Antitrust Law Daily Wrap Up, RICO—D.D.C.: Racketeering claims against BP, Statoil could not be revived after ‘biased’ arbitration, (Sep 9, 2016)

By Mark Engstrom, J.D.

Oil and gas developer Jack Grynberg was not entitled to Rule 60 relief from a prior judgment that dismissed his RICO claims and forced him to arbitrate his dispute against BP and Statoil, companies that allegedly deprived him of his full interest in profits that were subject to prior settlement agreements, the federal district court in Washington, D.C., has ruled. Because the developer failed to show that the arbitrator was biased, or that the defendants had acted in bad faith in exploiting that bias, the revival of his RICO claims was not warranted (Grynberg v. BP PLC, September 8, 2016, Bates, J.).

Grynberg and several companies that he controlled (collectively, "Grynberg") sued multiple oil companies and their executives for violations of the federal RICO statute and state law. The court dismissed the complaint in light of an arbitration agreement that the parties had executed. Thereafter, Grynberg added his RICO claims to the parties’ ongoing arbitration, and the arbitrator ruled against Grynberg.

Eight years after the court’s dismissal of the RICO claims and six years after the arbitrator’s unfavorable decision, Grynberg filed a motion for relief under Rule 60 of the Federal Rules of Civil Procedure. The motion urged the court to vacate the prior dismissal, rescind the arbitration agreement, and revive Grynberg’s RICO claims. According to Grynberg, the arbitrator had demonstrated "extraordinary" bias and the defendants had shown bad faith in exploiting that bias.

Grynberg sought relief even though: (1) the court’s prior dismissal was not appealed; (2) the arbitrator’s unfavorable decision was never directly challenged; (3) significant preclusion issues were present; (4) the parties’ arbitration agreement continued to exist; and (5) federal policy favored arbitration.

In an attempt to overcome those significant hurdles, Grynberg tried to convince the court that the revival of his RICO claims was warranted because the arbitrator was exceptionally biased. Ultimately, however, the hurdles were too high and Grynberg’s evidence was too equivocal. Because the court was not convinced that the arbitrator was biased, or that the defendants had acted in bad faith during arbitration, Rule 60 relief was not warranted. Grynberg’s motion for relief from judgment was therefore denied.

The case is No. 08-301 (JDB).

Attorneys: Bruce Samuel Marks (Marks & Sokolov, LLC) for Jack J. Grynberg. Daryl Andrew Libow (Sullivan & Cromwell LLP) for BP PLC, d/b/a BP Corp. North America, Inc. Mordecai Geisler (Emmet, Marvin & Martin, LLP) for StatoilHydro ASA. Robert A. Burgoyne (Norton Rose Fulbright US LLP) and Anne Rodgers (Fulbright & Jaworski) for BG Group PLC, d/b/a BG Group North America, LLC.

Companies: BP PLC, d/b/a BP Corp. North America, Inc.; StatoilHydro ASA; BG Group PLC, d/b/a BG Group North America, LLC

Cases: RICO DistrictofColumbiaNews