Case: 13-30315 Document: 00512549612 Page: 1 Date Filed: 03/03/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
___________________ United States Court of Appeals
Fifth Circuit
FILED
No. 13-30315 March 3, 2014
___________________
Lyle W. Cayce
IN RE: DEEPWATER HORIZON Clerk
--------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------
Consolidated with: 13-30329
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
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No. 13-30315
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
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--------------------------------------------------------------------------------------------------
Consolidated with 13-31220
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
-------------------------------------------------------------------------------------------------
Consolidated with 13-31316
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
3
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No. 13-30315
v.
BP EXPLORATION & PRODUCTION, INCORPORATED; BP AMERICA
PRODUCTION COMPANY; BP, P.L.C.,
Defendants - Appellants
_______________________
Appeals from the United States District Court
for the Eastern District of Louisiana
__________________
Before DENNIS, CLEMENT and SOUTHWICK, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
This appeal concerns issues arising under a Settlement Agreement
approved by the district court in December 2012. Relevant to us today is that
the settlement provided a mechanism for presenting and processing claims for
business losses caused by the April 2010 Deepwater Horizon disaster in the
Gulf of Mexico. The district court made two rulings as directed by our October
2013 remand. One concerned an accounting question, which was resolved in a
sufficiently satisfactory manner as not to be appealed by any party. The other
ruling was that the Settlement Agreement did not require those submitting
claims for certain business losses to provide evidence of causation. BP
Exploration and Production, Inc. appeals that ruling and also argues that an
injunction is required to stop payments on such claims. We AFFIRM.
FACTUAL AND PROCEDURAL BACKGROUND
This appeal was originally briefed in May and June of 2013 and orally
argued in July. BP’s argument at that time concerned contract interpretation.
Its appeal was from an order of the district court entered on March 5, 2013.
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That order affirmed a Policy Statement issued by the claims administrator on
January 15, 2013. BP asserted that the district court and claims
administrator’s interpretations of Exhibit 4C of the Settlement Agreement
were erroneous because they did not require matching of revenues and
expenses in claims processing. On October 2, 2013, this panel, writing three
separate opinions, remanded with guidance to the district court for
reconsidering the necessity of matching revenues and expenses when
processing Business and Economic Loss (“BEL”) claims. See In re Deepwater
Horizon, 732 F.3d 326, 332-39 (5th Cir. 2013) (“Deepwater Horizon I”).
Additionally, in a part of the opinion for the court that no other panel
member joined, Judge Clement wrote on a separate but related issue. She
determined that if the Settlement Agreement’s causation evidentiary
framework was interpreted not to require proof of a nexus between the
Deepwater Horizon disaster and a claimant’s damages, the Settlement
Agreement would violate Article III, Federal Rule of Civil Procedure 23, and
the Rules Enabling Act. Id. at 342-43. Because that issue had not been briefed
or argued, Judge Southwick wrote that it was inappropriate to resolve it. Id.
at 346 (Southwick, J. concurring). Nonetheless, he called the analysis “logical”
and joined in requiring the district court to consider, on remand, the relevance
of causation to the extent the parties argued the point. Id.
On remand, the district court, in three different orders spread over
several weeks, indicated that it did not believe this court had required an
evaluation of the causation issue. On December 2, 2013, we clarified that
Judges Clement and Southwick had agreed in their separate October opinions
that, if raised, the district court must consider the Article III and other
causation arguments on remand. We acknowledged that our issuance of
multiple “opinions may have created interpretive difficulties on the remand,
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but the district court erred by not considering the arguments on causation.”
Yet again today, we each express ourselves individually. Two of us do at least
say in tandem, clearly we trust, “affirm.”
On December 24, the district court held that the Settlement Agreement
requires matching of revenues and expenses. The court directed the claims
administrator to implement that interpretation. As of that ruling, the entirety
of BP’s initial argument, namely, that the initial interpretations of Exhibit 4C
were incorrect, was successful. Also at that point, though, the district court
rejected BP’s arguments with respect to the new issue of whether Article III,
Rule 23, and the Rules Enabling Act permitted the parties to agree to a
settlement that dealt with causation in this manner. To answer that second
question, the district court analyzed the terms of the Settlement Agreement
and an October 10, 2012, Policy Statement by the claims administrator to
which BP had not objected. The district court concluded that the language of
the Settlement Agreement did not require extrinsic inquiry into causation and
that the Settlement Agreement had not violated Article III, Rule 23, or the
Rules Enabling Act by eschewing the need for evidence of causation.
