     Case: 18-30588      Document: 00514945828         Page: 1    Date Filed: 05/07/2019




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

                                                                                     FILED
                                                                                   May 7, 2019
                                      No. 18-30588
                                                                                  Lyle W. Cayce
                                                                                       Clerk
BP EXPLORATION & PRODUCTION, INCORPORATED; BP AMERICA
PRODUCTION COMPANY; BP, P.L.C.,

              Requesting Parties - Appellants

v.

CLAIMANT ID 100212052,

              Objecting Party - Appellee




                   Appeal from the United States District Court
                      for the Eastern District of Louisiana
                             USDC No. 2:18-CV-3369


Before STEWART, Chief Judge, and DAVIS and ELROD, Circuit Judges.
PER CURIAM:*
       This case presents another appeal involving the Deepwater Horizon
Settlement Program.         Like the many other appeals, BP Exploration and
Production challenges (1) a decision of the Appeals Panel (“Panel”) for the
Settlement Program and (2) the district court judge’s decision to decline
review.



       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
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                                 No. 18-30588
      BP first challenges the Panel’s decision to classify certain expenses as
fixed instead of variable. The claimant, Woodruff, listed equipment rental
expenses in the documents supporting its claims. It classified those expenses
as cost of goods sold (“COGS”), without specifying whether they were variable
or fixed. The Panel determined that they were a fixed expense, a decision that
increased Woodruff’s recovery by over $500,000.
      BP also challenges the Panel’s decision that Woodruff is not a real estate
developer, a group excluded from the settlement class. While Woodruff was
affiliated with some real estate developers, the Panel found that Woodruff’s
primary business is construction, not real estate development.
      BP appealed both decisions to the district court.      The district court
declined to review them. BP then appealed to this court. We must now decide
if (1) the Panel committed an error and (2) the district court abused its
discretion in declining to review a potential error. Because the district court
committed no error, we AFFIRM the district court.
                                       I.
      Woodruff is a construction contractor in Florida. In May 2013, Woodruff
filed a Business Economic Loss claim pursuant to the Economic and Property
Damages Settlement Agreement (“Settlement Agreement” or “Agreement”), a
court-approved, court-supervised settlement that resolves claims against BP
by individuals and businesses for economic loss and property damage. In its
income tax returns, which were submitted as supporting documents, Woodruff
labeled certain equipment rental expenses as COGS. In its profit and loss
statements, Woodruff specifically listed rental expenses, detailing the monthly
amount of these expenses from January 2007 until December 2011. In 2010,
its rental equipment expenses were roughly $53,523 per month.
      The Claims Administrator treated Woodruff’s equipment rental
expenses as a variable expense, and eventually awarded Woodruff
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                                      No. 18-30588
approximately $3,945,000. Both BP and Woodruff appealed the award. BP
argued, in part, that the Administrator erred because it did not exclude
Woodruff as a real estate developer. Woodruff argued that the Administrator
erred because it classified Woodruff’s equipment rental expenses as variable,
instead of fixed.
       After two rounds of appeals, 1 the Panel held that Woodruff was not an
excluded real estate developer. It also held that Woodruff’s equipment rental
expenses were fixed, not variable. Accordingly, the Panel adopted Woodruff’s
proposed award of $4,736,476. The Panel then added on a review cost, risk
transfer premium, and accounting support, giving Woodruff a final award of
$6,163,089.80.
       BP appealed the Panel’s decision to the district court. But the district
court declined discretionary review. BP now appeals.
                                             II.
       This court reviews a “district court’s denial of discretionary review for
abuse of discretion.” Holmes Motors, Inc. v. BP Expl. & Prod., Inc., 829 F.3d
313, 315 (5th Cir. 2016) (citing In re Deepwater Horizon, 785 F.3d 1003, 1011
(5th Cir. 2015)). Interpretation of the Settlement itself, however, “is effectively




       1 Following the Claims Administrator’s initial ruling, the Panel ruled for Woodruff on
both issues. It first held that there was no evidence Woodruff developed real estate.
According to the Panel, Woodruff’s affiliations with real estate developers were insufficient
to trigger the real estate developer exclusion. The Panel also held that Woodruff’s equipment
rental expenses were fixed, not variable, based on the “plain terms” of the Settlement
Agreement. The Panel then remanded the case to the Administrator to determine Woodruff’s
proper award.
        On remand, the Administrator kept its conclusion the same, treating Woodruff’s
equipment rental expenses as variable, not fixed. It did, however, increase the amount of its
award to roughly $4,010,000. Again, both BP and Woodruff appealed, with BP arguing that
the real estate developer exclusion should apply, and Woodruff arguing that its equipment
rental expenses were fixed, since the equipment leases had fixed monthly payments.

