article

05.21.10

Conflict of Interest in BP Legal Fight?

Will BP get its oil spill case moved to friendly Houston? A clerk of the panel that will decide the issue is first cousins with a former regulator of the sunken BP drill platform. Rick Outzen reports on the legal impact of the family tie.

Two key figures in the upcoming investigation and litigation phases in the case of the Deepwater Horizon explosion, which killed 11 workers on April 20 and subsequently spewed millions of gallons of crude oil into the Gulf of Mexico, are first cousins.

Randall Luthi is the former director of the agency that regulated BP and its Deepwater Horizon floating platform, and Jeffery Luthi, his cousin, is the clerk of the judicial panel that will render a crucial decision about where the lawsuits, which could total billions of dollars, will be tried. Both Luthis are both from Freedom, Wyoming, a town with just 135 residents.

The battle over where the cases against BP, Transocean, Halliburton, and other defendants will be tried has significant impact over how the cases will proceed and their final outcomes.

Consolidating all the lawsuits into a federal court in Houston would give BP a huge home field advantage.

BP wants them all moved to Houston, Texas. Its attorneys are arguing that BP Exploration and Production, Inc. and the other defendants maintain their principal places of business and their key documents and witnesses within the Houston area, according to court documents: “Transfer and consolidation of this litigation in the Southern District of Texas, Houston Division, would greatly promote the just and expeditious resolution of these actions.”

The Most Polluted Places in America The plaintiffs’ attorneys, who represent the commercial fishermen, shrimpers, and others affected by the BP oil spill, argue in the response they filed with the court that the Eastern District of Louisiana in New Orleans is “closer to the epicenter of this disaster than Texas, Florida, or the other Gulf States, and it is the geographical focal point.” Pertinent witnesses are in Louisiana, including claimants and potential claimants, key eyewitnesses to the incident, and investigators, including representatives of Mineral Management Service (MMS) and the Coast Guard.

Jeffery Luthi, 56, as clerk of the panel of the United States Judicial Panel on Multidistrict Litigation (JPML), has significant influence over the final decision. He has already denied a motion by the plaintiffs to expedite the hearings on BP’s motion.

Cousin Randall Luthi will most likely be a key witness in the lawsuits and in the congressional hearings on whether MMS, the agency that regulated Deepwater Horizon and that he led under the Bush administration, improperly awarded safety certificates to BP and Transocean.

The former director of MMS, Randall Luthi, 54, is now president of National Ocean Industries Association (NOIA), a national trade association that, according to its website, represents “all segments of the offshore industry with an interest in the exploration and production of both traditional and renewable energy resources on the nation’s outer continental shelf.”

As MMS director in September 2008, he defended the agency against charges by the DOI inspector general of a “culture of substance abuse, promiscuity, and ethical failure” existing inside MMS, where investigators found that employees were having sex and taking drugs with energy company representatives. Officials in the MMS royalty collection office in Denver accepted gifts from energy companies including golf, ski and paintball outings; meals and drinks; and tickets to a Toby Keith concert, a Houston Texans football game, and a Colorado Rockies baseball game. All the abuses found by investigators occurred before Randall Luthi took office, but he spent the last four months of his tenure fighting off calls for his resignation.

Randall Luthi once worked for Dick Cheney and, according to his MMS bio, served on Cheney’s Energy Council, an organization composed of legislative representatives from energy-producing states and private energy-related industries that set the energy policies of the Bush administration.

BP; Halliburton, the company responsible for cementing the deepwater drill hole at the site; and Cameron International, the company that built the safety valves for the rig, have seats on board of NOIA, the trade organization led by Randall Luthi.

Jeffery Luthi handles the docket of the JPML, which has the authority to determine whether civil actions pending in two or more federal judicial districts should be transferred to a single federal district court for pretrial proceeding.

He is dealing with the BP motion to combine all the civil lawsuits involving Deepwater Horizon and the oil spill into a federal court in Houston, Texas. The decision will be made by the JPML at its July session in Boise, Idaho.

Houston courts are notoriously tough on class-action lawsuits. There, three days after BP’s request, U.S. District Judge Keith Ellison issued an order suspending cases against Transocean, owner of the Deepwater Horizon rig, because the company filed a request to limit its liability in the lawsuits filed against it to $26.7 million.

Consolidating all the lawsuits into a federal court in Houston would give BP a huge home field advantage.

Asked by The Daily Beast if he was related to Randall Luthi, Jeffery Luthi replied, “I don’t why it matters.” Then he added, “Yes.” There was a pause.

“Are you brothers?”

“We’re first cousins,” Jeffery Luthi said, before hanging up.

Rick Outzen is publisher and editor of Independent News, the alternative newsweekly for Northwest Florida.