BP renewed its emergency motion for an injunction with this court on
December 30, challenging only the district court’s rejection of its causation
arguments. No party appealed the district court’s instruction to the claims
administrator to implement the district court’s interpretation of the
Settlement Agreement with respect to matching.
While this panel has been addressing questions arising out of the claims
administrator’s interpretation of the Settlement Agreement, another panel
considered the chronologically earlier question of the validity of the
certification of the class by the district court on December 21, 2012, and the
approval of the Settlement Agreement. In a January 10, 2014, decision, what
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we will refer to as the “certification panel” determined the class certification
and settlement approval did not contravene Article III, Rule 23, or the Rules
Enabling Act. See In re Deepwater Horizon, 739 F.3d 790, 795 (5th Cir. 2014)
(Deepwater Horizon II).
The certification panel declined to analyze issues arising from the
interpretation and implementation of the settlement after its approval by the
district court, but the panel held that all Article III, Rule 23, and Rules
Enabling Act concerns were resolved at the class certification and settlement
approval stage. Id. at 804. We directed letter briefing on the impact of that
decision on the remaining issues before this panel for resolution. We now
consider the issues that we conclude remain before us.
DISCUSSION
Contract interpretation is a question of law we review de novo.
Waterfowl L.L.C. v. United States, 473 F.3d 135, 141 (5th Cir. 2006). BP argues
that the district court erred in concluding that the Settlement Agreement’s
causation framework did not violate Article III, Federal Rule of Civil Procedure
23, and the Rules Enabling Act. Only part of this issue was resolved on
January 10 by the certification panel when it concluded that the certification
of a class and the approval of the Settlement Agreement were proper. What
this panel now must decide is whether the implementation of the Settlement
Agreement is defective.
BP contends that Section 1.3.1.2 of the class definition and footnote 1 of
Exhibit 4B establish a requirement that claimants prove with evidence that
they are proper class members. Section 1.3.1.2 states: “Economic Damage
Category. Loss of income, earnings or profits suffered by Natural Persons or
Entities as a result of the DEEPWATER HORIZON INCIDENT.” Footnote
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1 of Exhibit 4B states: “This Causation Requirements for Business Economic
Loss Claims does not apply to . . . Entities, Individuals, or Claims not included
within the Economic Class definition.” We will discuss the referenced footnote
later.
The class definition was relied upon by the certification panel when it
concluded that the Settlement Agreement complied with Article III:
Under the plain terms of the Class Definition, a “person or entity”
is included “in the Economic Class only if their Claims meet the
descriptions of one or more of the Damage Categories described” in
Section 1.3.1 of the Class Definition. Of these “Damage
Categories,” the only category that BP has identified as giving rise
to Article III difficulties is the “Economic Damage Category” under
Section 1.3.1.2. This section of the Settlement Agreement,
however, explicitly limits claims to those based on “[l]oss of income,
earnings or profits suffered by Natural Persons or Entities as a
result of the DEEPWATER HORIZON INCIDENT,” subject to
exclusions for participants in certain industries. As contemplated
by the Class Definition, therefore, the class contains only persons
and entities that possess Article III standing.
Deepwater Horizon II, 739 F.3d at 803 (footnotes omitted). The panel also
determined that the class definition and the amended complaint satisfied the
requirements of Rule 23 and the Rules Enabling Act. Id. at 804 & n.53.
The Settlement Agreement was approved in the same December 2012
district court order that certified the class. The certification panel’s opinion
notes that the terms of this settlement substitute for at least some of the
contested factual development that occurs in cases that do not have
simultaneous certification and settlement. Id. at 806-08. Despite the
settlement, the individual claims still had to be processed. Thus, we now
examine the methodology for presenting and processing those claims, as
written in the Settlement Agreement and as interpreted by the claims
administrator in the October 10, 2012, Policy Statement.
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Causation for BEL claims is primarily addressed in Exhibit 4B to the
Settlement Agreement. It provides for the use of proof of loss as a substitute
for proof of causation. Exhibit 4B exempts claimants located within certain
geographic regions and in certain industries from presenting any evidence of
causation. That exemption appears in a section under the heading “Business
Claimants for Which There is No Causation Requirement.” It continues: “If
you are a business in [geographic] Zone A, you are not required to provide any
evidence of causation unless you fall into one of the exceptions agreed to by the
parties, and listed in footnote (1).” Claimants not within the exempt criteria
must only meet one of a set of quantitative tests based on their revenue
patterns during the pre- and post- Deepwater Horizon disaster periods.
