     Case: 18-30971      Document: 00515070791         Page: 1    Date Filed: 08/09/2019




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

                                                                                 FILED
                                                                             August 9, 2019
                                      No. 18-30971
                                                                              Lyle W. Cayce
                                                                                   Clerk

BP EXPLORATION & PRODUCTION, INCORPORATED; BP AMERICA
PRODUCTION COMPANY; BP, P.L.C.,

               Requesting Parties–Appellees–Cross-Appellants,

v.

CLAIMANT ID 100248744,

               Objecting Party–Appellant–Cross-Appellee.




                  Appeals from the United States District Court
                      for the Eastern District of Louisiana
                            USDC No. 2:18-CV-6399


Before STEWART, Chief Judge, and JONES and OWEN, Circuit Judges.
PER CURIAM:*
       This is an appeal from the denial of discretionary review by the district
court under the Settlement Program established following the Deepwater
Horizon spill. Claimant filed a Business Economic Loss claim and sought a
Tourism designation that was denied. BP has cross-appealed, contending that
the Settlement Program misclassified Claimant’s accounts.                   Both parties



       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 18-30971      Document: 00515070791        Page: 2    Date Filed: 08/09/2019



                                    No. 18-30971
appealed the denial of discretionary review. We affirm in part but vacate in
part the denial of discretionary review. We remand to the district court to
review the classification of the Other Production Expenses account.
                                           I
      We have previously detailed the facts surrounding the Deepwater
Horizon oil spill, the Settlement Agreement that followed, and the claims
process for business economic loss (BEL) claimants. 1 Relevant to this appeal,
Claimant is a multi-purpose arena that hosts professional sporting events,
concerts, and other entertainment. It submitted its claim in September 2013.
It compared its post-spill revenue from July to December 2010 to its pre-spill
revenue from July to December 2009. It also claimed a Tourism designation.
Claimant is located in Zone C. The default Risk Transfer Premium (RTP) for
Zone C is 0.25. However, if the claimant falls within the Tourism definition,
the RTP for Zone C is 2.0.
      The Settlement Agreement defines Tourism in Exhibit 2 as “businesses
which provide services such as attracting, transporting, accommodating or
catering to the needs or wants of persons traveling to, or staying in, places
outside their home community.”          It lists forty-one NAICS codes that are
considered “in the Tourism Industry.” Interpreting that provision, the Claims
Administrator promulgated Policy 289 v.2: Definition of Tourism. According
to Policy 289, if the NAICS code for a business is listed in Exhibit 2, that
business will be considered to fall within the Tourism definition. The Claims
Administrator considers the list of codes to be “illustrative, not exhaustive.” If
the most appropriate NAICS code for the business is not listed in Exhibit 2,
“that claimant may still be considered to fall within the Tourism definition if



      1See In re Deepwater Horizon, 732 F.3d 326, 329-30 (5th Cir. 2013); see also In re
Deepwater Horizon, 785 F.3d 1003, 1007 (5th Cir. 2015).
                                           2
    Case: 18-30971     Document: 00515070791     Page: 3   Date Filed: 08/09/2019



                                  No. 18-30971
the Claims Administrator determines in his discretion that the claimant’s
business meets the definition” in Exhibit 2.
      The claims process begins when a claimant files a Claim Form with the
Settlement Program. If the claimant fails to submit sufficient documentation,
the Settlement Program will send an incompleteness notice. The Settlement
Program then evaluates the claim and awards the claimant the maximum that
it is entitled to under the Settlement.        The Settlement affords multiple
opportunities for review of an initial decision. If the decision of the Settlement
Program rests on a lack of documents, the claimant may seek review of that
decision and supply more documents.            The claimant may also request
reconsideration by the Settlement Program. If either the claimant or BP is
still dissatisfied with the result, it may appeal to an Appeal Panel consisting
of one or three panelists. The parties may seek discretionary review in the
district court of an Appeal Panel decision.
      The instant claim was identified as one of the claims with profit-and-loss
statements that were not matched, so the Settlement Program sent an
incompleteness notice.     Claimant provided additional documents and the
Settlement Program applied Policy 495 to match the profit-and-loss
statements. The Settlement Program determined that Claimant was entitled
to $2,101,909.26 in compensation. It concluded that Claimant did not qualify
for a Tourism designation and applied a 0.25 RTP multiplier, for an additional
compensation amount of $525,477.32. Together with accounting support, the
total initial award was $2,651,167.38.
      Claimant sought re-review, arguing that it was entitled to a Tourism
designation. It attached a list of events held at the arena and argued that even
though its NAICS code was not on Exhibit 2, it met the general Tourism
definition in Exhibit 2.    The events identified included home games for
professional sports teams, concerts, ministry events, car shows, and university
                                         3
    Case: 18-30971    Document: 00515070791      Page: 4   Date Filed: 08/09/2019



