Louisiana Fights Threat of Sanctions|in Discovery Phase of Oil-Spill Trial

     NEW ORLEANS (CN) – Louisiana on Monday filed a motion in opposition to a federal magistrate’s threat of sanctionsif the state does not produce all documents related to the Deepwater Horizon oil spill this week. Louisiana calls the judge’s order an unreasonable demand that would cost it millions of dollars to comply with.
     U.S. Magistrate Judge Sally Shushan wrote in a Sept. 27 order that Louisiana’s failure to produce discovery documents for BP could delay the start of first trial in the oil spill catastrophe, a limitation trial scheduled for Feb. 27, 2012.
     Shushan threatened Louisiana with escalating sanctions of up to $10,000 a day if it fails to produce documents, and said that if it misses the deadline by 21 days, the state could lose its right to seek any oil-spill claims at all, for failure to prosecute.
     In its response, Louisiana says, “Under the circumstances presented here, the State’s inability to complete the additional electronic searches demanded by BP and ordered by the Magistrate Judge within the timelines established in the 10/27/11 Order do not warrant the imposition of monetary sanctions, let alone the potential dismissal of any of the State’s claims. There is no basis to believe that anything captured in connection with the supplemental electronic searches required by the magistrate judge’s September 1, 2011 order would justify delaying commencement of Phases One and Two of the Limitation Trial.”
     Louisiana says the upcoming trial does not involve it in any way. In the heading for Section II of its response, Louisiana says: “The State Was Not Made a Party to the Limitations Action Until September 2011 Yet Was Subjected to Extensive Discovery Prior to That Date.”
     The response continues: “The extensive discovery obligations currently imposed upon the State of Louisiana relate to Phases One and Two of the Limitation Action filed by Transocean that is currently pending as one of the cases being coordinated for pretrial proceedings before this Court. In re: the Complaint and Petition of Triton Asset Leasing in a Cause for Exoneration from or Limitation of Liability, Civil Action No. 10-cv-2771 (‘Limitation Action’). The Limitation Action was commenced by Transocean pursuant to the Limitation of Liability Act of 1851 and Rule F of the Supplemental Rules for Certain Admiralty and Maritime Cases. Under this Rule, Transocean has sought to limit its liability to $26,764,083.00, the value of the Deepwater Horizon. All of the state’s Oil Pollution Act (OPA) claims are expressly exempt from this Limitation Action. … This court has ordered that the limitation action will proceed first. Phase one of the limitation action (the incident phase) involves issues of liability and allocation of fault among the limitation defendants, of which the state is not one. Phase two involves the ‘source control’ efforts – specifically, the efforts to cap and seal the well. The State of Louisiana has not been sued as a third-party defendant or tendered, pursuant to Rule 14(c), to the plaintiffs in the limitations proceedings. On April 29th of this year, BP and other defendants filed discovery, including extensive requests for production (‘RFP’) against the State of Louisiana, purportedly seeking information regarding the issues in phase one of the limitation action. At that time, Louisiana was not a party to the limitation action. Almost a week later, on May 3, 2011, Louisiana filed a motion for leave to file a claim in the limitation action, civil action No. 10-cv-2771. [Rec. Doc. 439]. However, for five months the court did not hear or grant Louisiana’s motion. Additionally, the court did not issue an order detailing the scope of the three phases of the limitation trial until mid-September. In May, the defendants reissued their initial discovery requests and the court set deadlines for the state to respond. Although still not a party to the litigation, the state, consistent with the magistrate’s direction, conducted a reasonable inquiry of its agencies for any information that might be relevant to the issues in phase one of the limitation action and provided this information to defendants on June 20, 2011, within the deadline established by the magistrate judge, with a supplemental production following in August. BP, unsatisfied, pressed the state to conduct additional extensive and overbroad searches of the state’s records, email and information.
