739 F.3d 790 (5th Cir. 2014), 13-30095, In re Deepwater Horizon

Docket Nº:13-30095.
Citation:739 F.3d 790
Opinion Judge:W. EUGENE DAVIS, Circuit Judge:
Party Name:In re DEEPWATER HORIZON— Appeals of the Economic and Property Damage Class Action Settlement.
Attorney:Stephen Jay Herman, Esq., Soren E. Gisleson, Esq., Herman & Katz, L.L.C., New Orleans, LA, Elizabeth Joan Cabraser, Lieff, Cabraser, Heimann & Bernstein, San Francisco, CA, Samuel Issacharoff, New York University School of Law, New York, NY, James Parkerson Roy, Domengeaux, Wright, Roy & Edwards,...
Judge Panel:Before DAVIS, GARZA, and DENNIS, Circuit Judges. EMILIO M. GARZA, Circuit Judge, dissenting:
Case Date:January 10, 2014
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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739 F.3d 790 (5th Cir. 2014)

In re DEEPWATER HORIZON— Appeals of the Economic and Property Damage Class Action Settlement.

No. 13-30095.

United States Court of Appeals, Fifth Circuit.

January 10, 2014

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Stephen Jay Herman, Esq., Soren E. Gisleson, Esq., Herman & Katz, L.L.C., New Orleans, LA, Elizabeth Joan Cabraser, Lieff, Cabraser, Heimann & Bernstein, San Francisco, CA, Samuel Issacharoff, New York University School of Law, New York, NY, James Parkerson Roy, Domengeaux, Wright, Roy & Edwards, Lafayette, LA, for Bon Secour Fisheries, Incorporated.

John Jacob Pentz, III, Esq., Law Offices of John J. Pentz, Sudbury, MA, Stuart Cooper Yoes, Yoes Law Firm L.L.P., Beaumont, TX, for Cobb Real Estate, Incorporated, G & A Cobb Family Limited Partnership, L & M Investments, Limited, Mad, Limited, Mex-Co, Limited, Robert C. Mistrot, Missroe, L.L.C.

Brent Wayne Coon, Esq., Brent Coon & Associates, Beaumont, TX, for Earl Aaron, Janie Aaron, Zuhair Abbasi, Michael Abbey, Mohammad Abdelfattah.

N. Albert Bacharach, Jr., N. Albert Bacharach, Jr. P.A., Gainesville, FL, Kevin Walter Grillo, Pena & Grillo, P.L.L.C., Corpus Christi, TX, for Ancelet's Marina, L.L.C., J.G. Cobb Construction, Limited, Ships Wheel, Allpar Custom Homes, Incorporated, Sea Tex Marine Service, Incorporated.

Richard Cartier Godfrey, Esq., Timothy A. Duffy, James Andrew Langan, Esq., Kirkland & Ellis, L.L.P., Chicago, IL, Theodore B. Olson, Thomas George Hungar, Miguel Angel Estrada, Scott Payne Martin, Gibson, Dunn & Crutcher, L.L.P., Jeffrey Bossert Clark, Sr., Esq., Steven Andrew Myers, Kirkland & Ellis, L.L.P., Robert C. Mike Brock, Covington & Burling, L.L.P., Washington, DC, Don Keller Haycraft, Liskow & Lewis, P.L.C., New Orleans, LA, George Howard Brown, Esq., Gibson, Dunn & Crutcher, L.L.P., Palo Alto, CA, for BP Exploration & Production, BP America Production Company.

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Appeals from the United States District Court for the Eastern District of Louisiana.

Before DAVIS, GARZA, and DENNIS, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

This is an interlocutory appeal from the district court's order certifying a class action and approving a settlement under Rule 23 of the Federal Rules of Civil Procedure.1 The ongoing litigation before the district court encompasses claims against British Petroleum Exploration & Production, Inc. (" BP" ) and numerous other entities. All these claims are related to the 2010 explosion aboard the Deepwater Horizon, an offshore drilling rig, and the consequent discharge of oil into the Gulf of Mexico.

Several of the original appellants in this case have moved to dismiss their appeals voluntarily, and we have granted those motions. We accordingly do not consider the arguments unique to those appellants. The three groups of appellants remaining before us— the " Allpar Objectors," the " Cobb Objectors," and the " BCA Objectors" — all filed objections with the district court opposing class certification and settlement approval based on various provisions of Rule 23. The Objectors' arguments were each addressed and rejected by the district court in its order of December 21, 2012. The Objectors have now appealed the district court's order and ask this court to remand with instructions to decertify the class and withdraw approval from the Settlement Agreement.

BP also now asks this court to vacate the district court's order, although BP is not formally an appellant and, in fact, BP originally supported both class certification and settlement approval before the district court. In addition to its own set of new arguments under Rule 23, BP also raises additional arguments regarding the Article III standing of certain class members to make claims under the Settlement Agreement. Unlike the Objectors, however, BP argues that the Settlement Agreement can be salvaged if " properly construed and implemented." In BP's view, all of the problems that invalidate the class settlement under Article III and Rule 23 result from two Policy Announcements issued by the Claims Administrator, Patrick Juneau, who was appointed under the Settlement Agreement by the district court.

