Fifth Circuit Reverses Award of $1.5 Million in Deepwater Horizon Case

May 10, 2019

In a majority ruling, the 5th U.S. Circuit Court of Appeals has ruled that a district court abused its discretion when it denied discretionary review over an award of almost $1.5 million in lost earnings to a professional basketball player pursuant to the Deepwater Horizon Settlement Agreement.
In essence, the majority noted that “in civil litigation, the plaintiff can recover damages only after suffering actual losses.” See Lewis v. Casey, 518 U.S. 343, 349, 116 S. Ct. 2174, 135 L. Ed. 2d 606 (1996).
The basketball player, David West of the New Orleans Pelicans, suffered no such losses “because the player had received every penny specified in his $45 million front-loaded team contract.” In ruling for the appellant, BP Exploration & Production, rather than simply remanding the case, the appellate court noted that “remand was not necessary because the decision (by the court) to give money to the player actually contradicted or misapplied the (Deepwater Horizon Economic and Property Damages Settlement Agreement), which was a purely legal question of contract interpretation.”
The Deepwater Horizon oil rig exploded on April 20, 2010. At that time, West was four years into a five-year contract. That contract paid West a total of $45 million. But it was “front-loaded,” meaning West’s annual salary decreased every year of the contract—including from 2009 to 2010. West received all $45 million owed to him under the contract.
Still, he submitted an “Individual Economic Loss Claim” under the Settlement Agreement. The Individual Economic Loss Claim form states, on its very first page, that the fund covers only “individuals who have experienced income losses caused by the Spill.” Based on West’s attestation, the Claims Administrator determined West was entitled to $1,412,673.06. BP contested that determination because West “lost” nothing—he received all the money promised by the front-loaded terms of his pre-spill contract.
BP challenged the ruling, but the Appeal Panel affirmed West’s award, concluding that he “established causation because his employer—the Hornets—benefited from presumed causation under the Settlement. It therefore held West needed nothing more to claim ‘lost’ earnings.” BP asked the district court to review the award decision, but it denied discretionary review without explanation, leading to the instant appeal.
The 5th Circuit agreed with BP, noting that West “did not suffer actual and unexpected ‘losses’ or damages. In 2010, he earned exactly what he was entitled to receive under his contract. The fact that West received less money in 2010 than in 2009 does not mean he ‘lost’ anything or was ‘damaged’ in any way. It means only he agreed to a front-loaded contract. And he did so many years before the Deepwater Horizon catastrophe.
“The decision to give money to West ‘actually contradicted or misapplied the Settlement Agreement.’ Holmes Motors, 829 F.3d at 315. Our holding to that effect answers a ‘purely legal question of contract interpretation.’ In re Deepwater Horizon, 785 F.3d at 1011.”
BP Exploration & Prod. v. David West; 5th Cir.; 2019 U.S. App. LEXIS 8325, 2019 WL 1275006; 3/20/19
Attorneys of Record: (for appellants) Lisa Schiavo Blatt, David Weiner, William Perdue, Arnold & Porter Kaye Scholer, L.L.P., Washington, DC; Devin Chase Reid, Esq., Liskow & Lewis, P.L.C., New Orleans, LA. (for appellee) Stephen Henry Kupperman, Esq., David N. Luder, Barrasso, Usdin, Kupperman, Freeman & Sarver, L.L.C., New Orleans, LA.


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