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BP Claim Discretionary Review of Appeal 2016-842: Gasoline Retailer Not Excluded–Appeal Panel REVERSED

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 The following is a Discretionary Review Order issued by Judge Barbier pursuant to the Rules Governing Discretionary Court Review of Appeal Determinations. Judge Barbier’s rulings are binding on the Claims Administrator and the Appeal Panelists. 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


The overarching issue is whether  BLANK is excluded from the Settlement under Section 2.2.4.5 (“Oil and Gas Industry”) and Exhibit 17 (“Oil & Gas Industry Exclusions”). The Claims Administrator determined that  BLANK was not excluded.

The Appeal Panel, in an en banc session, reversed. The Panel noted that parent company, YYYY,, “was a cradle to grave oil company, which engaged in the full array of operations beginning with exploration and extraction and ending with the retail sale of fuel.” The Appeal Panel unanimously held that “was the refining and marketing
arm of an integrated oil and gas company and, therefore, is excluded from the class pursuant to Section 2.2.4.5.”
Section 2 of the Settlement states, in pertinent part:
2.1. . . [T]he following individuals and Entities, including any and all of their past and present predecessors, successors, personal representatives, agents, trustees, insurers, reinsurers, indemnitors, subrogees, assigns, and any other Natural Person, legal or juridical person or Entity entitled to assert any Claim on behalf of or in respect of any such individual or Entity in their respective capacities as such are excluded from the Economic Class.
. . .
2.2.4.
The following exclusions are based on the substantive nature of the business, not the legal or juridical form of that business. Any of the following types of Entity . . . are
excluded:
. . .
2.2.4.5.
Oil and Gas Industry, as identified in the NAICS codes listed on Exhibit 17, which includes by way of example, firms engaged in: extracting crude petroleum, natural gas
or other hydrocarbons; drilling wells; preparing, maintaining or constructing petroleum or natural gas well -sites or other mineral extraction sites; mining; maintaining or constructing petroleum or natural gas pipeline or distribution facilities; pipeline distribution of crude petroleum, refined petroleum, oil or natural gas; petroleum or natural gas refining or other mineral refining and/or manufacturing; manufacturing petroleum lubricating oil and grease, petrochemical products, or other petroleum and coal products or chemical products derived from extracted minerals; merchant wholesaling of construction and mining (except oil well) machinery and equipment; wholesale distribution of oil well machinery, equipment and supplies; wholesale distribution of petroleum, petroleum products, other extracted minerals, chemical products produced from extracted or refined minerals, petroleum bulk stations and terminals, petroleum and petroleum products merchant wholesalers.
Exhibit 17, referenced above in Section 2.2.4.5, states in pertinent part:
Business Entities within the NAICS Code descriptions set forth below are excluded from the class. . . .
. . .
The Claims Administrator shall determine the appropriate NAICS code for a Business Entity based on his review of (a) the NAICS code shown on a Business Entity claimant’s 2010 tax return, (b) 2010 business permits or license(s), and/or (c) other evidence of the business’s activities necessary for the Claims Administrator to determine the appropriate NAICS code.  Exhibit 17 then provides an exhaustive list of NAICS codes for those entities that are excluded from the class under Section 2.2.4.5. Those NAICS codes state that a particular code applies if the entity is “primarily engaged” in the activity described by that code. Thus, whether or not BLANK
is excluded from the Settlement turns on what NAICS code best describes the primary nature of its business.
Furthermore, per Section 2.2.4, the focus is on the substantive nature of business, not legal or juridical form.  YYYY is undoubtedly excluded from the class. But the focus here is on not parent. Indeed, Section 4.4.7.1 requires the Claims Administrator to determine the appropriate NAICS code “for the Entity ” that filed the claim, and
Exhibit 17 states that “Business Entities within the NAICS Code descriptions set forth below are excluded from the class.”  Section 2.1 excludes “Entities, including any and all of their past and present predecessors, successors, personal representatives, agents,” etc., but Section 2.1 does not mention an Entity’s parent corporation, subsidiary, affiliate, etc. The Settlement’s definition of “Entity” also does not include a parent corporation. Rather, the Settlement provides a separate definition for “Affiliate,” which is “any other. . . Entity that directly, or indirectly . . . controls” the claimant Entity.
§ 38.3. The Settlement explicitly mentions“Affiliates” in certain contexts, but not when discussing exclusions. Thus, the question returns to determining primary business. BLANK admits that it engaged in some excluded activities—it wholesaled gasoline to third-parties and operated two refineries.  BLANK persuasively argues, however, that its primary business is retail sales of gasoline, which is not an excluded activity under Exhibit 17.  BLANK owned and operated over 1,000 retail gasoline stations with convenience stores, and more than 60% of its revenues came from retail sales. As such, the Court finds that the NAICS code that is most appropriately assigned to this business is 447110, “Gasoline Stations with Convenience Stores,” described as, “establishments engaged in retailing automotive fuels . . . in combination with convenience store or food mart items.”
Because NAICS code 447110 is not listed in Exhibit 17, claimant is not excluded from the Settlement. Accordingly, the decision of the Appeal Panel is REVERSED, and the determination of the Claims Administrator is REINSTATED.
 [Editor’s Note: This Order affirms the holding of the appeal panel in Appeal 2016-842.

 

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