ID 100190818 v. BP Exploration & Prodn, I

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 17-30099 FILED
January 3, 2018
Lyle W. Cayce
CLAIMANT ID 100190818, Clerk
Requesting Party - Appellant
v.
BP EXPLORATION & PRODUCTION, INCORPORATED; BP AMERICA
PRODUCTION COMPANY; BP, P.L.C.,
Objecting Parties - Appellees
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:16-CV-17706
Before DAVIS, HAYNES, and COSTA, Circuit Judges.
PER CURIAM:*
This case comes to us from the Deepwater Horizon Economic & Property
Damages Settlement Agreement (“Settlement Agreement”). Claimant sought
recovery under the Settlement Agreement, but the Claims Administrator
denied the claim. The Appeal Panel affirmed the denial. Claimant then sought
discretionary review in the Eastern District of Louisiana, but the district court
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
No. 17-30099
denied review. Claimant has appealed that denial. Because the district court
acted within its discretion when it declined to review Claimant’s case, we
affirm.
I. Background
Claimant is in the business of buying and leasing trucks and heavy
equipment. Its sole shareholder, Jim Bockman, also wholly owns Claimant’s
only customer, JGB, LLC (“JGB”), a dirt-moving business. Both companies
have filed a Business Economic Loss Claim to the Court Supervised Settlement
Program under the Settlement Agreement, seeking recovery for oil-spill
related losses. Only Claimant’s claim is at issue in this case.
Under Exhibit 4B of the Settlement Agreement, a claimant may recover
only for spill-related losses. Exhibit 4B requires claimants to satisfy revenue
tests, which compare the claimant’s revenue during a pre-spill benchmark
period to the claimant’s revenue during a particular post-spill period. The
Claims Administrator has also issued a related policy statement, Policy 328
v.2. Under the Policy, the Claims Administrator does not typically count
certain items as “revenue” for purposes of Exhibit 4B’s revenue tests. Relevant
to this appeal, the Policy excludes “related party transactions that are not
arm’s length transactions.” The reason is that revenue from such transactions
is “not typically earned as revenue under the normal course of operations in an
arm’s length transaction.”
On initial review, the Claims Administrator determined that Claimant
failed Exhibit 4B’s revenue tests because all of Claimant’s revenue came from
a related party, JGB, and the Claims Administrator could not determine
whether their transactions were at arm’s length based on the information
Claimant provided. In particular, the Claims Administrator cited “sporadic
rental payments in 2009 and 2010,” showing that Claimant and JGB “did not
honor th[eir] rental agreements.” Therefore, pursuant to Policy 328 v.2, the
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Claims Administrator excluded all of Claimant’s revenue in calculating
Claimant’s revenue for Exhibit 4B’s revenue tests. In turn, Claimant failed
those tests, and its claim was denied.
Claimant requested re-review, and the Claims Administrator denied the
claim. The Claims Administrator again cited “sporadic rental payments,”
specifically under three leases between Claimant and JGB, where the resulting
payments were inconsistent with contracted terms. Claimant sought
reconsideration and was again denied recovery. Claimant subsequently
appealed to the Appeal Panel. The Appeal Panel affirmed the denial,
concluding that the sporadic payments evidenced related-party transactions
that were not at arm’s length, as they showed “a pattern of one related party
paying another when it can afford to or when the owner wishes to,” which “is
not an arrangement one would expect to find in the marketplace.”
After the Appeal Panel’s decision, Claimant petitioned for discretionary
review in the Eastern District of Louisiana. The district court declined to
review the appeal. Claimant now appeals the district court’s decision.
II. Jurisdiction and Standard of Review
We have appellate jurisdiction over this appeal under the collateral order
doctrine. In re Deepwater Horizon, 785 F.3d 1003, 1009 (5th Cir. 2015). This
court reviews the 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).
Although we have not defined the exact limits of a district court’s
discretion to deny review, we have said a district court abuses its discretion
when: (1) the request for review raises an issue that has split the Appeal Panels
and would substantially impact the Settlement Agreement’s administration
once resolved; (2) the dispute concerns a pressing question about how to
interpret or implement the Settlement Agreement’s rules; (3) the Appeal Panel
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No. 17-30099
misapplied or contradicted the Settlement Agreement, or had the clear
potential to do so; or (4) the district court’s decision was premised on an error
of law. Claimant ID 100212278 v. BP Expl. & Prod., Inc., 848 F.3d 407, 410
(5th Cir. 2017) (per curiam); Holmes Motors, Inc., 829 F.3d at 315; In re
Deepwater Horizon, 785 F.3d 986, 999 (5th Cir. 2015) (“Deepwater Horizon II”).
We have been careful not to transform discretionary review into
mandatory review. Deepwater Horizon II, 785 F.3d at 999. Accordingly, the
district court need not review a claim that raises a non-pressing Settlement
Agreement interpretation issue, or that merely challenges “the correctness of
a discretionary administrative decision in the facts of a single claimant’s case.”
