Lake Eugenie Land & Development, Inc. v. BP Exploration & Production, Inc.
785 F.3d 1003
| 5th Cir. | 2015Background
- The Deepwater Horizon Settlement Agreement established a Court-Supervised Settlement Program (CSSP) and a Claims Administrator to process Business Economic Loss (BEL) claims for entities (explicitly including nonprofits) using Exhibits 4B (causation/revenue patterns) and 4C (compensation formula comparing pre- and post-spill revenue).
- The Claims Administrator issued a Policy Announcement (Nov. 30, 2012) that for nonprofits "grant monies or contributions shall typically be treated as revenue" (the Nonprofit‑Revenue Interpretation); BP challenged that interpretation in district court but did not appeal the district court’s December 12, 2012 email affirmance at that time.
- Three nonprofit claimants obtained BEL awards by counting donations/grants (one a cy pres award, one a large one‑time trust grant, and one in‑kind donated legal services); BP sought discretionary review in the district court, which denied review, and BP appealed those denials under the collateral-order doctrine.
- BP argued the Claims Administrator’s interpretation (1) conflicts with the Agreement’s text, (2) violates Rule 23 and Article III by expanding the class to persons without injury, and (3) even if the interpretation is valid, the three individual awards were improper (windfalls or improperly included atypical/voluntary receipts).
- The Fifth Circuit held appeals were timely (Rule 4 runs from docket entry), reviewed contract interpretation de novo, and reviewed denial of discretionary review for abuse of discretion (effectively de novo because legal questions predominated).
Issues
| Issue | Plaintiff's Argument (BP) | Defendant's Argument (Claimants/CSSP) | Held |
|---|---|---|---|
| Whether the Claims Administrator may treat nonprofit donations/grants as "revenue" under Exhibits 4B/4C | "Revenue" and modifiers like "business revenue," "profit," "earn," and "sales" exclude grants/donations; nonprofits’ receipts are not commercial "business revenue" | Modern nonprofits generate revenue; the Agreement expressly includes nonprofits, so their primary income (donations/grants, including in‑kind) fits the revenue-based framework | Court affirmed the Nonprofit‑Revenue Interpretation as consistent with the Agreement's text and purpose |
| Whether the Nonprofit‑Revenue Interpretation renders the class certification invalid under Rule 23 (commonality, typicality, adequacy, predominance, fairness, ascertainability) | Inclusion of nonprofits with non‑commercial receipts creates members without the "same injury," undermining commonality, typicality, adequacy, predominance, fairness, and ascertainability | Prior Fifth Circuit rulings accepted the Claims Administrator’s approaches; class may include some members who fail individually; predominance and other Rule 23 findings remain unaffected | Court held Doctrine of Orderliness binds it to Deepwater Horizon II; the Interpretation does not violate Rule 23 |
| Whether the Interpretation violates Article III (class contains members lacking standing) | Treating donations as revenue admits entities with no injury traceable to BP, so class includes members without Article III standing | Causal link between spill and diminished donations is plausible; prior rulings treated standing sufficiently under both Denney and Kohen approaches | Court held the Interpretation does not defeat Article III standing and is consistent with prior holdings in Deepwater Horizon II |
| Whether the three individual awards (cy pres, trust grant, donated legal services) were improper despite the Interpretation | Each award was an atypical windfall or not properly within "revenue" (one‑time cy pres/trust grants, volunteer hours valuation) and so should be rejected or excluded from calculations | The compensation framework and Exhibits do not require claimants to prove revenue would have continued; including atypical but real pre‑spill receipts is permitted; donated specialized services are recognized in accounting and free cash resources | Court found no abuse of discretion in denying review of each award and upheld inclusion of those receipts as revenue under the Interpretation |
Key Cases Cited
- In re Deepwater Horizon, 732 F.3d 326 (5th Cir. 2013) (addressed revenue/expense accounting method and remanded)
- In re Deepwater Horizon, 739 F.3d 790 (5th Cir. 2014) (affirmed Claims Administrator interpretations and upheld class certification under Rule 23 and Article III)
- In re Deepwater Horizon, 744 F.3d 370 (5th Cir. 2014) (resolved remand regarding matching revenues and expenses and implementation)
- Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (abuse‑of‑discretion standard for district court’s decision to entertain declaratory relief)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (elements of Article III standing)
- Denney v. Deutsche Bank AG, 443 F.3d 253 (2d Cir. 2006) (class must be defined so that anyone within it would have standing)
- Kohen v. Pac. Inv. Mgmt. Co., 571 F.3d 672 (7th Cir. 2009) (permissive approach focusing on named plaintiffs’ standing at certification)
- Bell Atl. Corp. v. AT&T Corp., 339 F.3d 294 (5th Cir. 2003) (predominance concerns when damages not susceptible to formulaic calculation)
- Chembulk Trading LLC v. Chemex Ltd., 393 F.3d 550 (5th Cir. 2004) (contract interpretation should give effect to all terms)