Lake Eugenie Land & Dev., Inc. v. BP Exploration & Prod., Inc. (In re Deepwater Horizon)

• Decision Date: 08 May 2015
• Docket Number: 13–31299,13–31302.,Nos. 13–31296,s. 13–31296
• Citation: 785 F.3d 1003
• Parties: In re DEEPWATER HORIZON. Lake Eugenie Land & Development, Incorporated ; et al., Plaintiffs Plaintiffs' Steering Committee, Appellee v. BP Exploration & Production, Incorporated; BP America Production Company; BP, P.L.C., Defendants–Appellants v. Sealed Appellees, Claimants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

785 F.3d 1003

In re DEEPWATER HORIZON.

Lake Eugenie Land & Development, Incorporated ;

et al., Plaintiffs

Plaintiffs' Steering Committee, Appellee

v.BP Exploration & Production, Incorporated;

BP America Production Company;

BP, P.L.C., Defendants–Appellants

v.Sealed Appellees, Claimants–Appellees.

Nos. 13–31296

13–31299

13–31302.

United States Court of Appeals, Fifth Circuit.

May 8, 2015.

Stephen Jay Herman, Esq., Soren E. Gisleson, Esq., Herman Herman & Katz, L.L.C., New Orleans, LA, James Parkerson Roy, Domengeaux, Wright, Roy & Edwards, Lafayette, LA, Elizabeth Joan Cabraser, Lieff, Cabraser, Heimann & Bernstein, L.L.P., San Francisco, CA, Samuel Issacharoff (argued), New York University, New York, N.Y., for Appellee.

Theodore B. Olson, Miguel Angel Estrada, Thomas George Hungar (argued), Scott Payne Martin, Gibson, Dunn & Crutcher, L.L.P., Jeffrey Bossert Clark, Sr., Esq., Kirkland & Ellis, L.L.P., Kevin Michael Downey, Williams & Connolly, L.L.P., Washington, DC, George Howard Brown, Esq., Gibson, Dunn & Crutcher, L.L.P., Palo Alto, CA, Richard Cartier Godfrey, Esq., James Andrew Langan, Esq., Kirkland & Ellis, L.L.P., Chicago, IL, Don Keller Haycraft, Liskow & Lewis, P.L.C., New Orleans, LA, for Defendant–Appellant.

Zachary Logan Wool, Barrios, Kingsdorf & Casteix, L.L.P., New Orleans, LA, for Amici Curiae.

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

Before BENAVIDES, PRADO, and GRAVES, Circuit Judges.

Opinion

EDWARD C. PRADO, Circuit Judge:

In these consolidated cases, BP Exploration & Production, Inc., BP America Production Company, and BP p.l.c. (collectively “BP”) appeals three Deepwater Horizon -related settlement awards it paid to nonprofits through its Court–Supervised Settlement Program (CSSP). The district court denied discretionary review of these three awards even though BP argued that the Claims Administrator improperly interpreted the Settlement Agreement (the Agreement). The awards were based on the Claims Administrator's determination that nonprofits may count donations and grants as “revenue” under the terms of the Agreement (the Nonprofit–Revenue Interpretation). BP argues that 1) the Nonprofit–Revenue Interpretation violates the terms of the Agreement, 2) the Nonprofit–Revenue Interpretation puts the class settlement in violation of Rule 23 and Article III, and 3) even if the Nonprofit–Revenue Interpretation is upheld, each of these three awards is improper. We affirm the district court.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case arises from the class action settlement of civil claims arising from the Deepwater Horizon oil spill. The Settlement Agreement negotiated by the parties and approved by the district court established the CSSP, through which class members can submit claims.

A. The Claims—Administration Process

The CSSP is managed by the Claims Administrator. After a claim determination has been made, BP or the claimant may appeal to an Appeal Panel.¹ A party may then appeal the Appeal Panel's determination to the district court of Judge Barbier in the Eastern District of Louisiana, which has discretion to hear such appeals. Pursuant to a district court order of May 20, 2013, denials of discretionary review are not docketed.² Rather, the district court gives notice to the parties and posts decisions on the CSSP website.

The Settlement Agreement expressly includes nonprofits in the definition of entities who may recover pursuant to the settlement. The awards at issue were granted under the Business Economic Loss (BEL) framework. To recover under the BEL framework, a claimant must fall within one of twelve “Damage Categories” listed in § 1.3 of the Agreement. The Sealed Claimants recovered under the Economic Damage Category, which is summarized as encompassing “[l]oss of income, earnings or profits suffered by Natural Persons or Entities as a result of the DEEPWATER HORIZON INCIDENT.” To recover in this category, a claimant must meet one of the “causation requirements” in Exhibit 4B of the Agreement. Claimants can establish causation by showing various “revenue patterns.” If a claimant can show one of these revenue patterns, its compensation award is calculated under Exhibit 4C's “compensation framework”; compensation is based on a comparison of its pre- and post-spill revenue.

