This Thursday, a panel of federal judges will meet in Boise, Idaho, to consider arguments on the all-important question of whether the litigation over the Deepwater Horizon rig explosion and oil gusher should be consolidated in New Orleans, Houston or some other city.
Their decision, expected in August, will be highly consequential. Houston is more convenient for the oil company defendants; New Orleans may be more convenient for the many parties that have been injured by the oil on the Gulf Coast; and whichever venue is selected may give its proponents an edge.
The winning city will also benefit economically from thousands of additional airport landings, hotel room reservations and restaurant meals over several years.
These critical decisions will be made by seven federal judges from across the country who are charged with consolidating similar cases to allow for more efficient collection of evidence and testimony to simplify and expedite the court process.
By definition, all of these consolidated cases are big cases, but the BP oil spill litigation is unusually large. With at least 264 cases potentially in the umbrella, it’s bigger than the Toyota acceleration issue, said Susan Boland, acting executive of the Judicial Panel on Multidistrict Litigation, but not as big as the asbestos litigation, which involved about 20,000 cases. “It’s definitely one of the larger ones,” Boland said.
Normally, the panel allows only 20 minutes for all arguments on where each consolidated case should be held, giving attorneys only a few minutes apiece. Because the oil spill case is so big, the panel is allowing an hour for arguments. It’s the first case of the day on the docket. A separate proceeding to consolidate BP shareholder lawsuits will be heard immediately afterward.
Boise, meanwhile, is hosting its first MDL meeting, and is gearing up for what it anticipates will be scores of private planes landing in the city and a need for television trucks to park outside the courthouse.
Judges recuse themselves
The disputes related to the oil spill include civil racketeering charges, wrongful death, personal injury, economic injury and natural resource damages, to name a few.
In addition to Houston and New Orleans, at least seven other federal courthouses in Gulf Coast states have asked to host the litigation, according to filings. It’s unlikely, but the panel could also opt to consolidate all the litigation outside the region.
Complicating the questions of venue are which judges in federal court in New Orleans would be able to handle the litigation. At least seven of the 12 judges in federal court in New Orleans have had to recuse themselves from oil cases because of stock ownership or family members working for oil companies or law firms involved in the litigation.
“I’ve never seen this before. I’ve seen one or two judges get bumped, but never this many,” said Danny Becnel, a Reserve class action attorney who filed the initial petition in early May to consolidate all the litigation in New Orleans.
Becnel believes that the case is so big, it could get broken into several pieces, such as the securities litigation, rig owner Transocean Ltd.’s maritime limitation of liability proceeding, the economic damages and the environmental damages. Alternatively, Becnel wonders whether the case could get put in a third-party site such as Lafayette, which would still leave it in Louisiana but would put it between New Orleans and Houston.
Another idea is to import a judge to the Gulf South to oversee proceedings in New Orleans, and the name of a New York judge, Shira Scheindlin, has been floated as a candidate. Scheindlin declined an interview.
In New Orleans, the main judges taking cases have been Judge Martin Feldman, the judge handling the drilling moratorium case, and Judge Carl Barbier. Feldman has stayed all of his oil spill cases until after the panel from Boise weighs in on where they should go. Barbier has been moving forward and actively trying to organize about 50 cases in his jurisdiction.
Steve Herman, a New Orleans plaintiff attorney who is serving as interim co-liaison counsel for the cases bundled in Barbier’s court, said that Barbier is doing an excellent job of demonstrating that New Orleans can manage the litigation effectively. In May, Herman filed a memo with the federal panel on behalf of 73 plaintiff attorneys from across the country arguing for the litigation to be put in New Orleans in front of Barbier.
Herman thinks it makes more sense to leave everything except the securities litigation as one case.
In Houston, two judges have been assigned oil leak cases. Judge Keith Ellison is handling Transocean Ltd.’s limitation of liability proceeding under maritime law, which many see as a tool to try to prod the proceedings toward Houston. And Judge Lynn Hughes has been suggested by BP by name.
Attorneys for Transocean and BP did not respond to interview requests for this report.
Anywhere but Houston
Meanwhile, arguments have been passionate all the way around.
In court filings, BP argues that Houston is the best place for the case because all the company defendants, and therefore, all the evidence, is there. It also argues that it’s the easiest place for people to get to, because of Houston’s many hotel rooms and excellent air connections.
BP also argues the federal court in Houston is best positioned to handle the case because smaller cities on the Gulf Coast have little experience in handling massive litigation, and that dockets in New Orleans are still too jammed with Katrina and Chinese drywall cases to be effective. The company says that the 12 federal judges in New Orleans are dealing with 14,815 civil cases, while the 19 federal judges in Houston have 4,666 cases, and are able to move them to completion more quickly.
The company also points out that Houston is the only venue with support of both plaintiff and defense attorneys: Mark Lanier, a Houston plaintiff attorney with several oil disaster cases, has also argued that the proceedings should be held in Houston.
Lanier and BP’s attorneys from the firm Kirkland & Ellis in Chicago are expected to argue for Houston on Thursday.
Transocean makes many of the same arguments as BP and mentions that its limitation of liability proceeding has already gotten the ball rolling in Houston. New Orleans attorney Kerry Miller is expected to argue for Houston on behalf of Transocean.
Meanwhile, other attorneys from the Gulf Coast argue that New Orleans is the proper venue because Louisiana is the site of most of the environmental and economic damage, and many of the workers who were injured or killed are from here. As for Transocean’s limitation of liability, it can be moved.
Herman and the other attorneys pushing for New Orleans also make an emotional appeal in a brief. “After surviving Hurricane Katrina, living in FEMA trailers plagued with formaldehyde and having to gut homes that were built with Chinese drywall, hundreds of thousands of people living and working in Southeast Louisiana now face yet another existential threat not only to their economic well-being, but to the heart of their very culture and life. To send this litigation to ‘Oil City USA’ — Houston, Texas, where the major defendants have their U.S. operational headquarters, and where virtually no lawsuits are filed, in a state that has suffered little or no damage — would be a cruel irony to the victims of the spill, the majority of which are in Louisiana.”
But in practice, plaintiff attorneys other than Lanier are taking an anywhere-but-Houston approach, dividing up time to make quick cases for every jurisdiction along the Gulf Coast.
New Orleans has at least one major supporter for it being the venue: the U.S. Department of Justice has filed pleadings with the panel of federal judges suggesting that the case be held in New Orleans to help it recover cleanup costs and assess natural resource damages.
