Lake Eugenie Land & Dev., Inc. v. BP Exploration & Prod., Inc. (In re Horizon), Nos. 13–30315

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtEDITH BROWN CLEMENT
Citation732 F.3d 326
PartiesIn re DEEPWATER HORIZON. Lake Eugenie Land & Development, Incorporated; Bon Secour Fisheries, Incorporated; Fort Morgan Realty, Incorporated; LFBP 1, L.L.C., doing business as GW Fins; Panama City Beach Dolphin Tours & More, L.L.C.; Zekes Charter Fleet, L.L.C.; William Sellers; Kathleen Irwin; Ronald Lundy; Corliss Gallo; John Tesvich; Michael Guidry, on behalf of themselves and all others similarly situated; Henry Hutto; Brad Friloux; Jerry J. Kee, Plaintiffs–Appellees, v. BP Exploration & Production, Incorporated; BP America Production Company; BP Pipe Line Company, Defendants–Appellants, In re Deepwater Horizon. Lake Eugenie Land & Development, Incorporated; Bon Secour Fisheries, Incorporated; Fort Morgan Realty, Incorporated; LFBP 1, L.L.C., doing business as GW Fins; Panama City Beach Dolphin Tours & More, L.L.C.; Zekes Charter Fleet, L.L.C.; William Sellers; Kathleen Irwin; Ronald Lundy; Corliss Gallo; John Tesvich; Michael Guidry, on behalf of themselves and all others similarly situated; Henry Hutto; Brad Friloux; Jerry J. Kee, Plaintiffs–Appellees, v. BP Exploration & Production, Incorporated; BP America Production Company; BP, P.L.C., Defendants–Appellants, BP Exploration & Production, Incorporated; BP America Production Company Plaintiffs–Appellants, v. Lake Eugenie Land & Development, Incorporated; Bon Secour Fisheries, Incorporated; Fort Morgan Realty, Incorporated; LFBP 1, L.L.C., doing business as GW Fins; Panama City Beach Dolphin Tours & More, L.L.C.; Zekes Charter Fleet, L.L.C.; William Sellers; Kathleen Irwin; Ronald Lundy; Corliss Gallo; John Tesvich; Michael Guidry, on behalf of themselves and all others similarly situated; Henry Hutto; Brad Friloux; Jerry J. Kee, Intervenor Defendants–Appellees Deepwater Horizon Court Supervised Settlement Program; Patrick A. Juneau, in his official capacity as Claims Administrator of the Deepwater Horizon Court Supervised Settlement Program administering the Deepwater Horizon Economic and Property Damages Settlement Agreement, and in his official capacity as Trustee of the Deepwater, Defendants–Appellees.
Docket NumberNos. 13–30315,13–30329.
Decision Date02 October 2013

732 F.3d 326

In re DEEPWATER HORIZON.
Lake Eugenie Land & Development, Incorporated; Bon Secour Fisheries, Incorporated; Fort Morgan Realty, Incorporated; LFBP 1, L.L.C., doing business as GW Fins; Panama City Beach Dolphin Tours & More, L.L.C.; Zekes Charter Fleet, L.L.C.; William Sellers; Kathleen Irwin; Ronald Lundy; Corliss Gallo; John Tesvich; Michael Guidry, on behalf of themselves and all others similarly situated; Henry Hutto; Brad Friloux; Jerry J. Kee, Plaintiffs–Appellees,
v.
BP Exploration & Production, Incorporated; BP America Production Company; BP Pipe Line Company, Defendants–Appellants,
In re Deepwater Horizon.

Lake Eugenie Land & Development, Incorporated; Bon Secour Fisheries, Incorporated; Fort Morgan Realty, Incorporated; LFBP 1, L.L.C., doing business as GW Fins; Panama City Beach Dolphin Tours & More, L.L.C.; Zekes Charter Fleet, L.L.C.; William Sellers; Kathleen Irwin; Ronald Lundy; Corliss Gallo; John Tesvich; Michael Guidry, on behalf of themselves and all others similarly situated; Henry Hutto; Brad Friloux; Jerry J. Kee, Plaintiffs–Appellees,
v.
BP Exploration & Production, Incorporated; BP America Production Company; BP, P.L.C., Defendants–Appellants,
BP Exploration & Production, Incorporated; BP America Production Company Plaintiffs–Appellants,
v.
Lake Eugenie Land & Development, Incorporated; Bon Secour Fisheries, Incorporated; Fort Morgan Realty, Incorporated; LFBP 1, L.L.C., doing business as GW Fins; Panama City Beach Dolphin Tours & More, L.L.C.; Zekes Charter Fleet, L.L.C.; William Sellers; Kathleen Irwin; Ronald Lundy; Corliss Gallo; John Tesvich; Michael Guidry, on behalf of themselves and all others similarly situated; Henry Hutto; Brad Friloux; Jerry J. Kee, Intervenor Defendants–Appellees Deepwater Horizon Court Supervised Settlement Program; Patrick A. Juneau, in his official capacity as Claims Administrator of the Deepwater Horizon Court Supervised Settlement Program administering the Deepwater Horizon Economic and Property Damages Settlement Agreement, and in his official capacity as Trustee of the Deepwater, Defendants–Appellees.