BP seeks to override the explicit language disclaiming the need for
evidence of causation by focusing on this footnote that appears in Exhibit 4B:
“This Causation Requirements for Business Economic Loss Claims does not
apply to . . . Entities, Individuals, or Claims not included within the Economic
Class definition.” Wielding this footnote, BP seeks to dismantle the complex
framework of exemptions, presumptions, and formulas that allow business
claimants to submit evidence of their income and expenses before and after the
BP-caused disaster. BP, in essence, is arguing that only if a claimant can prove
its injuries are traceable to BP’s conduct will Exhibit 4B’s forswearing of the
need for proof of traceability to BP’s conduct apply. There likely is a more
nuanced manner in which BP would characterize its argument, but this fairly
captures its essence. We reject the argument, of course.
We acknowledge, though, that BP is pointing out a possible inconsistency
between what the certification panel says it found to satisfy Article III –
namely, a requirement that class members be able to trace their claims to the
defendant’s conduct – and the way the Settlement Agreement is written and
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has been implemented. In effect, BP argues that Exhibit 4B cannot be
interpreted to exclude a requirement of causation because the certification
panel held that requirement to be a feature of the class definition. BP argues,
then, that even if the class were properly certified under Article III based upon
this definition, a settlement that abandons such a requirement, or at least a
settlement later interpreted and implemented as not including such a
requirement, was simultaneously approved. This, according to BP, reanimates
Article III, Rule 23, and Rules Enabling Act issues put to rest by the
certification panel. We disagree with the premise of abandonment and
therefore we never reach the applicability of these fundamental issues to the
questions that remain before us. 1 Neither the Settlement Agreement’s terms
nor its implementation ignore causation. Instead, the parties explicitly
contracted that traceability between the defendant’s conduct and a claimant’s
injury would be satisfied at the proof stage, that is, in the submission of a claim,
by a certification on the document that the claimant was injured by the
Deepwater Horizon disaster. We explain.
The parties agreed to a form that BEL claimants would submit to make
a claim. The introductory section of the form states: “The Business
Economic Loss Claim is for businesses . . . that assert economic loss due to
the spill.” (Italics added). The end of the form requires the claimant “certify
and declare under penalty of perjury” that all of the information in the claim
form is “true and accurate to the best of my knowledge.” The claimant further
attests “I understand that false statements or claims made in connection with
this Claim Form may result in fines, imprisonment, and/or any other remedy
1 We observe that the difficulties that BP points out as to causation are outgrowths of
the definition of the class and the terms of the Settlement Agreement that were sustained by
the Certification panel. We do not perceive any basis for saying Article III, Rule 23, and the
Rules Enabling Act are violated at the claims processing stage that has not already been
addressed by the prior panel.
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available by law . . . and that suspicious claims will be forwarded . . . for
possible investigation and prosecution.” Every claim BP argues suffers from
some causal-nexus infirmity should have with it an attestation from the
claimant or an attorney that the economic loss was caused by the spill.
In light of our reading of the Settlement Agreement, claim form, letter
briefing, and the voluminous record in this appeal, we conclude the Settlement
Agreement does not require a claimant to submit evidence that the claim arose
as a result of the oil spill. Each claimant does attest, though, under penalty of
perjury, that the claim in fact was due to the Deepwater Horizon disaster. The
attestation, of course, applies to all assertions on the claims form, including
the financial figures and other details. Suspicious forms would be subject to
investigation. These requirements are not as protective of BP’s present
concerns as might have been achievable, but they are the protections that were
accepted by the parties and approved by the district court. It was a contractual
concession by BP to limit the issue of factual causation in the processing of
claims. Causation, or in Rule 23 terms, traceability, was not abandoned but it
was certainly subordinated.
There is nothing fundamentally unreasonable about what BP accepted
but now wishes it had not. 2 One event during negotiations in the fall of 2012
suggests reasons for just requiring a certification. The claims administrator,
in working through how the proposed claims processing would apply in specific
situations, submitted a hypothetical to BP and others. It posited three
accountants being partners in a small firm located in a relevant geographic
region. One of the three partners takes medical leave in the period
immediately following the disaster, thus reducing profits in that period
2 Though the approach may have been reasonable, that fact does not make it legally
valid. As we have already held, though, the Certification panel precedentially resolved
validity.