       The Panel again reversed and did not change its conclusions.
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                                  No. 18-30588
de novo because” it presents “purely legal questions of contract interpretation.”
In re Deepwater Horizon, 785 F.3d at 1011.
      The Settlement Program gives district courts discretion to review
Appeals Panel awards. Id. A district court can abuse its discretion in declining
to review an award in two situations: the Panel (1) “actually contradicted or
misapplied the Settlement Agreement” or (2) “had the clear potential to
contradict or misapply the Settlement Agreement.” Claimant ID 100212278 v.
BP Expl. & Prod., Inc., 848 F.3d 407, 410 (5th Cir. 2017). A district court,
however, does not abuse its discretion when it refuses to review a simple
question of correctness. In re Deepwater Horizon, 641 F. App’x 405, 410 (5th
Cir. 2016) (unpublished) (per curiam) (“If the discretionary nature of the
district court’s review is to have any meaning, the court must be able to avoid
appeals like this one which . . . simply raise the correctness of a discretionary
administrative decision in the facts of a single claimant’s case.”). Instead, a
district court only abuses its discretion when it refuses to review a potentially
incorrect decision that involves a “pressing question of how the Settlement
Agreement should be interpreted or implemented.”              Id.; Claimant ID
100217021 v. BP Expl. & Prod., Inc., 693 F. App’x 272, 274 (5th Cir. 2017)
(unpublished) (per curiam) (“Not all contradictions or misapplications,
however, warrant review. The issue must be recurring or substantial.” (citation
omitted)). In deciding whether an issue is pressing, we typically examine
whether the issue “is frequently recurring or has divided” Appeals Panels.
Claimant ID 100226366 v. BP Expl. & Prod., Inc., 671 F. App’x 940, 941 (5th
Cir. 2016) (unpublished) (per curiam).
      BP argues that the district court abused its discretion by failing to review
two of the Panel’s decisions: first, the decision to classify Woodruff’s equipment
rental expenses as fixed; second, the decision not to classify Woodruff as an
excluded real estate developer. Neither argument is convincing.
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                                        No. 18-30588
                                A. The Rental Expenses
       Under the Settlement Agreement, a claimant is compensated for any
reduction in variable profit during 2010, the compensation period.                     The
Agreement defines variable profit as the sum of monthly revenue over the
relevant period minus variable expenses over the same period. Fixed expenses
are not subtracted from monthly revenue.
       Here, the parties disagree about how to classify certain equipment rental
expenses, which Woodruff labeled as COGS in its supporting documents. The
Agreement deals with COGS and rental expenses in two provisions. In Exhibit
4C, the Agreement sets a baseline rule that “COGS will be treated as a variable
expense.” Rental expenses are listed, however, in a second relevant provision,
Exhibit 4D. This exhibit breaks 46 different expenses into fixed and variable
costs. 2 The list of “Fixed Costs” contains “Rental Expenses.” The primary issue
is whether Woodruff’s rental expenses should be classified as fixed or variable.
       We have already opined on this issue in two separate cases. As we have
previously held, when the Claims Administrator or Appeals Panel classifies an
expense as fixed or variable, it must classify that “expense according to its
substantive nature, rather than deferring to the claimant’s characterization.”
BP Expl. & Prod., Inc. v. Claimant ID 100185315, No. 18-30331, 2019 WL
507598, at *2 (5th Cir. Feb. 8, 2019); see also BP Expl. & Prod., Inc. v. Claimant
ID 100094497 (Texas Gulf Seafood), 910 F.3d 797, 802 (5th Cir. 2018). Here,
it is unclear that the Panel perfectly followed this directive. Nevertheless, the
record supports the Panel’s decision. 3 And BP can point to no other evidence
showing that the Panel erred.


