statements,” and “treat[ed] those variances adversely.” Id. at
*2. In that case, the Appeal Panel explained that “Customer Mix data that
does not match the P and Ls is considered unknown and treated in a manner
adverse to the claimant.” Id. (quotations omitted). We rejected the claimant’s
contention on appeal that “the Administrator violated the Settlement
Agreement by adversely classifying the variances between [the claimant’s]
customer mix data and its P & L statements.” Id. at *2; see also Claimant Id
100227611 v. BP Expl. & Prod., Inc., No. 18-30396, 2018 WL 6261854, at *3
(5th Cir. Nov. 28, 2018) (“The only way to reasonably interpret the customer
                                     10
                                       No. 18-30771
mix test is that it requires the claims administrator to compare the claimant’s
‘total revenue’ with its subset of revenue ‘generated by customers located in’
the affected areas and ask whether the latter—as a ‘share of the total’—
declined 10 percent over the relevant period.”). We agree with this analysis
and conclude that adverse treatment based on discrepancies between P&Ls
and Customer Mix Data is permissible under the Settlement Agreement.
       The foregoing discussion resolves Claimant’s arguments surrounding
Policy 218: The policy applies to its 4-4-5 financials and applies to the
Customer Mix Test. See Claimant ID 100262795, 2019 WL 113684, at *2–3.
To the extent Claimant challenges the comparison of P&L data to the
Customer Mix Data it submitted and treating discrepancies between the two
data sets adversely to Claimant, that argument also fails. 3 See Claimant ID
100187576, 2019 WL 476080, at *2–3.
                                             ***
       For these reasons, the judgment of the district court is AFFIRMED.

       3 We also reject Claimant’s contention that application of Policy 218 results in
impermissible “moving and smoothing” of revenue data. The precedent Claimant cites in
support of that contention is inapposite, as it relates to Industry-Specific Methodologies for
calculating compensation. See In re Deepwater Horizon, 858 F.3d 298, 300–01 (5th Cir. 2017).
We instead apply the same reasoning as Claimant ID 100262795, 2019 WL 113684, at *2–3,
as discussed supra.
                                             11