In Re: Deepwater Horizon ( 2010 )


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  •    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 R. 47.5, the court has determined that this opinion should not
    be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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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                                          No. 10-30631
    
                                                 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.”
    
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                                       No. 10-30631
    
    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
    
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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
    
    
    
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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.
    
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                                   No. 10-30631
    
         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.
    
    
    
    
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