Nos. 13–30315, 13–30329.

United States Court of Appeals,
Fifth Circuit.

Oct. 2, 2013.


[732 F.3d 328]


Stephen Jay Herman, Esq., Soren E. Gisleson, Esq., Herman Herman & Katz, L.L.C., New Orleans, LA, Samuel Issacharoff, New York University School of Law, New York, NY, James Parkerson Roy, Domengeaux, Wright, Roy & Edwards, Lafayette, LA, for Plaintiffs–Appellants.

Theodore B. Olson, Miguel Angel Estrada, Gibson, Dunn & Crutcher, L.L.P., Robert C. Mike Brock, Covington & Burling, L.L.P., Jeffrey Bossert Clark, Sr., Esq., Kirkland & Ellis, L.L.P., Thomas George Hungar, Scott Payne Martin, Gibson,

[732 F.3d 329]

Dunn & Crutcher, L.L.P., Andrew Tanner Karron, Arnold & Porter, L.L.P., Steven Andrew Myers, Kirkland & Ellis, L.L.P., Washington, DC, Andrew Baker Bloomer, Esq., Counsel, Richard Cartier Godfrey, Esq., James Andrew Langan, Esq., Kirkland & Ellis, L.L.P., Jeffrey Lennard, Dentons US, L.L.P., Chicago, IL, S. Gene Fendler, Esq., Don Keller Haycraft, Liskow & Lewis, P.L.C., Richard C. Stanley, Esq., Patrick Henry Fourroux, Gina Marie Palermo, Jennifer L. Thornton, Stanley, Reuter, Ross, Thornton & Alford, L.L.C., New Orleans, LA, Mark Holstein, BP Amoco, Houston, TX, for Defendants–Appellees.


Appeal from the United States District Court for the Eastern District of Louisiana.
Before DENNIS, CLEMENT, and SOUTHWICK, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge:

BP Exploration & Production, Inc. (“BP”) appeals the district court's decision upholding the Claims Administrator's interpretation of the settlement agreement between it and the class of parties injured in the Deepwater Horizon oil spill. BP also appeals the district court's dismissal of its action for breach of contract against the Administrator and denial of its motion for a preliminary injunction. We affirm the district court's dismissal of BP's suit against the Claims Administrator. We reverse the district court's denial of BP's motion for a preliminary injunction and the district court's order affirming the Administrator's interpretation of the Settlement and remand to the district court for further consideration.

FACTS AND PROCEEDINGS

BP leased the Deepwater Horizon drilling platform from Transocean to drill its Macondo prospect off the Louisiana coast. On April 20, 2010, the exploratory well Transocean was drilling blew out. After the initial explosion and during the ensuing fire, the platform sank, causing millions of barrels of oil to spill into the Gulf of Mexico. Eleven workers died; sixteen more were injured. Litigation followed.

The Judicial Panel on Multidistrict Litigation centralized the non-securities federal lawsuits in the District Court for the Eastern District of Louisiana. BP, as lessor of the rig, was named as a defendant in most of these suits.

BP waived its statutory limit of liability and committed to pay all legitimate claims, even those in excess of the $75 million liability cap under the Oil Pollution Act, 33 U.S.C. § 2704(a)(3). BP initially established its own claims process and later funded the claims process administered by the Gulf Coast Claims Facility (“GCCF”) to begin paying out claims immediately instead of at the conclusion of litigation. Over approximately 18 months, the company paid out more than $6.3 billion to individuals and businesses with spill-related losses.

BP began negotiating a class settlement in February 2011. In March 2012, the district court granted the parties' request to implement a process to transfer claims from the GCCF to a court-supervised program that the parties agreed to in principle. The court appointed Patrick Juneau as Claims Administrator of this program. The parties filed notice of their proposed settlement (the “Settlement”) in April 2012, to which the district court gave preliminary approval in May and directed to begin processing claims in June.

Businesses' claims for economic loss are one type of claim covered by the Settlement. Under the class definition, business economic loss (“BEL”) claimants must have conducted commercial activities in

[732 F.3d 330]

the Gulf Coast region during the relevant period.1 In order to qualify as a class member, BEL claimants also must have suffered loss of income, earnings, or profits as a result of the Deepwater Horizon accident. This category of economic damage to a business is fully described in the attached Exhibit 4, which includes requirements for documenting losses (Exhibit 4A) and establishing causation (Exhibit 4B), as well as the compensation scheme (Exhibit 4C).

After a BEL claimant provides the documentation needed to submit a claim and evidence required that the oil spill caused its losses, the claimant is entitled to compensation for the difference between its actual profit “during a defined post-spill period in 2010[and] the profit that the claimant might have expected to earn in the comparable post-spill period of 2010.” This amount includes “the reduction in Variable Profit,” defined as “any reduction in profit between the 2010 Compensation Period selected by the claimant and the comparable months of the Benchmark Period.” The post-spill Compensation Period “is selected by the Claimant to include three or more consecutive months between May and December 2010.” It is compared to a pre-spill baseline, the “Benchmark Period,” of the claimant's choosing: either 2009, the average of 2008–2009, or the average of 2007–2009. Variable Profit “is calculated for both the Benchmark Period and the Compensation Period as follows:

1. Sum the monthly revenue over the period.

2. Subtract the corresponding variable expenses from revenue over the same time period.”

As early as September 28, 2012, BP raised concerns about the varied accounting methods claimants used in the ordinary course of their record-keeping and the ways in which erroneously-stated expenses could cause erroneous variable profit calculations. The district court held the final fairness hearing on November 8 and granted final approval on December 21, 2012.

