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BP Business Economic Loss Claim Appeal 2017-350: Start-Up Fails Customer Mix Test

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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 denial of it Start-up BEL Claim. Claimant failed Causation. Specifically, Claimant failed the Customer Mix Test.
As background, Claimant submitted customer information, including addresses, to the Settlement Program. The Program ran the customer addresses through its mapping software, which resulted in a number of addresses being labeled “unknown.” Some of the addresses with a physical location (i.e., street,avenue) could not be located by the mapping software. Other addresses with only a PO Box were labeled “unknown” pursuant to Policy 345 v.3.
On appeal, Claimant argues that the mapping software “misread” the physical addresses and either failed to find the address, or found it, but assigned the wrong Zone. As to the PO Box addresses, Claimant argues that Policy 345 v.3 is arbitrary and contrary to the Settlement Agreement. Policy 345 v.3 specifies that any P.O. Box address is to be labeled as “Unknown” and as such, counted against the Claimant in determining causation. CSSP Vendor incorrectly excluded PO Box addresses from the Customer Mix Test. This completely ignores the realities of corporate travel as hotel and credit card companies record the addresses of where the bill is to be sent, as they are the addresses from which revenue is to be derived. It also leads to further questions as to the data required to produce a “known” address. To this date the Claims Administrator has not provided any guidance to this particular issue.
However, addresses labeled as “unknown” are easily located through a simple Google search for corporate entities. On the other hand requesting physical customer addresses from a credit card processor runs afoul of privacy laws that protect individual customers. Privacy laws and agreements forbid the credit card processor from disclosing the “valid” address of an individual. As such the Claims Facility is required to locate the correct address or allow a valid legal address such as a P.O. Box to be used in this calculation. In addition, the Claims Administrator DOES have discretion to consider PO Box Addresses despite the fact Policy 345 states they should be marked as unknown.
Since the Claimant is classified under the Tourism designation the CSSP Vendor could easily determine if the Customer is Local or Non Local by simply viewing the customer’s zip code. Logically a customer with a PO Box address from out of state can only possibly be considered as being non local. No individual or corporate entity registered as a resident in the Claimant’s state would have a PO Box in a different state where they would not be able to receive the correspondence, particularly the credit card bill with which the stay was purchased.
The pertinent part of this Policy 345 v. 3 reads as follows:
C. Verification of Economic Loss Zones of Customers and Distance Between Customers and Claimant.
To perform the Customer Mix Test, the Settlement Agreement requiresthe following information:
(1) the Economic Loss Zone of each of the claimant’s customers, and (2) the distance between the claimant and
each of its customers. The Claims Administrator will use mapping software to verify this information. In doing so,
the Claims Administrator will typically follow these guidelines:(a) For any customer address omitting a street number,
the Claims Administrator will use the location result as generated by the Claims Administrator’s mapping software company.
(b) For any customer address provided in the form of a P.O. Box and/or any customer address in which the mapping software
company’s geo-coder can only identify the City and/or Zip Code, the Claims Administrator will consider the Economic Loss Zone
of the customer and the distance between the customer and the claimant to be unknown. For the purposes of performing the
Customer Mix Test,revenue generated during the Benchmark Period from customers whose address is considered unknown
will be excluded from the claimant’s share of revenue generated by non-local customers or customers located in Zones A-C; conversely,
revenue generated during the Compensation Period from customers whose address is considered unknown will be included in the
claimant’s share of revenue generated by non-local customers or customers located in Zones A-C. The claimant is still able to pass the
Customer Mix test if it can demonstrate the required percentage change in revenue derived from customers in Zones A-C or customers
located within 60 miles of the claimant’s business location between the Benchmark Period and Compensation Period. Illustrative examples
are provided in Exhibit 1 attached. (c) In determining the distance between the claimant and its customers, the Claims Administrator’s
mapping software company will use the distance measured by roads and/or walkways.
At the core of the Customer Mix Test is the differentiation between local and non-local customers. The line of demarcation between these two categories of customers is 60 miles from Claimant’s location. In order to calculate the distance, the Program needs to know the physical location of the customer. Additionally, the Program cannot assign a Zone to a customer without knowing its location. Hence, without a physical address, the Program labels the location of PO Box customers as unknown. As noted above, Claimant argues that the Program should use the Zip Codes of the PO Box addresses in order to determine the customer’s location.
This Panel acknowledges that in some instances this approach might result in determining an accurate location for a customer. However, this approach might has some
shortcomings. For instance, what if a Zip Code includes addresses that were both more than and less than 60 miles from the Claimant’s location? Or what if a Zip Code
includes addresses that were both Zone B and Zone D? Further, what if a customer, whose physical address was local, charged his/her purchase to his/her employer,
whose Zip Code address was more than 60 miles from Claimant’s location?
Claimant also argues that the Program has the obligation to investigate the PO Box addresses and come up with the physical addresses. This Panel disagrees. The
Settlement Program makes it fairly clear that the Claimant has the burden of providing documentation sufficient to meet Causation.
In light of the issues associated with PO Box addresses, this Panel is of the opinion that Policy 345 v.3’s approach is reasonable. As to Claimant’s argument that the mapping software (perhaps due to clerical error) failed to confirm the location of certain physical addresses and thus incorrectly labeled the addresses as unknown, this Panel asked the Claimant to submit a list of all customers with physical addresses that the Claimant contends were mistakenly labeled as unknown. This list was provided to the Program, who reran the Customer Mix Test using Claimant’s updated data. Claimant still failed the Test.
In light of the above, the denial of this Claim is upheld.

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