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BP Business Economic Loss Claim Appeal 2016-977: Drug store in tourist area not necessarily tourism


The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms.

Claimant appeals the Program’s denial of a BEL award for several stores in Louisiana. The subject store is located near the XXXXX, with an address of XXXXX. This panelist’s decision is based upon the specific facts found as to this particular address and does not necessarily apply to other locations appealed from.

Claimant’s appeal lives or dies based upon whether it can establish presumed economic causation by attaining Tourism status. Initially, it argues that it sells a wide range of products at its store (some 137 items) and, combined with its location at or near a location commonly visited by tourists, entitles it to a NAICS Code (452990-“All other general merchandise stores”) which is listed in Exhibit 2 of the Agreement as presumptively Tourist in designation. It further argues that the Program already saw fit to award Tourism status to at least 3 other stores in the New Orleans area, and that consistency requires a similar result, since the Claimant’s location and variety of merchandise falls “within the broad ambit” of the by now well familiar definition of Tourism. Alternatively, Claimant asserts its qualification for Tourism status under Policy 289v2.

BP replies that the Program properly chose a non-Tourism NAICS code (446110-“Pharmacies and drug stores”) and that Claimant’s P&Ls show that the majority of revenue comes from prescription sales, consistent with its website self-description as “a drug store chain.” A Summary of Request response by the Program resulted in the Program’s response that in determining Tourism status it applied a two-part test:

(1) Was the store located in a tourist destination(arguably, yes); and if so,

(2) with the assumption that the majority of prescription drug sales were to locals, was over 50% of the store’s revenue produced by prescription sales.

The Program noted that the subject store’s prescription sale percentage was 61.6% (or 38.4% general merchandise), in contrast to the other New Orleans area stores granted Tourism status, whose non-prescription sales ranged from 50.84% to 100%.

A subsequent reply brief by Claimant argued that based upon SEC filings, the national average of prescription sales was about 65%, and that therefore the relatively lower percentage of said sales for this store is evidence of its tourism status. As noted above, this particular store’s prescription percentage was 61.6%, a number relatively close to the national average. Nothing in this record indicates anything other than at best Claimant’s incidental relationship to tourism, and accordingly the Program’s actions in declining a Tourism status were amply justified.

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