                                 No. 18-30971
graduations. It did not, however, include an indication of how many customers
and attendees came from outside their home communities. BP argued that the
non-Tourism designation was proper and that the Claims Administrator had
misclassified some of Claimant’s accounts.
      The Settlement Program subsequently issued a new Eligibility Notice.
It again denied Claimant a Tourism designation. In addition, it determined
that Claimant was only entitled to $1,743,053.95 in compensation, with
$433,763.49 in RTP, for a total award of $2,194,182.44.
      Claimant sought reconsideration.        It argued that the Settlement
Program had not seriously considered its arguments in favor of its Tourism
designation. It also attached additional documentation claiming that at least
30% of its account and ticket revenue for 2010 came from customers located
more than 60 miles from the arena. That percentage excluded events from the
local professional sports teams.    It also submitted additional information
showing the geographical range of its advertising and where those
advertisements were targeted.
      The Settlement Program again denied the Tourism designation.              It
concluded that “[t]he claimant has not provided objective evidence sufficient to
change the Non-Tourism designation.”         It noted that the list provided in
Claimant’s reconsideration request “does not contain a customer list, therefore
it is impossible to make a determination of the percentage of Claimant’s 2010
revenue derived from persons traveling over 60 miles to visit the business.”
The award was revised slightly, providing a total amount of $2,208,405.98 after
RTP and accounting support.
      Claimant appealed to an Appeal Panel. It reiterated its objections to its
Non-Tourism designation and attached copious Ticketmaster data purporting
to verify that its customers travel from outside their home communities. It
also argued that the Settlement Program improperly required a customer list
                                       4
     Case: 18-30971      Document: 00515070791         Page: 5    Date Filed: 08/09/2019



                                      No. 18-30971
without giving notice. Based on the Ticketmaster data, Claimant argued that
between 48-52% of its revenue comes from “nonlocal” customers. Claimant did
not define “nonlocal.” BP again defended the non-Tourism designation and
argued that certain accounts were improperly classified. BP argued that the
Settlement Program did not exercise its independent judgment when
classifying the accounts and instead copied Claimant’s descriptions verbatim.
       The Appeal Panel affirmed the award in all respects. It reasoned that
Appeal Panels have used various data “to determine if a business primarily
caters to or accommodates the needs and wants of tourists.” It acknowledged
that no bright-line test exists but that most decisions require “a percentage of
50 or better of total revenues being derived from non-local customers for all
revenue generating events to measure tourism involvement.” Based on those
metrics, it concluded that Claimant did not qualify because, at most, 30-36%
of account and ticket revenues are derived from non-local customers. The
panel also rejected BP’s arguments that certain accounts were misclassified,
concluding that there was no basis for any of BP’s contentions.
       Both parties sought discretionary review with the district court. The
district court denied review without comment. Claimant appealed to this
court. BP cross-appealed.
                                            II
       We review the district court’s denial of discretionary review for abuse of
discretion. 2 It is generally an abuse of discretion not to review a decision that
“actually contradicted or misapplied the Settlement Agreement, or had the
clear potential to” do so. 3 However, we have been careful to note that it is


       2  Claimant ID 100212278 v. BP Expl. & Prod., Inc., 848 F.3d 407, 410 (5th Cir. 2017)
(per curiam) (citing Holmes Motors, Inc. v. BP Expl. & Prod., 829 F.3d 313, 315 (5th Cir.
2016)).
        3 Id. (quoting Holmes Motors, 829 F.3d at 315).



