In Re: Deepwater Horizon ( 2014 )

Case: 13-30315 Document: 00512635492 Page: 1 Date Filed: 05/19/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
___________________
No. 13-30315
___________________
IN RE: DEEPWATER HORIZON
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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
Case: 13-30315 Document: 00512635492 Page: 2 Date Filed: 05/19/2014
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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No. 13-30315
--------------------------------------------------------------------------------------------------
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
USDC No. 2:10-MD-2179
__________________
ORDER ON PETITION FOR PANEL REHEARING
Before DENNIS, CLEMENT, and SOUTHWICK, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
BP Exploration & Production, Inc. petitions for rehearing of our March
3, 2014 decision in In re Deepwater Horizon, 744 F.3d 370 (5th Cir. 2014). We
upheld the district court’s opinion that because of the terms of the parties’
settlement, claimants need not present direct evidence of causation during the
processing of claims. On rehearing, BP argues that if the settlement is
interpreted as not requiring evidence of causation at the claims-processing
stage, that effectively “permit[s] the expansion of class membership during the
claims-processing stage, resulting in awards to claimants whose injuries lack
any causal nexus to the defendant’s conduct.” We disagree. What follows is a
response to the rehearing argument, and our prior opinion remains fully in
effect. The petition for rehearing is DENIED.
Judge CLEMENT dissents from this denial of panel rehearing for the
reasons stated in her panel dissent of March 3, 2014, In re Deepwater Horizon,
744 F.3d 370, 380-84 (5th Cir. 2014) (Clement, J., dissenting), and in the
dissent from rehearing en banc.
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FACTUAL AND PROCEDURAL BACKGROUND
A thorough discussion of the relevant background of this case may be
found in this panel’s opinion of October 2013, In re Deepwater Horizon, 732
F.3d 326, 332-39 (5th Cir. 2013) (“Deepwater Horizon I”), and that of March
2014, 744 F.3d 370 (“Deepwater Horizon III”). A different panel’s opinion of
January 2014, affirmed the district court’s approval of the Class Definition and
the Class Settlement. See In re Deepwater Horizon, 739 F.3d 790, 795 (5th Cir.
2014) (“Deepwater Horizon II”).
On rehearing in the current case, BP seeks reconsideration of whether
the Claims Administrator’s interpretation of the Settlement Agreement
expands the settlement class beyond its certified definition. We had based our
conclusions in part on Deepwater Horizon II. We noted that the earlier decision
had held that Article III, the Rules Enabling Act, and Rule 23 requirements
were fully met at the class certification stage. See 744 F.3d at 374-75. We
concluded that no new potential constitutional or other deficiencies existed in
the procedures for resolving individual claims. See 744 F.3d at 376 n.1. In
light of the petition for rehearing, we will analyze why the manner in which
claims are presented and resolved is not fundamentally flawed.
The principal objection on rehearing focuses on the Claims
Administrator’s interpretation of the Settlement Agreement, exemplified by a
Policy Statement issued by the Claims Administrator on October 10, 2012, and
approved by the district court on April 9, 2013. The Policy Statement was
developed because of questions that arose after a proposed Settlement
Agreement was agreed upon by the parties in April 2012. As discussed more
thoroughly below, the Policy Statement was issued with input and assent from
BP. The proposed settlement contained an Exhibit 4B (which was later
approved by the district court), entitled “Causation Requirements for
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Businesses Economic Loss Claims.” Instead of direct evidence of a causal
connection between the Deepwater Horizon disaster and the claimant’s
business losses, the Exhibit described four geographic zones, several types of
businesses, formulae for presenting economic losses, and various presumptions
regarding causation that apply to specific combinations of those criteria. The
parties agreed that a claimant’s satisfaction of those criteria would establish
causation for the purposes of the Settlement Agreement.
Agreement occurred after all parties had an opportunity to decide
whether these indicia of causation were sufficient equivalents to direct
evidence of causation to satisfy their respective evidentiary concerns. The
factors set out in Exhibit 4B were acceptable to the parties at the time, and
remained so through approval of the Settlement Agreement in December 2012.
After the proposed settlement was filed in April 2012, the Claims
Administrator asked the parties what should be done with claims in which
payment under the terms of Exhibit 4B would be permissible, but a cause for
the business losses other than or in addition to the Deepwater Horizon disaster
seemed possible. The Policy Statement expressed the agreement by all
participants, including BP, on the answer to the Claims Administrator’s
question. We will discuss that answer in detail below. We say now, though,
that BP argues it unconstitutionally allows the Claims Administrator to pay
claims regardless of whether those losses were actually caused by BP’s conduct.
We conclude that causation is never abandoned as a requirement.
