Justia Energy, Oil & Gas Law Opinion Summaries

Plaintiffs invested in oil-and-gas exploration companies and lost money when the companies’ wells produced little oil or gas. They sued the companies and their officers, claiming violations of state and federal law in selling unregistered securities and in making other material misrepresentations and omissions. They also sued Durham, the lawyer who represented the companies. Durham drafted the documents, including joint-venture agreements and private placement memoranda that provided details about the investment opportunity, and told prospective investors he was available to answer questions. Plaintiffs allege that Durham knew the documents contained material misrepresentations and omissions and that the securities were neither registered nor exempt from registration. District courts ruled in favor of Durham. The Sixth Circuit affirmed. The Kentucky Securities Act imposes liability on anyone who “offers or sells a security” in violation of its terms and any “agent” of the seller who “materially aids” the sale of securities, defined as someone who “effect[s] or attempt[s] to effect” the sale. Ky. Rev. Stat. 292.480(1),(4); 292.310(1). An attorney who performs ordinary legal work, such as drafting documents, giving advice and answering client questions, is not an “agent” under the Act. View "Bennett v. Durham" on Justia Law

During World War II, the U.S. contracted with oil companies for the production of aviation fuel, which resulted in production of hazardous waste. The waste was dumped at the California McColl site. Several decades later, the oil companies were held liable for cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601, and sought reimbursement from the government based on the contracts. The district court entered summary judgment on liability, finding that the contracts contained open ended indemnification agreements and encompassed costs for CERLCA cleanup, and awarded $87,344,345.70. The trial judge subsequently discovered that his wife had inherited 97.59 shares of stock in a parent to two of the oil companies. The judge ultimately vacated his summary judgment rulings; severed two companies from the suit and directed the clerk to reassign their claims to a different judge; reinstated his prior decisions with respect to two remaining companies; and entered judgment against the government ($68,849,505). The Federal Circuit vacated and remanded for reassignment to another judge. The judge was required to recuse himself under 28 U.S.C. 455(b)(4) and the error was not harmless.View "Shell Oil Co. v. United States" on Justia Law