                                             5
     Case: 18-30971       Document: 00515070791         Page: 6     Date Filed: 08/09/2019



                                       No. 18-30971
“wrong to suggest that the district court must grant review of all claims that
raise a question about the proper interpretation of the Settlement
Agreement.” 4 It is not an abuse of discretion to deny a request for review that
“involve[s] no pressing question of how the Settlement Agreement should be
interpreted or implemented, but simply raise[s] the correctness of a
discretionary administrative decision in the facts of a single claimant’s case.” 5
It may also be 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.” 6
                                             A
       Claimant argues that the Settlement Program and Appeal Panel
improperly concluded as a factual matter that it is not in the Tourism industry.
The Appeal Panel decision concluded that Claimant did not meet its burden of
proof with the supporting documents that it provided.                     The amount of
supporting documentation required and factual determinations are the kind of
discretionary administrative decisions that do not require district court review,
and we will not overturn the district court’s decision on that basis.
       Claimant contends that there is a split among Appeal Panels as to
whether the fact that 30% of a business’s customers are non-locals is sufficient
to satisfy the definition of Tourism for purposes of the Settlement Agreement.




       4 Id. (quoting Holmes Motors, 829 F.3d at 316); see also In re Deepwater Horizon, 785
F.3d 986, 999 (5th Cir. 2015) (“We do not intend any part of this opinion to turn the district
court’s discretionary review into a mandatory review. To do so would frustrate the clear
purpose of the Settlement Agreement to curtail litigation.”).
       5 Claimant ID 100212278, 848 F.3d at 410 (alterations in original) (quoting In re

Deepwater Horizon, 641 F. App’x 405, 410 (5th Cir. 2016) (per curiam)).
       6 Id. (quoting In re Deepwater Horizon, 632 F. App’x 199, 203-04 (5th Cir. 2015) (per

curiam)).

                                              6
     Case: 18-30971       Document: 00515070791         Page: 7    Date Filed: 08/09/2019



                                      No. 18-30971
However, it does not appear that decisions are split regarding the percentage
of customers who are non-local in order to support the Tourism designation.
                                             B
       As an independent basis for remand, Claimant argues that the Appeal
Panel did not follow precedent from a similar claim. We take this to be an
argument that there is a split among Appeal Panels that required district court
review. 7 We do not accept the argument that there is a split every time an
Appeal Panel comes to a different result. “[T]he fact that Appeal Panels have
reached different conclusions for this issue depending on the circumstances of
each case does not represent the type of Appeal Panel split that would require
the district court’s review.” 8
       A sports stadium in the same area as the arena at issue in the present
case received a Tourism designation. However, the facts of that particular case
are not identical to the facts in the present case. In that case, the claimant
was a football stadium that primarily derived its revenue from concessions and
parking. The stadium hosted a variety of events such as NFL and NCAA
games, monster truck rallies, and concerts. The Appeal Panel rejected BP’s
argument that the majority of visitors “are, no doubt, locals to the area.” After
de novo review, that Appeal Panel found no error in the Settlement Program’s
determination that the stadium was in the Tourism industry. By contrast, the
nature of the sports events hosted by the arena were not as likely to draw
crowds from distant locales or to draw them in the numbers that the stadium
in the prior case had. We do not have the record in the prior case before us,



       7  See id. (quoting In re Deepwater Horizon, 632 F. App’x at 203-04) (acknowledging
that it may be an abuse of discretion not to review when the request 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”).
        8 Claimant ID 100051301 v. BP Expl. & Prod., Inc., 694 F. App’x 236, 240 (5th Cir.

