Energy companies’ lease of land in Buchanan County is at issue
Roanoke Times - March 5, 2000
By Michael Hemphill
They are huge lumber companies and small-time coal firms. They are wealthy businessmen and families living check to check. One is a widow in a Wisconsin nursing home.
What these disparate folks have in common is ownership in some Buchanan County land rich in coal-bed methane, and now a $10.7 million verdict. Last November, a federal jury in Abingdon found that three giant energy corporations, which had gotten leases to gather the gas in exchange for a portion of the profits, had jilted the landowners for years by illegally inflating production costs and leaving little to divvy up.
But there's a chance that a substantial sum with all its zeros may never get from the verdict form to a check.
Six weeks after the trial, U.S. District Judge James Turk stunned the lawyers by announcing he'd discovered he owned stock in one of the energy companies. The amount was small, just over $9,000. Still, Turk felt compelled to recuse himself from hearing any post-trial motions.
But his decision has prompted another motion that goes to the heart of the judicial system: the belief in impartial judges to sort out disputes.
Attorneys for the energy companies are asking for another trial, arguing that Turk's refusal cannot "erase the appearance of impropriety that now pervades this case."
The landowners' lawyers, with the Roanoke firm of Gentry, Locke, Rakes & Moore, counter, "It is an unfortunate but invariable trait of human nature to grasp at straws when faced with defeat."
The decision will be up to Chief U.S. District Judge Samuel Wilson, who has the 2-foot-thick court file sitting in his chambers. He will hear arguments Tuesday and issue his opinion soon afterward.
How Turk got that financial interest is a complicated tale that shows the trickiness of keeping track of investments in today's corporate America.
One of the lawsuit's defendants, Buchanan Production Co., was forged out of a partnership between Appalachian Methane Inc. and Appalachian Operators Inc., two subsidiaries of the Michigan-based MCN Energy Group. Turk acquired stock in MCN a few years ago when it spun off of another company in which he'd invested.
But MCN wasn't named as a defendant. Turk didn't realize the connection until a week after the trial when a representative of Detroit-based DTE Energy Co., which planned to merge with MCN, called his office to ask about the verdict.
Federal law requires judges to disqualify themselves from any case in which their "impartiality might reasonably be questioned," but the defendants' lawyers suggest that the law must be applied retroactively.
Their filings suggest Turk was told at trial of MCN's ownership and that, "The outcome of this case will seriously impact MCN Energy and Judge Turk's personal finances."
The landowners' attorneys decry these claims.
"The name of the company in which Judge Turk owns an interest was never mentioned," attorney Scott Sexton said.
In their response, they point to a January news release that, in announcing MCN's plans to sell the Buchanan operation for $169 million, pegged the company's worth at $4 billion.
As for Turk, the $9,000 stock is among the smallest pieces of his investment portfolio, according to his most recent financial disclosure report filed with the Administrative Office of the U.S. Courts.
Including MCN, the 76-year-old judge has nine investments worth less than $15,000. By contrast, five of his investments are worth $15,000 to $50,000; two between $50,000 and $100,000; six from $100,000 to $250,000; three up to $500,000; and one over $1 million.
(In a later court filing, the energy companies back off their allegation: "The personal significance of a $9,000 investment to Judge Turk is not known.")
Personal significance aside, the landowners say Turk didn't even have to recuse himself. If a judge has already invested a lot of time in a case and then discovers a financial conflict, Congress allows him or her to sell the interest and continue.
Finally, their lawyers note, a jury of citizens and not the judge decided the case, and the company in which Turk owned stock actually lost.
"In our system of justice, a jury's verdict is pretty sacred," Sexton said.
Steven Lubet, a Northwestern University law professor and judicial ethicist, believes the landowners will prevail in this case. "A judge isn't strictly liable - put that in quotes - for possible conflicts he doesn't know about," Lubet said.
Stock ownership in the parent company might not even require disqualification, he said, "but even if it was, that ordinarily wouldn't be sufficient to overturn a jury verdict."
So agrees James Turner, executive director of HALT, an Organization of Americans for Legal Reform, in Washington, D.C.
But Turner says this ordeal could have been avoided had the judge's financial disclosure records been readily available to the public and parties in the case.
Unless a judge provides his records - which Turk willingly did last week - the only way they can be obtained is from the Administrative Office in Washington, D.C., which requires a written request and then at least a month to mail them. During that time, the office will tell the judge who requested the records - a disclosure that can scare away many attorneys from asking for fear of angering the judge.
"One case like this is one case too many," Turner said. "The most careful and scrupulous judge in the world is going to miss this sometimes."
Michael Hemphill can be reached at 981-3336 or michaelh@roanoke.com
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