Tronox Incorporated v. Anadarko Petroleum Corporation

Background

In 2014, Anadarko Petroleum Corporation and affiliated companies entered into a $5.15 billion environmental and toxic-tort settlement to resolve an adversary proceeding in bankruptcy court. The settlement included a permanent injunction barring certain claims against parties released by the settlement, including claims held by or that could have been asserted by the bankruptcy litigation trust, as well as claims duplicative of those claims.

In 2020, Larry Ashworth filed a lawsuit in the Western District of Louisiana alleging toxic-waste contamination from creosote treatment sites located 5.1 miles from his property. He named Anadarko Petroleum Company and Occidental Petroleum Company among the defendants and alleged that they were liable as successors in title to companies that caused the contamination. Ashworth alleged that he discovered the contamination in 2019.

Anadarko asked this court to enforce the injunction by barring Ashworth’s claims against it. Anadarko also asked the court to hold Ashworth and his counsel in contempt for refusing to dismiss those claims after Anadarko’s counsel explained its position.

Whether the Injunction Covered Ashworth’s Claims

The court applied the Second Circuit’s prepetition-relationship test. Under that test, a bankruptcy claim based on prepetition conduct that causes later injury arises before bankruptcy only if the claim arose before the bankruptcy filing or resulted from prepetition conduct fairly giving rise to the claim, and there was some minimum contact or relationship between the debtor and claimant making the claimant identifiable.

The court rejected Anadarko’s argument that the release of toxic substances alone created a claim before bankruptcy. It found that Ashworth and Anadarko had no prepetition contact or relationship in which both parties knew liability could arise. The fact that the contaminated site had been designated as a federal Superfund site, and that the site appeared in bankruptcy documents, did not establish the required relationship. The court also concluded that Ashworth’s mere proximity to the site—more than five miles away—was insufficient.

The court therefore held that, on the facts alleged, Ashworth’s claim arose after the bankruptcy. It was not a claim that could have been asserted in the earlier bankruptcy litigation and was not a “Trust Derivative Claim” under the settlement agreement.

Duplicative Claims

The injunction also barred claims “duplicative of” trust derivative claims, meaning claims that substantially overlap with, but are not identical to, those claims. The court concluded that Ashworth’s claims were not duplicative. Because Ashworth had no prepetition claim under the applicable test, the court found it difficult to treat his later-arising claim as duplicative. The court also relied on due-process concerns, explaining that interpreting the injunction to bar Ashworth’s claims would preclude a claim based on a relationship he did not have with Anadarko before the bankruptcy.

Contempt Motion and Disposition

Because the court concluded that the injunction did not bar Ashworth’s claims, it found no conduct by Ashworth or his counsel warranting contempt. Judge J. Paul Oetken denied Anadarko’s motion to enforce the judgment and to hold Ashworth and his counsel in contempt. The clerk was directed to close the motion at Docket Number 102.