More than 100 lawyers squeezed into a courtroom in Boise, Idaho, on July 29 to argue before a panel of seven judges about which U.S. courthouse should host the massive litigation over the Deepwater Horizon oil spill.
Plaintiffs’ lawyers soon touched on a sticky issue — how to find a judge untainted by ties to the energy business. “The entire country has been watching this unfold 24-7,” said Elizabeth Cabraser, a partner at San Francisco’s Lieff Cabraser Heimann & Bernstein. “They’ll be watching the litigation. There will be speculation. This is an instance where the highest-profile litigation there’s ever been in this country will require a judge beyond reproach. Real is not the problem. It’s perception that’s the issue.”
During a U.S. Judicial Panel on Multidistrict Litigation hearing that also touched on proposals to consolidate claims against Toyota Motor Corp. over its recall of Prius hybrids, 18 plaintiffs’ lawyers suggested that the BP cases be tried in Alabama, Florida, Louisiana, Mississippi, South Carolina or Texas.
The panel appeared receptive to appointing more than one judge, if not necessarily convinced. Its chairman, U.S. District Judge John G. Heyburn II of the Western District of Kentucky, asked several times how the cases, which include personal injury, environmental and economic-loss claims, could be effectively divided into separate proceedings.
“The magnitude of this case may be such that it may dictate several judges working in tandem together,” said W. Mark Lanier of the Lanier Law Firm in Houston.
Lawyers expected the panel to decide how to handle the cases before the end of August.
Some 300 lawsuits have been filed against BP PLC, which leased the Deep­water Horizon oil rig in the Gulf of Mexi­co. Other defendants are Transocean Ltd., which operated the rig; Halliburton Co., which cemented the rig; and Cameron International Corp., which made the flow-control device that malfunctioned on April 20, causing the largest oil spill in U.S. history. The rig’s explosion killed 11 workers and injured dozens more.
One hundred days later, the litigation’s future was being decided in Boise, where the MDL panel held its regularly scheduled July hearing. Dozens of lawyers in dark suits dotted the city beginning the day before the hearing, many arriving on chartered planes. Several attended a private cocktail reception on the eve of the hearing.
On hearing day, the courtroom was packed with lawyers. The same MDL panel four months ago addressed a similarly sized crowd in the multidistrict litigation involving sudden acceleration claims against Toyota Motor Corp. Many of the lawyers present have been involved in the Toyota MDL, which is being heard in Santa Ana, Calif.
Unlike in that case, the panel this time appeared more open to the idea of separating the oil spill cases. Most of the suits assert economic damages on behalf of area fishermen, oyster farmers, tourism companies, charter boat operators and restaurants that lost business. Others have been filed by condominium and other property owners whose holdings have lost value.
Additional cases have been filed under environmental statutes and the federal Racketeering Influenced and Corrupt Organization (RICO) Act. A small number of personal injury claims have been filed in federal court on behalf of the workers killed or injured in the blast.
Dan Becnel of the Becnel Law Firm in Reserve, La., argued that the environmental and RICO cases should be consolidated separately from the economic-loss cases, and that the personal injury and wrongful death cases also should be heard separately.
Scott Bickford of Martzell & Bickford in New Orleans, who has personal injury cases, agreed. Most of the personal injury and wrongful death cases are pending in state courts anyway and would not be part of the MDL, he said. “What I would urge is [that] the wrongful injury and death cases — the limited ones before the court now, and that number may not grow that much — deserve to move out of the umbrella of these thousands and thousands of environmental cases.”
Regarding the BP shareholder claims, both Nancy Fineman, a partner at Cotchett, Pitre & McCarthy of Burlin­game, Calif., who represents shareholders, and BP’s lawyer, J. Andrew Langan, a partner at Chicago’s Kirkland & Ellis, argued for the Western District of Louisi­ana. Langan said the securities litigation should be combined with the rest of the oil spill case as it “squarely puts into play the very facts we’re talking about in the personal injury, wrongful death and economic-loss cases,,” he said.
Heyburn did not appear persuaded.
“I’m not sure I could come up with an example off the top of my head where we kept economic damage/personal injury cases and combined them with securities cases,” he said. “Although clearly there are some similar facts, the essential factual questions in those two cases are very distinctively different.”
Those supporting the Eastern District of Louisiana argued that the region is the most affected by the oil spill and is home to the most potential witnesses. “The destruction of marshland could cost $1 million an acre to restore,” said Allan Kanner, founder of Kanner & Whiteley in New Orleans, who represents the state of Louisiana. “If, after 9/11, this panel had sent all those cases in New York to Houston, or brought in a judge from New Orleans to sit in New York, the public would’ve been outraged.”
Also arguing for New Orleans was Stephen Flynn, assistant director for admiralty in the Justice Department’s Civil Division. “The U.S. is not a party at present, as the court knows, to the cases against the corporate defendants. However, we believe we will be,” he said. “So we’ve been asked to speak today.”
A RAFT OF RECUSALS
Heyburn raised concerns about the number of judges who had recused themselves in recent months. All but four of the judges in New Orleans have recused themselves due to conflicts ranging from stock ownership in a defendant company to having personal ties to lawyers involved in the litigation. Of those remaining, some face potential recusal in the future.
Perry Weitz of Weitz & Luxenberg in New York offered one solution: Shira Scheindlin of the Southern District of New York could sit in New Orleans to hear the cases. Scheindlin comes with no conflict and has experience handling an MDL against oil companies, including BP, over groundwater contamination by the gasoline additive MTBE, he said.
Patrick C. Morrow, a senior partner at Morrow, Morrow, Ryan & Bassett in Opelousas, La., suggested the Western District of Louisiana as an alternative. “Lafayette is the compromise venue between New Orleans and Houston,” he said.
Lawyers for the defendants tried to put forth their best case for Houston, where all four maintain U.S. headquarters. They argued that many of the key witnesses and documents are located in Houston. Other lawyers argued that the cases should be moved away from New Orleans or Houston, where feelings are running high, to districts that, while affected by the oil spill, could present a less biased forum. Cabraser, for example, argued for the Southern District of Mississippi.
Similar arguments were made for the Southern District of Florida and the District of South Carolina. “Clearly, Louisiana is the most affected state, but there may be appearances of conflicts, whether real or not, that might be of concern,” said Ervin Gonzalez, a partner at Colson Hicks Eidson in Coral Gables, Fla., who argued for Miami. “The perception of bias or not bias — we’ll be fighting that for the first couple of years if we don’t choose the right location,” said J. Edward Bell of the Bell Legal Group in Georgetown, S.C., who argued for his home state.
The panel also heard brief arguments by lawyers handling about a dozen federal class actions against Toyota over its recall of 150,000 Prius and Lexus hybrids because of a defect in the anti-lock brake systems. The cases are separate from the sudden-acceleration MDL, and U.S. District Judge Cormac Carney of the Central District of California has been hearing many of the cases.
On Thursday, lawyers on both sides argued that the cases belonged before Carney, who sits in Santa Ana.
Contact Amanda Bronstad at email@example.com.