Additional Blogs of Interest

BP Contests Walmart’s Economic Loss Claims

Posted by Whitcomb, Selinsky, PC Staff on Mar 11, 2020 12:11:29 AM

The effects of the explosion from the Deepwater Horizon in the Gulf of Mexico on April 20, 2010 are still present today. The explosion killed 11 people and leaked 3.19 million barrels of oil into the Gulf of Mexico on the ocean floor 42 miles off the coast of Louisiana. It is likely that much of the oil spilled is still present in the Gulf today. As a result of the explosion and spill, a settlement agreement was made between BP and class action representatives that claimed damages from the disaster. The agreement included provisions for business economic-loss (BEL) claims for those companies that incurred damages resulting from the explosion and spill.

BP challenged (BEL) awards made to Wal-Mart stores, East, L.P. Its challenge was based on Walmart changing its accounting system one month after the explosion on the Deepwater Horizon. The accounting change affected the amount of Walmart’s BEL claims, which are based upon the difference between expenses before and after the disaster. BP contended that the change resulted in “artificially inflated award amounts.”

In June 2015, Walmart submitted BEL claims for each of its nine stores located along the Gulf Coast. BP questioned the validity of five of the claims. The United States Court of Appeals consolidated these claims in an appeal filed by BP. To facilitate reconciliation of the differences between the accounting systems, Walmart submitted supplemental documentation to the Claims Administrator for the claims in April 2017. After reviewing Walmart’s claims with PWC accountants, the Claims Administrator issued awards to Walmart in 2018 of over $17.4 million.

BP Appeal

BP appealed the Court Supervised Settlement Program (“CSSP”) awards. It argued the change in Walmart’s accounting system “made its profit and loss data for the pre-May 2010 period inconsistent with the subsequent period.” BP argued to the Appeal Panels that Walmart artificially inflated its awards by changing its accounting system. The change in accounting systems caused the pre-disaster period to appear more profitable compared to the later period following the Deepwater Horizon disaster.

U.S. Court of Appeals Decision

The U.S. Court of Appeals was tasked with determining whether it should reverse the district court’s decision not to review a final award under the CSSP settlement program. The Court applied the abuse-of-discretion standard to the district court’s refusal to review the final award. In applying the standard, the Appeals Court considered whether the final award “actually contradicted or misapplied the Settlement Agreement or had the clear potential to contradict or misapply the Settlement agreement.”

The Appeals Court noted the district court would not abuse its discretion if it denied a request for review that “involves no pressing question of how the Settlement Agreement should be interpreted and implemented,” but instead raised questions as to whether the discretionary administrative decision is correct or not.

Misapplication of Settlement Agreement

BP argued that the case BP Expl. & Prod., Inc. v. Claimant ID 100094497, 910 F.3d 797 (5th Cir. 2018) demonstrated that a claimant that changes its accounting system during the relevant time period, as Walmart did, must provide information on how each expense was categorized before and after the change. Walmart responded by providing supplemental information to the Claims Administrator, which the court concluded was necessary for the change in its accounting system to be factored into the calculations. The court also noted that the Claim Administrator’s calculation notes indicate the accounting systems were reconciled. The U.S. Court of Appeals held BP did not show that the Claims Administrator or any Appeal Panel misapplied the Settlement Agreement, nor was there potential for any contradiction or misapplication.

BP’s Request for Walmart Expenses

BP argued that Walmart needed to provide additional information describing how each expense in Walmart’s pre-May 2010 accounting systems was classified in its post-May 2010 system. The U.S. Court of Appeals held it was “unconvinced by BP’S pleas for more information.” It stated it was presiding over an exercise of judgment by the district court, Appeal Panels and Claims Administrator whether there was enough evidence under the Settlement Agreement to make an award. The Court of Appeals found that BP’s challenge to the Appeal Panels’ decisions raised issues regarding the “correctness of a discretionary administrative decision in the facts of a single claimant’s case.” The U.S. Court of Appeals concluded that the district court’s denial of a request for discretionary review was not an abuse of discretion.

Conclusion

The U.S. Court of Appeals held that the district court’s denial of a request for discretionary review was not an abuse of discretion. This case demonstrates the lengthy amount of time it takes for legal issues to be resolved following a disaster. The events of the Deepwater Horizon disaster occurred nearly ten years ago, and the question of Walmart’s economic loss claims were not resolved until January 14, 2020. Environmental restoration will take even longer. If your company has sustained a casualty loss resulting from a disaster, or if you would like more information on this case, please contact Whitcomb Selinsky PC at 303-534-1958.
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Tags: Trial Lawyer

Francisco Ruybalid had a very bad day recently

Posted by Kimberly Craven on Jul 25, 2019 6:01:31 PM

Colorado attorney Francisco Ruybalid had one of those Mondays we all dread. That was when he found out he would not be reimbursed for the more than $200,000 in legal fees he had wracked up defending himself from misconduct charges while serving as the District Attorney for the Third Judicial District of Colorado.

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Tags: Criminal Defense Attorney, Trial Lawyer

Tips on Preparing for a Successful Deposition

Posted by Daniela Tarolli on Jul 11, 2019 11:02:55 AM

The deposition is an important part of the discovery process in a lawsuit.  Essentially, a deposition is the taking of sworn testimony before trial. Depositions are not limited solely to the parties named in a suit and may be required for any potential witness. Attorneys may take a deposition to see what a witness knows, to preserve the testimony of a witness, or to potentially point out inconsistencies in a witness’s testimony. Additionally, if a witness will be unavailable at trial, a deposition may be read into the record as that witness’s official testimony.

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Tags: Trial Lawyer

How to Perform Basic Contract Evaluation

Posted by Whitcomb, Selinsky, PC Staff on Jul 6, 2019 2:00:34 PM

Given that a contract is an agreement between parties, there are an infinite number of ways that parties can agree and a contract can be written. There are some common contract evaluation methods worth reviewing before signing a contract, however, to ensure that it will suit your needs.

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Tags: Contracts Law, Trial Lawyer

Breaking Up Is Hard to Do: Expulsion of an LLC Member

Posted by Andrew Newell on Feb 23, 2019 9:39:03 AM

“Change the changeable, accept the unchangeable, and remove yourself from the unacceptable.”
—Denis Waitley

It’s hard to argue with this advice from Mr. Waitley, a Naval Aviator turned business consultant and motivational speaker. When faced with an LLC member or members that have become toxic, disagreeable or just plain useless, converting Waitley’s advice into action is essential.

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Tags: Government Contracts, Trial Lawyer

Digital Media: YouTube, Demonetization and the Adpocalypse

Posted by Andrew Newell on Mar 26, 2018 8:38:09 AM

In the past ten years, social media platforms have been the biggest growth story in the world. Controversy usually follows success.  Ask any big business or celebrity.  Social media platforms like YouTube have both.  Twenty years ago scandals played out in supermarket tabloids; now they play out online.  Grainy images and suspiciously unbelievable headlines about Princess Diana and Madonna in the Enquirer have given way to streaming HD video documenting the idiocy of Jake and Logan Paul and the off-color rantings of Felix “PewDiePie” Kjellberg.  The three (Brothers Paul and Kjellberg) collectively have more than 91 Million subscribers on YouTube, with a single video post routinely exceeding 10 Million views.

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Tags: Communications Law, Trial Lawyer

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