Court Opinion

ID: 1034920
Source: CourtListenerOpinion
Date Created: 2013-07-24 00:00:34.672618+00
Date Added: 2024-06-11T15:27:02.956371
License: Public Domain

Case: 13-20243       Document: 00512318354         Page: 1     Date Filed: 07/23/2013

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                            July 23, 2013

                                       No. 13-20243                        Lyle W. Cayce
                                                                                Clerk

UNITED STATES OF AMERICA,

                                                  Plaintiff - Appellee
v.

TRANSOCEAN DEEPWATER DRILLING, INCORPORATED,

                                                  Defendant - Appellant

                 On Motion for Stay of Judgment Pending Appeal

Before KING, CLEMENT, and HIGGINSON, Circuit Judges.
PER CURIAM:*
       Pending before us is Defendant-Appellant Transocean Deepwater Drilling,
Inc.’s motion to stay judgment pending appeal. For the reasons that follow, we
DENY the motion.
             I. FACTUAL AND PROCEDURAL BACKGROUND
       The Chemical Safety and Hazard Investigation Board (“CSB”) is an
independent governmental board composed of experts in industrial safety and
environmental health. 42 U.S.C. § 7412(r)(6)(A)–(B). It is charged with
investigating any actual or potential “accidental release”—that is, “an

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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unanticipated emission of a regulated substance or other extremely hazardous
substance    into    the   ambient       air   from    a   stationary   source,”    id.
§ 7412(r)(2)(A)—and with recommending measures to prevent future accidental
releases. Id. § 7412(r)(6)(C), (F).
      On April 20, 2010, a blowout and subsequent explosion occurred at the
Macondo lease site on the United States Outer Continental Shelf in the Gulf of
Mexico. According to Transocean, oil traveled up the riser to the deck of the
mobile offshore drilling unit (“MODU”), where it combusted in a fire until the
MODU collapsed and sank two days later. See In Re: Oil Spill by the Oil Rig
“Deepwater Horizon” in the Gulf of Mexico on April 20, 2010 (In Re: “Deepwater
Horizon”), No. 2:10-md-02179, slip op. at 2 & n.4 (E.D. La. Feb. 22, 2012) (order
on cross-motions for partial summary judgment). As separate Transocean and
government investigative teams later stated, the blowout emitted large amounts
of hazardous gases, which “made an explosion inevitable.”
      Invoking its jurisdiction to investigate accidental releases of regulated or
extremely hazardous substances into the ambient air, the CSB asked
Transocean (the MODU’s owner) to preserve all evidence relevant to the CSB’s
investigation of the incident. The CSB later served Transocean with
administrative subpoenas, demanding documents that had been collected by a
Transocean internal investigative team, as well as documents that had been
provided to other government agencies. As later alleged, Transocean only
partially complied with the subpoenas. On October 12, 2011, after almost one
year of seeking Transocean’s compliance through non-judicial means, the
government filed in the district court a petition to enforce the CSB’s subpoenas.
      Transocean moved to dismiss the petition and quash the subpoenas,
arguing that the CSB lacked statutory authority to investigate the Macondo well
incident. After considering the parties’ written submissions and oral arguments,
the district court, in a comprehensive opinion, denied Transocean’s motion and

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granted the government’s petition to enforce the subpoenas. Final judgment was
entered on April 22, 2013.
      Transocean asked the district court to stay execution of its judgment
pending appeal. The district court temporarily stayed its judgment to permit
further briefing. After considering the parties’ arguments, the district court
denied the motion. Transocean now asks this court for a stay pending appeal.
                           II. LEGAL STANDARDS
      “A stay is not a matter of right . . . . It is instead an exercise of judicial
discretion, and the propriety of its issue is dependent upon the circumstances of
the particular case.” Nken v. Holder, 556 U.S. 418, 433 (2009) (alteration
omitted) (internal quotation marks and citations omitted). We review a district
court’s denial of a stay pending appeal for abuse of discretion. Beverly v. United
States, 468 F.2d 732, 740 n.13 (5th Cir. 1972).
      The Supreme Court has repeatedly stated that a four-factor test governs
a court’s consideration of a motion for stay pending appeal: “(1) whether the stay
applicant has made a strong showing that he is likely to succeed on the merits;
(2) whether the applicant will be irreparably injured absent a stay; (3) whether
issuance of the stay will substantially injure the other parties interested in the
proceeding; and (4) where the public interest lies.” Nken, 556 U.S. at 434
(citation omitted); see, e.g., Chafin v. Chafin, 133 S. Ct. 1017, 1027 (2013); Hilton
v. Braunskill, 481 U.S. 770, 776 (1987). Under this “traditional standard,” the
first two factors “are the most critical.” Nken, 556 U.S. at 434. The final two
factors “merge when the Government is the opposing party.” Id. at 435. The
applicant bears the burden of showing that a stay is justified. Id. at 433–34.
      Instead of seeking to satisfy the traditional standard, in which courts
begin by evaluating whether an applicant has made a “strong showing” that
success on the merits is likely, Transocean turns to our decision in Ruiz v. Estelle
(Ruiz I), 650 F.2d 555 (5th Cir. Unit A June 1981) (per curiam). We held in Ruiz

