Bloomberg News

Anadarko Can Exclude Evidence From $15.5 Billion Tronox Suit

December 22, 2011

(Updates with judge’s remarks in second paragraph)

Dec. 22 (Bloomberg) -- Anadarko Petroleum Corp. can exclude some evidence from a $15.5 billion pollution lawsuit brought by creditors of Tronox Inc., the chemical maker that says it was driven into bankruptcy after it was saddled with environmental liabilities.

U.S. Bankruptcy Judge Allan Gropper in Manhattan today agreed to a request from The Woodlands, Texas-based Anadarko to limit evidence from an earlier case involving about 4,000 people in Avoca, Pennsylvania, who claimed creosote at a wood-treatment plant made them sick. Some plaintiffs with skin cancer were paid an average of $117,000 a person in that case.

Creditors for Oklahoma City-based Tronox, which exited bankruptcy on Feb. 14, are, along with the U.S. government, suing Anadarko and Kerr-McGee. Tronox said it was saddled with about 2,800 polluted sites and liability for 70 years’ worth of pollution when Kerr-McGee spun it off. Anadarko got valuable oil and gas assets when it bought the rest of Kerr-McGee in 2006 for $18 billion, Tronox claims.

“What most concerns me is the length of this trial,” Gropper said. “I’m not trying a creosote case, and I’m not trying 30 or 40 environmental cases, as to specifics of liability.”

The trial is set to begin May 15. The parties today agreed to work with a mediator to try to resolve the case.

License Suspended

Anadarko said the creosote evidence should be limited because the founder of the law firm that developed it, Robert Powell of the Pennsylvania-based Powell Law Group, has since had his law license suspended and because much of what he presented in his lawsuit was hearsay.

“We think it’s, frankly, garbage,” Thomas Lotterman, a lawyer for Anadarko, told the judge today. Anadarko would have to get more witnesses to rebut Powell’s allegations about matters such as creosote emitted from cooling towers and the toxicological properties of chemicals, he said.

The creditors have called the Kerr-McGee transactions a two-step fraud that drove Tronox into bankruptcy. They said the deals benefited banks, company managers and other investors, while leaving thousands of sick and dying people harmed by the company’s pollution.

U.S. government agencies including the Environmental Protection Agency will get 88 percent of whatever is won in the lawsuit, while tort claimants such as those in Avoca will get the remainder, according to court papers. The amounts will be paid out through a litigation trust.

The bankruptcy case is Tronox Inc., 09-10156, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

--Editors: John Pickering, Andrew Dunn

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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