B. The Claims Administrator's “Revenue” Interpretation

This appeal stems from the Claims Administrator's interpretation of “revenue” as it is used in Exhibits 4B and 4C of the Agreement. On November 30, 2012, the Claims Administrator determined that for nonprofit entities “grant monies or contributions shall typically be treated as revenue for the purposes of the ... settlement agreement.” BP challenged this interpretation in the district court, and the court affirmed the Claims Administrator on December 12, 2012, via an email to the parties. BP never directly appealed this decision. After the Nonprofit–Revenue Interpretation went into effect, the Sealed Claimants, each a nonprofit organization, counted donations and grants as revenue in their calculations, and received awards through the CSSP.

• The Claimant in No. 13–31296 (the Cy Pres Claimant) counted as revenue $331,395 in cy pres funds from a class action settlement.

• The Claimant in No. 13–31299 (the Grant Claimant) counted as revenue its receipt of a large, one-time “Trust Grant.”

• The Claimant in No. 13–31302 (the Legal–Services Claimant) included $157,500 in revenue that was based on “legal services performed by its legal fellows.”

BP appealed the awards all the way to the district court, which denied its motion for discretionary review. BP now appeals these denials of discretionary review.³

II. LEGAL BACKGROUND

This is the fifth appeal we have heard arising out of this class action settlement, and many of the issues presented relate to our earlier Deepwater Horizon decisions. Thus, we begin with a brief overview of the relevant portions of those cases.

A. Deepwater Horizon I

In In re Deepwater Horizon (Deepwater Horizon I ), 732 F.3d 326 (5th Cir.2013), BP appealed a district court order affirming the Claims Administrator's interpretation of the terms “revenue” and “expenses” in the Agreement. Id. at 331. This case centered on a dispute about accounting standards. In a Policy Announcement, the Claims Administrator stated that these terms encompassed only cash payments and disbursements, consistent with the cash-accounting method. Id. at 334. BP disagreed and argued that the Agreement was to be governed instead by the accrual-accounting method, which requires matching of revenues and expenditures, and therefore the order allowed claimants to recover for inflated or nonexistent losses. Id. at 331–34. We remanded to the district court for further proceedings on this contract-interpretation question. Id. at 339.

B. Deepwater Horizon II

BP next challenged the class certification as violating Federal Rule of Civil Procedure 23 and Article III of the Constitution. In re Deepwater Horizon (Deepwater Horizon II ), 739 F.3d 790, 795 (5th Cir.2014). At issue in Deepwater Horizon II was the district court's affirmance of two Claims Administrator Policy Announcements that interpreted Exhibits 4B and 4C of the Agreement. Id. at 795–96. The Claims Administrator determined that Exhibit 4B, which sets forth various causation requirements for claimants, did not require any further proof of causation once a claimant had met one of the 4B criteria. Id. at 797. The Claims Administrator also determined that Exhibit 4C, which provides the formula to calculate payments for BEL claimants, allowed the Claims Administrator to use the cash or accrual method of accounting in the calculation. Id.

BP argued that these interpretations broadened the class to include members whose injuries were not caused by the oil spill, in violation of Article III and Rule 23. Id. at 798–99. We noted that the Fifth Circuit had not addressed the standard for Article III standing at the class-certification stage and that other circuits are split between two tests. Id. at 800–02. We held that the Agreement passed both tests and therefore declined to decide which approach was correct. Id. at 813. We also rejected BP's numerous arguments that the Policy Announcements included class members with no injury and therefore violated Rule 23. Id. at 812–21.

C. Deepwater Horizon III

The third appeal arose from our remand in Deepwater Horizon I. In re Deepwater Horizon (Deepwater Horizon III ), 744 F.3d 370, 373–74 (5th Cir.2014), cert. denied ––– U.S. ––––, 135 S.Ct. 754, 190 L.Ed.2d 641 (2014). On remand, “the district court held that the Settlement Agreement requires matching of revenues and expenses,” as BP had originally argued. Id. However, the district court rejected BP's newly briefed argument—that the Claims Administrator's refusal to require specific evidence of causation violated Article III and Rule 23. Id. at 374. Whereas Deepwater Horizon II addressed the certification of the class, Deepwater Horizon III “decide [d] ... whether the implementation of the Settlement Agreement is defective.” Id. at 375. In spite of the decision in Deepwater Horizon II, BP again argued that any interpretation or implementation of the Agreement that does not require proof of causation “reanimates” the Article III and Rule 23 issues decided in that case. Id. at 376. BP sought reversal of the district court's ruling and an injunction preventing payment of claims to entities without evidence of causation. Id. at 373. We affirmed the district court's order, denied the injunction, and held that we were bound by our Deepwater Horizon II rulings on Rule 23 and Article III. See id. at 375–78.

III. JURISDICTION

We have jurisdiction over this appeal under the collateral-order doctrine.⁴ The three denials of discretionary review at issue “ ‘(1) conclusively determine the disputed question, (2) resolve an important issue completely separate from the merits of the action, and (3) [are] effectively unreviewable on...