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BP Exploration & Production Inc. v. Claimant ID 100166533

United States Court of Appeals, Fifth Circuit

April 8, 2019

BP EXPLORATION & PRODUCTION, INCORPORATED; BP AMERICA PRODUCTION COMPANY; BP, P.L.C., Requesting Parties - Appellants,
v.
CLAIMANT ID 100166533, Objecting Party - Appellee.

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

          Before STEWART, Chief Judge, and DAVIS and ELROD, Circuit Judges.

          JENNIFER WALKER ELROD, CIRCUIT JUDGE

         This Deepwater Horizon case involves the fixed vs. variable cost issue that has arisen frequently in appeals of claims submitted pursuant to BP's Economic and Property Damages Settlement Agreement (Settlement Agreement). Because the reviews conducted by the Claims Administrator and Appeal Panel were consistent with our recent decision in Texas Gulf Seafood, and because BP's arguments regarding the substantive accuracy of the "fixed" classification only raise the correctness of a fact-dependent decision in a single claimant's case, we AFFIRM the district court's judgment.

         I.

         The claimant here, Ordes Services LLC (Ordes), is an electrical contractor that provides installation, maintenance, and repair services in southeast Louisiana. Ordes submitted a claim pursuant to the Settlement Agreement in March 2013. Relevant here, in the profit-and-loss statements Ordes submitted with its claim, Ordes recorded an expense labeled "Management Fee." The Claims Administrator requested additional information about this expense during the processing of Ordes's claim.

         In October 2017, the Claims Administrator determined that Ordes was entitled to $2.1 million under the Settlement Agreement. In calculating the award, the Claims Administrator classified Ordes's Management Fee as a "fixed" cost rather than a "variable" cost under the Settlement Agreement.[1] BP appealed to a three-member Appeal Panel, challenging the Claims Administrator's treatment of the Management Fee. The Appeal Panel concluded that the Claims Administrator had properly categorized the expense as fixed and affirmed Ordes's award. The district court denied BP's request for discretionary review.

         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 the decision it declined to review "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 (Texas Gulf Seafood), 910 F.3d 797, 800 (5th Cir. 2018) (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.

         On appeal, BP contends that the district court's denial of discretionary review was an abuse of discretion for two reasons: (1) the district court failed to resolve an Appeal Panel split regarding the proper approach to classifying fixed vs. variable expenses; and (2) classifying the Management Fee as "fixed" was substantively incorrect.

         A.

         We recently resolved the Appeal Panel split that BP complains of in our decision in Texas Gulf Seafood. There, we set out the proper approach for

         Claims Administrators and Appeal Panels in classifying fixed vs. variable ...


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