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I that on a motion for stay pending appeal “the movant need not always show a
‘probability’ of success on the merits.” Id. at 565. “[I]nstead, the movant need
only present a substantial case on the merits when a serious legal question is
involved and show that the balance of the equities weighs heavily in favor of
granting the stay.”1 Id. While citing Ruiz I, however, Transocean asks us to
apply a variant of Ruiz I that uses a sliding scale approach “in which the
probability of success that must be demonstrated is inversely proportionate to
the amount of irreparable injury that would be suffered absent a stay.”2
Transocean Mot. at 4. While the sliding scale approach has been adopted by
some other circuits, see, e.g., Davis v. Pension Benefit Guar. Corp., 571 F.3d
1288, 1291–92 (D.C. Cir. 2009); Thapa v. Gonzales, 460 F.3d 323, 334 (2d Cir.
2006), we have continued to use the Ruiz I test.
       In repeatedly reaffirming Ruiz I, we have reiterated that “[l]ikelihood of
success remains a prerequisite in the usual case” and “[o]nly ‘if the balance of
equities (i.e. consideration of the other three factors) is . . . heavily tilted in the
movant’s favor’ will we issue a stay in its absence, and, even then, the issue must
be one with patent substantial merit.” Ruiz v. Estelle (Ruiz II), 666 F.2d 854,
856–57 (5th Cir. 1982)(quoting Ruiz I, 650 F.2d at 565–66); see also Weingarten
v. Realty Investors v. Miller, 661 F.3d 904, 910 (5th Cir. 2011); Arnold v. Garlock,

       1
        We based our holding in Ruiz I on the D.C. Circuit’s decision in Washington
Metropolitan Area Transit Commission v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir.
1977).
       2
          Transocean is not consistent in its formulation of the Ruiz standard. In a different
part of its motion, it sets out the standard as follows:
       In order to merit a stay, the movant need establish only that the case was
       sufficiently close (or the issues sufficiently novel) such that the party has a
       reasonable likelihood of appellate success, and that there are equitable reasons
       for staying the relief temporarily. This standard is further loosened in cases,
       like this one, that present the courts with a serious legal question.
Transocean Mot. at 7. This formulation is wrong, i.e., not faithful to our precedents, in all
material respects.

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Inc., 278 F.3d 426, 438–39 (5th Cir. 2001); Wildmon v. Berwick Universal
Pictures, 983 F.2d 21, 23–24 (5th Cir. 1992); O’Bryan v. McKaskle, 729 F.2d 991,
993 (5th Cir. 1984) (per curiam).
      Because Transocean relies on Ruiz and the government argues in a similar
vein, we will consider this matter under the Ruiz standard.
                               III. DISCUSSION
      Transocean has failed to satisfy its burden under Ruiz.
      A.    Success on the Merits
      Transocean has not even attempted to make a “strong showing that [it] is
likely to succeed on the merits.” Nken, 556 U.S. at 434. Instead, invoking Ruiz,
it relies on the “substantial case on the merits” standard. Seeking to satisfy
Ruiz’s prerequisites, Transocean argues that “serious legal questions” are
implicated in this matter. The district court agreed, stating “[t]he questions
include whether, under the Clean Air Act and related regulations, the Deepwater
Horizon qualifies as a ‘stationary source’ and whether the release of gasses from
the seabed went into the ‘ambient air.’” We assume, without deciding, that
Transocean has raised serious questions respecting statutory interpretation and
the CSB’s jurisdiction. See Wildmon, 983 F.2d at 24 (a legal question may be
“serious” when it implicates “far-reaching effects or public concerns”).
      While ruling firmly against Transocean on the merits, the district court
also concluded that Transocean had made out a “substantial case.” Again, we
assume, without deciding, that the district court is correct on this point. So, for
purposes of our Ruiz inquiry, we accept that Transocean has raised serious legal
questions and has made a substantial case on the merits. Regardless, the three
Ruiz equities do not “weigh heavily” in favor of granting a stay. See Ruiz, 650
F.2d at 565. Accordingly, Transocean fails the Ruiz test.
      B.    Irreparable Injury