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because that partner is not performing services for the firm. At least some of
the firm’s loss, then, would have resulted from the absence of the partner
during his medical leave. BP responded that such a claim should be paid. We
raise this not for the purpose of analyzing an issue we conclude is not relevant
to our decision, namely, whether BP is estopped from its current arguments.
Instead, we mention it in order to identify the practical problem mass
processing of claims such as these presents, a problem that supports the logic
of the terms of the Settlement Agreement. These are business loss claims.
Why businesses fail or, why one year is less or more profitable than another,
are questions often rigorously analyzed by highly-paid consultants, who may
still reach mistaken conclusions. There may be multiple causes for a loss. As
with the hypothetical accountants, all of the loss may be attributable to the
missing partner, or some of the loss may be traceable to the Deepwater Horizon
disaster. The difficulties of a claimant’s providing evidentiary support and the
claims administrator’s investigating the existence and degree of nexus between
the loss and the disaster in the Gulf could be overwhelming. The inherent
limitations in mass claims processing may have suggested substituting
certification for evidence, just as proof of loss substituted for proof of causation.
Because the Settlement Agreement at least requires a formal assertion of the
causal nexus, we conclude that what the certification panel relied upon in
approving the class definition and Settlement Agreement remained in place
during the processing of claims.
The dissent concludes we require too little as to causation. We see the
extent of our colleague’s disagreement to be as follows. All of us accept that
the class definition and Settlement Agreement require that membership in the
class be based on harm from BP’s conduct, as the Certification Panel previously
held. We also agree that the provision in Exhibit 4B that disclaims the need
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for evidence of causation is at least generally applicable. We part analytical
ways when identifying the role of the claims administrator regarding
suspicious or implausible claims. The dissent would require the claims
administrator to “ensure that claims are not paid that are not plausibly
traceable to the spill,” thus placing the onus on the claims administrator to
ensure that implausible claims are adequately scrutinized such that those
lacking a causal nexus are rejected.
We do not agree that we should order the claims administrator to
perform that gatekeeping function. There is no language in the Settlement
Agreement nor in BP’s briefing, supplemental submissions, or emergency
motions, about a procedure to be followed when an attestation of a nexus seems
at odds with the specifics of the claim. Far from proposing a specific procedure
or even guidelines for crafting one, the entirety of BP’s requested relief,
exemplified in its Renewed Motion for Injunction, is “a permanent injunction
barring the [claims administrator] from issuing or paying awards to claimants
whose alleged injuries are not traceable to the spill.” BP identifies its desired
relief but does not identify a part of the Settlement Agreement that in any way
suggests that each submitted claim would be examined as to whether it
satisfies a traceability requirement.
Relevant to this concern is that BP did not object in this appeal to a
decision made in October 2012 that the claims administrator was not to look
at potential alternative causes for claimants’ losses. Though we are reluctant
to say that all claims must be accepted no matter how clear the absence of the
required nexus may be, no one has concerned itself in this appeal with the
when, by whom, and how of analyzing such suspicious claims after they are
submitted. It seems to us that absent any specific provision in the Settlement
Agreement, and no one suggests there is one, such concerns are to be addressed
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in the usual course of processing individual claims. The Settlement Agreement
contained many compromises. One of them was to provide in only a limited
way for connecting the claim to the cause. The claims administrator, parties,
and district court can resolve real examples of implausible claims as they
resolve other questions that arise in the handling of specific claims.
We affirm the district court’s December 24, 2013, order interpreting the
Settlement Agreement. An injunction has been in place preventing payment
of BEL claims pending the resolution of all of these issues. Between the
certification panel’s decision of January 10 and ours today, all issues presented
to this panel have been resolved. On the other hand, petitions for rehearing en
banc of the certification panel’s decision on which we have relied have been
filed. We can anticipate that our decision might not persuade all parties either.
We conclude that the injunction should be dissolved, but the injunction
remains in place until the mandate of the court is issued.
The December 24, 2013, ruling of the district court is AFFIRMED. The
injunction prohibiting payment of the relevant claims is VACATED.
