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BP, Transocean Spill Suits Shunned by Gulf-State Judges Citing Conflicts

BP Plc and Transocean Ltd. oil-spill lawsuits may be combined before a judge from outside the Gulf Coast states, because judges in the region are withdrawing from cases, citing conflicts of interest.

Six of 12 active judges in the federal judicial district based in New Orleans have removed themselves from spill-damage cases filed by fishermen, property owners and coastal businesses, according to a court official and court records. The judges found conflicts tied to oil investments or personal relationships with lawyers or companies involved.

“Plaintiffs have been informed that most or all of the judges in the district have a conflict and cannot preside” over the litigation, victims’ lawyers said in a request to a Washington judicial panel asking that all the cases be combined before one judge in the New Orleans district.

Federal judges in southern Alabama also have stepped aside from handling spill-damage cases, a court official there said.

Virtually all of more than 150 lawsuits over the spill are proposed class actions representing potentially thousands of claims against BP, owner of the offshore lease where the damaged well is located, and Transocean, which owned the Deepwater Horizon rig that exploded and sank in April.

Also named in the majority of the cases are Halliburton Energy Services, the Halliburton Co. unit that which provided cementing services, and Cameron International Corp., which supplied blowout-prevention equipment.

New York Judge

Plaintiffs’ lawyers with Weitz & Luxenberg PC of New York asked the Washington judicial panel to assign U.S. District Judge Shira Scheindlin to the multidistrict litigation in southern Louisiana, which they called “the epicenter of this disaster.”

Scheindlin, whose court is in New York, previously handled the consolidation of more than 200 lawsuits over drinking water supplies contaminated by a gasoline additive.

Some of the world’s largest energy companies were defendants in that litigation, including a unit of BP, the company with primary liability for Gulf spill damages.

Plaintiffs and defendants both favor pulling together all federal-court suits over the spill to hold down costs and avoid conflicting rulings by different judges. They differ in where they want the cases consolidated.

The federal Multi-District Litigation program gathers cases over the same product or incident in a single federal court. One judge oversees pretrial evidence gathering, streamlining document exchanges and avoiding duplication.

Plaintiffs’ Choice

Victims’ lawyers asked that the litigation be combined in Louisiana, where the bulk of the oil has washed ashore and efforts to cap the well are concentrated.

“We have five orders of recusal at the moment,” Gene Smith, chief deputy clerk of the New Orleans court, said in a May 28 telephone interview.

The judges are Mary Ann Vial Lemmon, Lance M. Africk, Helen G. Berrigan, Ivan L.R. Lemelle and Jay C. Zainey, Smith said. A sixth, Judge Kurt D. Engelhardt, is also recusing himself from some cases, Judge Carl J. Barbier told lawyers last month. A seventh will join the group, he said.

Barbier, who didn’t include himself in the count, owns Transocean Sedco Forex notes and Halliburton Co. debentures, according to disclosure statements obtained from the Web site of Judicial Watch, a self-styled conservative advocacy group based in Washington.

Disclosure Forms

Dick Carelli, a spokesman for the U.S. Administrative Office of the Courts, said “there’s never been any question about the authenticity” of judicial disclosure forms posted on the group’s website.

Barbier didn’t respond to a request for comment, left with one of his law clerks, on whether there is a conflict between his investments and the oil-spill litigation.

In the federal judicial district based in Lafayette, Louisiana, Judge Tucker Melancon stepped aside from some oil- spill cases, according to court records.

Alabama hasn’t seen a “wholesale” withdrawal of judges from spill cases, said Jeff Reinert, chief deputy clerk of the judicial district based in Mobile.

“But several have stepped down from individual cases over relationship issues with the law firms involved,” he said. “Either their friend or son works there.”

BP and other defendants in spill cases asked the multidistrict panel to put the case in Houston, home of each one’s U.S. operational headquarters. The companies asked that the case be assigned to Judge Lynn Hughes.

Hughes has lectured for an oilfield industry professional group that pays his travel expenses, according to filings obtained from the Judicial Watch website.

Mutual Funds

Hughes also owns six mutual funds that include shares in companies involved in the spill, including one fund whose largest component is Anadarko Petroleum Corp., a minority partner in the damaged well, according to the filings.

Among Hughes’s reported mutual fund holdings are Legg Mason Aggressive Growth Fund, which was almost 10 percent Anadarko at the end of March, and AIM Basic Value Fund, which included shares of Halliburton and Transocean as of the same period.

Hughes, in an e-mail, declined to discuss any aspect of the oil spill case before him or any potential conflict of interest.

“I’m happy to do it,” Hughes told lawyers at hearing in his Houston court last month, referring to the proposed oil- spill litigation. “But I’m certainly not going to love you for it.”

The case is In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, U.S. Judicial Panel on Multidistrict Litigation, MDL-2179, Washington.

To contact the reporters on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com; Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net.

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