Claimant ID 100212278, 848 F.3d at 410 (quoting In re Deepwater Horizon,
641 F. App’x 405, 410 (5th Cir. 2016)); see also Holmes Motors, Inc., 829 F.3d
at 316–17.
III. Discussion
The district court did not abuse its discretion when it declined to review
the Appeal Panel’s decision, because Claimant has not shown that any of the
abuse-of-discretion factors are present. First, Claimant’s request does not
raise an issue that has split Appeal Panels and that would, once resolved,
substantially impact administration of the Settlement Agreement. According
to Claimant, Appeal Panels have reached divergent results on whether related-
party transactions are at arm’s length, which Claimant says indicates
disagreement over how to define “arm’s length transaction.” But the purported
split does not exist, because the decisions that Claimant cites turn only on their
facts.
In those decisions, the Appeal Panels relied on specific facts in the record
to reach their conclusions, including how a particular claimant conducted its
businesses, whether a claimant’s related companies also sought recovery under
the Agreement, and the existence of indicia of special treatment to a related
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party. In one case, the Appeal Panel explained that its decision was based on
“an extensive review of the record,” and in another case it remanded so that
the Claims Administrator could “look more closely at the [claimant’s] revenue
data.” Likewise, another case explained that “the circumstances inform[ed]
the [Appeal Panel’s] evaluation.” Generally, the Appeal Panels inquired into
whether related-party transactions reflected fair-market terms or gave special
advantages to related parties. Because Claimant’s alleged split reflects only
that Appeal Panels have reached different decisions based on different facts,
Claimant has not shown that resolving the issue presented in its request would
substantially impact the Settlement Agreement’s overall administration.
This appeal also does not concern a pressing question about how to
interpret or implement the Settlement Agreement’s rules. As to interpreting
the Settlement Agreement, we have made clear that “its words [are] given their
plain meaning unless the provision is ambiguous.’” Holmes Motors, Inc., 829
F.3d at 315 (quoting Breaux v. Halliburton Energy Servs., 562 F.3d 358, 364
(5th Cir. 2009)). Indeed, both parties essentially agree that, where related
parties are involved, an “arm’s length transaction” is one that is substantively
the same as transactions among strangers. See Black’s Law Dictionary (10th
ed. 2014).
Instead, what BP and Claimant disagree about is whether Claimant’s
transactions with JGB meet the arm’s length standard in light of the evidence.
We require review only when the Appeal Panel’s decision involves a non-
isolated, pressing question about interpreting or implementing the Settlement
Agreement’s rules. Claimant ID 100212278, 848 F.3d at 410. Claimant has
not shown a substantial error of interpretation or implementation. 1 Nor has
1 Claimant argues that the Appeal Panel should have concluded that the disputed
transactions were arm’s length transactions because Claimant provided an expert affidavit
and IRS reviews of its tax returns, which Claimant says show that the transactions meet the
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No. 17-30099
Claimant shown that the facts of its case, involving concededly irregular
payments from a company wholly owned by Claimant’s sole shareholder, arise
so frequently in implementing the Settlement Agreement as to present a
pressing question that requires review.
Finally, the Appeal Panel’s decision did not misapply or contradict the
Settlement Agreement, and nor did it have the clear potential to do so. We do
not require district courts to consider every claim involving a possible
misapplication or contradiction, but only those where the Appeal Panel’s
decision is incongruent with the Settlement Agreement’s language. See
Claimant ID 100250022 v. BP Expl. & Prod., Inc., 847 F.3d 167, 170 (5th Cir.
2017) (per curiam). We cannot say the Appeal Panel acted incongruently with
the Settlement Agreement. It concluded that Claimant’s transactions with
JGB were “different from what would have been coordinated with an unrelated
third party . . . in the marketplace,” which is consistent with the plain meaning
of “arm’s length transaction.” Further, the purpose of Exhibit 4B’s revenue
tests is to allow recovery only for spill-related losses. Excluding revenue that
seems to be based on “one related party paying another when it can afford to
or when the owner wishes to” is consistent with that purpose.
Claimant’s request for review raises none of the abuse-of-discretion
factors. Thus, the district court acted within its discretion when it denied
Claimant’s request, and its decision was not premised on any error of law. On
that basis, we AFFIRM the district court’s decision.
definition of “arm’s length charge” under a tax regulation, 26 C.F.R. § 1.482-2(c)(2).
Assuming, arguendo, that § 1.482-2(c)(2)’s arm’s length standard is relevant here, the Appeal
Panel’s conclusion that this evidence did not outweigh other evidence in the record is not a
substantial error of interpretation or implementation but, rather, “a discretionary
administrative decision in the facts of a single claimant’s case.” Claimant ID 100212278, 848
F.3d at 410.
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