DISCUSSION
The elements of Article III standing “are not mere pleading requirements
but rather an indispensable part of the plaintiff’s case [and] each element must
be supported . . . with the manner and degree of evidence required at the
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successive stages of the litigation.” Lujan v. Defenders of Wildlife, 504 U.S.
555, 561 (1992). The element of standing being contested in this case is
traceability, i.e., the causal connection between a plaintiff’s injury and a
defendant’s conduct. Allegations of causation are sufficient to satisfy Article
III in a class action complaint and in a class definition. 1 Exhibit 4B and the
October 10, 2012 Policy Statement are evidentiary frameworks that have no
effect on the claimants’ allegations or on the class definition. They are an
agreed-upon methodology for presenting proof establishing that a claimant’s
loss was caused by the Deepwater Horizon disaster. Any claim not meeting the
requirements of Exhibit 4B is precluded from recovery. Through Exhibit 4B,
the parties agreed that claims would be governed by an objective formulae. BP
argues that an additional duty on the Claims Administrator exists to ensure
that every claim contains a direct causal nexus to BP’s conduct. That
requirement does not arise under the agreed terms of Exhibit 4B, and it does
not arise under constitutional or other requirements for a class action.
I. Exhibit 4B
Exhibit 4B does not negate the claimants’ allegations of Article III
causation. Indeed, BP has never challenged Exhibit 4B. It has not argued, for
example, that the approach of the exhibit violates Article III, such as not being
1 See Cole v. Gen. Motors Corp., 484 F.3d 717, 723 (5th Cir. 2007) (concluding that during Rule 23
proceedings it is “sufficient for standing purposes that the plaintiffs seek recovery for an economic
harm that they allege they have suffered,” because ‘‘a federal court must assume arguendo the merits
of [each claimant’s] legal claim’’ (citation and quotation marks omitted)); see also Kohen v. Pac. Inv.
Mgmt. Co., 571 F.3d 672, 677 (7th Cir. 2009) (concluding that “one named plaintiff with standing . . .
is all that is necessary” even where “[i]f the case goes to trial, this plaintiff may fail to prove injury . .
. . [A]t the outset of the case many of the members of the class may be unknown, or if they are known
still the facts bearing on their claims may be unknown. Such a possibility or indeed inevitability does
not preclude class certification . . . .” (citation omitted)); Denney v. Deutsche Bank AG, 443 F.3d 253,
263-64 (2d Cir. 2006) (‘‘We do not require that each member of a class submit evidence of personal
standing. At the same time, no class may be certified that contains members lacking Article III
standing. The class must therefore be defined in such a way that anyone within it would have
standing.’’ (citations omitted)).
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protective enough of causation or allowing too many questionable claims to
receive damage awards. Exhibit 4B explicitly contains no requirement that
the Claims Administrator perform an additional calculation or take an
additional step to ensure that each paid claim has a direct causal nexus to BP’s
conduct. In fact, it says the opposite: “If you are a business [meeting certain
criteria], you are not required to provide any evidence of causation.” It
continues: “If you are not entitled to a presumption as set forth . . . above [and
you meet other criteria] you must satisfy the requirements of one of the
following” formula. BP has not argued that Exhibit 4B itself is
unconstitutional, but it maintains that the Constitution has been violated
when the Claims Administrator applies it.
The dissent in Deepwater Horizon II identified the Policy Statement as
the source of the constitutional defect. See In re Deepwater Horizon, 739 F.3d
at 823 (Garza, J., dissenting). The dissent stated that Exhibit 4B “seemingly
preserves a threshold causation requirement while simply eliminating the
need for specific evidence to prove it when making a settlement claim. In other
words, causation ostensibly remains an element of a claim even though proof
is not a central feature of the claims process.” Id. The Policy Statement, the
dissent argued, then eliminated the requirement of causation. Id. We
disagree. As we will explain, the Policy Statement was at most a clarification
or an application of the terms of the exhibit to a specific factual situation. It
did not amend the basic approach. BP has not even argued, much less shown,
that Exhibit 4B is constitutionally infirm. We conclude that it is not.
BP has urged in multiple filings in this case that the Claims
Administrator’s interpretation of the Settlement Agreement has expanded the
class beyond its certified definition. We read BP’s arguments to say that the
Claims Administrator has interpreted the evidentiary framework in such a
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way as to expand the settlement class. In other words, BP argues that there
are certain claimants who, while they meet every explicit evidentiary standard
in Exhibit 4B, should be denied recovery by the Claims Administrator if their
claim lacks an actual causal nexus to the Deepwater Horizon disaster. The
October 10, 2012 Policy Statement was developed in order to address that
scenario. We discuss it next.
