 |
| BP Settlement |
We expect that payments may be restarted shortly, since the opinion essentially lifts the injunction that had frozen payments to Gulf Coast claimants. Here are the precise words from the Court today.
Text of the Opinion Dated May 19, 2014
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.
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 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 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 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)).
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 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 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
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 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 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.