As set forth below, we cannot agree with the arguments raised by the Objectors or BP. The district court was correct to conclude that the applicable requirements of Rule 23 are satisfied in this case. Additionally, whether or not BP's arguments regarding Exhibits 4B and 4C are correct as a matter of contract interpretation, neither class certification nor settlement approval are contrary to Article III in this case. Accordingly, the district court's order is affirmed.

I.

The factual background of this case is described in more extensive detail in the district court's opinion, In re Oil Spill by Oil Rig Deepwater Horizon in Gulf of Mexico, on April 20, 2010, 910 F.Supp.2d 891 (E.D.La.2012), and in a previous decision by a different panel of this court, In re Deepwater Horizon, 732 F.3d 326 (5th Cir.2013) ("Deepwater Horizon I " ). As explained in Deepwater Horizon I, BP leased the Deepwater Horizon drilling vessel to drill its Macondo prospect off the Louisiana coast. On April 20, 2010, an

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exploratory well associated with the drilling vessel blew out. After the initial explosion and during the ensuing fire, the vessel sank, causing millions of barrels of oil to spill into the Gulf of Mexico. Numerous lawsuits were filed against a variety of entities, and many of these lawsuits were transferred by the Judicial Panel on Multidistrict Litigation to the United States District Court for the Eastern District of Louisiana pursuant to 28 U.S.C. § 1407.

To satisfy its obligations under the Oil Pollution Act ("OPA" ), BP initially established its own claims process and later funded the claims process administered by the Gulf Coast Claims Facility (" GCCF" ) in order to begin paying out claims immediately rather than at the conclusion of litigation. BP then began negotiating a class settlement in February 2011 and jointly worked with the Plaintiffs' Steering Committee ("PSC" ) to transfer claims from the GCCF to a program supervised directly by the district court.

On April 16, 2012, the PSC filed an Amended Class Action Complaint and a proposed Settlement Agreement for the district court's preliminary approval. In accordance with the terms of the Settlement Agreement, the district court appointed Patrick Juneau as Claims Administrator of the settlement program. Although the Settlement Agreement had not yet received the district court's final approval under Rule 23 of the Federal Rules of Civil Procedure, the Claims Administrator began reviewing claims left unresolved by the GCCF and processing new claims in June 2012 as provided for in Section 4 of the parties' Settlement Agreement, entitled " Implementation of the Settlement."

On August 13, 2012, after a preliminary hearing and the distribution of notifications to the absent members of the proposed class, BP and the PSC moved for final approval of the Settlement Agreement and certification of the class defined at paragraph 306 of the Amended Class Action Complaint. The Allpar Objectors, Cobb Objectors, and BCA Objectors all filed objections with the district court opposing class certification and settlement approval based on various provisions of Rule 23. After conducting a fairness hearing on November 8, 2012, to consider the views of these Objectors and numerous others in accordance with Rule 23(e), the district court issued a final order certifying the class and approving the parties' Settlement Agreement on December 21, 2012. The district court emphasized in particular that the " uncapped compensation" available under the Settlement Agreement would " ensure that a benefit paid to one member of the class will in no way reduce or interfere with a benefit obtained by another member." 2 The Objectors appealed.

BP supported the Settlement Agreement during the proceedings leading up to and including the district court's order of December 21, 2012. BP now argues that two Policy Announcements issued by the Claims Administrator regarding the interpretation and application of the Settlement Agreement— both of which were adopted in orders by the district court— have subsequently brought the Settlement Agreement into violation of Rule 23, the Rules Enabling Act, and Article III of the U.S. Constitution.

One of these two Policy Announcements by the Claims Administrator addresses the interpretation and application of the Settlement Agreement's Exhibit 4C, entitled " Compensation Framework for Business Economic Loss Claims." The Policy Announcement was endorsed on March 5, 2013, by the district court in an order that

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became the subject of the appeal heard by Judges Dennis, Clement, and Southwick in Deepwater Horizon I. The Settlement Agreement's Exhibit 4C establishes a formula for measuring the payments made to class members as compensation for business-related economic loss. The text of Exhibit 4C, however, does not explicitly identify the accounting methodology that the Claims Administrator should apply when interpreting this payment formula. BP argued before the other panel that the Claims Administrator's interpretation of Exhibit 4C fails to reflect the parties' intent to apply the accrual method of accounting, rather than the cash method, when evaluating the financial records of all prospective claimants. The PSC disagreed and argued that the cash method of accounting could also be used by the Claims Administrator if a prospective claimant ordinarily used the cash method in its own business accounting and bookkeeping.

After considering the parties' arguments, a majority of the panel in Deepwater Horizon I remanded the case for further proceedings to reexamine the contractual interpretation questions...

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