2017) (per curiam).
                                             7
    Case: 18-30971         Document: 00515070791        Page: 8    Date Filed: 08/09/2019



                                       No. 18-30971
and we cannot say that, as a factual matter, there is actually a conflict between
the manner in which the stadium was given a Tourism designation and the
manner in which it was decided that the arena did not qualify for a Tourism
designation. These are factually intensive inquiries. The Claimant in the
present case did not meet its burden of establishing that non-locals attended
the events it hosted, including local hockey and football games, in sufficient
numbers to require a factual finding that the Tourism designation must be
applied. We give deference to the Settlement Program’s decision regarding
what evidence is sufficient to substantiate a claim.
                                             C
      Claimant also argues that the Settlement Program improperly required
a customer list without notifying Claimant of the requirement. It bases this
claim on Section 4.3.7 of the Settlement Agreement, which requires the
Settlement Program to “use its best efforts to provide [claimants] with
assistance, information, opportunities and notice so that the [claimant] has the
best opportunity to be determined eligible for and receive the Settlement
Payment(s) to which the [claimant] is entitled.” The Appeal Panel considered
this argument and rejected it. The Appeal Panel considered the absence of a
customer list noted by the Settlement Program to be “a relevant observation,”
not an absolute requirement. We cannot say that the district court abused its
discretion by failing to review that determination.                The Appeal Panel’s
determination that the Settlement Program did not require a customer list
does not raise any issue of the proper interpretation of the Settlement
Agreement. 9




      9   See Claimant ID 100212278, 848 F.3d at 410 (citation omitted).
                                              8
    Case: 18-30971      Document: 00515070791        Page: 9    Date Filed: 08/09/2019



                                    No. 18-30971
                                          D
      Claimant further argues that the Appeal Panel erred in failing to
remand its claim for further analysis after it provided new data. However, it
does not cite any relevant portion of the Settlement Agreement that mandates
such a result or a split among the Appeal Panels. Accordingly, there is no basis
to hold that the district court abused its discretion by failing to review that
portion of the Appeal Panel’s decision.
                                          III
      BP cross-appeals, arguing that the Appeal Panel erred by failing to use
its independent judgment to classify Claimant’s accounts. In particular, BP
urges that Claimant’s “Other Production Expenses” account was improperly
characterized as a fixed expense and its “Shares” accounts were improperly
characterized as contra-revenue.
      The Settlement Agreement compensates businesses for lost Variable
Profit. Variable Profit is reduced by variable expenses but does not consider
fixed expenses. Accordingly, whether an expense is classified as “fixed” or
“variable” can significantly impact the size of the award. 10 Exhibit 4D to the
Settlement Agreement contains a list of expenses which the parties stipulated
are fixed or variable. Contract labor, consumable goods, freight, and fuel are
among the items defined as “variable expenses.” “Fixed” expenses include
internet fees, postage, and uniforms, among others. We held in Texas Gulf
Seafood that the Settlement Agreement requires claims administrators to use
their independent judgment and to classify expenses according to their
substantive nature, rather than rational basis review of the claimants’ own
descriptions. 11


      10  BP Expl. & Prod., Inc. v. Claimant ID 100094497 (Texas Gulf Seafood), 910 F.3d
797, 799 (5th Cir. 2018).
       11 Id. at 802.

                                           9
   Case: 18-30971        Document: 00515070791    Page: 10   Date Filed: 08/09/2019



                                   No. 18-30971
                                        A
      BP asserts that the Settlement Program adopted Claimant’s description
of its “Other Production Expenses” account without using its independent
judgment as to the substantive nature of the expense. Neither the record nor
Claimant’s briefing indicates how Claimant described the expenses apart from
the account label. The record does not clearly indicate whether these expenses
were fixed or variable.
      Claimant asserts that the Other Production Expenses account is part of
Direct Event Expense. It contends that the account is an overhead expense
relating to the actual events themselves and not directly tied to ticket sales or
concessions. Claimant suggests that the expense includes equipment rentals
for events, which will incur the same cost regardless of the amount of revenue
earned. However, Claimant does not cite any record document to support is
characterization of the account. It does cite a Deepwater Horizon Document
Portal ID number, though it does not indicate where that document can be
found in the 25,000-page record before this court. Nevertheless, we located the
document, and it does not mention the Other Production Expenses account and
contains no information about the substantive nature of those expenses.
      In Texas Gulf Seafood, the claimant served as an intermediary for Texas
gulf shrimpers, freezing and packing shrimp and arranging for delivery to
wholesalers. 12 When it submitted its BEL claim to the Settlement Program, it
explained that its “supplies” account consists of “items which are used to
unload, process, and package shrimp, such as packing bags and other
materials.” 13 Importantly for purposes of that appeal, “supplies” are classified