II. The October 10, 2012 Policy Statement
As a part of claims processing, the Claims Administrator issues
occasional policy statements on various issues. The October 10, 2012 Policy
Statement addressed a specific issue relevant to causation. As that Policy
Statement explains, it was agreed after discussions among the parties and the
Claims Administrator that a claimant establishes causation by satisfying the
criteria set forth in Exhibit 4B even if additional or alternative explanations
for a claimant’s loss might exist:
The Settlement Agreement represents the Parties’ negotiated
agreement on the criteria that must be satisfied in order for a
claimant to establish causation. Once causation is established, the
Settlement Agreement further provides specific formulae by which
compensation is to be measured. All such matters are negotiated
terms that are an integral part of the Settlement Agreement. The
Settlement Agreement does not contemplate that the Claims
Administrator will undertake additional analysis of causation
issues beyond those criteria that are specifically set out in the
Settlement Agreement. Both Class Counsel and BP have in
response to the Claims Administrator’s inquiry confirmed that this
is in fact a correct statement of their intent and of the terms of the
Settlement Agreement. 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
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provided such claimants have satisfied the specific causation
requirements set out in the Settlement Agreement. Further, the
Claims Administrator will not evaluate potential alternative
causes of the claimant’s economic injury, other than the analysis
required by Exhibit 8A of whether an Individual Economic Loss
claimant was terminated from a Claiming Job for cause.
The above language does not abandon any claimant’s allegation of
Article III causation. Left in place is that the Claims Administrator must
establish causation for settlement purposes with respect to every claim under
the specific criteria and formulae that BP and Class Counsel agreed would be
utilized for that purpose. The Policy Statement makes clear that there is no
“additional analysis of causation issues beyond those criteria” in Exhibit 4B.
It is true that the phrase appears that claims will be paid “without regard to
whether such losses resulted or may have resulted from a cause other than”
the Deepwater Horizon disaster. This language, though, is not an assertion by
the Claims Administrator that he will pay claimants regardless of whether
their losses are alleged to be traceable to BP’s conduct. We cannot ignore the
context for the language. The Policy Statement states this: “Once causation is
established” under the approach of Exhibit 4B, the Claims Administrator will
not be concerned with the possibility that a particular claimed injury might
have been caused in whole or part by other events.
To summarize, causation is established by certain factors set out in
Exhibit 4B that the parties agreed were a sufficient indirect way to satisfy the
goal of connecting a claim to BP’s conduct in the Gulf. The parties did not
reject the need to establish a connection. Instead, they agreed to a means for
doing so that sufficiently satisfied each party’s litigation interests. The Policy
Statement itself explains that its treatment of possible alternative causes was
“a correct statement of their intent and the terms of the Settlement
Agreement.” Exhibit 4B can be analogized to a stipulation at trial. If parties
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stipulate to an element of a claim, no proof at trial will be needed. Here, they
stipulated to the form of the proof that would demonstrate causation.
We do not accept that the phrasing of the October 2012 Policy Statement,
particularly the “without regard to whether such losses resulted” from other
causes, either discards the carefully crafted approach of Exhibit 4B or creates
an unconstitutional breach in the boundaries of the Class Definition. It also
does not negate the claimants’ allegations of Article III causation.
We reach these conclusions, first, because neither the Policy Statement
nor Exhibit 4B has anything to do with allegations in the complaint or with
the Class Definition. Deepwater Horizon II held that Article III standing in
this case has been met at the pleading stage and in the Class Definition. 739
F.3d at 804-805. We accept that conclusion. The Policy Statement and Exhibit
4B apply later during settlement administration when the Claims
Administrator examines the claimants’ documentation. Second, the parties
agreed that the evidentiary criteria of Exhibit 4B were a sufficient substitute
for a full trial of factual causation by a preponderance of the evidence. Finally,
the Policy Statement does not alter Exhibit 4B. The “without regard” language
is inartful but not invalidating. In fact, there was substantial regard given to
causation in the creation of the elaborate criteria that substituted for proof of
factual causation as a separate element of the claim.
The Policy Statement did nothing more than state the most reasonable
explanation of what Exhibit 4B meant if some other cause might appear during
claims processing to have been a factor. The accepted conclusion follows
readily from Exhibit 4B, which explicitly does not require direct evidence of
causation but instead requires each claimant to present documentation that
substituted for proof by a preponderance of the evidence at trial. The Claims
Administrator did not thereby expand the class beyond its definition. Exhibit
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4B was the compromise reached by the parties on how an extremely difficult
part of the claims process was to be handled. The Policy Statement simply
states that the compromise still controls even when its accuracy as a substitute
for direct evidence of causation as to a particular claim is questionable.
In settling this lawsuit, the parties agreed on a substitute for direct proof
of causation by a preponderance of the evidence. By settling this lawsuit and
agreeing to the evidentiary framework for submitting claims, the claimants did
not abandon their allegations of Article III causation.
The petition for rehearing is DENIED.
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