     “The state objected to BP’s demand that it conduct additional searches and, as the federal rules allow, argued that the expense (projected to be several millions in public funds) was not justified in light of the improbability that the state possessed additional information relevant in any way to phases one and two of the limitation action.” (Brackets and parentheses in original; footnote omitted.)
     Louisiana says it has conducted a reasonable document search and determined that it is unlikely to have any additional information relevant to the first and second phase of the limitation trial.
     “Additionally, although the court granted the state’s motion for leave to file a claim in the limitation action, the state’s ability to participate in the proceeding has been severely limited by this court’s prior orders, which, for example, preclude the State of Louisiana from issuing any discovery on any defendant and preclude Louisiana from presenting evidence or otherwise affirmatively participating in the trial under the limitation trial plan as drafted. In light of these circumstances, requiring this expansive and costly discovery effort of Louisiana at this time and the imposition of sanctions upon the State for an inability to complete its efforts under the deadlines imposed in the magistrate judge’s 10/27/11 order, is unreasonable.” (Parentheses in original.)
     Louisiana says it does not even have the software required for the highly specific additional searches that BP insists on.
     “The only other plaintiff that has been required to undertake the ESI collection and searches in the manner and at such expense as required of Louisiana is the United States. However, the potential for the State of Louisiana to have much relevant information in the context of discovery related to phases one and two of the limitation action is distinguishable from that of the United States. As an initial matter, the United States has been made a party defendant in connection with the limitation action. While Louisiana disagrees with defendants’ efforts to minimize their liability for the consequences of this disaster by blaming the United States, the fact remains that the United States and its agencies are in a distinguishable position to the State of Louisiana with respect to both the regulation of deepwater drilling as well as the efforts to cap the well. Indeed, this court, at BP’s urging, has concluded that the State does not have authority to regulate or otherwise control activities outside of its territorial waters. ‘Thus, to the extent state law could apply to conduct outside state waters, in this case it must ‘yield to the needs of a uniform federal maritime law.’ …
     “As described more fully in the State’s Opposition to BP’s Motion to Compel, the State was served with discovery requests from BP that extend far beyond this phase of the limitation proceeding and, in effect, seek all documents and information that reference BP, the Deepwater Horizon, Macondo, Transocean, etc., and that are in the possession of virtually every state agency. State of Louisiana’s Opposition to BP’s Motion to Compel [Rec. Doc. 3915]. The discovery requests, and more importantly the search terms, were not limited to the issues in the upcoming phase one of the limitation trial. Louisiana engaged BP in an effort to limit the discovery in a way that would allow for the efficient use of resources, while still producing the information they needed and sought. These discussions were taking place during May and June after the receipt of the discovery. During this time, the Louisiana Department of Natural Resources, DEQ [Department of Environmental Quality], DWF [Department of Wildlife and Fisheries], DPS [Department of Public Safety], as well as LOSCO [Louisiana Oil Spill Coordinators Office] were actively searching for responsive documents, which were turned over to the defendants in June with a supplemental production in August. The State believed at that time, and continues to believe, that those are the only materials related to and even potentially relevant to the liability issues in phase one. During this time, the state also became aware of technical limitations of its various computer systems, which are not capable of implementing the types of complex searches in the manner BP was requesting.
     “Simply put, BP sought to impose discovery obligations on the State of Louisiana that are premature and unwarranted in light of their expense. BP previously argued to the magistrate that its phase one discovery is limited to the collection of information necessary for the defendants to prepare their expert reports in the context of the determination of the allocation of fault among them (i.e., the limitation action) and confirmed that it had issued the April 29, 2011, discovery in an effort to avoid surprise. However, as described more fully in the State’s Opposition to BP’s Motion to Compel, the discovery obligation created by BP’s requests cast a much larger net than phase one, especially when viewed in light of the state’s circumstances outlined in its original opposition and herein.” (Parentheses, but not brackets, in original.)
     The state’s motion was filed by Allan Kanner of Kanner and Whitely of New Orleans, counsel for the State of Louisiana.

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