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JAMES L. DENNIS, Circuit Judge, concurring in part and concurring in the
judgment:
The Oil Pollution Act of 1990 (“OPA”), 33 U.S.C. § 2701 et seq., imposes
strict liability on those responsible for oil spills “into or upon the navigable
waters or adjoining shorelines” of the United States. Id. § 2702. It provides
for recovery of removal costs and of six categories of damages that “result from”
such incidents, including damages for “loss of profits or impairment of earning
capacity due to the injury, destruction, or loss of real property, personal
property, or natural resources.” Id. § 2702(b)(2)(E).
The oil spill from BP’s Macondo oil well and Deepwater Horizon drilling
rig into the Gulf of Mexico, which continued from April 20 to July 15, 2010,
caused damages in all of the six OPA categories. Following the unprecedented
spill that affected thousands of businesses across the Gulf Coast and
surrounding regions, it seemed apparent that BP’s liability for business
economic loss (viz., “loss of profits or impairment of earning capacity”) could be
enormous. However, the full scope of § 2702(b)(2)(E) liability, which is defined
as affording recompense for business economic loss “due to” property and
environmental damage that “result[s] from” a covered oil spill, had not yet
been, and still has not been, judicially construed. Furthermore, the scope of
such liability was, and still is, subject to intense scholarly debate. 1
For these and other reasons, BP and the economic-loss claimants entered
a settlement agreement adopting clearer definitions and formulas for the
1 See John C. P. Goldberg, Liability for Economic Loss in Connection with the
Deepwater Horizon Spill, 30 MISS. C. L. REV. 335 (2011); David W. Robertson, The Oil
Pollution Act’s Provisions on Damages for Economic Loss, 30 MISS. C. L. REV. 157 (2011);
John C. P. Goldberg, OPA and Economic Loss: A Reply to Professor Robertson, 30 MISS. C. L.
REV. 203 (2011); David W. Robertson, OPA and Economic Loss: A Response to Professor
Goldberg, 30 MISS. C. L. REV. 217 (2011).
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payment of such claims. At their request, the district court approved the
settlement agreement as a class-action settlement in its consent decree.
Within days of the district court’s judgment, however, BP brought this
litigation, which has evolved into BP asking the courts to interpret the
settlement agreement and consent decree to require certain economic-loss
claimants to prove, with trial-type evidence, that their losses were caused by
the oil spill, regardless of whether they have met the definitions and formulas
provided by the settlement agreement and consent decree. The district court
rejected BP’s demands, and BP appealed. The majority of this panel, first,
addressing an issue of how damages should be calculated, vacated the district
court’s judgment and remanded with instructions to determine whether the
claims administrator was converting claimants’ accrual-method accounting
data into cash-method data. Second, addressing whether claimants must
satisfy causation requirements external to the settlement agreement’s text, the
majority of this panel ordered the district court to “expeditiously craft” a
“narrowly-tailored injunction” that would allow “those who experienced actual
injury traceable to loss from the Deepwater Horizon accident to continue to
receive recovery but those who did not do not receive their payments” pending
further decision of the court. In re Deepwater Horizon, 732 F.3d 326, 345-46
(5th Cir. 2013) (Clement, J.). I dissented from the panel majority’s vacatur and
remand because, in my view, BP’s action was an unwarranted attempt to
change the terms of the settlement agreement and the district court’s judgment
rejecting that attempt should have been affirmed. Id. at 361 (Dennis, J.,
concurring in part and dissenting in part).
Next, after the district court issued an injunction, BP filed an
“emergency motion” in this court seeking to have this panel order the district
court to expand the injunction’s scope. BP’s Mot. (Doc. No. 195, filed Nov. 21,
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2013). A majority of this panel remanded to the district court and ordered it
to give further “expeditious consideration” in the first instance to the “issue of
causation” and to revise the injunction as found needed. In re Deepwater
Horizon, No. 13-30315 (5th Cir. filed Dec. 2, 2013). I dissented from the panel’s
remand and order because I thought the district court had acted correctly and
I agreed with the reasons it had assigned; moreover, I stated that BP’s belated
attempt to raise the issue of causation of damages under the OPA clearly did
not survive BP’s entering voluntarily into the settlement agreement and
consent decree and failing to raise the causation issue in the initial proceedings
in the district court and appeal. Id. (Dennis, J., dissenting).
