In Re: Deepwater Horizon ( 2010 )

Case: 10-30631 Document: 00511182013 Page: 1 Date Filed: 07/22/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 22, 2010
No. 10-30631 Lyle W. Cayce
Clerk
In re: CAMERON INTERNATIONAL CORPORATION, formerly known as
C o o p e r C a m eron C orp ; H A L L I B U R T O N E N E R G Y S E R V IC E S ,
INCORPORATED; BP PRODUCTS NORTH AMERICA, INCORPORATED; BP
AMERICA, INCORPORATED,
Petitioners
Petitions for a Writ of Mandamus to the
Eastern District of Louisiana, New Orleans
Before JOLLY, GARZA, and STEWART, Circuit Judges.
PER CURIAM:*
Cameron International Corporation; Halliburton Energy Services,
Incorporated1 ; BP Products North America, Incorporated; and BP America,
Incorporated (“Petitioners”) petition2 this court for a writ of mandamus directing
United States District Court Judge Carl J. Barbier to recuse himself from any
further proceedings involving cases related to the Deepwater Horizon oil rig.
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
1
Halliburton moves to join in the petition for writ of mandamus filed by Cameron
International. The motion to join is GRANTED.
2
Cameron International and the BP Entities filed separate petitions. The petitions
seek the same relief, but present distinct arguments supporting entitlement thereto.
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I
Following the tragic explosion at the Deepwater Horizon oil rig, numerous
lawsuits have been filed in the Eastern District of Louisiana. Because a number
of the federal district court judges in that District have recused themselves,
many of these cases have been assigned to Judge Barbier (over forty at present).
When the first Deepwater Horizon cases were assigned to Judge Barbier,
he owned debt instruments issued by Halliburton 3 and Transocean,4 two of the
defendants in the instant proceedings.5 Judge Barbier instructed his broker to
sell the debt instruments on June 2, 2010. Judge Barbier stated on the record
on June 4, 2010, that he was unaware that he owned the debt instruments until
reports surfaced in the media, and that, though not required, he thought
divestment the best policy to avoid the appearance of bias.
Notwithstanding the divestment, Petitioners moved to have Judge Barbier
recuse himself from the proceedings based on 28 U.S.C. § 455(b), the federal
recusal statute. Petitioners argued that the debt instruments were “financial
interests” under the terms of the statute, and that, accordingly, recusal was
mandatory.6 Judge Barbier orally denied their motion, finding that “the
ownership of a bond or debt instrument is not the ownership of a financial
3
Judge Barbier’s disclosure form lists “Halliburton Co. Debentures 3/01/21” as the
“Description of the Assets.” The income (from interest) during the reporting year (2008) was
between $1,001 and $2,500. The gross value was between $15,001 and $50,000.
4
Judge Barbier’s disclosure form lists “Transocean Sedco Forex Notes 4/15/18” as the
“Description of the Assets.” The income (from interest) during the reporting year (2008) was
between $1,001 and $2,500. The gross value was between $15,001 and $50,000.
5
Transocean owned the Deepwater Horizon oil rig, and Halliburton was the cement
contractor. Both Transocean and Halliburton appear as defendants in many of the Deepwater
Horizon cases pending before Judge Barbier.
6
The memorandum in support of Petitioners’ motion states that “the Court held a
‘financial interest’ in two litigants.” After reviewing the record, we are convinced that the
gravamen of the argument below addressed only whether the debt instruments were “financial
interests . . . in a party to the proceedings.”
2
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interest because when you own a bond, you do not own any part of the company
. . . .” Because the debt instruments were “not a legal interest in the
corporation,” they did not trigger § 455(b) and so did not require recusal.
II
This circuit has recognized that the question of recusal is reviewable on a
petition for a writ of mandamus. See In re City of Houston, 745 F.2d 925, 927
(5th Cir. 1984). The writ, however, will not lie in the absence of exceptional
circumstances, id., and the party seeking the writ has the burden of proving a
clear and indisputable right to it. In re Placid Oil Co., 802 F.2d 783, 786 (5th
Cir. 1986) (citing United States v. Gregory, 656 F.2d 1132, 1136 (5th Cir. 1981)).
Section 455 governs the disqualification or recusal of federal judges.
Germane to the instant matter is § 455(b)(4), which provides, in relevant part:
(b) [A judge] shall . . . disqualify himself in the following
circumstances:
***
(4) He knows that he . . . has a financial interest in the subject
matter in controversy or in a party to the proceeding, or any other
interest that could be substantially affected by the outcome of the
proceeding . . . .
Section 455(d)(4) defines “financial interest” as “ownership of a legal or equitable
interest, however small . . . .”