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      The second factor in the traditional test (and the first of the three equities
under Ruiz) is “whether the applicant will be irreparably injured absent a stay.”
Nken, 556 U.S. at 434. Under the traditional test, this factor and the “likelihood
of success” factor are “the most critical.” Id. This factor weighs against
Transocean because it has offered no valid reason why immediately turning over
the subpoenaed documents will cause irreparable injury. See Weingarten, 661
F.3d at 913.
      Transocean’s principal argument is that denial of a stay—i.e., being forced
immediately to comply with the subpoenas—will cause irreparable injury by
mooting its appeal. This is so, Transocean argues, because compliance with the
subpoenas will remove it from “an adversarial posture with CSB.” See Already,
LLC v. Nike, Inc., 133 S. Ct. 721, 726 (2013) (“A case becomes moot . . . when the
issues presented are no longer ‘live’ or the parties lack a legally cognizable
interest in the outcome.” (internal quotation marks and citation omitted)).
      In Church of Scientology of California v. United States, 506 U.S. 9, 10–11
(1992), the Supreme Court discussed whether a matter was rendered moot by
compliance with a district court’s final order enforcing an IRS summons that
permitted tax agents to examine and make copies of certain records (a close
parallel to the subpoenas at issue here). The Court held that although “a court
may not be able to return the parties to the status quo ante,” a case is not moot
if a court “can fashion some form of meaningful relief.” Id. at 12–13. When
documents have been provided pursuant to a subpoena later found to be
unlawful, a court can fashion “meaningful relief” by ordering the documents
returned. Id. This is because the owner of subpoenaed documents retains “an
obvious possessory interest in [its] records.” Id.; see also In re Motor Fuel
Temperature Sales Practices Litig., 641 F.3d 470, 483 (10th Cir. 2011); United
States v. Constr. Prods. Research, Inc., 73 F.3d 464, 469 (2d Cir. 1996); FTC v.
Gibson Prods. of San Antonio, Inc., 569 F.2d 900, 903 (5th Cir. 1978).

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      Transocean contends this reasoning is inapposite because, in each of the
cases we have cited, the party resisting the subpoena had a privacy interest in
the subpoenaed documents or was subject to a criminal or civil enforcement
action by the agency seeking the records. Transocean has repeatedly emphasized
that it retains no privacy interest in the documents the CSB seeks, many of
which are publicly available as a result of earlier government investigations and
civil litigation against Transocean. See In Re: “Deepwater Horizon”, No. 10-md-
02179 (E.D. La. filed Aug. 10, 2010). Further, although the CSB may investigate
accidental releases and recommend measures to prevent future releases, it
cannot enforce its own regulations. See 42 U.S.C. § 7412(r)(6)(O). More than
that, its “conclusions, findings, or recommendations” cannot be used in an
“action or suit for damages.” Id. § 7412(r)(6)(G).
      Transocean’s argument is unavailing. In Church of Scientology, the
Supreme Court held out as separate a party’s possessory interest and its privacy
interest in subpoenaed records. 506 U.S. at 12–13; see also Soldal v. Cook
County, Ill., 506 U.S. 56, 62–66 (1992) (discussing the independent nature of
possessory and privacy interests under the Fourth Amendment); ADAPT of
Phila. v. Phila. Hous. Auth., 417 F.3d 390, 393–94 (3d Cir. 2005) (holding that
documents’ return would provide relief, “however Pyrrhic,” with respect to
possessory interests, and would “alleviate, at least in part, any affront to”
privacy rights that had already been violated); Reich v. Nat’l Eng’g &
Contracting Co., 13 F.3d 93, 98 (4th Cir. 1993) (recognizing Church of
Scientology’s distinction between possessory and privacy interests). Although
Transocean contends that the documents’ return would “provide[] no relief
whatsoever to Transocean,” the Supreme Court has held that mootness depends
on whether a “legally cognizable interest” is still in play, Already, LLC, 133 S.
Ct. at 726, which is not necessarily the interest that is of most importance to a
litigant. See Church of Scientology, 506 U.S. at 13 (the relief provided need not

