An NBA Player’s Claim for Millions of Dollars in Damages Due to the BP Oil Spill Reversed by 5th Circuit

BP Expl. & Prod. v. Claimant ID 100281817, No. 18-30394, 2019 U.S. App. LEXIS 8325 (5th Cir. Mar. 20, 2019).

By: Roy E. Lambert

In 2006, David West negotiated a five-year, $45 million contract with the New Orleans Hornets (now “New Orleans Pelicans”). The contract was a “front-loaded” contract, which meant he was paid more money annually in the beginning of the contract and less toward the end. West received all $45 million that he was guaranteed. In 2010, the Deepwater Horizon oil spill occurred in the Gulf of Mexico. West, receiving less money in the fourth year of his contract, claimed the BP oil spill caused him to lose $1.5 million in earnings.Under a settlement agreement known as the Deepwater Horizon Economic and Property Damages Settlement Agreement,[1] West filed an “individual Economic Loss Claim” to a BP claims administrator. After reviewing West’s tax records, the administrator determined that West was entitled to over $1.4 million. BP unsuccessfully urged the claims appeal panel to reverse the determination. BP then asked the United States District Court, Eastern District of Louisiana, to review the decision. However, the district court denied discretionary review without explanation. BP subsequently filed a timely appeal to the United States Court of Appeals for the Fifth Circuit.In a decision written by Judge Andrew S. Oldham, the Fifth Circuit considered (1) whether claimants can recover from non-spill-related economic loss under the BP settlement agreement and (2) whether West met the attestation requirements to sustain a loss claim. The applicable standard of review is abuse of discretion.[2] Although denying a request for review on a recurring issue constitutes an abuse of judicial discretion, denying a request to review a non-pressing question of interpretation or implementation of the Settlement Agreement is not.[3] Because the Settlement Agreement is a contract, its interpretation is a “question of law,”[4] which is reviewed de novo.[5]The court first considered the contractual provisions pertaining to West’s claim. The Individual Economic Loss Claim document describes a loss as one involving a natural person who loses earnings from employment “due to or resulting from the [Deepwater Horizon oil spill].”[6] Because “loss” was not clearly defined by the contract, the court looked to the plain meaning of the word.[7] According to Black’s Law Dictionary, a “loss” is an unexpected diminution of wages or income that could support a claim for civil damages.[8] The court rejected West’s contention that the Settlement Agreement’s calculation worksheet proved a loss, stating that his argument “puts the cart before the horse.”[9] The threshold question before calculating a loss is whether the asserted loss resulted from the oil spill. Second, the court examined West’s alleged unexpected loss. West received all the money to which he was contractually entitled. Consequently, West did not suffer a loss or damage; his front-loaded contract was the cause for his diminution in wages.The court concluded that because the issues were purely legal questions, it reversed the decision of the district court. Judge Haynes wrote a separate concurring and dissenting opinion.  She agreed that West’s loss was not caused by the oil spill. However, remanding the case would have been necessary to evaluate the causation argument. Additionally, failing to remand the case to the district court was inconsistent with recent jurisprudence.[1] BP Expl. & Prod. v. Claimant ID 100281817, No. 18-30394, 2019 U.S. App. LEXIS 8325, at *4 (5th Cir. Mar. 20, 2019) (describing the Settlement Agreement as a contract).[2] Holmes Motors v. BP Expl. & Prod., 829 F.3d 313, 315 (5th 2016).[3] Claimant ID 100212278 v. BP Expl. & Prod., 848 F.3d 407, 410 (5th 2017).[4] Citing In re Deepwater Horizon (Deepwater Horizon I), 732 F.3d 326, 345 (5th Cir. 2015) (adding that an error of law constitutes an abuse of discretion).[5] In re Deepwater Horizon, 783 F.3d 1003, 1011 (5th Cir. 2015).[6] Claimant ID 100281817, at *5.[7] See BP Expl. & Prod. V. Claimant ID 100094497, 910 F.3d 797, 801 (5th Cir. 2018).[8] Loss, Black’s Law Dictionary (10th ed. 2014).[9] Claimant ID 100281817, at *6.