After this second remand, the district court, first, granted BP certain
partial relief it sought regarding the court’s interpretation of the settlement
agreement’s provisions for calculating damages and ordered the claims
administrator to adopt and implement a policy for matching revenue and
corresponding variable expenses when calculating business-economic-loss
claims. Second, the district court held that the settlement agreement would
be interpreted as written without any judicial gloss. Third, the district court
held that BP was judicially estopped from pursuing its causation arguments
because those arguments contradicted numerous representations BP had
made to the district court and this circuit court regarding how the settlement
agreement should be interpreted and implemented. The district court
explained, essentially, that BP had long maintained that the settlement
agreement’s definitions and formulas were the sole relevant provisions for
processing claims, and such statements on BP’s part clearly contradicted BP’s
new arguments that claimants must also prove causation with supporting
evidence. And the district court rejected BP’s arguments under Article III,
Rule 23, and the Rules Enabling Act. In re: Oil Spill by the Oil Rig “Deepwater
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Horizon” in the Gulf of Mexico, on April 20, 2010, No. 10-MD-2179 (E.D. La.
filed Dec. 24, 2013).
BP has now lodged another appeal and motion with this panel, seeking
to have this court, not the district court, “permanently enjoin” the claims
administrator from processing claims from claimants who have not proven
with trial-type evidence that their “alleged injuries” are “traceable to the
Deepwater Horizon oil spill.” BP’s Mot. (Doc. No. 231, filed Dec. 30, 2013).
Although I continue to adhere to the views I expressed previously in this
case, I now join Judge Southwick in affirming the district court’s December 24,
2013 order interpreting the settlement agreement as written and declining to
add, by judicial gloss, any additional requirements, procedures, or other
provisions not contained in the text of the settlement agreement and consent
decree and its attached exhibits. I agree with Judge Southwick that BP’s
renewed motion for an injunction should be denied and that no injunction
against the payment of business-economic-loss claims shall continue. I also
agree that we are bound by the certification panel’s Article III, Rule 23, and
Rules Enabling Act rulings in its January 10, 2014 opinion and decision.
Accordingly, for these reasons, I concur in the above-described conclusions
reached by Judge Southwick and in the judgment he has written for the
majority of this panel.
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EDITH BROWN CLEMENT, Circuit Judge, dissenting.
A majority of this panel (1) affirms the district court’s December 24, 2013
order, (2) denies BP’s motion for a permanent injunction against the issuance
or payment of awards to claimants whose injuries are not traceable to the
Deepwater Horizon oil spill, and (3) holds that this panel is bound by the
certification panel’s rulings on Article III, Rule 23, and the Rules Enabling
Act. 1 I respectfully dissent.
The judicial power of federal courts extends only to cases and
controversies. There are but three irreducible constitutional requirements: an
injury in fact, a causal connection between the injury and the conduct
complained of, and that the injury is likely to be redressed by a favorable
decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Despite
the modern development of class actions under our law, the extent of our
judicial power remains unchanged. It extends only to cases and
controversies—redressable injuries with a causal connection. Lewis v. Casey,
518 U.S. 343, 349 (1996).
The Deepwater Horizon tragedy took eleven lives and caused great
damage to our environment and region. Cases and controversies abounded. In
light of this, the parties sought to negotiate a settlement agreement that would
resolve these issues on an enormous, class-wide basis, one of the largest
settlements in history. This was a settlement that would compensate
claimants for “[l]oss of income, earnings or profits . . . as a result of the” spill.
Settlement Agreement § 1.3.1.2. The agreement was signed and the class was
certified on December 21, 2012, with the support of the parties.
1 Judge Dennis “concur[s] in the above-described conclusions reached by Judge
Southwick and in the judgment he has written for the majority of this panel.” While this
opinion refers to Judge Southwick’s opinion as speaking for the “majority,” it is worth noting
that little of his analysis and reasoning carries the support of two panel members.
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Two subsequent decisions of the Claims Administrator brought the
parties into conflict. One was the Policy Statement endorsed by the district
court in an order of March 5, 2013, that established the accounting
methodology to be used to measure payments for Business Economic Loss
claims under Exhibit 4C of the Settlement Agreement. The other was a Policy
Statement that was issued on October 10, 2012, and adopted by the district
court on April 9, 2013, that laid out a position on “Causation Requirements” in
Exhibit 4B. It stated:
The Claims Administrator will thus compensate eligible Business
Economic Loss and Individual Economic Loss claimants for all
losses payable under the terms of the Economic Loss frameworks
in the Settlement Agreement, without regard to whether such
losses resulted or may have resulted from a cause other than the
Deepwater Horizon oil spill provided such claimants have satisfied
the specific causation requirements set out in the Settlement
Agreement.