In orally denying Petitioners’ motion for recusal, Judge Barbier held that
recusal was not required because debt instruments are not “financial interests”
within the meaning of § 455(b). Judge Barbier reasoned that bond and stock
ownership are vastly different because bond ownership does not imply any
ownership interest in the company issuing the bond. He relied in part on the
Code of Conduct for United States Judges and an Advisory Opinion from the
Judicial Committee on Codes of Conduct, which states in relevant part:
Debt interests are not considered to give rise to financial interest in
the debtor that issued the debt security because the debt obligation
3
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does not convey an ownership interest in the issuer. Therefore,
disqualification is not required solely because a party in a matter
before the judge is a corporation or governmental entity that has
issued a debt security owned by the judge.
Advisory Op. No. 101, “Disqualification Due to Debt Instruments,” 101-1)101-2.
Although the Judicial Committee is not authorized to interpret § 455, the
Code of Conduct, which the Judicial Committee is authorized to interpret,
contains language similar to § 455. Judges often rely on the Judicial
Committee’s opinions in evaluating their conduct, and we consider the Advisory
Opinion’s persuasive value. See Union Carbide Corp. v. U.S. Cutting Serv., Inc.,
782 F.2d 710, 715 (7th Cir. 1986). Neither party provided, nor did our research
uncover, any case suggesting that the distinction between stocks and debt
instruments is not sound. Indeed, this distinction accords with the language of
§ 455(b)(4), which speaks, at least in part, of a “financial interest . . . in a party
to the proceeding.” Stocks, which represent fractional ownership in the issuer,
fit within this language, whereas bonds do not. Cf. In re New Mexico Natural
Gas Antitrust Litig., 620 F.2d 794, 796 (1980).
Judge Barbier denied the recusal motion on the ground that ownership of
debt instruments is different than ownership of corporate stock because the debt
instruments do not equate to an ownership interest in a party. We see no error
in his reasoning for denying the motion to recuse.
This conclusion, however, does not put the matter completely to rest for
two reasons. First, the Advisory Opinion, which was the basis of Judge Barbier’s
ruling, ignores language from 28 U.S.C. § 455(b)(4). The statute speaks of a
“financial interest in the subject matter in controversy or in a party to the
proceeding.” 28 U.S.C. § 455(b)(4) (emphasis added). Thus, even if debt
instruments do not qualify as a “financial interest[s] . . . in a party” because they
do not convey an ownership interest, they could nonetheless qualify as “financial
4
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interest[s] in the subject matter in controversy.”7 Furthermore, the second part
of § 455(b)(4) speaks of “any other interest that could be substantially affected
by the proceeding” as an alternative basis for disqualification. The Advisory
Opinion specifically notes that “[o]wnership of any type of debt interest . . . may
in some circumstances occasion disqualification if the judge’s interest is such
that it could be substantially affected by the outcome of the proceeding.” Judge
Barbier never reached the “substantially affected” issue because Petitioners’
motion relied entirely on the “financial interest” prong of § 455(b)(4).8
In sum, because we find no error in the district court’s conclusion that the
debt instruments do not qualify as “financial interests . . . in a party to the
proceeding,” petitions for writ of mandamus are DENIED. The denial is without
prejudice to Petitioners moving for recusal in the district court on the basis of
either (1) the debt instruments being “financial interests in the subject matter
in controversy,” or (2) the possibility that the debt instruments “could be
substantially affected by the proceeding.” See 28 U.S.C. § 455(b)(4). We express
no opinion as to the merits of either ground.
7
Although some of Cameron International’s arguments could be read to raise this issue
before us, we decline to rule on it in the first instance. Because Judge Barbier based his
holding on a finding that debt instruments do not constitute an ownership interest in a party,
he never reached whether the debt instruments might qualify as a financial interest in the
subject matter in controversy.
8
In their petition, the BP Entities argue that we should decide in the first instance
that the debt instruments could be substantially affected by the proceedings. We decline to
do so because the current record says virtually nothing about the potential impact of the
litigation on the debt instruments. Thus, we would be forced to speculate. The better course
of action is to allow the district court to address the issue in the first instance. See Tramonte
v. Chrysler Corp., 136 F.3d 1025, 1031 (5th Cir. 1998). We note that if the district court
concludes that the debt instruments could be substantially affected, then recusal would be
mandatory because the divestment exception would not apply. See 28 U.S.C. § 455(f) (noting
that divestment exception applies only to a financial interest in a party “other than an interest
that could be substantially affected by the outcome”); Advisory Op. No. 69, “Removal of
Disqualification by Disposal of Interest,” 69-2.
5
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The petitions for writ of mandamus filed by Cameron International
Corporation and BP Products North America Incorporated and BP America,
Incorporated are DENIED without prejudice. Halliburton Energy Services,
Incorporated’s motion to join in the petition for writ of mandamus filed by
Cameron International Corporation is GRANTED. Respondent Felix Alexie,
Jr.’s motion to expedite briefing and oral argument and motion for expedited
ruling on the petition for writ of mandamus are DENIED as moot.
6