Schexnaydre Law Firm, LLC

BP's Flawed Argument on Appeal

 

By David Schexnaydre, Esq.

BP's argument regarding the Claims Administrator's application of the terms of the Settlement Agreement is flawed.  To support its argument, BP ignores certain words in the Settlement Agreement and then adds others. BP admits that "compensation is measured by determining the amount of decrease in the claimant's variable profits in defined months before and after the Spill.  The Settlement Agreement instructs that variable profits are to be calculated as follows:

1. Sum the monthly revenue over the period.

2. Subtract the corresponding variable expenses from revenue over the same time period."

Here is where the disconnect occurs.  BP ignores the phrase "over the same time period" and adds the words "incurred in generating the revenue."  

In order to support its argument that the Claims Administrator is improperly interpreting the Settlement Agreement, BP argues:

"The use of variable profit to measure the compensation amount puts a premium on determining in which months revenue was earned and subtracting the variable expenses incurred in generating the revenue. If the data entered into the methodology does not assign revenue to the correct months and/or does not properly subtract corresponding variable costs, it is impossible to accurately measure variable profit." 

The problem with this argument is that nowhere in the Settlement Agreement does the phrase "incurred in generating the revenue" appear. This is a phrase BP has added in its post-Settlement Agreement motions and appeal memoranda. Many times determining what variable expenses a business "incurred in generating the revenue" would require the business to look back to months that are not "over the same time period" as the revenue.  

But as BP correctly points out, in order to determine the compensation amount, the Claims Administrator must (1) sum the monthly revenue over the period, and (2) subtract the corresponding variable expenses from revenue over the same time period. That is the methodology to which BP agreed. That is the methodology that was the subject of the Fairness Hearing. That is the methodology that was accepted by the Court. But, now, that is the methodology to which BP objects. Instead, BP wants to ignore the fact that the Claims Administrator is required to subtract corresponding variable expenses over the same time period, and instead engage in a process of determining the variable expenses incurred in generating the revenue.

Had BP wanted the Claims Administrator to subtract the corresponding variable expenses incurred in generating the revenue and, moreover, go back to prior time periods to find those "corresponding" variable expenses, then it (a) should have included the phrase "incurred in generating the revenue," and (b) should not have agreed that the "corresponding variable expenses" to be subtracted would be "over the same time frame."  

But BP did neither. Or, maybe they tried and the Plaintiff's Steering Committee negotiated away such a cumbersome process. We will never know. But what we do know is that the Settlement Agreement says what it says. And we also know what it does not say. It does not say "incurred in generating the revenue."  

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