On December 5, 2012, BP requested that the Administrator convene a Claims Administration Panel to consider “the issue of the assignment of revenue to the proper months for purposes of the BEL causation framework and the proper matching of revenue and corresponding expenses for purposes of the BEL compensation framework.” 2 BP asked to meet with the Administrator, Class Counsel, and the accounting vendors to discuss this issue, followed by a formal Panel, if necessary.

On December 16, Class Counsel requested a Policy Announcement addressing the issue. After reviewing both parties' written submissions, the Administrator issued a Policy Announcement on January 15, 2013. He stated that, for both calculation of Variable Profit and purposes of causation, he would “typically consider both revenues and expenses in the periods in which those revenues and expenses were recorded at the time,” and would “not typically re-allocate such revenues or expenses to

[732 F.3d 331]

different periods,” but would “however, reserve the right to adjust the financial statements in certain circumstances, including but not limited to, inconsistent basis of accounting between benchmark and compensation periods, errors in previously recorded transactions and flawed or inconsistent treatment of accounting estimates.” The Administrator later explained that he did not believe he was authorized “to carve out specific types of claims for additional analysis as BP had proposed.”

BP was not satisfied with the Policy Announcement. BP alleged that the Administrator's misinterpretation of the Settlement resulted in awards of hundreds of millions of dollars to BEL claimants with inflated losses or no losses at all. The parties convened a Claims Administration Panel. When the panel failed to reach a unanimous agreement, they presented the matter to the district court for resolution. Before the district...

To continue reading

Request your trial
62 practice notes
  • Lake Eugenie Land Dev., Inc. v. BP Exploration & Prod., Inc. (In re Deepwater Horizon), No. 14–30823.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • July 16, 2015
    ...cases, this court heard an appeal arising from a dispute about an interpretation of the Settlement Agreement. See In re Deepwater Horizon, 732 F.3d 326, 329 (5th Cir.2013) (“Deepwater Horizon I ”). The appeal involved an accounting methodology that potentially affected “thousands of claiman......
  • Earl v. The Boeing Co., Civil Action 4:19-cv-507
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • September 3, 2021
    ...unlike here, concerned a settlement class (see Dkt. #431 at p. 24:20-25:2). See also In re Deepwater Horizon (Deepwater Horizon I), 732 F.3d 326, 344 n.12 (5th Cir. 2013) (opinion of Clement, J.). This distinction is critical because “a pre-trial litigation class certification . . . presupp......
  • In re Economy, No. 13–30095.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • January 10, 2014
    ...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 Ma......
  • Highsteppin' Prods., LLC v. Porter (In re Porter), Bankruptcy No. 10–13553.
    • United States
    • United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Eastern District of Louisiana
    • June 24, 2014
    ...is assumed that the transition between counsel was less than ideal. 83.Frazin, 732 F.3d at 325 (Owen, J., concurring). 84.Id. 85.Frazin, 732 F.3d at 326 (Reavley, J., concurring). 86. Because distributions to claimants are based both on their priority and their pro rata share with a total c......
  • Request a trial to view additional results
62 cases
  • Lake Eugenie Land Dev., Inc. v. BP Exploration & Prod., Inc. (In re Deepwater Horizon), No. 14–30823.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • July 16, 2015
    ...cases, this court heard an appeal arising from a dispute about an interpretation of the Settlement Agreement. See In re Deepwater Horizon, 732 F.3d 326, 329 (5th Cir.2013) (“Deepwater Horizon I ”). The appeal involved an accounting methodology that potentially affected “thousands of claiman......
  • Earl v. The Boeing Co., Civil Action 4:19-cv-507
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • September 3, 2021
    ...unlike here, concerned a settlement class (see Dkt. #431 at p. 24:20-25:2). See also In re Deepwater Horizon (Deepwater Horizon I), 732 F.3d 326, 344 n.12 (5th Cir. 2013) (opinion of Clement, J.). This distinction is critical because “a pre-trial litigation class certification . . . presupp......
  • In re Economy, No. 13–30095.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • January 10, 2014
    ...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 Ma......
  • Highsteppin' Prods., LLC v. Porter (In re Porter), Bankruptcy No. 10–13553.
    • United States
    • United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Eastern District of Louisiana
    • June 24, 2014
    ...is assumed that the transition between counsel was less than ideal. 83.Frazin, 732 F.3d at 325 (Owen, J., concurring). 84.Id. 85.Frazin, 732 F.3d at 326 (Reavley, J., concurring). 86. Because distributions to claimants are based both on their priority and their pro rata share with a total c......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT