     Case: 18-30844   Document: 00514892706      Page: 1   Date Filed: 03/28/2019




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT   United States Court of Appeals
                                                                       Fifth Circuit

                                                                      FILED
                               No. 18-30844                        March 28, 2019
                             Summary Calendar                      Lyle W. Cayce
                                                                        Clerk

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
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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


        1BP raised a fourth argument regarding whether Claimant qualifies as a defense
contractor under the Settlement Agreement, but “appellate counsel has chosen not to renew
that argument” before this court.”
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                                  No. 18-30844
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 F. App’x 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
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                                      No. 18-30844
Claimant’s R&D expense as variable rather than fixed; and (3) erred by
omitting its previous matching adjustments to the R&D expense.
                                            A.
       BP’s attestation argument is familiar—BP has raised the same issue in
several other appeals currently pending in this court. Here, BP argues that
“[t]here is no logical connection” between Claimant’s sign manufacturing
business and the oil spill, so the Appeal Panel should have remanded the claim
to the Claims Administrator for “further investigation.”
       Although our opinion in Deepwater Horizon III forecloses any categorical
duty on the part of the Claims Administrator “to ensure that implausible
claims are adequately scrutinized,” BP is correct that that opinion also
acknowledges that “[s]uspicious forms [will] be subject to investigation” and
suggests that the Claims Administrator should “resolve real examples of
implausible claims” as they arise during the claims process. In re Deepwater
Horizon, 744 F.3d 370, 377–78 (5th Cir. 2014) (Deepwater Horizon III).
However, the only argument BP offers to demonstrate that Claimant’s
attestation is implausible is that “[it is] not clear how the fortunes of a sign
manufacturer 160 miles inland were tied to an oil spill.” BP does not identify
any other possible causes of Claimant’s loss, nor does it rely on any evidence
or authority to demonstrate that Claimant’s losses could not have been caused
at least in part by the Deepwater Horizon disaster. Accordingly, BP has not
established that Claimant’s causation attestation is implausible. 2 The district
court therefore properly denied discretionary review.




       2 Even if BP had made such a showing, the Claims Administrator appears to have
closely scrutinized the causation issue in its review of the claim: the Claims Administrator
twice requested additional documentation demonstrating that Claimant’s losses were caused
by the spill.
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                                      B.
      Regarding the fixed vs. variable costs issue, BP insists that classifying
Claimant’s R&D expense as variable artificially inflated Claimant’s award.
Conceding that R&D costs are not on the list of fixed and variable expenses in
Exhibit 4D, BP nonetheless insists that the Claims Administrator’s
classification violated the Settlement Agreement. BP further suggests that the
Claims Administrator did not make “any reasoned choice” on the R&D expense
because it simply “did not notice [Claimant’s] wrong classification.” According
to BP, the Appeal Panel erred by declining to correct this omission and instead
deferring to the Claims Administrator’s classification.
      Our recent opinion in Texas Gulf Seafood clarified the proper approach
for Claims Administrators and Appeal Panels in classifying a claimant’s
expenses as fixed or variable. There, resolving an Appeal Panel split, we held
that “the Settlement Agreement requires claims administrators to use their
independent judgment and classify expenses as ‘fixed’ or ‘variable’ according to
their substantive nature, rather than rational basis review of the claimants’
own descriptions.” Texas Gulf Seafood, 910 F.3d at 802. We further held that
“Appeal Panels, too, are bound by the substantive nature of the expense claims
under the Settlement Agreement rather than the claimants’ inaccurate
characterizations.”   Id.   Because the Appeal Panel had deferred to the
claimant’s “rational basis” for classifying certain expenses as “supplies”—a
category listed as a fixed cost in Exhibit 4D—we vacated the award and
remanded for proper classification of the expenses. Id. at 800, 803.
      Although the Claims Administrator and Appeal Panel in this case did
not have the benefit of Texas Gulf Seafood when they reviewed Claimant’s
claim, we believe their analyses comport with our holdings in that case. We
note first that this is not a case in which the Claims Administrator applied a
particular classification simply because the label the Claimant assigned to that
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                                 No. 18-30844
expense was included on one of the lists in Exhibit 4D. Cf. BP Expl. & Prod.,
Inc. v. Claimant ID 100185315, 2019 WL 597598, at *2 (5th Cir. Feb. 8, 2019)
(vacating and remanding where Appeal Panel “agreed with the claimant’s
argument that its Management Fee expense was properly classified as a fixed
cost because ‘fees’ are included as a fixed cost in [Exhibit 4D]”). As BP admits,
R&D expenses are not listed on Exhibit 4D, so the Claims Administrator had
to follow Policy 361 and “use discretion to apply the classification that best
conform[ed] to delineations made by the Parties.” The record indicates that
the Claims Administrator did so—it requested additional information from
Claimant about the R&D expense, including the “nature of the expenses
recorded,” and Claimant responded with a substantive description. Engaging
in this kind of independent analysis is all that Texas Gulf Seafood requires.
      While BP complains that the Appeal Panel applied an abuse of discretion
standard in reviewing the Claims Administrator’s classification, the Appeal
Panel expressly considered the substantive nature of the R&D expense. It first
listed the purpose of the expense and the types of costs included. Then, it
explained the basis for its conclusion that the Claims Administrator’s variable
classification was correct: “[T]he expenses involved are those relating to the
development of operational aspects of ‘the sign,’ i.e. a particular project.”
Importantly, the Appeal Panel did not merely defer to the label that Claimant
assigned to the expense. Thus, on this record, we cannot conclude that the
Appeal Panel’s analysis ran afoul of Texas Gulf Seafood.
      BP makes much of its argument that, regardless of the analyses
undertaken by the Claims Administrator and Appeal Panel, applying a
variable classification to the R&D expense was substantively inaccurate. Even
if this were true, it “simply raise[s] the correctness of a discretionary
administrative decision in the facts of a single claimant’s case” and therefore
does not warrant discretionary review. Texas Gulf Seafood, 910 F.3d at 800
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(alteration in original).   The district court did not abuse its discretion in
denying review on this issue.
                                       C.
      In its third issue, BP complains that the Claims Administrator’s
“inexplicable deletion” of the matching adjustments it had previously made to
the R&D expense resulted in a larger award than Claimant was entitled to
under the Settlement Agreement. But in its calculation notes in support of
Claimant’s award, the Claims Administrator confirmed that its review had
been conducted according to this court’s and the district court’s instructions
regarding matching under Policy 495.        In any event, even if the Claims
Administrator erred in omitting the adjustments, the error bears only on the
processing of Claimant’s claim and does not “raise[] a recurring issue on which
the Appeal Panels are split” or “involve [a] pressing question of how the
Settlement Agreement should be interpreted.” Id. As a result, the district
court did not err in declining to grant discretionary review.
                                      IV.
      For the reasons described, BP has not demonstrated that discretionary
review was appropriate in this case. We therefore AFFIRM the district court’s
judgment.




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