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be “fully satisfactory”). Because Transocean’s possessory interest can be
vindicated by ordering its records returned, this remedy’s effectiveness does not
depend on the documents’ confidentiality. See id. at 12–13; ADAPT of Phila., 417
F.3d at 393–34.3
       Transocean has identified no particular interest in the subpoenaed
documents. If this is true, then we find it remarkable that Transocean has
resisted the CSB’s subpoenas for approximately thirty-one months, and
continues to resist them on appeal. To be clear, Transocean has not argued that
the burden of complying with the subpoenas is an irreparable injury, or that the
absence of a stay will irrevocably deprive it of some other property or liberty
interest. In any event, the district court correctly recognized that the harm to
Transocean from producing documents that it has already provided to other
government agencies “is less than the burden of producing documents . . . in the

       3
          Transocean relies on inapposite authority for its argument. In Providence Journal Co.
v. FBI, 595 F.2d 889, 890 (1st Cir. 1979), the FBI’s right of appeal would have become moot
absent a stay because, had the disputed documents been given to the plaintiff newspaper, their
confidentiality would have “be[en] lost for all time.” Transocean ignores that, in granting the
stay, the court also considered the Holiday Tours factors, finding that they all weighed in the
FBI’s favor. Id. Moreover, because Transocean has disavowed any privacy interest in the
subpoenaed records, Providence Journal is not comparable.
        Transocean offers a number of cases in which the defendant’s court-ordered compliance
with an IRS subpoena mooted its appeal. See, e.g., United States v. Arthur Andersen & Co., 623
F.2d 720, 724–25 (1st Cir. 1980). These decisions have been effectively overruled. See Church
of Scientology, 506 U.S. at 15 (“[T]his case is not moot because if the summons were
improperly issued or enforced a court could order that the IRS’ copies of the tapes be either
returned or destroyed.”); United States v. Golden Valley Elec. Ass’n, 689 F.3d 1108, 1112–13
(9th Cir. 2012); In re Grand Jury Proceedings, 142 F.3d 1416, 1422 (11th Cir. 1998).
        In Texas Association of Business v. Earle, 388 F.3d 515, 517 (5th Cir. 2004), a federal
district court refused to enjoin enforcement of a state district attorney’s grand jury subpoenas.
We held that the issue of compliance with the subpoenas was moot because the state court
defendants had released the documents pursuant to a state court order. Id. at 518. The panel
did not cite Church of Scientology, nor did the parties mention it in their briefs. Subsequent
cases discuss Earle in the context of abstention. Because Church of Scientology is squarely
applicable in the instant circumstances, and Earle was decided in the context of an effort to
obtain a ruling from a federal court enjoining a state district attorney’s office from conducting
a grand jury investigation (a situation far removed from ours), Church of Scientology provides
the rule of decision that we apply today.

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first instance.” Further, how the lack of confidentiality strengthens Transocean’s
case for a stay escapes us because this means it will suffer no loss of privacy by
immediately releasing the documents. Transocean cannot argue that it will
suffer an irreparable injury by losing its right to vindicate an interest on appeal,
but fail to enlighten us as to what that interest is. See Nken, 556 U.S. at 433–34.
Transocean points only to the prospect of its appeal being mooted if it complies
with the subpoenas, and that argument is absolutely meritless. As the district
court correctly held, Transocean cannot justify a stay merely by arguing that it
should not have to comply with a subpoena enforcement order “unless and until
the appellate court says it must.”
      C.    Injury to CSB and the Public Interest
      The “injury to the other parties” and “public interest” factors “merge when
the Government is the opposing party.” Nken, 556 U.S. at 435. Accordingly, we
consider them together.
      The injury that a stay would work upon the government and the public is
clear. As we have discussed, the CSB is authorized to investigate accidental
releases of hazardous substances and make recommendations to prevent future
releases. See 42 U.S.C. § 7412(r)(6). Delaying the subpoenaed documents’ release
would impede the accomplishment of this mission, which is of unquestionable
significance to workplace and public safety.
      The injury to the public is compounded by the great amount of time it has
taken to secure enforcement of the CSB’s subpoenas. Transocean has resisted
the subpoenas for thirty-one months, of which twenty-one were consumed by
litigation. An appeal in this court could take anywhere from one to three years.
By the time the subpoenas’ enforceability is finally determined, a delay in the
documents’ release may cause the CSB to have missed the opportunity to
prevent another accident of the type that occurred on the Deepwater Horizon,
which itself resulted in eleven deaths. If this danger were not obvious enough,