      12   Id. at 799.
      13   Id.

                                        10
    Case: 18-30971     Document: 00515070791       Page: 11    Date Filed: 08/09/2019



                                    No. 18-30971
as fixed expenses by the Settlement Agreement. 14 The claims administrator
initially categorized the claimant’s account as a variable expense because it
determined that the expense fluctuated based on the amount of shrimp the
company shipped. 15     The claimant sought reconsideration and eventually
appealed to an Appeal Panel. 16 The Appeal Panel agreed with the claimant
and held that the claims administrator should defer to the claimant’s labels for
the expense so long as the claimant has a rational basis for labeling the
expense as fixed or variable. 17      The district court declined discretionary
review. 18 We reversed, holding that the language of the Settlement Agreement
required the claims administrators to use independent judgment to classify the
expenses as fixed or variable. 19
      Here too, it is apparent that the Settlement Program did not exercise its
independent judgment and deferred to Claimant’s description of the Other
Production Expense account.          The only evidence in the record of the
substantive nature of the account is its label. That provides no basis for the
claims     administrators   to   exercise    independent      judgment.      Claims
administrators cannot exercise their independent judgment if there is no
evidence describing the substantive nature of the account. There may be
instances in which the label on the account is sufficiently clear and specific for
claims administrators to evaluate the substantive nature of the account, but
Texas Gulf Seafood mandates reversal in this instance. 20 Accordingly, the




      14 Id.
      15 Id.
      16 Id. at 800.
      17 Id.
      18 Id.
      19 Id. at 802.
      20 See id.

                                        11
   Case: 18-30971     Document: 00515070791        Page: 12   Date Filed: 08/09/2019



                                    No. 18-30971
district court abused its discretion by failing to review the Appeal Panel’s
decision that misapplied the Settlement Agreement.
                                         B
      BP also argues that the Settlement Program misclassified Claimant’s
“Shares” accounts as contra-revenue rather than a variable expense.              BP
repeats its arguments that the Settlement Program copied Claimant’s
descriptions of the Shares accounts and did not exercise its independent
judgment.    Claimant provided information to the Settlement Program in
response to questions about the Shares accounts, indicating that the accounts
“are actual payments that [Claimant] ma[de] to the show promoters for their
portion of revenues generated per the contracted deal that [Claimant] ha[d] for
that particular event. The ‘Share’ accounts usually have a negative amount
because this is a payment to the show promoters.” The Calculation notes of
the Settlement Program did copy that description almost verbatim but added:
“[a]s both ‘Billed’ and ‘Shared’ amounts net to the correct revenue to be
recognized, DWH Accountant classified all ‘Billed’ and ‘Shared’ revenue
accounts as Revenue.” Accordingly, there is at least some evidence that the
Settlement Program exercised its independent judgment in classifying the
Shares accounts and considered the effect the classification would have on
revenue. Further, BP has not explained how the classification as contra-
revenue versus a variable expense would have affected the award in this
instance. Both contra-revenue and variable expenses decrease Variable Profit.
The district court did not abuse its discretion by declining to review the
classification of those accounts.
                                    *    *     *
      The district court abused its discretion by failing to review the
Settlement Program’s classification of the Other Production Expenses account


                                        12
   Case: 18-30971   Document: 00515070791    Page: 13   Date Filed: 08/09/2019



                              No. 18-30971
in this case.   The district court’s judgment is VACATED in part and
AFFIRMED in all other respects.




                                   13