On October 2, 2013, a majority of our panel agreed that Exhibit 4C
required matching of revenues and expenses, and remanded to the district
court with the additional instruction to consider the issue of causation if raised
by the parties. In re Deepwater Horizon, 732 F.3d 326 (5th Cir. 2013)
(“Deepwater Horizon I”). On remand, the district court declined to address the
causation issues, and after a renewed motion to our panel, we remanded again
on December 2, 2013, with instructions to consider the causation issues BP
raised.
On December 24, 2013, the district court issued an order requiring the
Claims Administrator to match revenue and expenses as directed by our
October 2 opinion and subsequent order of December 2. This resolved the first
dispute raised by the Claims Administrator’s Policy Statement, and no party
has appealed this issue.
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The district court also addressed the second disputed issue in an order
that analyzed the causation issues we directed the court to consider. It held
that BP was judicially estopped from arguing that individuals and entities
whose injuries were not fairly traceable to the oil spill should not be able to
recover. BP responded with an additional motion asking this court to put in
place a permanent injunction to ensure that the Claims Administrator
considers causation before paying out claims.
Meanwhile, another panel of this court heard challenges to the
certification of the class action in this case and released an opinion on January
10, 2014, upholding the district court’s certification of the Settlement
Agreement. 2 The majority of that panel found no issue with upholding the
certification of the Settlement Agreement, because the agreement as written
“explicitly limits claims to those based on ‘[l]oss of income, earnings or profits
suffered by Natural Persons or Entities as a result of the DEEPWATER
HORIZON INCIDENT,’ . . . . As contemplated by the Class Definition,
therefore, the class contains only persons and entities that possess Article III
standing.” In re Deepwater Horizon, 739 F.3d 790, 803 (5th Cir. 2014)
(“Deepwater Horizon II”).
The certification panel declined to address the Claims Administrator’s
interpretation of the Settlement Agreement, leaving that issue for our panel’s
consideration in light of our retention of jurisdiction. As the certification panel
stated, “[t]he evidentiary standard to be applied by the Claims Administrator
. . . is a question of interpreting the Settlement Agreement and applying it to
2 While the decision of the certification panel is binding under our circuit’s rule of
orderliness, that opinion was careful to limit its holding to the class certification and
settlement approval context. In addition, it was arguably premature for that panel to rule
on the certification issue before ours had issued a final ruling on the proper interpretation of
the Settlement Agreement. Much of the confusion, delay, and additional briefing in these
cases could have been avoided if the cases had been consolidated into one panel.
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each individual claim, and we are not called upon to address those issues in
this appeal.” Id. at 808. The opinion further acknowledged:
The parties now vigorously dispute how this evidentiary
framework was intended to work. For its part, BP has argued in
its subsequent submissions to the Deepwater Horizon I panel that
“the Claims Administrator must make a threshold determination
whether the claimant has suffered loss as a result of the spill” and
that under footnote 1 of Exhibit 4B this “threshold determination
must be made before applying the causation criteria outlined in
Exhibit 4B.” The named plaintiffs hold a different view.
Id. at 807–08.
While the certification panel majority does not address what occurred
after class certification, Judge Garza’s dissent traces the ostensible elimination
of the causation requirement to the Policy Statement of the Claims
Administrator. That interpretation stated that the program would
“compensate . . . claimants . . . without regard to whether such losses resulted
or may have resulted from a cause other than the Deepwater Horizon oil spill.”
Id. at 823 (Garza, J., dissenting). This reading “effectively eliminated” the
language requiring causation. Id. at 823 n.5.
The majority adopts the view that the agreement as written does not
eliminate causation or traceability, but “subordinate[s]” it. Specifically, Judge
Southwick agrees with the certification panel that causation was contemplated
by the Settlement Agreement. He points to the Business Economic Loss claim
form informing claimants that, “[t]he Business Economic Loss Claim is for
businesses . . . that assert economic loss due to the spill.” Deepwater Horizon
Economic and Property Settlement Business Economic Loss Claim Form
(Purple Form) 1. Nine pages later, the form requires the claimant to certify
under penalty of perjury “that the information provided in this Claim Form is
true and accurate to the best of my knowledge.” Id. at 9. “Every claim BP
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argues suffers from some causal-nexus infirmity should have with it an
attestation from the claimant or an attorney that the economic loss was caused
by the spill.” To the majority, this attestation satisfies any concerns about
causation.
