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BP Exploration & Production Inc. v. Claimant Id. 100261922

United States Court of Appeals, Fifth Circuit

March 28, 2019

BP EXPLORATION & PRODUCTION, INCORPORATED; BP AMERICA PRODUCTION COMPANY; BP, P.L.C., Requesting Parties - Appellants,
v.
CLAIMANT ID 100261922, Objecting Party - Appellee.

          Appeal from the United States District Court for the Eastern District of Louisiana

          Before HIGGINBOTHAM, ELROD, and DUNCAN, Circuit Judges.

          JENNIFER WALKER ELROD, Circuit Judge

         In this Deepwater Horizon appeal, BP challenges the $2 million award Claimant received pursuant to the Economic and Property Damages Settlement (Settlement Agreement). Because the district court properly denied discretionary review, we AFFIRM.

         I.

         Claimant, an Alabama-based manufacturer of commercial signs, submitted a claim to the Settlement Program in November 2013. While processing the claim, the Claims Administrator requested additional information from Claimant on several occasions, including information pertaining to a $900, 000 "Research & Development" expense that Claimant classified as a "variable" cost on its profit and loss statements. Claimant complied, explaining the purpose of the R&D effort and listing the types of costs included, and provided a month-by-month breakout demonstrating that the costs had been incurred periodically between February 2010 and June 2011.

         During this exchange, the Claims Administrator rejected Claimant's claim twice, and Claimant requested re-review each time. In its explanation of the second denial, the Claims Administrator noted that it had adjusted Claimant's accounting data to record the R&D costs in the months in which they were incurred rather than as a lump sum in June 2011. Finally, after a third review of the claim, the Claims Administrator determined that Claimant was entitled to approximately $2 million under the Settlement Agreement. This time, the Claims Administrator's analysis did not include the adjustments to the R&D expense.

         BP appealed the award to an Appeal Panel on three grounds: (1) Claimant's attestation on its claim form that the oil spill caused its losses was implausible; (2) the Claims Administrator improperly characterized the R&D expense as "variable" rather than "fixed"; and (3) the Claims Administrator erroneously omitted its adjustments that "matched" the R&D costs to the months in which they were incurred.[1] The Appeal Panel declined to consider the attestation issue but noted that it was preserved for further review. On the fixed vs. variable costs issue, the Appeal Panel affirmed the Claims Administrator's classification of the R&D expense as a variable cost. Finally, turning to the matching issue, the Appeal Panel found the issue mooted because, even if it was error to omit the R&D expense adjustments, the correct value would be closer to the $2 million award amount than BP's final proposal of $0. Thus, the Appeal Panel denied the appeal.

         BP next sought discretionary review in the district court, raising the same issues it raised before the Appeal Panel. The district court denied review in June 2018, and BP now appeals.

         II.

         This court reviews the district court's denial of discretionary review for an abuse of discretion. Holmes Motors, Inc. v. BP Expl. & Prod., Inc., 829 F.3d 313, 315 (5th Cir. 2016). The district court abuses its discretion if it declines to review a decision that "actually contradicted or misapplied the Settlement Agreement, or had the clear potential to contradict or misapply the Settlement Agreement." Id. (quoting In re Deepwater Horizon, 641 Fed.Appx. 405, 409-10 (5th Cir. 2016)). It is also an abuse of discretion to deny a request for review that "raises a recurring issue on which the Appeal Panels are split if 'the resolution of the question will substantially impact the administration of the Agreement.'" BP Expl. & Prod., Inc. v. Claimant ID 100094497, 910 F.3d 797, 800 (5th Cir. 2018) (Texas Gulf Seafood) (quoting Claimant ID 100212278 v. BP Expl. & Prod., Inc., 848 F.3d 407, 410 (5th Cir. 2017)). In contrast, the district court does not abuse its discretion if it denies a request for review that "involve[s] no pressing question of how the Settlement Agreement should be interpreted and implemented, but simply raise[s] the correctness of a discretionary administrative decision in the facts of a single claimant's case." Id. (alterations in original) (quoting Claimant ID 100212278, 848 F.3d at 410).

         III.

         BP contends that the district court abused its discretion because the Claims Administrator: (1) failed to investigate Claimant's implausible attestation that the oil spill caused its losses; (2) improperly classified Claimant's R&D expense as variable rather than fixed; and (3) ...


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