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Controversy in U.S. fraud claim brought against Shell Oil

8th Circuit Removes Federal Judge Over Angry Dismissal of Contract Case

However, appeal court notes that both sides ‘provoked’ the judge

A federal appeals court has removed a Missouri federal judge from a $28 million contract case based on the judge’s use of profanity and his angry dismissal of the case over testy allegations of discovery abuse.

Judge Michael J. Melloy of the 8th U.S. Circuit Court of Appeals was quick to point out that both sides in the case “provoked” Judge Dean Whipple of the Western District of Missouri in Kansas City, Mo., into the salty language and created the appearance of partiality.

Melloy said in the March 24 opinion that the plaintiffs filed a motion to recuse Whipple six months too late. But the panel held that the judge’s outburst and his grounds for dismissal of the case, based on discovery abuse, made it necessary to reassign the case to a new judge based on the appearance of partiality.

The proceedings leading up to and including the sanctions hearing and the order of dismissal “reflect a sufficiently high degree of antagonism to require reassignment of the case on remand,” wrote Melloy in the 2-1 panel decision.

Whipple declined through a secretary to comment on the ruling based on judicial canons barring judges from comment on cases before them.

Melloy said the panel was not “blind to the course of conduct that triggered the court’s frustration.” He noted that defendant Shell Oil Co.’s goals shifted from conducting discovery to “fanning the flames of the court’s frustration and building a case for sanctions.”

Shell spokeswoman Robin Lebovitz responded in a prepared statement, “Shell Oil Products U.S. is disappointed in the circuit court’s decision. The dissenting opinion correctly applied the law to the facts in the case. Shell complied with applicable federal, state, and local laws and expects to be exonerated in the lawsuit.”

The plaintiffs attorney, Fred Starrett of Lathrop & Gage in Overland Park, Kan., said, “We’re pleased to have a decision and now be able to try the case on the merits. He declined to discuss the discovery dispute, except to say, “the appeals court felt [dismissal] was a little draconian. They did suggest [of the lawyers that] both of us could be criticized.”

The lawsuit centers on claims by Sentis Group Inc., and owner Alan Barazi, regarding a contract with Shell Oil Co. to operate 29 mini-mart gas stations in Kansas City. Barazi disputed Shell’s expense and profit figures and sought $28 million in damages for alleged fraud and breach of contract under the Petroleum Marketing Practices ActSentis Group Inc. v. Shell Oil Co., No. 07-2308 (8th Cir.)

The discovery dispute grew increasingly testy over a witness that Barazi alleged was an employee at some points and an expert witness at others. Shell alleged that Barazi lied to the court and defense about the status of the witness to prevent it from gaining access to evidence, according to the opinion.

Whipple ordered the plaintiffs to produce documents and tape recordings allegedly made secretly by Barazi of Shell officials. Whipple issued four different orders, ultimately requiring 58 documents turned over to the defense in the final order.

In a December 2006 sanctions hearing Whipple demanded to know if Starrett had turned over the 58 documents. “To them?” Starrett responded, according to the opinion.

Whipple responded, “Well, hell yes. Why would you ask a question like that? Hell, yes, to the defendant.”

Starrett attempted to reply, and Whipple said in part, “I kept telling you to produce stuff, expert stuff. You ducked. You wove … .You must produce them. Jesus Christ, I don’t want any more ducking and weaving from you on those 58 documents.”

When Starrett suggested the court had not ordered production of all documents four times, Whipple said, “That’s it. I’m done. I’m granting the defendant’s motion to dismiss this case for systematic abuse of the discovery process.”

He accused Barazi of lying and added, “What a disgrace to the legal system in the Western District of Missouri … .We’re done. We’re done, done, done.”

SOURCE ARTICLE

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