The form certainly provides further evidence that causation was a
critical part of the Settlement Agreement. The difficulty is that the
interpretation and implementation of the agreement eliminated this
requirement when the Exhibit 4B Policy Statement informed claimants that
they would be compensated whether or not their injuries “resulted . . . from a
cause other than the Deepwater Horizon oil spill.” These decisions and
pronouncements may not have been relevant for the certification panel
majority, which declined to analyze issues that arose from the interpretation
and implementation of the settlement after its approval by the district court,
but they are crucial in assessing “whether the implementation of the
Settlement Agreement is defective.” This interpretation that submitting forms
that lack colorable causation was acceptable under the agreement was relied
upon by attorneys, who urged uninjured plaintiffs to file claims “[i]f the
numbers work.” BP Br. 77, Doc. 00512230427 (May 5, 2013) (citing R.16719).
These attorneys were not urging perjury: they were merely interpreting the
agreement in light of the Claims Administrator’s interpretation that was
upheld by the district court. How can they be pursued for false statements for
relying on these legally binding pronouncements, much less an individual,
unrepresented claimant who lacks even this level of legal sophistication? This
Policy Statement effectively eliminated the need for a claimant to allege injury
traceable to BP’s conduct, and therefore raises once again the Constitutional
concerns that the majority claims were “put to rest by the certification panel.”
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The elements of standing do not end at certification, but continue to be
vital throughout “the successive stages of litigation.” Lewis, 518 U.S. at 358.
Because this is a settlement class action, there are no successive stages of
litigation: the certification stage and the proof stage have been combined. If
someone is a member of the class, they recover. But while the certification
panel analyzed the agreement as written, the subsequent implementation has
expanded those who can recover even to those who cannot trace their injuries
to BP’s conduct. This agreement, as implemented, is using the powers of the
federal courts to enforce obligations unrelated to actual cases or controversies.
Judge Southwick’s opinion points out the challenge of proving causation
when multiple causes are at stake by offering the hypothetical of an accounting
firm that experienced economic loss after the disaster in part because one of
its three partners took medical leave. It is admittedly difficult to isolate
multiple causes, and that is not what Article III requires. Even in that
example, an argument can be made that the disaster impacted part of the
firm’s losses. If so, these claimants can colorably assert injury due to the spill
and are appropriate members of this class. A more fitting example here would
be an accounting firm in Zone A where all three partners went on medical leave
for several months after the disaster. The profits of their firm drop
precipitously, but in no way due to the negligence of BP. Under Judge
Southwick’s reasoning, the Settlement Agreement requires BP to pay these
losses as well so long as they sign a claim form. But these plaintiffs have no
injury traceable to BP’s actions, and would not have standing to maintain a
suit individually under Lujan. Nonetheless, because of the majority’s ruling
here, these claimants will recover.
Perhaps recognizing that its ruling would lead to absurd results in at
least a small number of cases, the majority states that the “[t]he claims
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administrator, parties, and district court can resolve real examples of
implausible claims as they resolve other questions that arise in the handling
of specific claims.” But I do not see how this statement provides any comfort
in light of the district court’s ruling that BP is judicially estopped from arguing
causation. And the majority declines to rule one way or the other on judicial
estoppel, which it inexplicably concludes is “an issue . . . not relevant to our
decision.” In the end, we are left with the majority’s holding that the Claims
Administrator does not need to perform the “gatekeeping function” of ensuring
that claims are not paid that are not plausibly traceable to the spill. Claimants
whose losses had absolutely nothing to do with Deepwater Horizon or BP’s
conduct will recover as a result of this ruling.
The number of claimants ultimately affected by this issue may well be
small, but the constitutional principles are important because they assure the
vigorous and fair resolution of disputes and respect the limitations on the
power of the federal judiciary. I would reverse the district court’s holding on
judicial estoppel and permanently enjoin the Claims Administrator from
paying awards to claimants whose injuries are not traceable to the Deepwater
Horizon oil spill.
I respectfully dissent.
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