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a CSB lead investigator’s affidavit confirms that documents Transocean is
withholding are necessary to completing the CSB’s report on the Macondo well
incident.
       Transocean argues that CSB will suffer no injury from a stay because
various government agencies have already “received exhaustive information,
documents, and records from Transocean concerning the BP Oil Spill” through
other investigations and the Deepwater Horizon litigation. The district court
found, however, that the subpoenas cover some documents that have not been
made available to other government agencies, and Transocean’s bare argument
does not satisfy its burden of proving otherwise.4 See Nken, 556 U.S. at 433–34.
Moreover, Transocean has offered no authority suggesting that possession of
subpoenaed documents by a different government agency can be imputed to the
agency that issued the subpoena. If anything, the legal authority on this point
contradicts Transocean’s position. See United States v. Powell, 379 U.S. 48,
57–58 (1964) (to obtain enforcement of a subpoena, the IRS must prove that it
(not some other agency) does not already possess the sought-after information);
United States v. Chevron U.S.A., Inc., 186 F.3d 644, 650 (5th Cir. 1999) (a
government agency’s possession of documents does not satisfy a subpoena by the
agency’s independently operating inspector general).
       Relying on Holiday Tours, 559 F.2d at 843, Transocean contends that the
public interest generally favors preservation of the status quo pending appeal.
In Holiday Tours, the district court had enjoined the defendant bus tour service
from operating without the appropriate certificate, but stayed its judgment

       4
        The Panel on Multidistrict Litigation, in vacating a conditional order transferring the
government’s enforcement petition to the MDL litigation in the Eastern District of Louisiana,
similarly found that “Transocean has not identified with any specificity the documents and
information that it has produced in the MDL and that it believes to be responsive to the CSB’s
subpoenas.” In Re: “Deepwater Horizon”, No. 2:10-md-02179, slip op. at 2 (E.D. La. Feb. 3,
2012) (order vacating conditional transfer order).

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pending appeal because enforcement would have meant the business’s
destruction. Id. The court of appeals explained that the plaintiff had not shown
any particularized public interest that would overcome the injury to the
defendant. Id. Transocean thus ignores that the equities in Holiday Tours
favored maintaining the status quo. Moreover, the proponent of the status quo
in Holidays Tours had prevailed below, whereas Transocean did not, and thus
bears the burden of showing that the district court abused its discretion in
refusing to issue a stay. Accordingly, Transocean’s misreading of Holiday Tours
is not a valid ground to perceive a public interest in any case where the status
quo is disturbed.
      Finally, Transocean submits that the public has an interest in having “the
appellate courts . . . consider[] the serious legal questions raised in this
case”—an interest that cannot be vindicated if its appeal becomes moot. Because
Transocean’s appeal will not be mooted by compliance with the subpoenas, we
will have ample opportunity to consider the legal questions raised in this case.
      D.    Conclusion
      Even assuming that Transocean has made out a “substantial case” with
respect to a serious legal question, we find that it has given no reason why it
should not immediately turn over the subpoenaed documents. The government
has obtained a final enforcement order after being forced to litigate this matter
for approximately twenty-one months. The CSB and the public, in addition to
being “generally entitled to the prompt execution of orders that the legislature
has made final,” Nken, 556 U.S. at 427, suffer further injury each day that the
CSB is prevented from concluding its investigation into an industrial accident
that resulted in eleven deaths. As we have explained, the prevention of similar
accidents in the future is an important public interest. Transocean has utterly
failed to justify making the government and the public wait any longer for the
CSB’s investigative report and safety recommendations.

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      Because Transocean has not established that “the balance of the equities
weighs heavily in favor of granting the stay,” Transocean fails to satisfy the Ruiz
standard. 650 F.2d at 565. Transocean does not purport to have made a “strong
showing that [it] is likely to succeed on the merits,” and thus also has failed to
satisfy its burden under the traditional test. Nken, 556 U.S. at 435. Even if it
had made this showing, we likely would not grant a stay because the three
remaining factors weigh against Transocean.
      In reaching this conclusion, we find instructive the Supreme Court’s
admonition that “[a] stay is an intrusion into the ordinary processes of
administration and judicial review.” Id. at 427 (internal citations and quotation
marks omitted). We cannot say that the district court abused its discretion in
finding that Transocean failed to justify such an intrusion.
                              IV. CONCLUSION
      Transocean’s motion for a stay pending appeal is DENIED.

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