       2   This provision is referenced as “Attachment A” in Exhibit 4C.

       3In its profit and loss statements for 2010, Woodruff listed rental expenses, and the
monthly payment was constantly between $53,518 and $53,524. In other words, its rental
expenses did not vary at all in 2010.
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                                      No. 18-30588
       Even if the Panel did err, the Panel’s classification affects only a single
claimant’s case. Claimant ID 100196090 v. BP Expl. & Prod., Inc., No. 18-
30137, 2018 WL 6600969, at *3 (5th Cir. Dec. 13, 2018) (unpublished) (per
curiam) (finding no abuse of discretion where the petitioner raised “a factual
dispute” that was “narrowly confined to the facts” of the case). The district
court does not abuse its discretion in failing to review a one-off decision that
does not affect how the Settlement Agreement will be administered. 4 Claimant
ID 100051301 v. BP Expl. & Prod., Inc., 694 F. App’x 236, 239 (5th Cir. 2017)
(unpublished) (per curiam) (holding that the district court does not abuse its
discretion in declining to review a “factbound and claimant-specific question”).
Accordingly, we hold that the district court did not abuse its discretion in
declining to review the Panel’s ruling on rental expenses.
                   B. The Real Estate Developer Exclusion
       BP also argues that the district court abused its discretion when it failed
to review the Panel’s decision to not classify Woodruff as a real estate developer
under the Settlement Agreement. BP argues that this decision was an error
because Woodruff was affiliated with a real estate developer. 5




       4BP argues that Appeals Panels are split when determining whether COGS are fixed
or variable. We disagree. Any former split was resolved by Texas Gulf Seafood. 910 F.3d
797. Following Texas Gulf Seafood, Panels uniformly analyze the economic substance of
expenses.

       5  This issue is governed by two main sources: Section 2.2 and Exhibit 18. Section 2.2
of the Settlement Agreement lists individuals and entities excluded from the class of
claimants. Section 2.2.4.7 contains the relevant exclusion for this case. Section 2.2.4.7
excludes from the class of claimants all “Real Estate Developers, including any Natural
Person or Entity that develops commercial, residential or industrial properties.” The term
“real estate developer” “includes, but is not limited to, any Entity developing an entire
subdivision . . . of real property.” In applying this exclusion, Section 2.2.4 directs Claims
Administrators to base their decisions “on the substantive nature of the business, not the
legal or juridical form of that business.”

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                                       No. 18-30588
       Again, our precedent squarely addresses this issue. We have held that
the “Settlement Agreement does not require [Appeals Panels] to consider
related but legally distinct entities for the purposes of determining exclusions.”
Claimant ID 100153748 v. BP Expl. & Prod., Inc., 708 F. App’x 812, 818 (5th
Cir. 2017) (unpublished) (per curiam); see also Claimant ID 100009540 v. BP
Expl. & Prod., Inc., 680 F. App’x 263, 267 (5th Cir. 2017) (holding that the
Settlement Agreement “makes clear that the proper claimant is the ‘entity’
asserting a business economic damages claim”); BP Expl. & Prod., Inc. v.
Claimant ID 100211268, 706 F. App’x 197, 198 (5th Cir. 2017) (unpublished)
(per curiam) (holding that exclusions apply at the entity level and the Panel
must look at the “substantive nature of [the claimant’s] business, not [its] legal
or juridical form, such as its parent company . . . .”). Since the Panel was not
required to look at Woodruff’s affiliations, it did not err by refusing to consider
those affiliations.
       Given that the Panel committed no error, the district court did not abuse
its discretion by declining to review the Panel’s decision. But even if it did, the
Panel’s decision is not a critical one that will substantially affect how the
Administrator applies the Agreement. 6 The decision turned on the unique
facts before the Panel and affected a single case. See Claimant ID 100153748,


        Exhibit 18 of the Settlement Agreement helps Administrators determine whether an
entity qualifies as a real estate developer. Exhibit 18 does so by instructing Administrators
to review three pieces of evidence: “(a) the claimant’s 2010 tax return, (b) 2010 business
permits or license(s), and/or (c) other evidence of the relevant business’s or individual’s
activities necessary for the Claims Administrator to determine whether the exclusion
applies.”

       6 BP argues that Appeals Panels are split when applying the real estate developer
exclusion to situations in which the claimant is affiliated with a real estate developer. While
some Panels have applied the exclusion in these situations, and others have not, these Panel
decisions turn on their facts, not any conflicting interpretations of the Agreement. See
Claimant ID 100190818 v. BP Expl. & Prod., Inc., 718 F. App’x 220, 222 (5th Cir. 2018)
(unpublished) (per curiam) (“But the purported split does not exist, because the decisions
that Claimant cites turn only on their facts.”).
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                                 No. 18-30588
708 F. App’x at 819 (“The district court decidedly does not abuse its discretion
when it declines to review factual and credibility determinations that affect a
single case.”). We, therefore, hold that the district court did not abuse its
discretion in declining to review the Panel’s ruling on the real estate developer
exclusion.
                                      III.
      For the foregoing reasons, the judgment of the district court is
AFFIRMED.




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